IN DEPTH
With a booming IT industry, whole
regions dedicated to the aforementioned, such as Silicon Valley and
the fact that amongst most developed countries the tertiary sector is
the main money maker; it appears
that the young, modern Indian graduate might be a possible answer to its
healthy economic position. There are
other factors as to why it is succeeding however, other than the seemingly endless recruiting pool of the
skilled IT specialist. Perhaps, the
power of language. Over 350 million
Indians can speak English at good to
exceptional level. Given the fact that
English is the widely regarded
‘International trade language’, India
seems to have an advantage there.
Another potential advantage is its
geographical position, or in other
words: time zone. India is awake
when America sleeps. So consumers
all over the world can have their
computers fixed by Indians riding
desks at call centres at any ungodly
hour they may choose. Not only all
that, but India is also a beneficiary of
considerable foreign direct investment (FDI). Since it opened up to
international trade in 1991, over 100
multinational firms have set up shop
there, creating jobs.
India is however not free from woe.
Despite its ‘general’ success on a
P.7
global scale, India is currently facing an economic slowdown. The
graph below shows the stagnating
value of India’s rupee; it is currently one of the worst performing currencies worldwide with its value
falling to just roughly 62/ dollar. Its
current situation is being likened to
its crisis of 1991, arguably its worst
ever economic situation. Its GDP
growth too has looked meagre.
Given its healthy GDP growth figures of the last decade (e.g. reaching 8.5% in 2009), its current figures look frail in comparison. As of
2012 its GDP growth had plummeted to 3.2%.
A possible explanation to this
could be India’s grim current account deficit. As of mid 2013, it had
risen to over 6.7% of the GDP. Imports are simply much greater than
exports. Although this can be a
sign of a ‘well-to-do’ nation (the UK
and the US both have current account deficits), not necessarily in
this case. There is just not enough
money being put into the Indian
economy. The matter is being further complicated by the fact that
foreign investors are pulling money
out
of
the
economy.
But it’s not all doom and gloom and
the end of the world as we know it.
Although India is ‘caught up in a bit
of a storm’ at the moment, it does
appear to be getting a grip on its
macro objectives. There is the added fact that China is facing a potential economic slowdown. Given
the fact that nations such as the
US are very consumption driven,
India’s trade opportunities do appear to be showing signs of hope
as nations will look to satisfy their
demands by importing and trading
with the likes of India. India still is
after all one of the strongest economies in the world. The newly appointed governor of the Reserve
Bank of India has pledged to get
the country going again. He has
stated that one of his main objectives is to turn around nonperforming assets; a good start
then. Having witnessed the fall in
the value of the rupee to ridiculously low levels, Raghuram Rajan and
his RBI have assured the Indian
public that financial stability is one
of its top priorities. So having considered all this, we can also conceive that this does not mean an
end for India’s status as a world
beater. It would seem that the
country is making amends for its
poor economic performance and a
plan of action for the recovery is in
full flow.
What is clear, however, is that in
such a colourful community, and
one of bright young minds and a
hard working people, a brilliant
idea or a game changing move is
never far away. Although it has
been taking a battering recently, it
does seem to be emerging from
the storm, clearly showing India is
still a force to be reckoned with.