INDIAN ECONOMIC GROWTH

What is Economics?

Economics is the study of how people choose to use resources.

Resources include the time and talent people have available, the land, buildings, equipment, and other tools on hand, and the knowledge of how to combine them to create useful products and services.

Indian Economy

The Economy of India is the seventh-largest in the world by nominal

GDP and the third-largest by purchasing power

parity(PPP). The country is classified as a newly industrialised country, one of the G-20 major economies, a member

of BRICS and a developing economy with an average growth rate of approximately 7% over the last two

decades.

Indian economy in British era

1793–1947

The economic policies of the British Raj caused a severe decline in

the handicrafts and handloom sectors, due to reduced demand and dipping

employment. After the removal of international restrictions, Indian trade

expanded substantially and over the long term showed an upward trend. The result was a significant transfer of capital from

India to England, which, due to the colonial policies of the British, led to a

massive drain of revenue rather than any systematic effort at modernization of the

domestic economy

Pre-liberalization period 

1947–1992

Indian economic policy after independence was influenced by the colonial experience,

which was seen by Indian leaders as exploitative, Domestic policy tended towards protectionism, with a strong

emphasis on import substitution industrialization, a large government-run public sector, business regulation, and central planning, while trade and

foreign investment policies were relatively liberal. Five-Year Plans of India resembled

central planning in the Soviet Union. Steel, mining, machine tools, telecommunications, insurance, and power plants, among other industries, were effectively nationalized in

the mid-1950s.

Post-liberalisation period 

since 1991

The collapse of the Soviet Union, which was India's major trading partner, and the Gulf

War, which caused a spike in oil prices, resulted in a major balance-of-payments crisis for India, which found itself facing the prospect

of defaulting on its loans. India asked for a $1.8 billion bailout loan from the International

Monetary Fund (IMF), which in return demanded de-regulation.

Growth From 2010-15

Starting in 2012, India entered a period of more anaemic growth, with growth slowing down to 5.6%. • a plunging Indian rupee, • a persistent high current account deficit• slow industrial growth. Hit by the U.S. Federal Reserve's decision to taper quantitative easing, foreign investors had been rapidly pulling out money from India though this has now reversed with the stock market at near all-time high and the current account deficit narrowing substantially.

India started recovery in 2014-15 when the growth rate accelerated to 7.2%. In 2015, Indian went through a startup boom and manufacturing growth skyrocketing due to which the growth in 2015-16 accelerated to 7.6%, which means for the first time since 1990 India grew faster than China which registered 6.9% growth in 2015. The economic growth is expected to be 7.7-8.0% in 2016-17.In Mid 2015 during the global stock market rout, India also witnessed a sharp fall in stock markets and the rupee weakened. It was repeated again in January 2016.

Important Facts and Figures

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