India is growing like a big balloon economically. Some fears that this balloon might explode like south-east Asian countries and we should not indulge in western concept of market. But they forget that same countries (Malaysia, Thailand, Taiwan, South Korea, and Singapore) were able to raise the life style of their citizen by a considerable amount when India was tottering in 70s and 80s. Even China started to rise after opening its economy in 80s. Export based opening of any economy always results in betterment of country, history shows this and so does economy. So here are some reasons why India and other developing countries should open their economy completely.
- India will be able to attract large foreign investment: This is the basis of all processes by opening of economy. This will cause the flow of more money in country and which will result in better infrastructure. Better roads, better power, better facilities will result in better lifestyle for all Indian people. Some people believe that it is too risky to rely upon foreign companies as they can pull their money anytime they want. But till then (such a hypothetical situation) we will have infrastructure, which cannot be taken away.
- Better and cutting edge technology: Growth of any country depends on the use of technology and state of art machinery. By opening market we can catch up with the whole world in terms of tech. Not like 80s when someone coming back from UK, USA was supposed to bring a TV set as we were not able to get it in India.
- Growth of Bajaar = more jobs: It is evident that growth of bajaar will produce more jobs for Indian people. Gone are the days when after completing degree people were not able to find a job. Now if you are willing to work hard, then you WILL get a job. This will ultimately increase the size of middle class in the country. Every country have its higher class (2%), it is composition of middle and lower class that determine the state of affairs in any particular country. USA has ~90%, whereas India has ~40% middle class. (Out of which 25% are made in last decade after opening the economy)
- Entrepreneurship will result in innovations: “India needs innovations”. This is a fact. We cannot apply same techniques and methods as in any other country here. By opening economy we are going to encourage young people to think out of box and start indigenous businesses. Otherwise quota/permit raj was plaguing the country (you have seen Guru, right!) and will continue to do so. It is true that out of 10 trying to do start a business 9 will fail, but 10% is still a good score. Also we have a great bania class already in country, which knows how to make money.
- Money fluidity: Any student of economics can tell you that money fluidity is measure of the growth of society. Higher purchasing power will not only improve the life standard but also promote the commodity manufactures to produce more goods. (See my article on mall culture here and here) This in turn will result in higher export, higher money coming in, and then higher prosperity. Wasn’t India “Sone ki Chidia” due to its trade and specially export?
- Government free to do welfare work: Above all this reason excites me most as a possible future civil servant that government is not meant to run companies. It is made for creating a welfare state, for education, for medical facilities, for defense and let it do its work. Running a corporation is work of businessmen and they should be allowed to do that. Government can be a watchdog, but not more than that.
There may be some downfall such as lower savings and higher materialistic values, but then there is nothing like black and white, it is grey dear. What do you think?