The country’s metamorphosis from an economic backwardness to the fastest growing economy globally is the result of far-sighted policy decisions over the past few decades.
Office of the Global BPO, Serco Global Services, Mumbai; (Photo: Mandar Deodhar)
IIndia’s transformation from a state of poor growth before 1947 to the fastest growing economy in the world has now been a remarkable one. In the pre-independence era, India’s real gross national product (GDP) only grew at an average rate of 0.9 percent per annum. After independence, the country embarked on an ambitious task of planned economic development to come out of this impasse.
Apart from consolidating the nation and building an administrative and political system, the country also had to grapple with the after-effects of World War II and Partition. Real GDP grew at an average annual rate of 4 percent after independence, with any significant acceleration occurring only in the 1980s. The regional structure of GDP gradually changed, with agriculture, which contributed more than half of GDP during the first three Five Year Plans, to a third by the late 1980s.
The 1960s saw major economic decisions including the nationalization of 14 private banks. In 1983, Maruti, a small car that inspired the rise of a new middle class and consumption, came off the assembly line in Gurgaon, a high point in India’s manufacturing capabilities. The mid-80s saw a leap in information technology and telecommunications. The 1990s saw liberalization after the balance of payments crisis in 1991, the end of the license raj and comprehensive reforms in the financial sector. The measures increased the competitiveness of domestic industry, promoted foreign trade, and encouraged the private sector and multinationals to invest in the country. The annual GDP growth rate increased to 6.1 percent during the 1990s.
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The first term (2014-19) of the current government was marked by the implementation of the Goods and Services Tax (GST) in July 2017. It also introduced the Insolvency and Bankruptcy Code in 2016, which made it possible for lenders to weed out and recover errant promoters. At least part of their money. In its second term starting in 2019, the Narendra Modi-led government had to grapple with the Covid-19 pandemic, one of the world’s strictest lockdowns and the Rs 20 lakh crore Atmanirbhar Bharat Abhiyan to help individuals and firms. Had to resort to Problem. The economy, which was already faltering with sub-5 per cent growth for several quarters, also went into its fifth recession since independence. It has now improved, showing a growth of 4.1 per cent in the January-March quarter of 2021-22. Economists say growth is still not broad-based, and private investment and consumption are lagging. However, the country remains a bright spot on the global stage with some countries likely to see a slowdown, given the uncertainty arising from the Russian invasion of Ukraine.