From the spinning wheel to the fiber optic wire Kelsey Zeitzer

Postcolonial period British Raj: 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 GandhiFeroze 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 OF TRADE EXTREME POVERTY 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:

Importing easier  Duty free  Lower costs Companies in certain industries can be 100% owned by foreigners 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 Growth China people dissatisfied = seek reform - communism - faster India 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”