Slide 1 StouffvilleSpartans com

							Proving the Impact
   of Politics on
     Business
          Before 1947
• History of India pre-dates Christ (i.e.
 B.C.)
• Many different countries held
  territories within what is now India
• Eventually the British controlled most
  of India and finally made it one of
  their colonies (known as the “British
  Raj”)
• “Raj” = Hindu word for “Reign”
                             1947
• After a long struggle India got its
  independence from Britain (led by
    Mahatma Gandhi)
• India and Pakistan separate into two
  different countries
• With political change comes economic
  change
• Under Nehru (first Prime Minister) the
  country follows Russia’s lead and embarks
  on an economic course of central planning
  and operates in a highly “protective”
  environment
• India cuts off imports with high tariffs to
  protect domestic producers
•   Watch Commanding Heights (Vol. 1 – Chapter 10)
          1947 - 1990
• Economic goal was “self sufficiency”
 (providing everything they need
 themselves)
• The British Raj is replaced by the “Permit
  Raj”
• Licences were required for starting new
  companies, producing new products,
  expanding production
• High level of bureaucracy strangles
  economic development
• India’s production becomes slow and only
  develops low quality products
                    1947 - 1990
• A wall of trade is created… very difficult to
  create “exportable” and globally competitive
  products without a corresponding increase in
  imports (new products bring new
    technologies, etc…)
• The negatives of a socialist economy
  appear…over-staffing, obsolete technology,
  excessive inventory of products not in
  demand, poor management, lack of
  motivation
• Stifled economic growth is very damaging
  considering the high level of both population
  and poverty
•   Watch Commanding Heights (Vol. 2 – Chapter 4)
                 1990
• Gulf war creates huge crisis because of the
  price of oil doubling
• Huge losses and massive debts require
  foreign borrowing to prevent economic
  meltdown
• Substantial, but vital, IMF loan comes with
  an agreement to liberalize economy
• Trade restrictions are lifted and door
  opened for foreign investment
• The “Permit Raj” ends, and with it, the
  bureaucratic grip loosens
                    After 1990
• An increase in the level of economic
  competitiveness brings with it huge
  economic growth
• India begins a period of rapid
  economic transformation and
  becomes a global success story
• A political change has, once again,
  created economic change
•   Watch Commanding Heights (Vol. 2 – Chapter 17)