Content area
Full text
The paper describes the challenges as well as the emerging opportunities of doing business in India. It finds high correlation between compound annual growth rates of India's major States in 1999-2006 period and poverty decline rates in these States during the four decades, 1960-2000.The analysis suggests that poverty decline is a robust explanatory factor of India's economic growth in recent years. The paper argues that India's poverty decline trend is sustainable as it is founded upon the enfranchisement of the poor in democratic India and the pro-poor vote winning strategy cutting across all major political parties. In view of the consequent increase in the size of the BOP market, targeting BOP market is a winning business strategy in India.
INTRODUCTION
Doing business in India is indeed challenging. Yet, today's India with its growing domestic market, burgeoning pool of human capital and increasingly robust democratic polity has begun to offer attractive longer term investment opportunities.
What makes the 'Rise of India' story particularly interesting is that unlike the East Asian story Indian governments have not fashioned any export led growth strategy and stimulated growth by allocating resources in key private sectors; nor is India's growth propped up by the bubbles of expectation generated in the financial/capital market or in the property/asset market as seen in USA and many other western countries. India's growth, on the other hand, is fueled by its growing domestic market and by productivity gains in manufacturing and service sectors. Most importantly, it is shaped and nurtured by India's democratic political processes the role of which in scripting India's growth story will be discussed in this paper.
The paper is divided into five sections. The next section gives an overview of the challenges of doing business in India, which is followed by the section that enumerates facts about the growth of Indian economy. In the penultimate section, an analysis of the factors driving India's recent growth is presented. Section 5 concludes the discussion.
Business Environment: Challenges
The challenges of doing business in India are many. It has inadequate infrastructure, rigid labor laws, complicated tax systems, labyrinthine judicial system and inefficient public delivery system afflicted by corruption. The economic and social backwardness of the average Indian is reflected in the human development profile...