India’s economic rise: 77 years, key milestones, a remarkable journey

India at 78 years old:As India celebrates its 78th anniversary of independence, the country’s economic trajectory offers a compelling narrative of resilience, ambition and transformation. From the humble beginnings of a nascent post-colonial state to becoming one of the world’s largest economies, India’s economic story is a tapestry woven with moments of crisis, innovation and bold reforms.

The dawn of a new era: the founding of Amul

On a cold December day in 1946, a group of marginal milk producers in Anand, GujaratThey took a step that would forever change the face of India’s dairy industry. Exploited by middlemen and local cartels, these farmers, under the guidance of leaders like Sardar Vallabhbhai Patel and Morarji Desai, formed the Kaira District Milk Producers’ Cooperative Union, which we know today as Amul. This cooperative was more than a business; it was a movement that empowered millions of farmers and made India the largest producer of milk and dairy products in the world.

Amul’s success was a precursor to the White Revolution, which made India self-sufficient in milk production and revolutionised rural livelihoods. It was an early indication of what collective action, backed by visionary leadership, could achieve in the newly independent nation.

The socialist experiment: building a mixed economy

In the years following independence, India’s economic policy was heavily influenced by socialist ideals. The scars of colonial exploitation were fresh and the country’s first Prime Minister, Jawaharlal Nehru, envisioned a self-sufficient economy in which both the public and private sectors played crucial roles. The Industrial Policy Resolution of 1948 laid the groundwork for a mixed economy, which sought to balance rapid industrialisation with the needs of a predominantly agrarian society.

The creation of the Planning Commission in 1950 was an important step towards realizing this vision. Modeled after the central planning system of the Soviet Union, the Commission was charged with drawing up Five-Year Plans to guide the nation’s economic and social development. The first plan, launched in 1951, focused on agriculture and irrigation, reflecting the urgent need to boost food production. The second plan, introduced in 1956, shifted the focus to heavy industries, laying the foundation for India’s industrial future.

Nationalization: the State takes control

The years after independence saw a wave of nationalisations, as the government attempted to consolidate its control over key sectors. The Air Corporations Act of 1953, which led to the nationalisation of nine airlines, was one of the first major steps in that direction. This move not only streamlined India’s aviation sector but also laid the groundwork for future nationalisations.

In 1969, Prime Minister Indira Gandhi took a bold step by nationalising 14 of the country’s largest banks. This move was aimed at ensuring that the banking sector served the broader economic needs of the nation, particularly in rural areas. The nationalisation of the banks was a watershed moment as it marked a significant shift in the government’s approach to economic management, emphasising the role of the state as a driver of development.

However, this period was not without its challenges. In 1957, India witnessed its first major financial scandal – the Mundhra scandal. Feroze Gandhi, an MP and husband of Indira Gandhi, exposed how the Life Insurance Corporation (LIC) had been manipulated into buying fraudulent shares, leading to the resignation of the then Finance Minister, TT Krishnamachari. The scandal was a stark reminder of the challenges involved in managing a rapidly expanding public sector.

Crisis and renewal: the green and white revolutions

The 1960s were tumultuous for India. The economy was hit by wars with China and Pakistansevere food shortages and rising inflation. The deaths of Nehru and his successor, Lal Bahadur Shastri, in quick succession increased the sense of uncertainty. The country was on the brink of mass famine and its dependence on US food aid was beginning to test its foreign policy autonomy.

In this context, Shastri’s investment in agriculture proved to be a turning point. The Green Revolution, pioneered by geneticist MS Swaminathan, introduced high-yielding wheat varieties that dramatically increased food production. This was followed by the White Revolution, which expanded Amul’s work and made India the world’s largest milk producer. These revolutions not only averted a potential famine, but also laid the foundation for India’s future food security.

The 1991 reforms: a new economic paradigm

In the early 1990s, India was facing a severe balance of payments crisis. The collapse of the Soviet Union, its main trading partner, and the Gulf War, which caused a sudden rise in oil prices, had brought the economy to the brink of default. The situation was so dire that India had to airlift its gold reserves to secure a bailout from the International Monetary Fund (IMF).

This crisis brought about a radical shift in economic policy. Under the leadership of Prime Minister PV Narasimha Rao and Finance Minister Manmohan Singh, India launched a series of economic reforms in 1991 that liberalized the economy. The Licence Raj (a system of licenses, permits, and quotas that stifled business activity) was dismantled, and the economy was opened to foreign investment. These reforms marked the beginning of India’s integration into the global economy and paved the way for the rapid growth that followed.

The 2008 global financial crisis and its consequences

The 2008 global financial crisis was another major challenge for the Indian economy. Although the country was relatively insulated from the immediate effects of the crisis, the government announced three stimulus packages totaling Rs 1.86 trillion to support the economy. These measures, along with monetary easing by the Reserve Bank of India (Reserve Bank of India) helped India weather the storm, but also left a lasting impact on the fiscal deficit, which remains a challenge to this day.

GST and Demonetisation: Bold Reforms of the 21st Century

In recent years, two major economic events have dominated the headlines: demonetization and the introduction of the Goods and Services Tax (GST). In November 2016, Prime Minister Narendra Modi The Chinese government has taken the unprecedented step of demonetizing the 500 and 1,000 rupee notes, rendering 86% of the currency in circulation invalid overnight. The move was aimed at curbing black money and promoting digital transactions, but it also caused significant disruption to the economy in the short term.

The following year, in July 2017, the government introduced the GST, a unified tax system that replaced a complex web of state and central taxes. The GST was one of the most significant tax reforms in India’s history, aimed at creating a single market and improving the ease of doing business. While the implementation of the GST had its challenges, it has since become a cornerstone of India’s economic policy.

Looking ahead: The path to a $5 trillion economy

India is celebrating 77 years of independence and is at a crossroads. The country has made significant progress, but challenges remain. The government has set an ambitious goal of turning India into a $5 trillion economy by 2025. Achieving this goal will require continued reforms, investments in infrastructure, and a focus on human capital development.

India’s economic journey over the past 77 years is a testament to the resilience and determination of its people. From the early hardships of a post-colonial state to the challenges of liberalisation and globalisation, India has navigated its path with a unique blend of pragmatism and idealism. As it looks to the future, the nation does so with confidence that it has the ability to overcome any challenge and continue its rise on the world stage.

Source: Republicbiz

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