NIC Case Study - India

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NIC Case Study - India

Level of development

Improved since gaining independence in 1947 - growing population (350 million at independence in 1948)

Poor access to education - primary school attendance as low as 80% and just over 60% for secondary education, under 20% student enrollment.

HDI= 0.59

Overview of growth

Pre-liberalisation period (1947-1991); the rate of annual growth of the Indian economy stagnated at around 3.5% in the first three decades after independence while capita income growth averaged 1.3%

Post-liberalisation period (since 1991); the reforms reduced tariffs and interest rates and ended many pubic monopolies, allowing automatic approval of foreign direct investment in many sectors.

GDP per capita likely to rise above $20,000 by 2050 (currently at $977)

Reasons why Bangalore is a good location:

3rd largest city in India, 450km2, 10 million people.

First Indian state to set up engineering colleges

Introduced a statewide policy to promote the IT industry with grants and tax incentives.

First to set up a technology university

In 1991 it established a software technology park in Bangalore which now covers 140,000m2.

Advantages of firms locating to India:

Large English speaking workforce (over 50 million)

Large market size with a middle class population of 250-350 million with increasing purchasing power.

Employing increasing numbers in call center operations, Western companies saving 40-50% of their costs e.g. American Express % British Airways.

Advantages to India:

Bangalore has become the highest job creating city in India, with over 65,000 jobs being created in 2004.

Rapid growth has led to average GDP growth rates of 8.5% per decade and often annual rates of 10%.

The government guaranteed that for every 1000 jobs that were located in India, a UK firm would save around £10 million - this stimulated growth and is now known as having the best telecom structure in the entire economy. The starting wage for programmers is around £300 a month, which is around 10x the average Indian income.

Disadvantages to India:

The advances in India have had a big effect on the country's environmental state - environmental degradation costs India $80 million a year or 5.7% of its economy.

Widening regional development gap between north & south.

Housing prices increased by 18% in 2012 along, faster than the GDP rate.