india economy chaos
Content
Contemporary Business Issues
CORP 3502
Niels Brock BA (hons), Strategy Stream 2011/12
Assignment: Essay
Tutors Name: Ian Choo Submitted By:Yogendra Mani Kharal Student No: p11016269
Submission Date: Tuesday, 15th November, 2011
Despite all the mess and chaos of India, the country’s business is booming. This will change the world.
Today, India is one of the emerging economies in the world. The emerging countries are BRIC (Brazil, Russia, India, china), whose economy is rapidly growing in the last few years. India, despite having enormous chaos, mess, poverty, illiteracy, poor infrastructure, huge class difference, the economy is rapidly growing. Now, It is world’s fourth largest economies by purchasing power parity(PPP) and tenth largest by GDP (gross domestic products). India has significantly gained economic growth if it is evaluated from the past six decades. As a result it is considered a major player in a global economy. Even though part of huge population 1.2 billion are not benefited from the rapidly growing economy (Wade, 2011). The private business sectors are accelerating the growth year by year. India achieved independence in 1947, from the British Empire who ruled over India for more than 300 years. That period was also called ‘British Raj’. The economy of India seems to be growing since 1947 but not in a significant pace because it had been facing problems regarding poverty, illiteracy, refuges, health hazards, Indo-Pak issues and many social and economical problems right after the Second World War ( Priya, 2007).That is why government headed by Pandit Jawaharlal Nehru focused on infrastructure develope and other business sectors like mining, heavy electrical, steel and others that are inevitable to grow economy rapidly. No private sectors wanted to invest in such sectors that are crucial for country’s growth and which need a lot of capital investment. The major economic reform took place in 1960s also that had a purpose to build economic improvement through agriculture. In relation to this ’green Revolution’, more focus went on a forestation, irrigation projects, quality seeds, good farming techniques and effective fertilizers. In the 1980s, the government leaded by Rajiv Gandhi step towards liberalization of market, emphasizing on modern technology, market competition, and private business sectors. In this tenure, business restrictions were eased, pricing regulations ended and all the effort made to raise the GDP of the country. (maps of India, 1999-2010). Even though the prevailing of government interest towards economic reform, the private sectors were not significantly involved. It is due to the unnecessary control and interventions of the government and administration over private sectors. Over all it can be seen from the slow economic growth of 1970s that despite having independence from British empire and political freedom in the nation, there was no economic freedom.(The guardian, 2011) In 1980s, government of India focused on importance of market competition, modern technology and private entrepreneurship to make an economic revolution. Apart from this the government eliminated license raj (bureaucratic control over private business activity) which was a huge obstacle for private entrepreneurs to start, expand and to change business. Economic liberalization in late1990, privatization and globalization inspired private business sectors to expand the business globally. There was a high tariff rate which directly affected the exports and imports, this was lowered down. which ultimately made a drastic increase in economic growth. was a magnificent step for Indian economy which opened a door for private sectors .Because until 1991 India mostly had a domestic economy and was not very generous for foreign investment(business maps of India). So, large economic reforms seem to begun from 1991 and to subsequent years because some barriers were made easier. It was also tried to reduce a number of poor by providing them with a job opportunity India, today’s 10th largest GDP and 4th largest economies in the world. Despite having enormous internal chaos, poverty, poor level of infrastructure, corruptions, it is really surprising to know the rapid economic growth in last couple of years. Even during the global recession 2007-2008, India
was not badly destroyed. Huge population of the country and their low level of living standard simply hint us to imagine that country’s business growth might be degrading but this becomes wrong belief as India is passing through economic boom in recent years. It has even predicted that India will be 3rd largest economy in the world by December, 2035 if it continues to grow by over 9 percent. (The times of India, 2007). This is the period, globalization (1990s-2011) where India has achieved a major economic reform. The private sectors has been flourishing their business globally. There is a drastic contribution from India’s service sectors like information technology which has a big impact on world economy. The GDP of India has been increasing every successive years. For example, in 1950 93.7 billion rupees to about 410006.4 billion rupees in 2006. (Priya, 2007) . The economic condition until the 1990s was hopeless where the growth was very slow. One of India’s biggest business partner soviet union broke, which caused India a huge loss in its economy as a result the liberalization plan initiated in late1990s.This is one of the milestone in the economic history of India. In this plan the economy became open which welcomed the foreign investments, monopolies of public sectors removed, privatization of public sector undertakings (PSU) occurred and service sectors like banking and information technology were developed. Since the open economy plan , India has achieved remarkable economic growth. As a result, it has become today’s a rapid economic growth country in the world having a growth rate of GDP(gross domestic products) around 6-7%. Along with the GDP growth it has similarly experiencing increase in per capita income, living standard and industrial development(maps of India). The inclining GDP figure of India clearly indicate that there is a drastic increase in GDP which was 93.7 billion rupees in 1950 and about 410006.4 b rupees in 2006. after 2003 India is having a rate of growth by 8% or more. Today India is known for its software services providing country in the world. This is the evidence of quality of hi-tech IT which grew by 33% and the business process outsourcing (BPO) part only grew by 37% in 2005-2006. Which has been attracting foreign investors to put billion dollars into the equity market of India. Which is the reason to make a record high after the open economy policy adopted during 1990s. All those factors indicate the entire world has trusted the confidence and strength of the Indian economy. Otherwise why would Goldman Sachs, a multinational financial company predict that India will be a developed country by 2040? This seems possible because of the benefits from open economy, FDI in some selected sector, privatization of some PSU, demographic benefit, large democracy are leading India to become the emerging economy (Priya, 2007). India has a positive impact on economy from its demographic structure. India is a young country where abundant young workers are available. Proportion of old and children to adult of working age in India shows that it is one of the best in the world. It is expected working age number will be raised by136 million by 2020. The other important factor contributing to Indian economy is quality and quantity of the mass young Indians coming into workforce. India has abundant skilled young people and still growing Work force. It has been predicted that India will be the great young working force provider in next couple of years. As china will be falling down in this because of one child scheme (The economic times, 2010). Available of mass of low cost labor is enabling to produce a product of cheap cost. The numbers of poor in india has not been significantly decreasing even though the economy is growing faster. Because the large numbers of unskilled people cannot be involved in service sectors, industry, banking sectors where they demand of skilled people is required. They are just limited in rural agriculture. Bandow (2011) adds India is the most important and strong counterweight to China. Previously a British colony, india faced a lot of violence and chaos when the world war II ended. India has world’s second biggest population after the china, and seems like it overtakes china’s population because china has taken only one child policy. Moreover the largest democracy of india yielding not only messes, violent and chaotic incidents nevertheless, there are abundant advantages to
Indian people such as social release, freedom for business. Now india is the world’s fourth largest economy. The globalization has been proved an importantly inevitable force to prosper the country. India and china are its contemporary examples. Because it expands the market worldwide. India is now the close competitor to china. Now india has increasing number of population(Bandow, 2011). Many global companies have outsourced their part of business in india because of the availability of skilled and unskilled labor and comparatively low rate. For example UK based banks outsourced it’s back –office operations to India. Many global companies outsources their design, software part, call center and banking services in india for efficiency. There are couple of other examples of worlds renowned companies which are taking India’s skilled manpower. But this is not necessarily that the labor is cheap, those large companies mainly focuses on using technological talents in their company. Skilled People working in the Google (USA) wanted to return back to india and thought of developing and contributing to their own country’s economic development. This could produce a huge loss to Google because it is hard to find a IT professionals in the USA that is why Google opened office in India for not to lose those skilled people. The same case is relevant with Yahoo and IBM. Yahoo has 900 engineers working in research center India and IBM is the largest foreign company having 50,000 employees in India. In the developed countries people are using internet as a part of lifestyle but in developing countries like India internet is livelihood by which they generate income. As a result they have many IT professionals who are resource for the big and small foreign companies. India has a macro-economic stability, competent labor and attractive environment for foreign investment (Daft, Kendrick, & Vershinina.2010). This not only the fact that foreign companies outsourcing to india but there are many Indian companies which base their business in foreign land and employs massive people around the world for example TATA has 40,000 workers in the UK, IT company outsources in the USA and employs many Americans itself. Bharati airtel the world’s 5th biggest mobile phone operator has massive employees in Africa. In India only every month one million mobile subscriber are added. Moreover, there are many other Indian multinational companies like Mahindra, Infosys, Wipro, Arcelor Mittal (Luxembourg based world’s largest steel producer)( the economist,2010).These companies are still investing billions of dollar to extend their business. which are participating and interconnecting actively in the global market. India also exports large scale of skilled or unskilled manpower throughout the world. By which it has been receiving solid remittance from Indian worker working in other countries. This is enough to explain that india is not only playing one way but also exchanging like giving and taking role in global economy. And indeed, it is a very important player of global economy of today. If the business growth keeps on increasing this will definitely change the whole world. According to the trend of previous economic growth it has been predicted by Goldman Sachs Economic Research (2008) that India can grow by 8.2% until 2020 by 2020, 140 million people will transfer to the cities and a largest 700 million will move by 2050. This will increase the number of cities with more than a million population will be double by 2020 and probably increase four times by 2050. this is important because cities are the hub for initiating economic growth. This movement of people to cities indeed increases the productivity. India is getting a potential power from rising population which is the largest manpower provider to the world. Goldman Sachs also predicts that the economy will obtain 7.8% growth in 2011-2012. On the other hand banking sector is expected to grow faster and become the world’s third largest by next 14 years(2025). India is going to take second position in steel production by 2013. The largest automobile industry, uprising tourism industry, elevator, motorcycle, air-condition, mining, manufacturing and competent service IT sector seems very hopeful to boost India’s economy furthermore. Government has an ambitious plan in infrastructure build up by 2017 by spending more than US$ 1 trillion. This will facilitate business sectors and expects more growth in private business sectors. (IBEF,2011)
Indian business has attracted many other MNCs companies like LG electronics, Samsung, Nokia, Pepsi, SAP, Vodafone, Mc Donald’s, Fiat, Hyundai which are worlds’ renowned companies. Recently, Posco steelmakers and Arcelor Mittal world’s top multinational steel makers have shown their commitment to invest in steel and power sector in India (business maps of India, 2011) . The drastic contribution from the service sector like information technology and banking in the recent years has helped Indian economy to boost up but it has not comparatively created large numbers of job opportunity to Indians. This business boom of India exhibits that it is a democratic but in the existence of capitalist periphery. Looking at the numbers of poor in India it is very strange for outsiders to say that it has world’s top ten economy. That is why it can be said that India has a surprising economy (wade, 2011). Frugal innovation in Indian business sectors has brought a drastic revolution in many ways but the overall purpose is to reach many customers by making a product affordable ,attractive or exciting by adding a unique value on it. Because an expensive product may not be affordable by entire people but the same kind of product in cheaper price can be very effective in the whole market(domestic or foreign). For example a portable ECG machine working with battery also invented by general electric only for $800, Tata’s Nano, the ultra cheap and small car for $2200 and TATA chemical’s ultra cheap water purifier for $24 which made up of the waste rice husks and works without power supply, Godrej’s small fridge for $70 which runs on battery too. TATA also own big brands like Jaguar and Land Rover They are just some examples, besides, there are many others companies adopting frugal innovation which are growing in the market rapidly. Because frugal innovation is not only about remodeling products but it involves rethinking the whole production process and business model so as to cover larger mass of customers. The companies should squeeze production cost in order to make price reduced which enables to reach more customers’ demand and expand sales. In next 20-25 years India will achieve the higher growth rate in GDP than other country( The economist, 2010). Even though having abundant opportunity, innovation, skilled manpower and potential business man or the highest FDI, there are many factors Which are holding India behind . most of them are from government side. Control of Bureaucracy and politics into the private business sectors is still prevailing. Large democracy is sometimes good but sometimes it is messy and complicated. The deeply rooted corruption in Asian countries is the worst barrier for growth. India could not get rid of this. After the independent it focused more on public sector undertaking but the relevant improvement and enhancement always lacking in public sectors. The infrastructure( soft and hard) has a miserable condition due to the lack of continuous development. Roads are not good, there is lack of quality education, transport system is not enough, water treatment system is inadequate, the political instability caused by Maoist insurgency in several districts of India are factors which are holding India backwards. Even though the working force is raising in India but the southern part has been using a lot of its skilled workers than northern part. This can be a situation later when skilled people in south are aging or scarce and excessively growing unskilled force in north is raising which makes no sense of the benefit from demographic advantage. The rising value of currencies and exchange rate fluctuation might directly affect the export and import. Which, as a result, can make imports more cheaper and export more expensive which ultimately affects the business(The Economist, 2008). Earlier mentioned business phenomenon, process, growth, outsourcing, FDI are far enough to say that Indian business is integrating with world economy. The core competence of business sectors are many in India. The competitive private company, competent managers and engineers, growing middle class, large democracy are helping to boost the business growth up. It can be said the strong private business sectors are emerging in the presence of weak public concerned development.
Although the business is booming there are several barriers and uncertainty for the future. Too much foreign investment can be bad for the country in the long run if all the income is taken back by the foreign company or if they suddenly closed the business. The poor infrastructure of the country is the worst part for business growth because private business are forced to create their own infrastructure like water from boring, heavy generator for electricity, transporting their staffs. The risk for the commodity Markey is deeply prevailing because some day the natural resources might be empty after digging so much today on earth like oil, steel, mining etc. the intensely rooted corruption and the control of administration and politics into the private business is very bad for growth. The are many districts which has revolutionary Maoist‘s control where they have occupied all the intense jungle and have their own autocracy. The very complicated structure of the government is beyond understanding because there is central government and every state has own minister which is complicated creates conflict. The open boarder of India with Nepal can allow anti-Indian terrorists to enter through Nepal. There has been several explosion in India causing people and property loss. This is a big challenge to be considered for the government of India. Because of the security reason may the US based companies transfer from india to other countries like Philippines where the labor cost is as low as india and have almost the similar culture like US. In conclusion, economy of India is booming with the increasing % of growth rate unfortunately it is not able to involve and address the huge part of population who are living under poverty line. Huge part of population depends on agriculture which is contributing just a nominal (1%) to its GDP. Modernization of agriculture may provide India an abundant benefit for more growth and to reduce poverty. The capitalization and the global competitive market has been proved to be very beneficial for India’s private business sectors. Being the maximum numbers of labor of very low minimum rate available in the market, private business can produce a product with low cost of production. The example can be taken from the cheapest car of TATA Group ”NANO CAR and TVS scooty. India has been exporting huge numbers of different vehicles in Asia and outside Asia. On the other hand this is frugal innovation where affordable products are produced to cover and extend the market. For example an expensive car, laptop or motorbike cannot be afforded by all Indians that is why to fulfill their demand a cheaper car, laptop or motorbike might be effective this is called frugal innovation which has been adopted by many Indian business sectors. This has positive impact on Indian business growth. The improvement in the quality of education allover India could have greater impact to produce more skilled manpower. So, Indian business sector has great impact on global economy in various ways. There are many countries from Europe, Asia, Africa, America , Australia which have multinational company in India. Why did they come to India? It is because there are cheap labor, economic stability, skilled manpower specially IT and engineering, business growth trend, suitable environment for FDI, open economy are attracting global companies to enter Indian market. That is why in today’s world India has a very intense relationship and influence too. For instance, Without which many reputed global companies like IBM, silicon valley, Google, yahoo might have a big problem due to the lack of professionals. But there are still many challenges to Indian business sectors like increasing price of good, exchange rate up and down, inflation, world economic crisis which have a significant impact on growth.
References: A bumpier but freer road.(2010, September 30). The economist. Available at: http://www.economist.com/node/17145035 (Accessed on 9th Nov. 2011)
Bandow,D. (2011,july 03). Is India An Economic Superpower In the Making? Forbes. Available at: http://www.forbes.com/sites/dougbandow/2011/03/07/is-india-an-economic-superpower-in-themaking/ (Accessed on 9th Nov. 2011) Chakrabortty, A.(2011, February16). The Business podcast: India's booming economy. The Guardian. Available at: http://www.guardian.co.uk/business/audio/2011/feb/16/business-podcast-india-boomingeconomy?INTCMP=SRCH (Accessed on 11th Nov. 2011)
Daft, R.L., Kendrick, M & Vershinina, N.( 2010) .Management,8thed. South-Western Cengage Learning.
First break all the rules, The charms of frugal innovation.(2010, April 15).The economist. Available at: http://www.economist.com/node/15879359?story_id=15879359 (Accessed on 9th Nov. 2011) Global economics paper no. 169.(2008, June 16). Goldman Sachs. Available at: http://www2.goldmansachs.com/our-thinking/brics/brics-reports-pdfs/ten-things-india.pdf (Accessed on 11th Nov. 2011) India economy history.( 2011, November 14). Business maps of India. Available at: http://business.mapsofindia.com/india-economy/history.html (Accessed on 09th Nov. 2011)
Indian Economy Overview.( 2011 August).IBEF. Available at: http://www.ibef.org/artdispview.aspx?in=36&art_id=29729&cat_id=140&page=3 (Accessed on 9th Nov. 2011).
India's surprising economic miracle. (2010,September 30) .The economist. Available at: http://www.economist.com/node/17147648 (Accessed on 05th Nov. 2011)
India to be 3rd largest economy by 2035.(2007, September 20). The times of India,1. Available at: http://articles.timesofindia.indiatimes.com/2007-09-20/india-business/27960461_1_largesteconomy-indian-economy-inclusive-growth (Accessed on 10th Nov. 2011). Priya, M.B.(2007, August 14). Indian Economic Progression Since 1947. One India news,1. Available at: http://news.oneindia.in/2007/08/13/india-economic-progression-since-1947.html (Accessed on 05th Nov. 2011) Wade, M.( 2011, October 18). India growing strongly, but poverty gap widens. The Sydney morning herald. Available at: http://www.smh.com.au/business/india-growing-strongly-but-poverty-gap-widens-201110171ltck.html (Accessed on 06th Nov. 2011).
What's holding India back?(2008, March 6). The Economist. Available at: http://www.economist.com/node/10808493 (Accessed on 12th Nov. 2011)
CORP 3502
Niels Brock BA (hons), Strategy Stream 2011/12
Assignment: Essay
Tutors Name: Ian Choo Submitted By:Yogendra Mani Kharal Student No: p11016269
Submission Date: Tuesday, 15th November, 2011
Despite all the mess and chaos of India, the country’s business is booming. This will change the world.
Today, India is one of the emerging economies in the world. The emerging countries are BRIC (Brazil, Russia, India, china), whose economy is rapidly growing in the last few years. India, despite having enormous chaos, mess, poverty, illiteracy, poor infrastructure, huge class difference, the economy is rapidly growing. Now, It is world’s fourth largest economies by purchasing power parity(PPP) and tenth largest by GDP (gross domestic products). India has significantly gained economic growth if it is evaluated from the past six decades. As a result it is considered a major player in a global economy. Even though part of huge population 1.2 billion are not benefited from the rapidly growing economy (Wade, 2011). The private business sectors are accelerating the growth year by year. India achieved independence in 1947, from the British Empire who ruled over India for more than 300 years. That period was also called ‘British Raj’. The economy of India seems to be growing since 1947 but not in a significant pace because it had been facing problems regarding poverty, illiteracy, refuges, health hazards, Indo-Pak issues and many social and economical problems right after the Second World War ( Priya, 2007).That is why government headed by Pandit Jawaharlal Nehru focused on infrastructure develope and other business sectors like mining, heavy electrical, steel and others that are inevitable to grow economy rapidly. No private sectors wanted to invest in such sectors that are crucial for country’s growth and which need a lot of capital investment. The major economic reform took place in 1960s also that had a purpose to build economic improvement through agriculture. In relation to this ’green Revolution’, more focus went on a forestation, irrigation projects, quality seeds, good farming techniques and effective fertilizers. In the 1980s, the government leaded by Rajiv Gandhi step towards liberalization of market, emphasizing on modern technology, market competition, and private business sectors. In this tenure, business restrictions were eased, pricing regulations ended and all the effort made to raise the GDP of the country. (maps of India, 1999-2010). Even though the prevailing of government interest towards economic reform, the private sectors were not significantly involved. It is due to the unnecessary control and interventions of the government and administration over private sectors. Over all it can be seen from the slow economic growth of 1970s that despite having independence from British empire and political freedom in the nation, there was no economic freedom.(The guardian, 2011) In 1980s, government of India focused on importance of market competition, modern technology and private entrepreneurship to make an economic revolution. Apart from this the government eliminated license raj (bureaucratic control over private business activity) which was a huge obstacle for private entrepreneurs to start, expand and to change business. Economic liberalization in late1990, privatization and globalization inspired private business sectors to expand the business globally. There was a high tariff rate which directly affected the exports and imports, this was lowered down. which ultimately made a drastic increase in economic growth. was a magnificent step for Indian economy which opened a door for private sectors .Because until 1991 India mostly had a domestic economy and was not very generous for foreign investment(business maps of India). So, large economic reforms seem to begun from 1991 and to subsequent years because some barriers were made easier. It was also tried to reduce a number of poor by providing them with a job opportunity India, today’s 10th largest GDP and 4th largest economies in the world. Despite having enormous internal chaos, poverty, poor level of infrastructure, corruptions, it is really surprising to know the rapid economic growth in last couple of years. Even during the global recession 2007-2008, India
was not badly destroyed. Huge population of the country and their low level of living standard simply hint us to imagine that country’s business growth might be degrading but this becomes wrong belief as India is passing through economic boom in recent years. It has even predicted that India will be 3rd largest economy in the world by December, 2035 if it continues to grow by over 9 percent. (The times of India, 2007). This is the period, globalization (1990s-2011) where India has achieved a major economic reform. The private sectors has been flourishing their business globally. There is a drastic contribution from India’s service sectors like information technology which has a big impact on world economy. The GDP of India has been increasing every successive years. For example, in 1950 93.7 billion rupees to about 410006.4 billion rupees in 2006. (Priya, 2007) . The economic condition until the 1990s was hopeless where the growth was very slow. One of India’s biggest business partner soviet union broke, which caused India a huge loss in its economy as a result the liberalization plan initiated in late1990s.This is one of the milestone in the economic history of India. In this plan the economy became open which welcomed the foreign investments, monopolies of public sectors removed, privatization of public sector undertakings (PSU) occurred and service sectors like banking and information technology were developed. Since the open economy plan , India has achieved remarkable economic growth. As a result, it has become today’s a rapid economic growth country in the world having a growth rate of GDP(gross domestic products) around 6-7%. Along with the GDP growth it has similarly experiencing increase in per capita income, living standard and industrial development(maps of India). The inclining GDP figure of India clearly indicate that there is a drastic increase in GDP which was 93.7 billion rupees in 1950 and about 410006.4 b rupees in 2006. after 2003 India is having a rate of growth by 8% or more. Today India is known for its software services providing country in the world. This is the evidence of quality of hi-tech IT which grew by 33% and the business process outsourcing (BPO) part only grew by 37% in 2005-2006. Which has been attracting foreign investors to put billion dollars into the equity market of India. Which is the reason to make a record high after the open economy policy adopted during 1990s. All those factors indicate the entire world has trusted the confidence and strength of the Indian economy. Otherwise why would Goldman Sachs, a multinational financial company predict that India will be a developed country by 2040? This seems possible because of the benefits from open economy, FDI in some selected sector, privatization of some PSU, demographic benefit, large democracy are leading India to become the emerging economy (Priya, 2007). India has a positive impact on economy from its demographic structure. India is a young country where abundant young workers are available. Proportion of old and children to adult of working age in India shows that it is one of the best in the world. It is expected working age number will be raised by136 million by 2020. The other important factor contributing to Indian economy is quality and quantity of the mass young Indians coming into workforce. India has abundant skilled young people and still growing Work force. It has been predicted that India will be the great young working force provider in next couple of years. As china will be falling down in this because of one child scheme (The economic times, 2010). Available of mass of low cost labor is enabling to produce a product of cheap cost. The numbers of poor in india has not been significantly decreasing even though the economy is growing faster. Because the large numbers of unskilled people cannot be involved in service sectors, industry, banking sectors where they demand of skilled people is required. They are just limited in rural agriculture. Bandow (2011) adds India is the most important and strong counterweight to China. Previously a British colony, india faced a lot of violence and chaos when the world war II ended. India has world’s second biggest population after the china, and seems like it overtakes china’s population because china has taken only one child policy. Moreover the largest democracy of india yielding not only messes, violent and chaotic incidents nevertheless, there are abundant advantages to
Indian people such as social release, freedom for business. Now india is the world’s fourth largest economy. The globalization has been proved an importantly inevitable force to prosper the country. India and china are its contemporary examples. Because it expands the market worldwide. India is now the close competitor to china. Now india has increasing number of population(Bandow, 2011). Many global companies have outsourced their part of business in india because of the availability of skilled and unskilled labor and comparatively low rate. For example UK based banks outsourced it’s back –office operations to India. Many global companies outsources their design, software part, call center and banking services in india for efficiency. There are couple of other examples of worlds renowned companies which are taking India’s skilled manpower. But this is not necessarily that the labor is cheap, those large companies mainly focuses on using technological talents in their company. Skilled People working in the Google (USA) wanted to return back to india and thought of developing and contributing to their own country’s economic development. This could produce a huge loss to Google because it is hard to find a IT professionals in the USA that is why Google opened office in India for not to lose those skilled people. The same case is relevant with Yahoo and IBM. Yahoo has 900 engineers working in research center India and IBM is the largest foreign company having 50,000 employees in India. In the developed countries people are using internet as a part of lifestyle but in developing countries like India internet is livelihood by which they generate income. As a result they have many IT professionals who are resource for the big and small foreign companies. India has a macro-economic stability, competent labor and attractive environment for foreign investment (Daft, Kendrick, & Vershinina.2010). This not only the fact that foreign companies outsourcing to india but there are many Indian companies which base their business in foreign land and employs massive people around the world for example TATA has 40,000 workers in the UK, IT company outsources in the USA and employs many Americans itself. Bharati airtel the world’s 5th biggest mobile phone operator has massive employees in Africa. In India only every month one million mobile subscriber are added. Moreover, there are many other Indian multinational companies like Mahindra, Infosys, Wipro, Arcelor Mittal (Luxembourg based world’s largest steel producer)( the economist,2010).These companies are still investing billions of dollar to extend their business. which are participating and interconnecting actively in the global market. India also exports large scale of skilled or unskilled manpower throughout the world. By which it has been receiving solid remittance from Indian worker working in other countries. This is enough to explain that india is not only playing one way but also exchanging like giving and taking role in global economy. And indeed, it is a very important player of global economy of today. If the business growth keeps on increasing this will definitely change the whole world. According to the trend of previous economic growth it has been predicted by Goldman Sachs Economic Research (2008) that India can grow by 8.2% until 2020 by 2020, 140 million people will transfer to the cities and a largest 700 million will move by 2050. This will increase the number of cities with more than a million population will be double by 2020 and probably increase four times by 2050. this is important because cities are the hub for initiating economic growth. This movement of people to cities indeed increases the productivity. India is getting a potential power from rising population which is the largest manpower provider to the world. Goldman Sachs also predicts that the economy will obtain 7.8% growth in 2011-2012. On the other hand banking sector is expected to grow faster and become the world’s third largest by next 14 years(2025). India is going to take second position in steel production by 2013. The largest automobile industry, uprising tourism industry, elevator, motorcycle, air-condition, mining, manufacturing and competent service IT sector seems very hopeful to boost India’s economy furthermore. Government has an ambitious plan in infrastructure build up by 2017 by spending more than US$ 1 trillion. This will facilitate business sectors and expects more growth in private business sectors. (IBEF,2011)
Indian business has attracted many other MNCs companies like LG electronics, Samsung, Nokia, Pepsi, SAP, Vodafone, Mc Donald’s, Fiat, Hyundai which are worlds’ renowned companies. Recently, Posco steelmakers and Arcelor Mittal world’s top multinational steel makers have shown their commitment to invest in steel and power sector in India (business maps of India, 2011) . The drastic contribution from the service sector like information technology and banking in the recent years has helped Indian economy to boost up but it has not comparatively created large numbers of job opportunity to Indians. This business boom of India exhibits that it is a democratic but in the existence of capitalist periphery. Looking at the numbers of poor in India it is very strange for outsiders to say that it has world’s top ten economy. That is why it can be said that India has a surprising economy (wade, 2011). Frugal innovation in Indian business sectors has brought a drastic revolution in many ways but the overall purpose is to reach many customers by making a product affordable ,attractive or exciting by adding a unique value on it. Because an expensive product may not be affordable by entire people but the same kind of product in cheaper price can be very effective in the whole market(domestic or foreign). For example a portable ECG machine working with battery also invented by general electric only for $800, Tata’s Nano, the ultra cheap and small car for $2200 and TATA chemical’s ultra cheap water purifier for $24 which made up of the waste rice husks and works without power supply, Godrej’s small fridge for $70 which runs on battery too. TATA also own big brands like Jaguar and Land Rover They are just some examples, besides, there are many others companies adopting frugal innovation which are growing in the market rapidly. Because frugal innovation is not only about remodeling products but it involves rethinking the whole production process and business model so as to cover larger mass of customers. The companies should squeeze production cost in order to make price reduced which enables to reach more customers’ demand and expand sales. In next 20-25 years India will achieve the higher growth rate in GDP than other country( The economist, 2010). Even though having abundant opportunity, innovation, skilled manpower and potential business man or the highest FDI, there are many factors Which are holding India behind . most of them are from government side. Control of Bureaucracy and politics into the private business sectors is still prevailing. Large democracy is sometimes good but sometimes it is messy and complicated. The deeply rooted corruption in Asian countries is the worst barrier for growth. India could not get rid of this. After the independent it focused more on public sector undertaking but the relevant improvement and enhancement always lacking in public sectors. The infrastructure( soft and hard) has a miserable condition due to the lack of continuous development. Roads are not good, there is lack of quality education, transport system is not enough, water treatment system is inadequate, the political instability caused by Maoist insurgency in several districts of India are factors which are holding India backwards. Even though the working force is raising in India but the southern part has been using a lot of its skilled workers than northern part. This can be a situation later when skilled people in south are aging or scarce and excessively growing unskilled force in north is raising which makes no sense of the benefit from demographic advantage. The rising value of currencies and exchange rate fluctuation might directly affect the export and import. Which, as a result, can make imports more cheaper and export more expensive which ultimately affects the business(The Economist, 2008). Earlier mentioned business phenomenon, process, growth, outsourcing, FDI are far enough to say that Indian business is integrating with world economy. The core competence of business sectors are many in India. The competitive private company, competent managers and engineers, growing middle class, large democracy are helping to boost the business growth up. It can be said the strong private business sectors are emerging in the presence of weak public concerned development.
Although the business is booming there are several barriers and uncertainty for the future. Too much foreign investment can be bad for the country in the long run if all the income is taken back by the foreign company or if they suddenly closed the business. The poor infrastructure of the country is the worst part for business growth because private business are forced to create their own infrastructure like water from boring, heavy generator for electricity, transporting their staffs. The risk for the commodity Markey is deeply prevailing because some day the natural resources might be empty after digging so much today on earth like oil, steel, mining etc. the intensely rooted corruption and the control of administration and politics into the private business is very bad for growth. The are many districts which has revolutionary Maoist‘s control where they have occupied all the intense jungle and have their own autocracy. The very complicated structure of the government is beyond understanding because there is central government and every state has own minister which is complicated creates conflict. The open boarder of India with Nepal can allow anti-Indian terrorists to enter through Nepal. There has been several explosion in India causing people and property loss. This is a big challenge to be considered for the government of India. Because of the security reason may the US based companies transfer from india to other countries like Philippines where the labor cost is as low as india and have almost the similar culture like US. In conclusion, economy of India is booming with the increasing % of growth rate unfortunately it is not able to involve and address the huge part of population who are living under poverty line. Huge part of population depends on agriculture which is contributing just a nominal (1%) to its GDP. Modernization of agriculture may provide India an abundant benefit for more growth and to reduce poverty. The capitalization and the global competitive market has been proved to be very beneficial for India’s private business sectors. Being the maximum numbers of labor of very low minimum rate available in the market, private business can produce a product with low cost of production. The example can be taken from the cheapest car of TATA Group ”NANO CAR and TVS scooty. India has been exporting huge numbers of different vehicles in Asia and outside Asia. On the other hand this is frugal innovation where affordable products are produced to cover and extend the market. For example an expensive car, laptop or motorbike cannot be afforded by all Indians that is why to fulfill their demand a cheaper car, laptop or motorbike might be effective this is called frugal innovation which has been adopted by many Indian business sectors. This has positive impact on Indian business growth. The improvement in the quality of education allover India could have greater impact to produce more skilled manpower. So, Indian business sector has great impact on global economy in various ways. There are many countries from Europe, Asia, Africa, America , Australia which have multinational company in India. Why did they come to India? It is because there are cheap labor, economic stability, skilled manpower specially IT and engineering, business growth trend, suitable environment for FDI, open economy are attracting global companies to enter Indian market. That is why in today’s world India has a very intense relationship and influence too. For instance, Without which many reputed global companies like IBM, silicon valley, Google, yahoo might have a big problem due to the lack of professionals. But there are still many challenges to Indian business sectors like increasing price of good, exchange rate up and down, inflation, world economic crisis which have a significant impact on growth.
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