Features and Major Issues of Indian Economy

Abstract

Theodore Roosevelt remarked, “A peep in the past prepares you better for the future”. Thus, for understanding the present state of the Indian economy and its future prospects a brief comment on its past will be appropriate. The Indian economy, before the British came around the middle of the nineteenth century, was quite sound. According to an estimate, the Gross Domestic Product (GDP) of India in the sixteenth century was about 25% of the world economy, the second largest in the world. However, after the arrival of the colonial rule the Indian economy faced disaster; from being an exporter of processed goods it changed to being an exporter of raw materials and a buyer of manufactured goods. As per British economist, Angus Maddison, India’s share of the world income went from 27% in 1700 A.D. (compared to Europe share of 23%) to 3% in 1950. After India got independence in 1947, the process of rebuilding the economy started. However, it was mostly centralized and the period from 1947 to 1991 was termed as the licence raj, because the successive governments followed protectionist economic policies. This trend led to a balance of payments crisis in the year 1990. The year 1991 turned out to be watershed in the Indian economy when the government of India in June 1991 announced major liberalization policies in Indian economy. The emergence of India as a major economic power in the world happens to be one such idea. Since then, Indian economy has progressed immensely with GDP progressing at the rate of 6 to 8% per annum and is expected to be one of the top three economic powers in the world over the next 10-15 years. India is also backed by its robust democracy and strong partnerships. India has finally arrived in the category of fast emerging economies. It is fast entering the league of high growth nations. The future seems to have much more in store. But a lot depends on how the grey areas are tackled. We have finally been able to unshackle ourselves from the stigma of being a low growth economy and have infused dynamism into our economic system. Not only is India achieving higher growth rates year after year, the rate at which it is moving towards higher growth targets is also higher. In this research paper discuss the features of Indian economy and major issues of Indian economy.