Couple of years ago, Brand India was shining. The world had taken note of a country with 30% of its population below the age of 25, a country reporting continuous GDP growth, a country that has somehow managed to bypass the last world economic downturn.
A number of factors in the past have contributed to this world image, but the single most stand-out factor could be said to be the IT sector. Previously too, India had body shopped but it was for worker class people. Construction workers and other lowly paid staff were travelling to Gulf countries for job opportunities, the IT sector changed that Image to high capacity and well paid software engineers being body shopped across the world.
The outsourcing business further enhanced the India image since CEOs, partners and NRI started to return to India to avail of the relative cheap services. Students, who went overseas to study largely returned in order to be part of the India Growth story. The two big names in Asia to reckon with were recognised to be China and India.
In the last three quarters, all of this has changed. The economy has crumbled, the rupee devaluated by nearly 20% against the US dollar, even Indonesia, Brazil and Turkey report a lower slide. India is now a country with a GDP drop from approximately 7% to approx 4%; from a fast growing economy, it is now being called a recovering or a struggling economy. The various economic reports and surveys have dropped India from their list of fastest growing economies.
Suggestions are being made on how it is time for India to learn from Latin countries. And China seemed to have stolen the march and Brand India lost its shine.
A number of reasons can be attributed to this and one that stands out in addition to the chronic corruption deep-rooted in the country is the high regulatory environment. Although the general impression is that we have done away with the License Raj, the high regulations on some sectors have been choking growth.
If one looks at the reason why IT sector took flight in growth, it is because of the lack of a regulatory environment. IT industry did not have restrictions of working hours, it almost worked round-the-clock in shifts, there were no restrictions on women working late as is in the manufacturing sector, which helped create a large middle class with double income.
The same cannot be said for other sectors and for some huge investments made by multi nationals that are nearly stagnant and suffocating.
Industrialisation is suffering, since economic liberalisation is not matched with back-end regulations that support growth and not become a hindrance to it. Corruption itself is a result of high regulations and a complicated tax structure.
The economic picture is gloomy; the political scenario is in transit. Both externally and internally, India is struggling. On the outside India has lost its shine, on the inside it needs cleaning, polishing and some strength of vision and decisive leadership.
The writer is an entrepreneur and educationist