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Out of necessity, the Indian government implemented 5-year plans based on the Soviet model from 1947 to 1985. Since it was previously a British colony, the economy was radically warped because it served as a source of raw resources and, subsequently, a market for British exports. The government determined that a strong state (central government) was required to reallocate resources and policy goals in order to establish fundamental strengths. The federal government spent heavily on industrial and heavy engineering skills, as well as on education and infrastructure.
In a vast country, there are just a few centres where all industries coexist. India’s industry was divided across four metropolitan areas: Chennai, Calcutta, Delhi, and Mumbai. In 1969, the Monopolies and Restrictive Trade Practices Act antitrust law restricted the size of firms, preventing them from enjoying monopolistic price and market domination. Banks were also nationalised by the government in 1969.
Theory of the Market
Market economies use supply and demand dynamics to establish proper prices and quantities for the majority of commodities and services in the economy. Entrepreneurs gather production inputs (land, labour, and capital) and combine them with workers and financial backers to generate goods and services for customers or other firms to purchase. Sellers and buyers co-ordinate with each other and agree on the selling parameters of the given transactions that are based upon the consumer preferences and choices for specific given commodities along with the income that companies expect to make on their investments.
Entrepreneurs allocate resources across multiple companies and production processes based on the profits they aim to generate by generating output that their consumers value more than what the entrepreneurs spent for the inputs. Entrepreneurs who succeed are rewarded with revenues that may be reinvested in future ventures, while those who fail must either learn to improve through the period and go out of business.
Reason for India to grow economically
According to the United Nations Conference on Trade and Development (UNCTAD), India’s GDP would expand the quickest in 2022, at 6.7 percent, followed by that of China, whose growth will be quicker in 2021.
According to UNCTAD’s Trade and Development Report 2021, India’s GDP would grow at 7.2 percent in 2021, the second highest in the world after China, but will drop to 6.7 percent in 2022.
“Given the intrinsic fragilities in coping with the pandemic and recovering employment and incomes, overall growth in 2021 is predicted at 7.2 percent, inadequate to re-establish pre-Covid-19 income levels,” UNCTAD concluded.
Whereas most industrialised countries now have market economies, India is frequently seen as having a mixed economy.
Experts feel that the market economy is obviously the system of choice in today’s global marketplace because it allows market forces to drive the majority of their operations, with government involvement often occurring only to the extent that it is required to ensure stability.
However, there is much disagreement over the level of government intervention that is deemed desirable for effective economic operations.
Between independence and 1991, India strongly embraced planned socialist programmes. It did not, however, solve India’s economic issues. In fact, India progressed so slowly that a disparaging phrase for sluggish growth was coined: Hindu rate of growth.
There were inherent flaws in the planned socialist economic structure that India embraced. Consumers have little choice, and only the products and services determined by the government are produced. Firms that lack a profit motivation may be inefficient. A lot of time and money was lost in transmitting government orders to the enterprises. All of these contributed to a slowing of growth.
Furthermore, the downsides of socialism include poor economic development, less entrepreneurial opportunities and competition, and a probable lack of desire on the part of individuals as a result of reduced rewards.
Both China, in 1978, and India, in 1991, adopted reforms that signalled the beginning of the transition to a market-based economy. As a result, GDP growth rates have accelerated. It is anticipated that a 1% rise in GDP growth rate might result in 1.5 million extra manufacturing jobs. Furthermore, one job in manufacturing may result in three new jobs in the service sector. As a result, if India could grow at a faster rate than its current rate of 4-5 percent, a total of six million jobs might be created.
With an average family size of five in India, six million jobs equate to 30 million individuals earning more and rising in social class and position. Due to its greater development rates and adoption of a market-based system in many areas, China has lifted 500 million people out of poverty since 1978.
Furthermore, globalisation is pressuring third-world nations to implement market-based systems in the majority of their economic sectors. India lacks the resources to accomplish such rapid development rates. As a result, the economy must be restructured in order to attract foreign money. The demand for foreign finance in India may be justified rationally by the following fact.
The incremental capital production ratio is a phrase used in economics. It is calculated by dividing the investment share of GDP by the GDP growth rate. In general, given the structure of a country like India, this ratio works out to be four.
As a result, if India’s GDP growth rate is 9% year after year, it will require a 36 percent investment share of GDP (four times the growth rate). India’s savings are estimated to be at 32% of GDP. As a result, the balance must come from outside sources, such as FDI and FII.
China has embraced capitalism and foreign money in industries, with surpluses being employed in the healthcare sector, which is nearly entirely government supported (public sector owned). As a result, we can see that a country may coexist with a healthy balance of both philosophies.
Conclusion
The Indian summer has just just begun for the economy. According to economists and research firms, there is nothing stopping Indian enterprises from advancing. Experts in economics and different studies performed throughout the world predict that India would govern the world in the twenty-first century.
Prime Minister Narendra Modi visited Ireland on September 23, 2015. It was the second time an Indian Prime Minister had visited Ireland. The first being Jawaharlal Nehru’s visit in 1956. Ireland is an island nation located in Northwestern Europe and surrounded by the North Atlantic Ocean.
The Prime Minister of Ireland, Enda Kenny, had hosted PM Modi during his visit. The PM was attended by other dignitaries such as the Minister of Foreign Affairs and Trade, Charles Flanagan, and Ireland’s Ambassador to India, Feilim McLaughlin. The main aim of the visit was to create stronger ties and improve trade and cultural relations. Described below is the impact of the PM’s Ireland visit.
Impact on trade and commerce
India and Ireland have strong bilateral trade and business relations. Before the PM’s visit, trades with Ireland were valued at €650 million in business in 2014. This included exports worth €248m and imports worth €402 million.
The indigenous exports increased from €32 million in 2012 to €55 million in 2014. In 2019, the total bilateral trade was around €1.2 billion. The exports and the imports have also increased to €636 million and €480 million respectively. Currently, the total trade between India and Ireland is valued at €4.2 billion. This resulted from improved bilateral ties between the two nations, owing to Prime Minister Modi’s visit to Ireland.
Indian Companies in Ireland
Many Indian companies carry out trade and commerce in Ireland. They provide services to Irish markets and consumers across various industries. Pharmaceutical giants such as Reliance Genemedix and Amneal Pharmaceuticals operate in Ireland. Major IT companies such as Wipro, Infosys, TCS, and HCL also have a strong presence in the country. The trade relations were bolstered after Indian Prime Minister Narendra Modi visited Ireland.
Other companies like Crompton Greaves, Deepak Fasteners, Jain irrigation systems, and Shapoorji Pallonji provide consumer goods and services. Likewise, many Irish companies conduct their business in the Indian market. These companies include pharmaceutical and nutrition players like ICON and Glanbia, IT firms like Globoforce and other companies like Keventer, CRH Taxback Group, and Connolly Red Mills.
Impact on Education
Ireland has been a coveted destination for higher education for Indian students. Over 5000 Indian students have enrolled for higher studies in various institutions in Ireland. The students are admitted to engineering, technology, medicine and management colleges. More than 30 research agreements have been signed between the two nations that allow institutes in both countries to collaborate.
Many reputed institutes like Trinity College, Dublin, and Thapar University, Patiala, have signed MOUs for engineering and science disciplines programmes. Thus, Ireland is an essential collaborator in graduate and doctoral research. This collaboration is also considered an impact of the PM’s Ireland visit.
Indian Community in Ireland
Ireland is diplomatically significant for India also due to the large number of Indian citizens residing there. The Indian origin population is approximately 45,000 people, of whom 18,500 are Non-Resident Indians (NRI), and others are Persons of Indian Origin (PIO). The majority of the residents are working professionals employed in engineering, healthcare and management positions.
It has helped in establishing many policies for the Indian origin population. Two such policies in practice are wearing hijab as a part of the police uniform and the non-requirement of obtaining an additional work permit for the spouse or the partner of Critical Skill Employment Permit holders.
Cultural Impact
As a result of a large population of Indian origin citizens in Ireland and the relationship between the two nations, Ireland promotes Indian culture in various forms. One such example is the celebration of Diwali in Ireland since 2008. The event is organised every year in collaboration with Irish and Indian committees.
Further, an annual contemporary film festival is also a part of the celebration of Indian culture. The promotion of such events indicates the importance of cultural exchange between the two nations. The Irish communities also take a keen interest in conventional practices such as cultivating and consuming Indian herbs and spices. This connects the agricultural practices between the two nations. The cultural ties between the countries were strong, and Prime Minister Modi’s visit to Ireland helped strengthen them further.
Another significant practice is the celebration of International Yoga Day in Ireland. The Irish communities have accepted Yoga as a form of a healthy lifestyle. The practice is similar to the Indian tradition.
Tourism
India attracts around 44,000 Irish tourists every year. Indian tourists too visit Ireland in similar numbers. This was facilitated by the introduction of the common British-Irish visa scheme. This scheme allows the tourists to visit the U.K. and Ireland under one visa, rather than applying for two separate visas. It is valid for short stays. India also extended its Electronic Tourist Visa facility to Ireland to digitally facilitate visa approval and generation. The impact of the PM’s Ireland visit was such that it has also helped establish the tourism sector in both countries.
Conclusion
The diplomatic ties between Ireland and India have been impacted positively after Prime Minister Modi visited Ireland in 2015. It was an essential step toward strengthening the bilateral relationship between these two nations. India and Ireland have been important to each other since the 1900s.
In 2010 and 2017, two honorary consulates were established in Chennai and Kolkata. Later in 2019, a formal and fully functional consulate general in Mumbai. Ireland and India have also shown their allegiance to fighting terrorism after the Pulwama attack. India has also hosted several Irish dignitaries on various occasions. These visits were directed toward engagement in business, education, health and tourism.
Further, many agreements were signed to provide opportunities for employment to people of both countries. Prime Minister Modi’s visit to Ireland helped revive relatively stagnant relations between these two nations. Several cultural and historically similar instances bind these two nations. From Yeats and Tagore to cricket and Diwali, the cultural semblance between these two nations has helped create a strong tie between them.
