The Elephant's Tryst with Capitalism - 3 Decades on

Raison d’être

I have been perusing through India's economic history. It was difficult to fathom that such a vibrant country grew at 3% for the vast majority of its history with inflation rates north of 20%.

Agricultural insecurity was its peak with imports of wheat and other essential commodities to ensure nutrition for the vast majority of the population.

The peak was in 1991 with a balance of payments crisis that left India with foreign exchange reserves to cover a few weeks of imports.

Pledging of Gold Reserves

It led to one of India's most iconic photos - dozens of RBI Vans outside the airport with physical gold reserves for pledging with the Bank of England in return for crucial foreign exchange.

In lieu of an IMF Bailout, India was forced to liberalize out of its license raj and free up its service and manufacturing sectors.

Slowly but surely, India raced ahead in areas where it had an advantage. India had a lot of STEM Educated talent with the only outlets being a handful of private sector jobs and the Indian Government itself.

Competitive Advantages - IT and Pharma

This bore out in the Technology Sector where a lot of companies - Infosys, Mindtree, Infoedge were born during this period.
Another offshoot was in the pharma sector which saw exponential growth in exports particularly to the United States and the West in General.

What started with labor cost arbitrage in the beginning now competes purely on its value proposition to its customers based on sheer skill and scale of the offering.

The Second Wave came in the decade the 2008 recession which saw a multitude of tech startups being launched - Zomato, Swiggy, Bigbasket, Zerodha which offered industry leading products with a particular focus on the Indian Consumer.

This has led us to the cusp of the age of plenty in India.

All this possible because of a single policy change made 3 Decades ago from Socialism to Capitalism.