India-Agrarian Economy

1947-1966
After Independence in 1947, India adhered to socialist policies. The
extensive regulation was sarcastically dubbed as the "Licence Raj". India
was an agrarian economy. In the early years of independence, India
suffered food shortage. In 1953, rationing and price controls were
abolished in large parts of the country. Imports exceeded exports
throughout the period from 1947 to 1966; in 1966, total exports amounted
to 11.5 billion Rupees, imports to 20.1 billion Rupees. India's political
leaders in the years immediately after independence blamed the British
administration for having prevented Indian development by failing to
improve the education of the masses and by preventing the country to
Industrialize. Many institutions of higher learning were established (where
English maintained importance); the state pursued a protectionist
economic policy and, in Five Year Plans, attempted to promote
industrialization of the country. The first Five Year Plan was implemented
1951-1956. In 1958, India adopted the metric system.

India-Protectionist Economy
1966-1984
India's rice production increased from 45.6 million metric tons in 1966 to
87.5 million metric tons in 1984. Policy tended towards protectionism, with
a strong emphasis on import substitution, industrialization, state
intervention in labour and financial markets, a large public sector,
business regulation, and central planning. Elaborate licences, regulations
and the accompanying red tape, commonly referred to as Licence Raj,
were required to set up business in India. Before the process of reform
began in 1991, the government attempted to close the Indian economy to
the outside world. Imports exceeded exports throughout the period from
1966 to 1984 with the exception of 1972. India continued to implement
Five Year Plan. The Oil Crisis of 1973 hit India's economy hard, as the
country depended on oil imports. In 1977, Coca Cola was banned in India.

Opening Up
1984-1991
The government slightly reduced License Raj and also promoted the
growth of the telecommunications and software industries. Rice
production increased from 87.5 million metric tons in 1984 to 110.5
million metric tons in 1991. The Sixth Five Year Plan ended in 1985,
followed by the Seventh (1985-1990) and the Eighth (1990-1995). Rajiv

Gandhi pursued the economic opening of India, the technological

modernization of which he strove for. Bangalore (Karnataka) developed
into a computer software development centre. On December 3rd 1984, at
a Union Carbide factory in Bhopal, Madhya Pradesh, India, where
pesticides were produced, toxic gases leaked; the number of immediate
fatalities in the city was estimated at 7,000; the death toll is estimated
between 10,000 and 22,000.

Liberalization and Breakthrough Reforms

1991-2004
India was a latecomer to economic reforms. A Balance of Payments crisis
in 1991 pushed the country to near bankruptcy. The reforms progressed
furthest in the areas of opening up to foreign investment, reforming
capital markets, deregulating domestic business, and reforming the trade
regime. Liberalization has done away with the Licence Raj (investment,
industrial and import licensing) and ended many public monopolies,
allowing automatic approval of foreign direct investment in many sectors
and increase access to world markets. Government's goals were reducing
the fiscal deficit, privatization of the public sector, and increasing
investment in infrastructure. Trade reforms and changes in the regulation
of foreign direct investment were introduced to open India to foreign trade
while stabilizing external loans. Introducing the SEBI Act of 1992 and the
Security Laws (Amendment) . Starting in 1994 of the National Stock
Exchange. The NSE emerged as India's largest exchange by 1996.Opening
up in 1992 of India's equity markets to investment by foreign institutional
investors and permitting Indian firms to raise capital on international
markets by issuing Global Depository Receipts (GDRs).The average growth
rate in the ten year period from 1992-93 to 2001-02 was around 6.0
percent. In 1993 India ended her ban on Coca Cola. A showcase of India's
modernizing economy is the computer software business cantered on
Bangalore. India joined the WTO in 1995.

Outsourcing Hub
2004-2009
Lately, outsourcing provides for a considerable number of new jobs in
India's economy; India's large number of well-educated attract service
sector jobs. Under PM Manmohan Singh (Congress Party), the Republic of
India continues in her commitment to a free market policy. India
experiences high economic growth figures. India's economy requires a
rising demand of raw materials, which, in combination with that of China
and other emerging industrial economies, drives up prices for these
commodities. Strategies like forming Special Economic Zones - tax

amenities, good communications infrastructure, low regulation to

encourage industries has paid off in many parts of the country. Right to
Information Act (2005). Indo-US civilian nuclear agreement (2008).

Ongoing Economic Challenges

2008
Challenges-Spreading the benefits of growth more equitably. Completing
investment projects which are essential for long term development of
economy. Dealing with global financial uncertainty, which will make capital
flows and exports more difficult. Problems in the agricultural sector..
Highly restrictive and complex labour laws. Inadequate infrastructure,
which is often government monopoly. Corruption. Inefficient public sector.
Failing education. Getting inflation under control.

Indian Economy and Global Recession

2009
After reaching growth of 9.8% in 2007/08, growth is expected to slow
down to 7%. This might not be a bad thing as it will avoid inflationary
pressures building further. However, some worry the global credit crunch
could reduce growth much more. Many argue, that Indias growth is not so
dependent on growth in the West. However, the Indian stock markets have
been hit by the global crisis. Indias growing service sector and
manufacturing sector would be adversely impacted by a global downturn.
However, Indias economic success is not dependent on growth in the
West, and at worst Indias growth rate will be less than hoped for. The
Indian government still have a target of 10% growth for 2010/11, but this
could prove unrealistic.