Economy India

Indian Economy@75 years of independence Miles to go before we become a developed economy

Indian Economy@75 years of independence
Miles to go before we become a developed economy

By Manohar Manoj

India is celebrating its amrit mahotsav of its azadi. This is the high time when we should thoroughly purview socio economic status of the country and its path of the uprising.
When we look back at the last seventy-five years of the passing of independent India’s economy, we notice a clear demarcation line in this period. That line was the initiation of the ‘new economy policy'(NEP) in the year 1991. The policy altogether brought a paradigm shift in our economic regime and till now we are following the same suit, irrespective of whatever the political regime got reigns in the country.
So the last 75 years period can be divided into two parts. The First can be termed as the pre-91 era of the Indian economy and the second as the post-91 era of the Indian economy. Our pre-91 eras start from that situation when our country just got its political freedom and was eagerly awaiting for its economy to be massively galvanized by all possible booster dozes by the incumbent government of independent India. As we all know, at that juncture our political regime picked the path of a planned economy with a target-based saving investment and growth rate method. The main thrust of the government was on the setting up of several heavy industries and on the other side great goals of the socialistic pattern of economy were kept at the top of the mind. The first decade of post-independent India did witness the establishment of many heavy industry units in the country on a mass scale along with big river valley projects were also laid upon in the country. During the second decade of the post-independence period, India adopted some hardcore socialistic agenda accompanied by a more controlled sort of economy. This period also witnessed some drastic steps on the agriculture front. With the help of new technology and vibrant sort of agricultural policies, we laid down the foundation of the green revolution in the country. It was a campaign that seriously started to work on making the country self-reliant on the agriculture front in order to create a permanent base for food security. The trio of personalities like Norman Borlaug, a Nobel laureate agriculture scientist, the then Indian agriculture minister C. Subramanium and Indian agriculture scientist MS Swaminathan, altogether pave the way for making a strong agriculture India. The slogan of Jai Jawan and Jai Kisan, scooped by the then Prime Minister Lal Bahadur Shastri during the 1965 Indo-Pak war, just galvanized this expedition. However this move was basically to make India self-reliant on several food items comprised of both kinds of cereal and non-cereals items, but agriculture kept continued as a profession of subsistence rather a profession of profit for the 150 million farming families of the country.
Till the coming of the 1970 decade the then prime minister Smt. Indira Gandhi took three prominent decisions which have had a greater impact on the status of Indian economy; first was the nationalization of the big 14 commercial banks, the second was the imposition of MRTP Act, which allowed govt. to impose restrictions over the industry houses in terms of license-permit-quota raj and third was promoting the role of government agencies in the domestic food market means the rationing of food items in the form of the public distribution system (PDS).
Till the coming of the 1980s country did not have a prominent market role in its economy. However here onwards we have a liberal atmosphere started to take place at the front of the economy. Finance ministers like Pranab Mukherjee and V P Singh injected some sort of liberalization into the economic policy regime. Since 1985 we have had the start of the information technology age in the country and the country got a foundation of mass computerization program. This program was comprised of imparting computer education to all, making India the hub of computer software and hardware and the third was to make India the world center of BPO.
Till the coming of 1990s country got trapped in a web of political instability and economic chaos. The huge crunch of FOREX reserve and also some external economic bottlenecks compelled the country to take the route of IMF and mortgaging its ten tones of gold reserve in order to secure the external loans. The duo of the then PM Narasimha Rao and FM, Dr. Manmohan Sing started the process of a new economic regime which was comprised of reforms in bunches. This regime took a series of reforms pertaining to many areas of the Indian economy in terms of abolishing license permit quota and inspector raj at the utmost level, allowing FDI and FII in more and more areas and keeping many of them on the automatic route, pubic private partnership, the policy of disinvestment and exit, tax holiday for many backward areas, etc and rationalization of both direct and indirect tax rates. This new economic policy was laid upon four main pillars; marketization, liberalization, privatization, and globalization.
It is worthwhile to mention that till 1991 we have a socialistic and communistic ideology that prevailed very strongly over our polity, governance, and most of the public policy-making areas. The fact of the matter was that we only have rhetoric regarding the plight of the poor, we only have had arguments regarding the pathetic conditions of the poor, in regards to the underdevelopment of agriculture and its low productivity and its indebtedness, but without any concrete solution. The only solution was lying in this fact that we kept advocating the promotion of the public sector and therefore we talked about only the nationalization of private affairs and giving a bigger role to the government sector with this perception and conviction that this can solve these problems of the poor and also able to accelerate the process of the poor’s upliftment in the country. However, in practice what we saw, the corruption and idleness of the bureaucracy of India, we saw the white elephant character of the public sector undertakings, we saw a huge time and cost overrun in most of the governmental projects, we saw the huge gap between the target and achievement, we saw the laziness and leakages in the government implementation authority. Under these circumstances, we kept talking about poverty, backwardness, illiteracy, malnutrition, unemployment, and price rise, but all public agencies attached to these tasks have been found either idle, lazy, corrupt, or non-performers. This was the time when the market and private industries were regarded as the enemy of the poor. Because of this perception and perspective, we found that we have a perennial trend of inadequate growth rate in our economy, which was being termed by our economists as the Hindu rate of growth which never went up beyond 3.5 percent growth in real terms.
The persistent poor growth rate in the Indian economy was always got reflected in the form of inadequate tax collection which never filled up the public kitty with sufficient funds for the several welfare schemes for the poor. All government-sponsored schemes and ventures used to have high costs and lower returns creating huge imbalances between cost and output. After the famous statement of then Prime Minister Rajeev Gandhi that only 15 percent of the fund actually goes to the pocket of the targeted people, we became very much sure regarding the inefficiency of our implementation hierarchy. This statement was indicative of an era when corruption and the high-cost public sector were just ruining our economy and creating not only a pattern of undergrowth but also underdevelopment and responsible for the lesser transfer of resources to the informal sector of the economy.
But ultimately the time came when the New Economic Policy broke this jinx that the market can be no longer an enemy to the poor rather it can be also made friendly to the poor which can be utilized utmost for the betterment of the nation’s economy. The market can create many opportunities in regard to income generation, employment creation, and growth rate enhancement. Second, the trickledown theory of poverty alleviation was now accepted as the most practical way to reduce poverty and also the number of poor people in the country.
It is to be mentioned here in the post-reform era the four-pillared new economic policy has had a series of reforms that first created a proper climate of investment in the economy. Liberalization, privatization, and marketization altogether opened the gate of domestic investment and the process of globalization opened the process of foreign direct investment in the Indian economy.
Therefore the decade of the 90s could be termed a turning point in the history of independent India. This was the time when all major macroeconomic indicators of the Indian economy started to show big upheavals and reshuffles. We have an altogether effect on our annual growth rate, foreign exchange reserve, foreign investment, and most important the quantum of tax collection. This was the era when the country witnessed some path-breaking socio-economic and human development programs too. We have now more allocation for the rural development programs, for the education sector, we have a program launched named Sarva Shiksha Abhiyan, we have a mid-day meal program for the schools etc. BJP’s lead government which came in 1998 gave top priority to road highway development and for this highway, a cess was first time introduced over the per liter sale of petroleum products.
This was the time when center and state governments irrespective of their political ideology; followed the major path of new economic policy. Till the year 2004, the implementation of the new economic policy got its peak. However political regime got changed and the new incumbent govt. led by UPA started to mold the existing new economic policy regime. Dr. Manmohan Singh, as the finance minister founded the NEP, now as a prime minister was compelled to evolve the so-called human face of new economic policy. Under the pressure of some voluntary groups and civil society, govt. took three measures. Out of these first was the right to information, the second was the right to education and the third was the right to work. The right to information and the right to education both were very ideal things. This was the time when the Manmohan govt. brought the provision of an education surcharge in order to finance the sarva shiksha abhiyan. In order to bring right to work MNREGA program was brought in. Fact of the matter was that this targeted employment program created havoc for the economy coupled with a farm loan waiver program at the cost of Rs.75000 crore. Employment provision for petty works without any asset creation created huge inflationary pressure on the economy and also brought leakage and misutilisation of the resources. On the other side right to information just allowed many corruption scandals to get revealed. Seeing no. of corruption scandals coming to the forefront, the awakened civil society made huge political pressure on the government. Apart from this, ongoing failures over inflation and corruption opened the door for the opposition. As a result, the country witnessed a change in the regime and in 2014 we have NDA government under the leadership of Narendra Modi.
The new Narendra Modi government since its very beginning gave a very positive signal to the NEP regime and also the market economy. In the first three years, the macroeconomic indicators of the economy started to give a very positive note. We have again a high growth rate, employment rate, and transfer of funds to needy areas. However, in 2016 the sudden decision of demonetization brought a big furor over our economy. The momentum of growth just got downed and in the subsequent years, we have continuous low growth barely able to touch 5 pc marks. It was followed by the implementation of an ill-prepared GST regime, which was also very much accountable and instrumental in making the economic growth rate in very idle mode. The whole business climate of the economy was shaken. This situation was also followed by the pandemic of COVID 19 which forced the country to become trapped in a web of lockdowns and a non-functioning of the economy for almost 2.5 years. This was the time when the whole world suffered and India suffered bitterly.
Now the pandemic is almost over and also we have ushered in the amrit kaal. Meanwhile, our economy has gotten one big positive news and one big negative news as well. On the positive side, we have become now the fifth largest economy of the world and now the country is hoping to become the third-largest economy by the end of the year 2030. The negative news is that county’s currency rupee is continuously getting depreciated against US Dollar, which is hovering around 80 Rupees against one US Dollar.
Overall the present Indian economy cannot be rated in a static form, it is definitely on the uprising, but facing no. of difficulties, shackles, and ups and down too, but somehow it is able to sustain and survive the huge 140 crore citizenry of the country. The huge rural part of India has also gone through a turnaround. Thanks to the NEP, which allowed more funds for rural infrastructure areas and also created a demand for rural laborers in the big metropolitan and industrial cities area? GDP and per capita income both are rising but not in a very noticeable manner. On the basis of per capita consumption, we cannot term ourselves notable ones in the world. There is much likelihood that the country would be called a developed nation by the year 2050. But before this, we have to pass through our marathon journey. Our infrastructure growth is giving us a good sign, the way present govt. is giving priority and importance to this sector; it’s an optimistic sign for the future state of the economy. On the social development front, we need to redraft our policy on education and health, in a PPP mode with the help of a regulatory authority.
The Indian economy has to face many social odds also like inequality, the challenges of cleanliness, and above all corruption, mal governance and bad governance, etc. Overall governance is also like management. The way we try to establish total quality management in any firm, in the same manner, we need to create total quality governance in every sphere of our polity and public administration, and then only we have a robust kind of economy and after that the fulfillment of our all national dreams.
At the time of amirt kal this Indian economy cannot be rated in a bad shape or called to be trapped in the web of disappointments. However, it always requires correction, reshuffling, and a sensitive sort of reform with utmost commitment, determination, and the highest degree of political willpower. If we have at least 6 pc growth rates on a consistent note for not less than one decade, then we will definitely fill up all the past shortcomings along with availing multiple employment opportunities. Then we could ensure a glorious future for our economy based on that roadmap where nobody can check it in becoming a global economic power. 1 1 1

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