From the spinning wheel to the fiber optic wire

Kelsey Zeitzer

Postcolonial period

• British Raj: 1858 - 1947

• Freedom 1947

• Neocolonialism fear

• Socialism

• Economic self-sufficiency

Mahatma Gandhi• National Hero

• Anti-industrialized west– Only natural medicines

•Wooden spinning wheel

•Revolt against economic ties to colonial power

Jawaharlal Nehru

• Socialism

• Self-sufficiency

• Freedom movement = economic isolation

Laws discouraging

foreign trade

Antimonopoly rules

High income taxes

Laws granting

lavish jobs

Stock Market run by

government

License Raj

Political corruption

Strong Government

Rajiv Gandhi (1985)• Push reforms = nation’s economic growth doubled

– Exports grew dramatically – Companies began hiring

• Laws to allow more imports / exports • Cut taxes• Reduce number of industries requiring licenses • Raised antimonopoly limits • Problem: short-term borrowing form banks

Jawaharlal Nehru

Indira Nehru Gandhi Feroze Gandhi

Rajiv Gandhi

Economy at it’s worst • Debt

– Banks cut off India’s borrowings

• Oil prices spiked – Gulf War

• Loss of trade– Collapse of the USSR

• Extreme poverty DEBT

OIL PRICES SPIKED

LOSS OFTRADE

EXTREMEPOVERTY

Mill in poverty

Inflation

Mill Bellow Poverty line

foreign exchange reserves fallen to levels that would pay for 2 weeks worth of oil

OIL

Change in Power • Rajiv Gandi assassinated• Gandi’s congress party won power• P.V. Narasimha Rao as prime minister• Rao chooses Manmohan Singh as finance minister

Economic reforms

• Nationwide emergency = economic reform

• IMF bail out if India agreed to reforms

Week of Reform:

Less government control

Eliminating antimonopoly limits

Abolished license raj

Put stock market back in the hands of companies / investment banks

Lowered income taxes

Allowed for foreign economic interaction

Mutual funds & other investors can buy shares in Indian companies on the Bombay Stock Market

Importing easier

•Import duty free

•Imports at lower costs Companies in certain industries can be 100% owned by foreigners

Dramatic Effect

Economy grew faster than it had in decades

More jobs

Inflation dropped

Debt paid

Foreign exchange reserves built back up

Economic incentives

India today • Democracy

• Market economy

• Open trade

• Bangalore

India Vs. China GrowthChina

-1978- people dissatisfied = seek reform - communism- faster

India-1991- less ready to challenge government-Democracy - slower

“…It will never have speed, but will always have stamina”

“We are the fastest-growing free-market democracy in the world”

“China is winning the sprint and, we are going to win the marathon”