The Indian economy has always been a topic of extreme scrutiny, with all eyes on the ruling governing party to make the economy reach new highs. India is the sixth-largest economy in the world in terms of nominal GDP. It is a developing nation, and is regarded as one of the fastest-growing economies. Researchers and economists find the Indian economy very intriguing, all through its history and towards the future.
India After the British Rule
India was left poor after the British rule and had to start everything from scratch. Historians showed that India’s share of the world income reduced from 22.6% in the 1700s to a mere 3.8% in 1952. There came a dire need for proper and careful planning in such a state – planning committees were formed, budgets and five-year plans were prepared. The government introduced the first five-year plan of India in 1951, which mainly focused on agriculture, farming, and irrigation. It was done because the internal produce was negligible and of bad quality, and therefore the country’s reserves were being spent on importing food grains and other necessities. They also aimed to boost economic growth by way of increasing savings and investments. This plan proved to be a success and thus began the development of the Indian economy.
‘Make in India’ Initiative
The second five-year plan was launched in 1956 and is focused on speedy industrialization. It heavily encouraged industries and capital goods to scale rapidly. This move is considered by many as the beginning of giving importance to spreading goods made inside the country. Now, it is known as the ‘Make in India‘ initiative that has recently been promoted all over the country. The government advocated widely that the distribution of Indian goods should be encouraged to help the economy’s growth and encourage local businesses and entrepreneurs. During this time, the industry was classified into three groups. The sectors that were of basic importance and were strategically important were included in the public sector. The industries included in the second group were primarily owned by the state. The third group was comprised largely of consumer industries, which was given to the private sector. However, the private sector was still kept under strict and tight watch through licenses and charges.
In the following decade, the war with China further weakened and exposed the already declining economy, thereby leading to food shortages and price hikes; this was also due to the fact that the attention had been shifted from agriculture to industries in the second five-year plan. This was immediately revised, and the focus was brought back to agriculture and farm produce. There was also growing acceptance towards increased private sector role in the industry and more foreign investment in the economic cycle. There were many ups and downs in the coming decades, and the economy was shaky for a long time after that. Gradually, economic reforms with liberalization and privatization led to a major change in the economic scenario.
Progress and Reducing Poverty
Since the start of the 21st century, India has made exceptional progress concerning the economy and reducing poverty. From 2011 to 2015, more than 90 million people were lifted out of being in extreme poverty. Recently, the COVID-19 pandemic had led to a fall in the economy, with a contraction of 7.3% in the financial year 2021. The financial year 2022 is expected to be around the same range.
Even then, it puts India among the fastest-growing economies worldwide. Recent projections show that the poverty scenario may have reversed back into the levels in 2016. Along with the RBI, the government has taken various monetary and fiscal measures through policies and supporting firms and households. Through these measures, the economy is expected to rebound, and growth is expected in the coming years at around a stable 7%.
Other than these factors, the economy is also affected by natural and man-made factors out of its control and reach. Climate change is one such crisis that is affecting all economies worldwide. Wars and border tensions also affect the situation in the country. The government should keep its sole focus on bringing the economy back on track and put other things like politics and influences at a safe distance, especially until the country’s economic growth and development are stabilized. Unnecessary expenditure should be cut off until the foreseeable future, and savings and investment practices should be imbibed.