Pre Colonial: The economic history of India since Indus Valley Civilization to 1700 AD can be categorized under this phase. During Indus Valley Civilization Indian economy was very well developed. It had very good trade relations with other parts of world, which is evident from the coins of various civilizations found at the site of Indus valley.
Before the advent of the East India Company, each village in India was a self sufficient entity and was economically independent as all the economic needs were fulfilled within the village
Post Colonial Indian Economy: After India got independence from colonial rule in 1947, the process of rebuilding the economy started. For this various policies and schemes were formulated. First five year plan for the development of Indian economy came into implementation in 1952. These Five Year Plans, started by Indian government, focused on the needs of the Indian economy.
If on one hand agriculture received the immediate attention on the other hand the industrial sector was developed at a fast pace to provide employment opportunities to the growing population and to keep pace with the developments in the world. Since then the Indian economy has come a long way. The Gross Domestic Product (GDP) at factor cost, which was 2.3 % in 1951-52 reached 6.5 in the financial year 2011-2012
Trade liberalization, financial liberalization, tax reforms and opening up to foreign investments were some of the important steps, which helped Indian economy to gain momentum. The Economic Liberalization introduced by Man Mohan Singh in 1991, then Finance Minister in the government of P V Narsimha Rao, proved to be the stepping-stone for Indian economic reform movements.
To maintain its current status and to achieve the target GDP of 10% for financial year 2006-07, the Indian economy has to overcome many challenges.
Challenges before Indian economy:
- Population explosion:The rising population is eating into the success of India. According to 2011 census of India, the population of India has crossed one billion and isgrowing at a rate of 2.11% approx. Such a vast population puts lots of stress on economic infrastructure of the nation. Thus India has to control its burgeoning population.
- Poverty:As per records of National Planning Commission, 36 crore people are living below the poverty line in India in 2012.
- Unemployment:The increasing population is pressing hard on economic resources as well as job opportunities. Indian government has started various schemes such as Jawahar Rozgar Yojna, and Self Employment Scheme for Educated Unemployed Youth (SEEUY). But these are proving to be a drop in an ocean.
- Rural Urban Divide:It is said that India lies in villages, even today when there is lots of talk going about migration to cities, 70% of the Indian population still lives in villages. There is a very stark difference in pace of rural and urban growth. Unless there isn't a balanced development Indian economy cannot grow.
- Maintaining fiscal discipline
- Orientation of public expenditure towards sectors in which India is faring badly such as health and education.
- Introduction of reforms in labour laws to generate more employment opportunities for the growing population of India.
- Reorganization of agricultural sector, introduction of new technology, reducing agriculture's dependence on monsoon by developing means of irrigation.
- Introduction of financial reforms including privatization of some public sector banks.
|India's GDP rate since 1951-14:|
|Years||Agriculture, forestry & fishing, mining and quarrying (in %)||Manufacturing, construction, electricity, gas and water Supply (in %)||Trade, hotels, transport & Communication (in %)||Financing, insurance, real estate and business Services (in %)||Community, Social & Personal Services (in %)||Gross domestic product at factor cost (in %)|
Blogs about Indian Economy
100 Days of Modi Sarkar – Day 48 : There have been several positive aspects of the initial budget presented by the National Democratic Alliance government and this can be understood from the way people have reacted to the same. The salaried class is especially happy with the increase in the tax exemption limit from INR 2 lakh in a year to INR 2.5 lakh. The retired professionals are appreciative of the fact that their pensions have increased by some degree thus providing them…
Will El Nino Hit The Brakes On India’s Growth Story? : What is El Nino? The El Nino (Spanish – The Little One) is a weather phenomenon that occurs every two to seven years and lasts for almost a year. During this period, the east equatorial Pacific Ocean waters tend to become unusually warm and this affects wind patterns causing abnormal rainfall in many parts of the world. The years that the El Nino strikes witness excessive rainfall in some parts of the world and droughts…
100 Days of Modi Sarkar – Day 39 : As of now the Indian Government and the Kerala Government are deeply concerned about the condition of the 46 nurses who are surviving somehow in Iraq. This information has been revealed by Oommen Chandy who had a meeting with Sushma Swaraj regarding the issue. The nurses in question are stranded in Tikrit and have not been able to get a good night’s sleep in the last couple of days. They have also not availed the…
100 Days of Modi Sarkar – Day 38 : On the 38th day of Narendra Modi’s reign Singapore has offered assistance to India as far as constructing smart cities across the country is concerned. In fact this is one of the dreams that the Prime Minister has nurtured. The yet to be announced budget is expected to play a major role in this considering the importance of benefits it provides in the end to investors from outside the country. K Shanmugam, the Foreign Minister…
100 days of Modi sarkar- Day 37 : In a major embarrassment to the Modi sarkar, Chief Justice of India RM Lodha has lashed out against them for the “casual handling” of the Gopal Subramaniam incident. In the last one month many things have not gone in expected lines. But government can say that issues like price rise, fiscal deficit are legacy of UPA which they inherited and can’t be fixed so soon. But Modi sarkar can’t hide away from the perception created…