India's 50th Year Of Independence
August 14, 1997
After gaining independence from Great Britain 50 years ago, India wasted more than 40 years trying to make socialism work, say observers. Its problems were further compounded by a rigid social hierarchy -- the infamous Hindu caste system.
Indian socialist leader Jawaharlal Nehru created a vast public sector to industrialize the country. By 1990, the socialist democratic state was broke, state-owned enterprises were in deep trouble, jobs were not being created and subsidies were bleeding the country.
Then in 1991, things began to change:
- The government of Narsimha Rao undertook a reform program that opened the economy, lowered taxes and tariffs and sought to attract foreign investment.
- In three years, the country's economic growth rate shot up to 7 percent a year -- from an average of 3.5 percent in the period 1950 to 1975 and 5 percent a year in the 1980s.
- Exports began to grow 20 percent a year, foreign exchange reserves rose to $20 billion, the inflation rate fell to between 5 percent and 8 percent and foreign investments went up 25-fold -- to $2.5 billion a year.
In the caste system, the businessman or merchant -- called a bania -- is only in third place, behind the brahmin and kshatriya. But observers report that the offspring of upper class families are no longer interested in going into the civil service, but want -- and are training for -- careers in business. Indian intellectuals call it the "banianization of Indian society."
Source: Gurcharan Das (Citibank India), "Indians Get Ahead...," Wall Street Journal, August 14, 1997.
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