Dr. Tulika Devi
In a promising outlook for the Indian economy, it is anticipated that the growth rate for FY24 will likely reach or exceed 7%, with predictions suggesting a continuation of this trend into FY25. If realised, this would mark the fourth consecutive year of robust growth post-pandemic, showcasing the resilience and potential of the Indian economy. As the world struggles with uncertainties and disruptions, India’s economic performance serves as an example of hope and stability, offering a positive outlook for the years to come. The ability to maintain such growth rates in a global economic scenario struggling to reach 2% further underscores India’s potential as a key player in the international economic landscape.
The attainment of independence in India signified a pivotal moment in its economic trajectory, characterized by the effects of British-led deindustrialization. The nation, having experienced significant impoverishment with widespread poverty and social inequalities, is prompting concerns about its unity. According to historical data compiled by Cambridge historian Angus Maddison, India’s contribution to global income witnessed a drastic decline, declining from 22.6% in 1700 (almost on par with Europe’s 23.3%) to a mere 3.8% in 1952.
In the initial post-independence years, India also faced a significant decline in its share of world income, prompting the adoption of a strategy focused on economic self-sufficiency in the 1950s. This era witnessed rapid industrialization, with the government investing in large state-owned enterprises. Despite achieving a commendable decadal growth rate of 3.9% from 1952 to 1960, the 1960s presented economic setbacks due to wars, droughts, and high taxation.
The 1970s marked a period of devaluation, political instability, and global economic volatility. However, a pivotal shift occurred in the 1980s, when liberalisation measures were introduced. Reforms included the removal of price controls, fiscal reforms, and a revamp of the public sector. The entrepreneurial mindset was nurtured, leading to a notable improvement in GDP growth to 5.7% in the 1980s.
The balance-of-payments crisis of 1991 prompted substantial reforms, dismantling the complex regulatory regime and moving towards a market economy. The 1990s, however, saw setbacks, including the East Asian financial crisis and internal challenges, resulting in a 5.8% decadal growth rate.
The early part of the 2000s witnessed sustained momentum in domestic economic activity, better corporate performance, a conducive investment climate, positive sentiments for India as a preferred investment destination, and encouraging global liquidity conditions and interest rates. The growth dividends from the transformative reforms undertaken during the period 1998–2002 played a key role in this regard. There was a global growth boom, and capital flows to India boomed. There are measures such as SarvaShikshaAbhiyan (SSA), the National Rural Health Mission (NRHM), and the National Rural Employment Guarantee Scheme (NREGS), among others. However, the 2008 global financial crisis exposed vulnerabilities, leading to bad debt and an economic slowdown. From 2009 to 2014, the government faced challenges such as high inflation, twin deficits, and a depreciating rupee, resulting in a slowdown in economic growth. Over the next decade, the government initiated many reforms, leading to a significant economic turnaround. These reforms included transitioning from a closed to an open economy, balancing public and private investment, and recognising technology as a key growth driver. The government focused on financial sector reforms, easing business conditions, and enhancing physical and digital infrastructure.
The government emphasised that restoring growth potential involved strengthening the financial sector, simplifying regulatory frameworks, and introducing tax policy reforms like the Goods and Services Tax (GST). The government engaged the private sector as a co-partner in development with policies like disinvestment and a new public sector enterprise policy. A new public sector enterprise (PSE) policy for Aatmanirbhar Bharat has been introduced to minimise the presence of the government in the PSEs to only a few strategic sectors. Many initiatives have been introduced under the Aatmanirbhar Bharat and Make in India programmes to enhance India’s manufacturing capabilities and exports across industries. Production-linked incentives (PLI) are being provided to firms to attract domestic and foreign investments and develop global champions in the manufacturing industry.
Reforms for the Micro, Small, and Medium Enterprises (MSME) sector, investment incentives, and initiatives supporting startups created a conducive environment for economic growth. Large-scale public spending addresses infrastructure bottlenecks. Dedicated programmes for road connectivity (Bharatmala), port infrastructure (Sagarmala), electrification, railway upgrades, and new airports and air routes (UDAN), among others, have enabled the modernization of infrastructure. Crucially, technology and digital platforms played a pivotal role in all reforms, enhancing formalisation, financial inclusion, and economic opportunities. Digital infrastructure facilitated digital identities, improved access to finance, and reduced transaction costs.
Inclusive growth policies remained at the forefront, with efforts to empower traditionally excluded sections of society. Initiatives like free gas connections, toilet construction, Jan Dhan accounts, and the Ayushman Bharat Scheme aimed to bring marginalised populations into the mainstream.
The post-pandemic recovery showcased India’s resilience, with an estimated growth of 7.3% in 2023–24. Urban unemployment rates declined, and infrastructure development reached new heights. The year 2023 proved to be a pivotal moment for India’s global standing, highlighted by its role as the host of the G20 Presidency. Despite ongoing geopolitical differences among member nations, India emerged as a significant consensus-builder, encouraging cooperation on key global issues. This milestone, coupled with India’s increasing contribution to the global GDP, underscores the nation’s growing importance in the international economic landscape. India’s achievements extended beyond the diplomatic arena. The Chandrayaan-3 spacecraft made history by successfully reaching the South Pole of the Moon, marking a significant milestone in space exploration. Additionally, India achieved the fastest deployment of 5G globally, showcasing its technological prowess and commitment to advancing telecommunications. India’s economic journey from independence to transformative growth reflects a nation that has overcome challenges, embraced reforms, and leveraged technology to position itself as the fastest-growing economy. As the nation continues its journey, the lessons from the past decades provide a roadmap for future progress, emphasising the importance of innovation, inclusivity, and a dynamic approach to economic policies.
Prime Minister Narendra Modi introduced the concept of Amrit Kaal to the entire nation on India’s 75th Independence Day. Amrit Kaal is the Prime Minister’s vision 2047 for ‘New India’, a new dawn for the country that will bring with it the chance to fulfil the nation’s aspirations. He envisioned the coming years to restructure all fragments of the Indian economy through rapid profitable growth, better living conditions for all, infrastructural and technological advancements, and re-awakening the world’s trust in India. Looking at the times ahead, the Amrit Kaal is a vision well-balanced and planned, which lays the roadmap for India’s bright future by nurturing new possibilities, realising new resolutions, and moving ahead with confidence. Efforts and participation from all sections of society will make India a shining star of the world economy in the times to come.