19251950

US was the world's largest economy followed by the USSR, UK, China, France, Germany and India. The gross domestic product of India in 1950 was estimated at about 7 per cent that of the US.
[citation needed]

The Great Depression of 1929 had a very severe impact on India, which was then under the British. During the period 19291937, exports and imports fell drastically crippling seaborne international trade. The railways and the agricultural sector were the most affected.
[citation needed]

The international financial crisis resulted in the soaring prices of commodities. The discontent of farmers manifested itself in rebellions and riots. The Salt Satyagraha of 1930 was one of the measures undertaken as a response to heavy taxation during the Great Depression.
[citation needed]

The Great Depression and the economic policies of the Government of British India worsened the already deteriorating Indo-British relations. When the first general elections were held according to theGovernment of India Act 1935, anti-British feelings resulted in the Indian National Congress winning in most provinces with a very high percentage of the vote share.
[citation needed]

The newly independent but weak Union government's treasury reported annual revenue of 334 million in 1950. In contrast, Nizam Asaf Jah VII of south India was widely reported to have a fortune of almost 668 million then.
[17]

About one-sixth of the national population were urban by 1950. Rupees.

[18]

A US Dollar was exchanged at 4.79

Economic impact of British imperialism

Debate continues about the economic impact of British imperialism on India. The issue was actually raised by conservative British politician Edmund Burke who in the 1780s vehemently attacked the East India Company, claiming that Warren Hastings and other top officials had ruined the Indian economy and society. Indian historian Rajat Kanta Ray (1998) continues this line of reasoning, saying the new economy brought by the British in the 18th century was a form of plunder and a catastrophe for the traditional economy of Mughal India. (Economic Drain Theory) Ray believes that British depleted the food and money stocks and imposed high taxes that helped cause the terrible famine of 1770, which killed a third of the people of Bengal.
[19]

P. J. Marshall, a British historian known for his work on the British empire, has a reinterpretation of the view that the prosperity of the formerly benign Mughal rule gave way to poverty and anarchy. Marshall argues the British takeover did not make any sharp break with the past. British control was delegated largely through regional rulers and was sustained by a generally prosperous economy for the rest of the 18th century, except the frequent famines with very high fatality rate(Famine in India). Marshall notes the British raised revenue through local tax administrators and kept the old Mughal rates of taxation. Instead

of the Indian nationalist account of the British as alien aggressors, seizing power by brute force and impoverishing all of India, Marshall presents a British nationalist interpretation in which the British were not in full control but instead were controllers in what was primarily an Indian play and in which their ability to keep power depended upon excellent cooperation with Indian elites. Marshall admits that much of his interpretation is still rejected by many historians.
[20]

Republic of India
See also: Economy of India This section has been nominated to be checked for its neutrality.
Discussion of this nomination can be found on the talk page. (January 2010)

Nehruvian Socialist rate of growth

Compare India (orange) with South Korea (yellow). Both started from about the same income level in 1950. The graph shows GDP per capita of South Asian economies and South Korea as a percent of theAmerican GDP per capita.

The "Nehruvian Socialist rate of growth" is used to refer to the low annual growth rate of the economy of India before 1991. It stagnated at around 3.5% from 1950s to 1980s, while per capita income growth averaged extremely low 1.3% a year. 12%.
[22] [citation needed] [21]

At the same time, South Korea grew by 10% and Taiwan by

This phenomenon was called the "Hindu rate of growth", by the leading Indian economistRaj

Krishna.

Socialist reforms (19501975)

USA was the world's largest economy followed by the USSR, Japan, Germany and China. The gross domestic product of India in 1975 was estimated at about 5 per cent that of the USA.
[citation needed]

Before independence a large share of tax revenue was generated by the land tax, which was in effect a lump sum tax on land. Since then land taxes have steadily declined as a share of revenues and completely replaced by sales taxes.
[23]

Moreover, the structural economic problems inherited at independence were exacerbated by the costs associated with the partition ofBritish India, which had resulted in about 2 to 4 million refugees fleeing past each other across the new borders between India andPakistan. The settlement of refugees was a considerable financial strain. Partition also divided India into complementary economic zones. Under the British, jute and cotton were grown in the eastern part of Bengal, the area that became East Pakistan (after 1971,Bangladesh), but processing took place mostly in the western part of Bengal, which became the Indian state of West Bengal in 1947. As a result, after independence India had to employ land previously used for food production to cultivate cotton and jute for its mills.
[citation needed]

Government was assigned an important role in the process of alleviating poverty, and since 1951 a series of plans had guided the country's economic development. Although there was considerable growth in the 1950s, the long-term rates of real growth were less positive than India's politicians desired and much less than those of many other Asian countries.
[citation needed]

Toward the end of Nehru's term as prime minister, India would continue to face serious food shortages despite hoped for progress and increases in agricultural production. There was mass starvation in states like Bihar due to socialist controls on the economy. Farmers as well as industrialists were ham-strung with controls (License Raj) on their freedom to run their respective businesses.
[citation needed]

Despite such atrocious conditions in the country Nehru's popularity remained unaffected because of the larger-than-life image and the personality cult that was promoted by the state controlled mass media.
needed] [citation

Since 1950, India ran into trade deficits that increased in magnitude in the 1960s. The Government of India had a budget deficit problem and therefore could not borrow money from abroad or from the private sector, which itself had a negative savings rate. As a result, the government issued bonds to the RBI, which increased the money supply, leading to inflation. In 1966, foreign aid, which was hitherto a key factor in preventing devaluation of the rupee was finally cut off and India was told it had to liberalise its restrictions on trade before foreign aid would again materialise. The response was the politically unpopular step of devaluation accompanied by liberalisation. The Indo-Pakistani War of 1965 led the US and other countries friendly towards Pakistan to withdraw foreign aid to India, which further necessitated devaluation. Defence spending in 1965/1966 was 24.06% of total expenditure, the highest in the period from 1965 to 1989. This, accompanied by the drought of 1965/1966, led to a severe devaluation of the rupee. Current GDP per capita grew 33% in the Sixties reaching a peak growth of 142% in the Seventies, decelerating sharply back to 41% in the Eighties and 20% in the Nineties. From FY 1951 to FY 1979, the economy grew at an average rate of about 3.1 percent a year in constant prices, or at an annual rate of 1.0 percent per capita (see table 16, Appendix). During this period, industry grew at an average rate of 4.5 percent a year, compared with an annual average of 3.0 percent for

agriculture. They managed to tamp down on the natural business acumen and abilities of the population, yet some economists differed over the relative importance of those factors.
[citation needed]

Structural deficiencies, such as the need for institutional changes in agriculture and the inefficiency of much of the centrally directed industrial sector, also contributed to economic stagnation. Some other excuses that were generally offered were - War with China in 1962 and with Pakistan in 1965 and 1971; a flood of refugees from East Pakistan in 1971; droughts in 1965, 1966, 1971, and 1972;currency devaluation in 1966; and the first world oil crisis, in 1973-1974, all jolted the economy.
[citation needed]

This is a chart of trend of gross domestic product of India at market prices estimated by Ministry of Statistics and Programme Implementation with figures in millions of Indian Rupees. See also the IMF database. Per Capita Income (as % of USA)

Year Gross Domestic Product US Dollar Exchange[1]

1950 100,850

4.79 Indian Rupees

1.56

1955 110,300

4.79 Indian Rupees

2.33

1960 174,070

4.77 Indian Rupees

2.88

1965 280,160

4.78 Indian Rupees

3.26

1970 462,490

7.56 Indian Rupees

2.23

1975 842,210

8.39 Indian Rupees

2.18

[24]

The Union government treasury reported annual revenue of 5-6 billion in 1975 thus registering an average annual growth of almost 12 per cent during the third quarter of 20th century. Nevertheless, prime minister Indira proclaimed emergency and suspended the Constitution in 1975. About one-fifth of the national population were urban by 1975.
[25]

1975 - 2000
Main article: Economic liberalization in India

Service markets which would enjoy much lighter burden of regulation and other obstacles became more successful than still regulated sectors. For example, world-famous business process services are very lightly regulated.[1]

Economic liberalization in India in the 1990s and first decade of the 21st century led to large changes in the economy. This is a chart of trend of gross domestic product and foreign trade of India at market prices estimated by Ministry of Statistics and Programme Implementation with figures in millions of Indian Rupees. See also the IMF database. Per Capita Income (as % of USA)

Year

Gross Domestic Product

Exports

Imports

US Dollar Exchange[2]

Inflation Index (2000=100)

1975 842,210

8.39 Indian Rupees

2.18

1980 1,380,334

90,290

135,960

7.86 Indian Rupees

18

2.08

1985 2,729,350

149,510

217,540

12.36 Indian Rupees 28

1.60

1990 5,542,706

406,350

486,980

17.50 Indian Rupees 42

1.56

1995 11,571,882

1,307,330 1,449,530 32.42 Indian Rupees 69

1.32

2000 20,791,898

2,781,260 2,975,230 44.94 Indian Rupees 100

1.26

[26]

About one-fourth of the national population was urban by 2000.

[27]

2000 - present
The gross domestic product of India in 2007 was estimated at about 8 per cent that of the USA. National Democratic Alliance led by Bharatiya Janata Party(BJP), was in helm of economic affairs from 1998 to 2004. During this period there were two finance ministers, viz., Yashwant Sinha (19982003) and Jaswant Singh (20032004). The main economic achievement of the government was the universal license in telecommunication field, which allows CDMA license holders to provide GSM services and vice versa. NDA started off the Golden Quadrilateral road network connecting main metros of Delhi, Chennai, Mumbaiand Kolkata. The project, still under construction, was one of the most ambitious infrastructure projects of independent India. Simultaneously, North-South and East-West highway projects were planned and construction was started.
[citation needed]

The top 3 per cent of the population still contribute 50 per cent of the GDP and benefits of economic growth have not trickled down. Education for all is still an unrealised dream in India. This was made a fundamental right by amending the constitution of India and huge amount of money was pumped into the project under the name of Sarva Shiksha Abhiyan. This project met with limited success.Graduate unemployment was estimated at 34 million nationwide.
[citation needed]

Currently, the economic activity in India has taken on a dynamic character which is at once curtailed by creaky infrastructure, for example dilapidated roads and severe shortages of electricity, and cumbersome justice system
[28]

yet at the same time accelerated by the sheer enthusiasm and ambition of industrialists

and the populace. The upward economic cycle in India is expected in short time to effectively address the shortcomings and bottlenecks of the infrastructure. The fast changing, seemingly chaotic and unsettled situation is much more hopeful and reassuring than the socialist morass that was the Nehru and Indira Gandhi legacy.
[citation needed]

This is a chart of trend of gross domestic product and foreign trade of India at market prices estimated by Ministry of Statistics and Programme Implementation with figures in millions of Indian Rupees. See also the IMF database. Gross Domestic Product US Dollar Exchange[3] Inflation Index (2000=100)

Year

Exports

Imports

Per Capita Income

(as % of USA)

2000 20,791,898

2,781,260 2,975,230 44.94 Indian Rupees 100

1.26

2005 34,195,278

44.09 Indian Rupees 121

1.64

2010 66,911,800

45.83 Indian Rupees 126

2.01

[24]

For purchasing power parity comparisons, the US Dollar is exchanged at 9.46 Rupees only. Despite steady growth and continuous reforms since the Nineties, Indian economy is still mired in bureaucratic hurdles from coast to coast. This was confirmed by a World Bank report published in late 2006 ranking Pakistan (at 74th) well ahead of India (at 134th) based on ease of doing business.
[29]

The Union government treasury reported annual revenue of 51-52 billion in 2005 thus registering an average annual growth of almost 22 per cent since 2000. India imported about 85 per cent of oil and 22 per cent of gas consumption by 2003.
[citation needed]