INDIAN ECONOMY SINCE 1947.
On 15th August 1947, India got its freedom, ending an almost 200-year British rule in the subcontinent. It is a day of immense pride for all Indians as we commemorate the sacrifices made by millions of our freedom fighters, who had sacrificed their lives in the freedom struggle and with their unfaltering grit and patriotism, forced the British empire to finally retreat.
Independence brought dreams of not just individual, but also economic, social and political freedom. Seventy-five years later, these ideals have undergone a transformation as India seeks to join the $5 trillion club.
WAS OUR ECONOMY GOOD AFTER GETTING INDEPENDENCE?
Cambridge historian Angus Maddison’s work shows that India’s share of world income shrank from 22.6% in 1700—almost equal to Europe’s share of 23.3%—to 3.8% in 1952. As former prime minister, Manmohan Singh put it: “The brightest jewel in the British Crown” was the poorest country in the world in terms of per capita income at the beginning of the 20th century.
Since 1947, India has achieved tremendous progress in raising growth, income levels and standards of living. The gross domestic product (GDP) increased from Rs 2,939 billion during 1950-51 to Rs 56,330 billion during 2011-12 (2004-05 constant prices). In 2018-19, India’s GDP was valued at an estimated Rs 1,40,776 billion (2011-12 constant prices).
WHAT PROBLEMS DID BEING AN INDEPENDENT COUNTRY INVITE?
India’s Independence in 1947 was the biggest turning point in its economic history. Because of various attacks and deindustrialization by the Britishers, the country was left miserably poor and highly demoralized.
WAS THERE A SOLUTION TO OUR PROBLEM?
In spite of attaining Independence in 1947, Indian leaders were concerned that foreign rule would make a comeback on the pretext of economic control through trade and investments. To prevent such a situation, India adopted economic independence and worked towards economic sufficiency, along with formulating five-year plans to achieve set out goals. The five-year plans were national economic and social growth initiatives formulated after those existing in the USSR. India’s first five-year plan, launched in 1951, focused primarily on agriculture, price stability, power and transport.
The plan was a success, with the economy growing at an annual rate of 3.6 percent, surpassing the target of 2.1 percent. The second five-year plan also called the Mahalanobis Plan after Professor PC Mahalanobis focussed on rapid industrialization.
On July 19, 1969, Indira, the then Prime Minister and Finance Minister, decided to nationalize 14 largest banks of the country with the aim of increasing the credit given by banks to the agricultural sector as opposed to big businesses alone.
WHAT DIFFERENT EVENTS TOOK PLACE NEXT IN BUILDING OUR ECONOMIC CYCLE?
When PV Narasimha Rao took over as Prime Minister in 1991, he announced a new industrial policy which marked a sharp departure from the earlier policy of 1956. The new industrial policy laid emphasis on liberalisation, privatisation and globalisation thereby increasing India’s GDP growth rate, increase in foreign direct investment and increase in the per capita income.
Ten years of economic liberalisation saw Indian companies flourishing and the first decade of the 21st century bore witness to this changing tide. November 8, 2016, a red-letter day in the history of India’s economy, saw Prime Minister Narendra Modi make history as he said, “To break the grip of corruption and black money, we have decided that the five hundred rupee and thousand-rupee currency notes presently in use will no longer be legal tender from midnight tonight.”
After implementing “Make in India” and “Skill India” mission in July 2017, Modi announced the implementation of the Goods & Services Tax, making India one of the few countries to have a tax law that unifies various Central and State tax laws, thereby facilitating inclusive growth of the nation
Years after making commendable progress in terms of economic growth and development, the pandemic we face today has yet again pushed the economy several years back. In order to combat this and for the economy to overcome the hurdles caused by the pandemic as well as to march towards an Atmanirbhar Bharat, Modi announced a Rs 20 lakh crore package, amounting to about 10 per cent of the gross domestic product or GDP.
GDP Growth in Various Sectors (FY-19)
Current Scenario (2021)
The Indian economy is likely to grow 8.4-10.1% for the current financial year as against a contraction of 7.3% in the last fiscal, the economic think-tank National Council of Applied Economic Research. According to reports It is estimated that gross domestic product (GDP) will grow 11.5% in Q1 (first quarter) and 8.4-10.1% for the whole year 2021–22. However, the growth was somewhat so slow in the year 2021 especially due to the Covid- 19 pandemic situation in April and May but economically it showed growth around June as the economy slowly was coming back to normalcy.
To summarize, until 1991, India’s slow social and economic growth made it irrelevant in the global scenario, other than as a recipient of financial aid from other nations. But today leading nations view India as a potential superpower. Once a country that had to rebuild itself from ground zero, India now has the third-largest GDP in the world in purchasing power parity terms and an environment that is conducive for the growth of budding entrepreneurs and industries alike.