Economic development in India
The economic development in India followed socialist-inspired politicians for most of its
independent history, including state-ownership of many sectors; India's per capita income increased
at only around 1% annualised rate in the three decades after its independence.[1] Since the mid-
1980s, India has slowly opened up its markets through economic liberalisation. After more
fundamental reforms since 1991 and their renewal in the 2000s, India has progressed towards a free
market economy.[1] The Indian economy is still performing well, with foreign investment and looser
regulations driving significant growth in the country.[2]
In the late 2000s, India's growth reached 7.5%, which will double the average income in a decade.[1]
IMF says that if India pushed more fundamental market reforms, it could sustain the rate and even
reach the government's 2011 target of 10%.[1] States have large responsibilities over their economies.
The average annual growth rates (2007–12) for Gujarat (13.86%), Uttarakhand (13.66%), Bihar
(10.15%) or Jharkhand (9.85%) were higher than for West Bengal (6.24%), Maharashtra (7.84%),
Odisha (7.05%), Punjab (11.78%) or Assam (5.88%).[3] India is the fifth largest economy in the world
by nominial basis and the third largest by purchasing power parity adjusted exchange rates (PPP). On
per capita basis, it ranks 140th in the world or 129th by PPP.
The economic growth has been driven by the expansion of the services that have been growing
consistently faster than other sectors. It is argued that the pattern of Indian development has been a
specific one and that the country may be able to skip the intermediate industrialisation-led phase in
the transformation of its economic structure. Serious concerns have been raised about the jobless
nature of the economic growth.[4][5]
Favourable macroeconomic performance has been a necessary but not sufficient condition for the
significant improvement in the human development indicators. Although the rate of poverty declined
after economic reforms of 1991, the improvement in human development has been less than
satisfactory. For instance, child malnutrition has continued to persist (46% in 2005–6).[6]
The progress of economic changes in India is followed closely. The World Bank suggests that the
most important priorities are public sector reform, infrastructure, agricultural and rural development,
removal of labour regulations, reforms in lagging states, and HIV/AIDS.[7] For 2018, India ranked 77th
in Ease of Doing Business Index. According to Index of Economic Freedom World Ranking an annual
survey on economic freedom of the nations, India ranks 123rd as compared with China and Russia
which ranks 138th and 144th respectively in 2014.
,At the turn of the century India's GDP was at around US$480 billion. As economic reforms picked up
pace, India's GDP grew five-fold to reach US$2.2 trillion in 2015 (as per IMF estimates).
India's GDP growth during January–March period of 2015 was at 7.5% compared to China's 7%,
making it the fastest growing MAJOR economy.[8][9] During 2014–15, India's GDP growth recovered
marginally to 7.3% from 6.9% in the previous fiscal. During 2014–15, India's services sector grew by
10.1%, manufacturing sector by 7.1% & agriculture by 0.2%. Indian Economy grew at 7.6 & 7.1 in FY
2015–16 and FY 2016–17 respectively as major reforms had taken place like demonetization and
implementation of GST in FY 2016–17.
History
Prior to India's Independence, from the period of 1900 to 1947, per capita income in India had either
declined or stagnated. Post-Independence, Jawaharal Nehru demonstrated his willingness to
compromise socialism for the perceived benefit of the country to provide financial incentives for the
expansion of private enterprise. However, after the crisis of 1957, India turned towards import
substitution industrialization and introduced foreign exchange. The Nehru-Mahalanobis approach,
often referred to as the Second Five Year Plan, emphasized the development of basic and heavy
industries as a means of accelerating economic growth. These included steel, copper,
petrochemicals, paper, coal, and oil.[10] Mahalanobis strived for India to reach autonomy, ridding any
outstanding debts. Critics disagreed with this approach, stating that World Bank's claim of Indian
export prospects being low were falsified and due to India's inward-looking strategy, the growth
opportunity of the world economy was missed.[11] Nonetheless, over 1950–1965, India's acceleration
of per capita income growth had increased an average of 1.7%, a value not exceeded since.
The discourse on the efficacy of the Nehru-Mahalanobis Strategy is commonly contested by
economists. A criticism of the approach emphasizes the lack of resource allocation in the agriculture
sector. It is argued that the misbalanced weightage towards the machine-making sector contributed
to the increase in food-grain prices and thus, perpetuated poverty and malnutrition.[12] Defenders of
the strategy claim that it sought to increase agricultural output by increasing the output-capital ratio.
This agreeably would have been accomplished through land-reforms, something the strategy did not
address, not indicating a problem with the strategy itself.[12]
, Agriculture
Composition of India's total production of
foodgrains and commercial crops, in 2003–04, by
weight
India ranks second worldwide in farm output. Agriculture and allied sectors like forestry, logging and
fishing accounted for 18.6% of the GDP in 2005, employed 60% of the total workforce[13] and despite
a steady decline of its share in the GDP, is still the largest economic sector and plays a significant role
in the overall socio-economic development of India. Yields per unit area of all crops have grown since
1950, due to the special emphasis placed on agriculture in the five-year plans and steady
improvements in irrigation, technology, application of modern agricultural practices and provision of
agricultural credit and subsidies since the green revolution.
India is the largest producer in the world of milk, cashew nuts, coconuts, tea, ginger, turmeric and
black pepper.[14] It also has the world's largest cattle population (193 million).[15] It is the second
largest producer of wheat, rice, sugar, groundnut and inland fish.[16] It is the third largest producer of
tobacco.[16] India accounts for 10% of the world fruit production with first rank in the production of
banana and sapota, also known as chiku.[16]
The required level of investment for the development of marketing, storage and cold storage
infrastructure is estimated to be huge. The government has implemented various schemes to raise
investment in marketing infrastructure. Amongst these schemes are Construction of Rural Go downs,
Market Research and Information Network, and Development / Strengthening of Agricultural
Marketing Infrastructure, Grading and Standardisation.[17]
Main problems in the agricultural sector, as listed by the World Bank, are:[18]
India's large agricultural subsidies are hampering productivity-enhancing investment.
Overregulation of agriculture has increased costs, price risks and uncertainty.
The economic development in India followed socialist-inspired politicians for most of its
independent history, including state-ownership of many sectors; India's per capita income increased
at only around 1% annualised rate in the three decades after its independence.[1] Since the mid-
1980s, India has slowly opened up its markets through economic liberalisation. After more
fundamental reforms since 1991 and their renewal in the 2000s, India has progressed towards a free
market economy.[1] The Indian economy is still performing well, with foreign investment and looser
regulations driving significant growth in the country.[2]
In the late 2000s, India's growth reached 7.5%, which will double the average income in a decade.[1]
IMF says that if India pushed more fundamental market reforms, it could sustain the rate and even
reach the government's 2011 target of 10%.[1] States have large responsibilities over their economies.
The average annual growth rates (2007–12) for Gujarat (13.86%), Uttarakhand (13.66%), Bihar
(10.15%) or Jharkhand (9.85%) were higher than for West Bengal (6.24%), Maharashtra (7.84%),
Odisha (7.05%), Punjab (11.78%) or Assam (5.88%).[3] India is the fifth largest economy in the world
by nominial basis and the third largest by purchasing power parity adjusted exchange rates (PPP). On
per capita basis, it ranks 140th in the world or 129th by PPP.
The economic growth has been driven by the expansion of the services that have been growing
consistently faster than other sectors. It is argued that the pattern of Indian development has been a
specific one and that the country may be able to skip the intermediate industrialisation-led phase in
the transformation of its economic structure. Serious concerns have been raised about the jobless
nature of the economic growth.[4][5]
Favourable macroeconomic performance has been a necessary but not sufficient condition for the
significant improvement in the human development indicators. Although the rate of poverty declined
after economic reforms of 1991, the improvement in human development has been less than
satisfactory. For instance, child malnutrition has continued to persist (46% in 2005–6).[6]
The progress of economic changes in India is followed closely. The World Bank suggests that the
most important priorities are public sector reform, infrastructure, agricultural and rural development,
removal of labour regulations, reforms in lagging states, and HIV/AIDS.[7] For 2018, India ranked 77th
in Ease of Doing Business Index. According to Index of Economic Freedom World Ranking an annual
survey on economic freedom of the nations, India ranks 123rd as compared with China and Russia
which ranks 138th and 144th respectively in 2014.
,At the turn of the century India's GDP was at around US$480 billion. As economic reforms picked up
pace, India's GDP grew five-fold to reach US$2.2 trillion in 2015 (as per IMF estimates).
India's GDP growth during January–March period of 2015 was at 7.5% compared to China's 7%,
making it the fastest growing MAJOR economy.[8][9] During 2014–15, India's GDP growth recovered
marginally to 7.3% from 6.9% in the previous fiscal. During 2014–15, India's services sector grew by
10.1%, manufacturing sector by 7.1% & agriculture by 0.2%. Indian Economy grew at 7.6 & 7.1 in FY
2015–16 and FY 2016–17 respectively as major reforms had taken place like demonetization and
implementation of GST in FY 2016–17.
History
Prior to India's Independence, from the period of 1900 to 1947, per capita income in India had either
declined or stagnated. Post-Independence, Jawaharal Nehru demonstrated his willingness to
compromise socialism for the perceived benefit of the country to provide financial incentives for the
expansion of private enterprise. However, after the crisis of 1957, India turned towards import
substitution industrialization and introduced foreign exchange. The Nehru-Mahalanobis approach,
often referred to as the Second Five Year Plan, emphasized the development of basic and heavy
industries as a means of accelerating economic growth. These included steel, copper,
petrochemicals, paper, coal, and oil.[10] Mahalanobis strived for India to reach autonomy, ridding any
outstanding debts. Critics disagreed with this approach, stating that World Bank's claim of Indian
export prospects being low were falsified and due to India's inward-looking strategy, the growth
opportunity of the world economy was missed.[11] Nonetheless, over 1950–1965, India's acceleration
of per capita income growth had increased an average of 1.7%, a value not exceeded since.
The discourse on the efficacy of the Nehru-Mahalanobis Strategy is commonly contested by
economists. A criticism of the approach emphasizes the lack of resource allocation in the agriculture
sector. It is argued that the misbalanced weightage towards the machine-making sector contributed
to the increase in food-grain prices and thus, perpetuated poverty and malnutrition.[12] Defenders of
the strategy claim that it sought to increase agricultural output by increasing the output-capital ratio.
This agreeably would have been accomplished through land-reforms, something the strategy did not
address, not indicating a problem with the strategy itself.[12]
, Agriculture
Composition of India's total production of
foodgrains and commercial crops, in 2003–04, by
weight
India ranks second worldwide in farm output. Agriculture and allied sectors like forestry, logging and
fishing accounted for 18.6% of the GDP in 2005, employed 60% of the total workforce[13] and despite
a steady decline of its share in the GDP, is still the largest economic sector and plays a significant role
in the overall socio-economic development of India. Yields per unit area of all crops have grown since
1950, due to the special emphasis placed on agriculture in the five-year plans and steady
improvements in irrigation, technology, application of modern agricultural practices and provision of
agricultural credit and subsidies since the green revolution.
India is the largest producer in the world of milk, cashew nuts, coconuts, tea, ginger, turmeric and
black pepper.[14] It also has the world's largest cattle population (193 million).[15] It is the second
largest producer of wheat, rice, sugar, groundnut and inland fish.[16] It is the third largest producer of
tobacco.[16] India accounts for 10% of the world fruit production with first rank in the production of
banana and sapota, also known as chiku.[16]
The required level of investment for the development of marketing, storage and cold storage
infrastructure is estimated to be huge. The government has implemented various schemes to raise
investment in marketing infrastructure. Amongst these schemes are Construction of Rural Go downs,
Market Research and Information Network, and Development / Strengthening of Agricultural
Marketing Infrastructure, Grading and Standardisation.[17]
Main problems in the agricultural sector, as listed by the World Bank, are:[18]
India's large agricultural subsidies are hampering productivity-enhancing investment.
Overregulation of agriculture has increased costs, price risks and uncertainty.
