The Indian group discovered that despite our countries large size and population, the Indian economy is constantly in a state of struggle. To start, we should state that India has a mixed economy, with private and state owned business and demand is controlled by business and government. This mixed economy has come from the early 1990 economic reforms that took place within India. This reform focused on increasing the number of private companies tenfold, while also trying to minimize government interference within the business real, attempting to create a “free market”.
The Indian GDP is $4.962 trillion dollars, which is the fourth largest in the world. Per capita GDP is $4,000, where in comparison to the USA which is $52,800. The World Bank expects this to increase by around 6.7% in 2015 . In recent news, there is a near halt in the growth of the GDP, which is severely hurting the image of the Indian economy. Along these lines, the inflation rate is about 9.6%, which is 208th in the world. For comparison, The United States has an inflation rate around 1.5% and is ranked 39th in the world for inflation. This basically tells us that the prices within India are not very stable at all. The Indian currency is known as the Rupee, with an exchange rate to the US dollar of 0.016. The Indian budget deficit was 5.7% of the GDP. India had $181.3 billion dollars of revenue and $281.6 billion dollars of expenditure. India’s stock of foreign investment was $253.1 billion dollars and is ranked at 22nd in the entire world, with The United States being one of India’s greatest trading and investment partners. Trade within India before the 1990’s was incredibly expensive and difficult. Before the economic reform within India’s closed economy, trade tariffs and taxes were known to be as large as 200% on some items being imported and even exported! After the 1990’s, India has a non aggregate tariff below 15%, but still having 30-40% tariffs on agriculture to protect their industry. From 2012-2013 there was a $17 million dollar increase (5.6%) than the previous years exports, so this may be a sign of better trading days to come from India. Banking and foreign direct investments are a major saving factor of the Indian economy. Investments were always an issue for India and especially other developing countries. Investments were hard to get and easy to lose within India, but some of them had a massive impact on the Indian recession and pretty much boosted the economy to a safer place. Since labor is so available and cheap within India, foreign companies often look for technical support and manufacturing jobs within India.
Bureaucracy and corruption are terms used simultaneously by Indian people. This year once again, for the 12th consecutive time India has been ranked the worst bureaucratic nation within Asia. It is incredibly difficult to also own a small private business within India with so many confusing laws that are often broken and limiting red tape. This makes it difficult for some shop owners to pay their taxes correctly, or even have enough cash on hand to pay employees. This leads to increased crime with a lot of hard work and no pay. Some parts of India lose about 50% of production and transmission of products due to theft. Bureaucracy has actually lead to physical disabilities of the country, being know for having daily rolling blackouts. This is due to the government not allowing private electrical or energy companies within their country before the early 1990’s. India is playing a serious game of energy catchup, which is increasingly difficult with increasing population and corruption within the countries bureaucrats. Market de-regulations are also an increasing trend within India. The technology and telecommunications market is one of the most booming industries within India since new laws allowed massive private cellular and ISP companies to invest within India. The energy market is also attempting to de-regulate, although the government is still having a difficult time letting go of state owned mines. Retail is one of the most difficult markets to get the foot in the door, with little work to be done on changing laws to allow more small private companies. This leads us to the corruption within India, having government officials stealing resources such as social welfare and direct cash as well. Companies with 100+ workers also need governments permission to shut down, leading to massive scale riots around the upcoming elections. Overall, India does not seem like a very promising place to expand overseas after looking deeply into their economy. The country is still very controlled by their government, with reforms being very sluggish and unaccounted for within this area. The per capita GDP is also very, very small compared to the United States. The almost 10% inflation rate is very dangerous for price setting and stability, while one Indian Rupee is also only $0.016 of one US dollar. High tariffs in some aspects of the country limit how much could be imported and exported daily as well. Lastly, if the rest of it above did not convince you to not expand to India, it seems to be suffering one of the most corrupt business regimes with difficulty in challenging their bureaucrats and lawmakers.
