23 March 2014

Introduction to Indian Economy

Introduction to Indian Economy


Indian Economy:

Indian economy is the fastest and the largest growing economy. But unfortunately, we are also the poorest because of the huge population. Mumbai is considered the commercial capital of India. Even today majority of people in India depend directly or indirectly on agriculture.


Pre-British rule:

Before British conquered India, India is well developed with rich culture, heritage and prosperity. It is estimated to be from Indus Valley civilization to 1700 AD. During that time there were good trade relations. Each region, each village were independent economically. Different communities like artisans, agriculturists, village officers coexisted. They together worked on the village issues. 
During this time, India is a rich source for different raw materials. Silk, woolen fabrics, artistic items like wooden and stone carvings, brass and copper ware, jewelry, condiments and sundries like cardamon, cinnamon, pepper, cloves, saffron and others like opium, indigo, licorice and blue were found in large numbers in India. All there goods are exported to the foreign countries. 

Europe is the largest consumer of Indian goods during 17th and 18th century.


During British:

Europeans came as traders to India in 1600 AD. They captured power in 1757 AD. They got the complete power by Sepoy mutiny in 1857. British conquest of India coincided with the Industrial revolution in England during 1780-1820. The industrial revolution brought radical changes in manufacture, agriculture, and developing infrastructure and goods. This needs raw materials and there is a huge demand for those raw materials. The Britishers made India, the place and source for raw materials. 
So they started buying raw materials from India at cheaper rates and sold the finished goods ant high prices in the Indian market. This caused a huge problem in Indian economy and depletion of Indian resources. There was continuous exploitation of economic resources and mineral wealth. 

D R Gadgil called this as economic drain.Dadabhai Naoroji called this Plunder of Economic wealth.


Post British:

After British left India, it is the time for Indians to restructure the Indian economy. Many intellectuals struggled hard and planned many ways out of that depletion, which British had left for us.
Then started restructuring economy by formulation different policies and schemes. Five year plans were a milestone in Indian economy. There started industrialization and development of agriculture. Economic liberalization in India began by Manmohan Singh in 1991. Various forms were introduced in Indian Economy. Modified land tenure system was introduced which was an important source of revenue. Improved irrigation system, transport and creation of railways took place. 
Economic consequences of integration of British India into the world:Commercialization of agricultureDevelopment of plantation, jute and other agro based industries.

Milestones of Indian Economy:

  • Planning in India - Five year plans
  • Licence Raj or Permit Raj by Jawaharlal Nehru
  • Reforms in India
  • Economic liberalization by Manmohan Singh and then Finance minister P V Narasima Rao in 1991
  • 10th largest in the world by nominal GDP  
  • 3rd  largest in purchasing power parity
  • One of G-20 major economies
  • Member of BRICS
  • FDI in India - strength in telecommunication, IT and other areas
  • Bull run started since 2003
  • Nationalization of Banks
  • MGNREGA - India job guarantee act - August 25, 2005
  • Panchayat Raj and economic development

Sectors in Indian Economy:

Indian economy was divided into sectors to make administration and organization easy.
Main sectors include three - Primary, Secondary and Tertiary.
But there are originally many sectors, which are categorized under those three sectors, to make things break up without much trouble.

Some of those are:
  • Agriculture
  • Industries
  • Textiles
  • Services
  • Retail
  • Tourism
  • Mining
  • Banking and Finance
  • Energy and Power
  • Infrastructure
  • Global Trade
  • FDI

Comprehensive:

  • India - Third largest in purchasing power
  • Economic exploitation of British: D R Gadgil called it 'Economic Drain'; and Dadabhai Naoroji called it 'Plunder of Economic Wealth'
  • Modified land tenure system - Important source of revenue
  • Economic liberaliation by Manmohan Singh in 1991
  • MGNREGA started on August 25, 2005
  • Licence Raj or Permit Raj by Jawaharlal Nehru

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