Homespun and Microchips: India's Economic Dichotomy

摘要

India is a study in contrasts. It is a nation that produces nuclear weapons and launches sophisticated satellites into geosynchronous earth orbit, yet 260 million (26%) of its citizens live beneath the official poverty line. India's universities annually graduate thousands of the most talented scientists in the world, but the country's literacy rate is an appalling 52%. As in most countries, India is experiencing growing urbanization and budding industrialization, yet 70% of its workers still make their livelihood from agriculture. India is essentially two countries, one striving to become a world power and another deeply mired in the past. Depending on where one looks, an observer will see the India of microchips and high technology, or the India of Mohandas Gandhi and Mother Theresa. In the early 1950s, India was described as an emerging economic power. Fifty years later the country is still trying to live up to that label. Upon gaining its independence in 1947, India's leaders decided to use the power of the state to direct economic growth and reduce widespread poverty. The public sector controlled heavy industry, transportation, and telecommunications, while the private sector produced most consumer goods, but with heavy government regulation and oversight. India emphasized self- sufficiency rather than foreign trade and investment and imposed strict controls on imports, exports, and foreign ownership. This system initially produced significant economic growth, but by the 1960s this progress began to atrophy under the inefficiencies of socialist policies. Deficit spending throughout the 1970s and 80s brought on a balance-of-payments crisis in 1991. In order to receive an economic bailout by the International Monetary Fund, the ruling Congress Party opted to jettison its command economic policies and institute liberal reforms.