How has the Indian economy behaved since 1947?


On August 15, 2022, India will celebrate the 75th anniversary of its independence. Over the past 75 years, it has undergone vital turning points and changes that have allowed it to make significant progress in a number of areas, including income levels, growth, literacy, l life expectancy and a wide range of other economic indicators.

India was seemingly unimportant on the world stage until 1991, due to its slow social and economic development, except for being a young country which received help from other countries. But today’s superpowers see India as a power and a possible threat. A nation that had to start from scratch only 75 years ago now has the third highest GDP in the world, in terms of purchasing power parity.

Today, as India enters the global economic scene and works hard every day to establish itself as an emerging global economic power, the famous words of Pandit Jawaharlal Nehru – “A time comes, which comes but seldom in the ‘history, when we step out of the old for the new, when an age ends, and when the soul of a nation, long suppressed, finds expression’ – always rings true.

India’s first Independence Day, observed on August 15, 1947, not only marked the conclusion of the struggle for freedom, but rather the beginning of the enormous effort to rebuild a nation complete and of its economy.

The most significant turning point in India’s economic history came with its independence in 1947. The nation was left in appalling destitution and deeply demoralized as a result of numerous British aggressions and deindustrialization.

India’s economic development received a much-needed boost thanks to Nehru’s plan to maintain the country’s neutrality throughout the Cold War. During the war, both sides provided considerable aid to India; in terms of goods and technical support, the Soviet Union and Eastern Europe provided almost as much as the United States, Britain and West Germany.

Emergence of the five-year plan

Although they gained independence in 1947, Indian leaders feared that foreign rule would return under the guise of economic control. In a bid to prevent such a situation, India embraced economic independence and worked towards economic sufficiency, along with five-year plans.

The five-year plans were efforts for national economic and social progress modeled on those of the USSR. First introduced in 1951, India’s first five-year plan had a strong focus on transport, electricity, price stability and agriculture. It was based on the Harrod-Domar model, to boost India’s economic development by encouraging savings and investments.

The economy grew at an annual rate of 3.6%, above the target of 2.1%, proving that the strategy was successful. The second five-year plan, sometimes called the Mahalanobis plan in honor of Professor PC Mahalanobis, had a crucial element in rapid industrialization. In a way, the Mahalanobis plan laid the foundation for the agenda of Atmanirbhar Bharat.

Boom in agriculture and related sectors

Lal Bahadur Shastri, who replaced Nehru as Prime Minister on June 9, 1964, played a crucial role in sparking the White Revolution and the Green Revolution. He was convinced that India needed to refocus on agriculture and make room for private companies and foreign capital following the conflict with China, which had led to a severe food crisis and rising costs. In 1978-1979, the green revolution led to a record grain production of 131 million tons.

The introduction of the Green Revolution in the 1960s marked a turning point for the nation. In order to develop seeds of high-yielding varieties, he has seen the use of contemporary technologies and techniques, which have greatly improved agricultural productivity and multiplied the production of food grains. India was recognized as one of the major agricultural producers in the world. During his administration, Shastri also concluded that India had the resources and the know-how to start exporting chemical and technical products, as well as agricultural products like tea and rubber, and has been doing so ever since. From around 48 million tonnes in the 1950s to a 241 million tons in 2017, India’s net grain production has increased dramatically. India continues to be the world’s largest producer of milk and one of the largest producers of rice, wheat and a variety of fruits and vegetables.

A decade of different economic and developmental difficulties for India began in the 1960s. Political unrest was caused by the simultaneous deaths of Nehru and Shastri, and prices generally rose due to the depreciation of the rupee during Indira Gandhi’s tenure. In order to increase the amount of credit offered by banks to the agricultural sector, rather than to big business, Indira, the country’s prime minister and finance minister at the time, decided to nationalize the country’s 14 largest banks. July 19, 1969. .

Economic diversification

In 1991, PV Narasimha Rao introduced a New Industrial Policy, shortly after taking office as Prime Minister, marking a considerable change from that introduced in 1956. Due to the New Industrial Policy’s emphasis on liberalization, privatization and globalization, India GDP growth rate, foreign direct investment and per capita income have all increased. The Industrial Policy of 1991 constituted a major economic reform and was introduced to revitalize the industrial sector. The policy dismantled the industrial licensing system and opened the sector to greater private sector participation and foreign investment.

In terms of real gross value added, the manufacturing, construction and electricity, gas and water supply sectors amounted to about Rs 401 billion in 1950-51. The sector was valued at around Rs 36.684 billion (2011-12 series) and is expected to decline over 11% in FY 2022. This is a significant increase from industries in 2016, which reflected a growth rate of more than 9%.

In the manufacturing scenario, many sectors have gained momentum. The automotive sector has grown from just three companies to attracting global multinationals and offering products that meet global quality standards. India has become a major producer of pharmaceuticals and is undertaking research to develop new drugs. Apart from engineering goods, electrical machinery has also become a global benchmark. The emergence of new sectors such as information technology and telecommunications has transformed the landscape, creating new opportunities such as e-commerce and startups. There is no doubt that India’s IT skills are recognized globally.

There has also been an expansion of conventional service industries such as financial services, tourism and hospitality, and retail, which have changed in many ways, adapted to technology and gained market share. market. In the services sector, which includes trade, hotels, transport and communications, the real gross value added increased from about Rs 308 billion in 1950-51 to Rs 14,023 billion in 2011-12 (2004 series -05), and is estimated at around Rs 24,711 billion in 2018-19 (series 2011-12). Indian businesses have flourished throughout the ten years of economic liberalization, and the first ten years of the 21st century have seen this change in trend.

The Planning Commission was replaced by NITI (National Institute for Transformation of India) Aayog by the Modi government, to usher in a new era of economic progress. NITI Aayog is an advanced resource center that serves as a government think tank. It has all the tools, know-how and expertise needed to act quickly and advance research and innovation.

Fast forward to 2017, Prime Minister Narendra Modi announced the implementation of the Goods and Services Tax in July, following the implementation of the “Make in India” and “Skill India” missions, making India is one of the few countries that has a tax law that unifies various central and state tax laws, thus promoting inclusive growth in the country.

Connect India

The nation has made great strides in creating roads to connect its cities to the countryside, but as India’s inadequate infrastructure remains a major concern, more roads are needed to reap the benefits of expansion to the countryside. remote communities. From around 0.4 million km in the 1950s to almost 5.9 million km after 2016-2017, the length of roads has increased exponentially. The length of state and national roads has also increased significantly, and the number of registered vehicles has also increased, from 0.31 million in 1950-1951 to around 295 million in 2019.

India’s energy sector has also diversified considerably and made substantial progress since independence. The total energy generated by the hydroelectric, thermal and nuclear sectors has increased from just 5.1 billion KWH in 1950-51 to 1,303.5 billion KWH in 2017-18. India is the third largest electricity producer in the world. As of June 30, 2022, India’s national power grid had an installed capacity of 403.759 GW. Large hydroelectric facilities are included in the category of renewable power plants, which account for 39.2% of installed capacity.

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India’s human development indicators have also improved significantly. From 18.3% in the 1950s, to 52% in the 1990s, to 73% in 2011, literacy rates have increased dramatically. Along with this, other socio-economic indicators have also seen significant increases, including a growth in the number of nationally accredited educational institutions and gross enrollment ratios in schools. In healthcare, the introduction of advanced and contemporary technologies has led to a decrease in the prevalence of disease and an increase in longevity.

Over the past ten years, the Indian economy has experienced significant growth. Its borders have been opened to foreign trade, foreign direct investment has grown significantly, the pace of investment has increased significantly, and its workforce is expected to continue growing in the coming decades. Although the COVID pandemic has set the economy back for several years, the government has come up with a plan worth Rs 20 lakh crores, or about 10% of GDP, to help the economy weather the challenges and recover. bring the country closer to becoming truly Atmanirbhar Bharat.

Nonetheless, the nation continues to grow as a juggernaut in South Asia, with the potential for other Western countries, as she observes. Azadi ka Amrit Mahotsavcelebrating 75 years of independence.


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