THE BIRTH OF AN
ECONOMIC SUPER POWER
By Dr. Bharat Jujunwala
The American
economy was under severe stress towards the close of 1990s. In order to tide-over the situation drastic import controls were introduced specifically on luxury goods like automobiles. Most of the industrialized countries including strong Asian tigers were caught unawares by these measures and as a result their respective economies also suffered unprecedented setbacks.
To the surprise of the western world the Indian economy surged ahead during this catastrophic period. The reason was very simple; India was not over-dependant on the United States at that juncture for their export earnings and foreign exchange reserves. Their shipments to the U S were restricted to lower-end products, as their industrial
technology was not so very advanced to export higher-end technology products to the United States. Shielded from the negative impact of the American face saving measures, India could sustain the
growth path. The economic index moved steadily upwards registering a growth rate of 6.4 percent during the major part of the U S recession. This scenario boosted the confidence of the policy makers in India to dream high and set their growth targets at enviable heights. Any one perceiving the
international economic scenario of the decade will not hesitate to agree that the downslide of the U S economy had sustained the Indian economy to unparalleled strengths. This exactly is the reason for the Indian dream of becoming an economic super power during the first quarter itself of the present century.
However, sustained financial strength during a short span of a few years alone will not be accepted as a benchmark of favorable
investment climate. Though the investors were not fully convinced about the power of the Indian economy to retain the surge ahead to enable them to invest and withdraw with reasonable returns for their investments, still the developments had definitely served as strong publicity for the Indian attempts at achieving an edge over many other potential investment destinations.
The real testing time indeed, came in India’s way during the 1998-2000 period when the Information Technology revolution gripped the international center point. As usual the United States took over the reins of the IT regime under the leadership of world-renowned enterprises like Microsoft and Disco. Once again the U S economy regained its lost prestige with renewed vigor. They ensured their supremacy by introducing most advanced computing techniques and inter-net technology to the international community. These developments once again drew the world
capital markets closer to the U S. The US Capital markets registered healthy and prolonged bull-phase. The interest rates of the Federal Reserve Bank of America were brought down to almost zero levels.
Though this latest developments affected the inflow of foreign exchange to India, there was absolutely no panic. Close on heals, the Government of India, in its anxiety to keep the pace of economic growth, embarked upon measures to enhance its foreign exchange reserves through procurement of capital instruments like American Treasury Bonds. The Indian enterprises supported these efforts and contributed their mite by resorting to international havala transactions etc. Some of such measures even brought severe criticisms, as unhealthy practices, by noted economists of the country.
To the utter disappointment of the US, I T Industry all of a sudden experienced sharp downslide during 2003-04 sending panic waves in the western capitals. This not only adversely affected the American expectations of sustained growth through technology advancements but also resulted in substantial budget deficits, which was quite unusual for an economy like the US. These developments perplexed the international investing community who had already committed substantial stalks in the American capital market in expectation of golden harvests. Instantaneously they started looking elsewhere for safe investment of their financial assets. This change of mind-set brought down the value of the US Dollar. The Indian currency, on the other hand attained value additions consistently over a period of time.
There are unmistakable signals of retention of the position as obtaining above with further surge expectations for India. The uniform rate of growth sustained by the Indian economy against the backdrop of fluctuating index elsewhere, attracted large-scale international capital funds towards India. International Investment experts based at London and other recognized investment centers started recommending India as one of the safest investment portfolio destinations. As a result, it has now become very easy for Indian companies to tap the international capital markets for their expansion and research-based up dating of technology. Many of the Indian enterprises have by now become multi-nationals of high standing. Availability of external borrowings at very low interest rates added impetuous to the leap of the economy.
Indian morale was further boosted as the recognition as a dependable service provider came on India’s way. In service sectors like software, Call Centers, On-line education, Legal aid, Medical Transcription etc turned India into a force to reckon with. The very Indian concept of service is associated inseparably with its cultural heritage. And the slogan that come out of every Indian mind is “LOKHA SAMASTHA SUGHINO BHAVANTHU” meaning “ Let prosperity be showered upon the entire humanity”.
More reviews about the MATHRU BHOOMY MALAYALAM DAILY