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India and Economic liberalization - Assignment Example

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By the end of 20th century, the world had realized that the next century is going to be an Asian century on economic ground. The reason behind this view was neither Japan nor the South East Asian tigers comprising ASEAN; it's the world's two most populated nations namely China and India…
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India and Economic liberalization
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Download file to see previous pages China has now become the factory of the world while India is a service sector giant while leading in the sectors like software development and BPO industry (Perkovich, 2003). Though both have now become a very successful case of FDI channeled development model but the structure of the economy of these two nations are at the two ends of any of the economic theory. In China, being a one-party communist state and very strong central government economic decisions are taken irrespective of what is actually the people at ground wish while in India, being a secular democratic nation with multi-party political system decisions related to economy are often taken while considering the compulsions like electoral promises and is very much populist in nature. The governments which include both central and states are always under pressure from both opposition parties and popular public demand and many a time the decisions get affected due to this factor. At the same time, India's economic stand for more than forty years of its independence had been protective and least connected with the world (Bromley, Mackintosh, Brown & Wuyts, 2004, p. 196). Its neutral stand during the cold war and strategic military relationship with USSR caused very less interaction with the western world led by the USA. The country continued to pursue its independent political stand and entered the 21st century, its economic structure saw extreme changes and the country now boasts of having the USA as its largest trading partner and at the same time, US has also found great interest in world's largest democracy and the recently signed nuclear treaty between the US president George Bush and Indian Prime Minister Dr. Manmohan Singh clearly underlines the growing interest between the two.
So the new India or better to say the liberalized India post-reforms present a beautiful case where Kenneth Waltz's theory of International Relations which states that the action of a state can often get affected due to pressures being exerted by international forces and thereby limiting the options available to them(1979). The neorealist or structured model has been developed with the aim to explain the repeating patterns of state behavior and power and its extent which is the combination of its capacity to resist external influence while influencing others to behave according to its wishes (Extra Material, p. 6).
The liberalization process in India began in the early 1990s in the tenure of the Prime Minister P. V. Narashimha Rao under the leadership of the Finance Minister Dr. Manamohan Singh. The reform process and India's integration into the world economy was widely appreciated with the International Monetary Fund or the IMF calling it a long term corrective measure. The reform process which began with India signing GATT and becoming a part of WTO was widely appreciated by almost all economic quarters (Bromley et. al, 2004, p. 173). But still, the opposition led by communists and the BJP were dead against the proposal. The Narashimha Rao govt. continued with his reforms through slowly while destroying the opposition unity by making non-BJP opposition parties believe that the fall of the government will make way for BJP to grab power at the center. BJP at that time was regarded as a communal political party and there was widespread fear that once coming into power this party will make solid changes to the current political structure of India and might convert India into a single party ruled state. This fear helped the Narashimha Rao govt. to complete its full term and during this period, the Indian economy became irreversibility liberal. ...Download file to see next pagesRead More
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