October Magazine, p.25, (24/6/2007)

How could we benefit from the Indian experience

By: Basma El Manzalawi

The Indian government approved last week the establishment of 24 special economic zones which will attract several foreign investments to India. Such SEZs are exempted from taxes and all customs tariffs. Railway lines will be linking such zones with one another. It is worth mentioning that the Indian economy has achieved a growth rate that reached 8% in the past few years.

But what is the secret behind this success of the Indian experience? The key word here is "small-scale enterprises".

The small-scale industries sector in India comprises more than 3 million industrial units that contribute with 35% of the Indian GDP. It also employs 17 million workers.

This sector was like the magic want that was used to solve the problems facing the Indian economy. It depends in the first place on unskilled labor in a country with a large population.

The government gave a lot of attention to the sector and provided it with protection, financing, and infrastructure. This led to achieving high economic rates and reducing unemployment rates during the past few years.

As per a report issued by the World Bank, the poverty rates were reduced in India by 25% and the social indictors showed a remarkable improve especially those related o illiteracy. India represents a wide market that enjoys a high purchasing power due to the increase of the number of the members of the middle class in India. 

One of the industrial sectors that witnessed a great growth in India is that of software production. It grew by 12.3%; as for trade and industry, they grew by 13%.

It is worth mentioning that India is the largest world receiver of international aids. As per the World Bank, loans given to India in the fiscal year 2006 reached $ 2.9 billion.

This figure represents the credit India got from the International Development Agency that reached $ 1.1 billion. It is the largest credit a country gets worldwide.

By July 2006, the World Bank has got 64 projects in India that required $ 13 billion, $ 6 of them will be granted by the International Finance Facility, and the rest by the International Bank for Reconstruction and Development.

The increase of aids granted by the World Bank to India reflects the speedy growth the Indian economy is witnessing. The majority of those loans are used in developing the infrastructure, human resources development, and the small-scale industries sector.

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