India presents one of the strategic growth areas for e-commerce companies all over the world. In fact, this has so much been the case that various international brands such as Amazon and Alibaba are seeking to find investment opportunities in the Indian market. This paper considers the flipside of the Indian economy, namely its crisis and the strength of its currency, factors affecting business success and exchange rate flexibilities.
India’s Economy Crisis and Currency
India falls among the global top ten countries with the fastest-growing economies. This is according to survey conducted by the World Bank and the International Monetary Fund. Rupee is the name given to the official currency used in India (Athukorala & Warr, 2002) . In November 2017 , India’s government declared that it would ban existing 500- and 1000-rupee notes. These are the country’s two largest values. The government objective was to get rid of fraudsters and battle corruption and crime that rely on paper money. Since the announcement, the Indians have converted their holdings into new values. This has led to long lines and shortages at banks and ATMs. This is known as demonetization. This has led to a drop of potential corruption in the country (Rasure & Hungund, 2018) .
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Deficits
The growing burden of non-development expenditure has been caused by deterioration in the fiscal situation of India. Revenue deficit, budgetary deficit and primary deficit are indicators of fiscal crisis (Athukorala & Warr, 2002). This is caused by a few factors such as slow economic growth and tax evasion. The fiscal imbalance still continues in India. This is because the Government has failed to reduce its own expenditure.
Sulphur in India
Mining is a major activity that contributes to India’s economy. India is the leading producer of sulphur in the world. The mining of sulphur has led to environmental degradation. However India’s economy continues to grow day by day as a result of this mining (Reddy & Venkataraman, 2002).
Factors Affecting Business Venture Success
With the invention of the new technology, knowledge-based ideas are set to drive the global economy in the coming millennium. This is especially true for e-commerce ventures. Given the inherent strength by way of its human capital, technical skills, cost competitive workforce, research and entrepreneurship, India can release a revolution of wealth creation and rapid economic growth in a sustainable manner (Nayyar, 2017). However, for this to happen, there is a need for risk finance and venture capital environment which can leverage innovation, promote technology and harness knowledge based ideas.
Flexibility of exchange rates
Exchange rate links the price system of two countries. This prices confirms the relationship between all domestic prices and all foreign prices. Any change in the exchange rate between rupee and dollar will cause a change in the prices of all American goods for Indians and the prices of all Indian goods for Americans. To prevent the exchange rate from falling, the Reserve Bank of India has demanded more rupee in exchange for the US dollars. This has led to restriction of the excess supply of rupee and an upward pressure in exchange rate (Rajan, 2011).
References
Athukorala, P. C., & Warr, P. G. (2002). Vulnerability to a currency crisis: lessons from the Asian experience. The World Economy, 25(1) , 33-57.
Nayyar, D. (2017). ECONOMIC LIBERALIZATION: THEN AND NOW. Economic and Political Weekly, 52(2) , 41-48.
Rajan, R. S. (2011). Exchange rate and foreign direct investment in emerging Asia: selected issues and policy options. New York: Routledge.
Rasure, K. A., & Hungund, S. M. (2018). Demonetization: an effective strategy to reduce black money. Delhi, India: Manglam Publications.
Reddy, M. S., & Venkataraman, C. (2002). Inventory of aerosol and sulphur dioxide emissions from India: I—Fossil fuel combustion. Atmospheric Environment, 36(4) , 677-697.
