Understanding India’s miracle development
India is a diverse country with a population of more than 1.3 billion people. It has the world’s largest electorate, which also makes the India world’s largest democracy. Unlike other political systems like in the United States of America (USA) and the United Kingdom (UK) which have existed for centuries now, the Indian political system is comparatively young. In 1947, at the time of independence world had apprehensions about the longevity of India. The western observers said India will not be able to survive as a single nation and will undergo balkanization, and it could never become a democracy either. Shortly after India got independence, the last British commander in chief of the Indian Army, Gen. Claude Auchinleck, wrote -
“The Sikhs may try to set up a separate regime. I think they probably will and that will be only a start of a general decentralization and break-up of the idea that India is a country, whereas it is a subcontinent as varied as Europe. The Punjabi is as different from a Madrassi as a Scot is from an Italian. The British tried to consolidate it but achieved nothing permanent. No one can make a nation out of a continent of many nations.”
But proving everyone wrong, India is standing strong, united with its unique culture and strong political system in place. Since independence India has evolved into a vibrant constitutional democracy and made rapid strides in several domains, although there is a lot more work that still needs to be done.
India after Independence
India’s independence was celebrated by citizens with much exuberance but it came with years of problems like centuries of backwardness, poverty, inequality, and prejudice. Immediately after independence, when India was dealing with the scars of partition it also had to fight its first war with Pakistan after Pakistani tribesmen supported by the army invaded Jammu and Kashmir. The war was fought from 22 October 1947 to 5 January 1949. In the year 1949, the Indian Constituent Assembly adopted Article 370 of the Constitution, which ensured special status and internal autonomy for Jammu and Kashmir.
The Britishers had left India divided, hence the immediate problem for India to solve was the territorial and administrative integration of princely states, rehabilitation of the refugees from Pakistan, and protection of Muslims who were threatened by the communal gangs. In addition to these, in the medium-term India had to complete the framing of the constitution, start the nation-building process and drive economic growth. All these had to be dealt with the promises made during the national movement for freedom, keeping the basic values intact and with the national consensus.
During the 19th and 20th centuries, these princely states were patronized by the British on a large scale. They were not comfortable with the idea of giving away their power and prestige. India was against the idea of Independent nations within the state which will harm the internal and external security of the country. With great skill, diplomacy, and in some instances brutal force, Sardar Vallabhbhai Patel was able to integrate more than 500 princely states into India.
The era of economic development
In 1951, Prime Minister Jawaharlal Nehru introduced India’s first five-year plan. which defines the Nehruvian model of centralized economic planning and development. It was inspired by the Soviet style five year plan. The Planning Commission was set up with the Prime Minister as its Chairperson and the era of five year plans had begun. The turning point in India’s planning strategy came with the second five-year (1956- 61) plan, it defines the Nehru-Mahalanobis strategy of development as it was articulated by Jawahar Lal Nehru’s vision and P.C. Mahalanobis was its chief architect.
India adopted the policy of protectionism with great emphasis on the substitution of imports, industrialization, and centralized policymaking. Steel, mining, machine tools, telecommunications, insurance, and power plants, among other industries, were nationalized as PSUs in the mid-1950s. Another focus of the government was on integrating backward and forward linkages in the agricultural sector. India is a mixed economy with nearly 50% citizens involved in agriculture and related sector.
During 1965 green revolution took place, high yield variety of seeds, fertilizers, and improved irrigation facilities collectively contributed to the green revolution in India. Through the green revolution, India was able to make itself self-reliant for grains demands and also became the net exporter of grains. At the same time, India’s policy of centralized planning was also criticized by some stating it is giving rise to capitalism, ignoring institutional reforms, and widening income disparities. This policy was infamously called “license raj”
“I cannot decide how much to borrow, what shares to issue, at what price, what wages and bonus to pay, and what dividend to give. I even need the government’s permission for the salary I pay to a senior executive.” said JRD Tata
Liberalization, Privatization, and Globalization (LPG)
In the year 1991, USSR underwent disintegration which led to the formation of 12 new republics. USSR had been India’s long-standing trading partner and its disintegration had an impact on India. At the same time gulf war was ongoing which had led to increased oil prices and Deng Xiaoping had revolutionized China with market-friendly reforms. Altogether these global events and India’s economic situation resulted in the balance of payment crisis for India in 1991. IMF lent India $1.8 billion but with conditions to deregulate the Indian economy. Then prime minister PV Narasimha Rao and finance minister Dr. Manmohan Singh prepared India’s economic plan which was later called LPG reforms.
The new policy allowed foreign investment and technology in India, the role of PSUs diluted, reduction in tariffs and taxes, abolition of license raj, industrial location policy liberalized, and phased manufacturing programs for new projects were abolished. During 1990–91 India’s GDP growth rate was only 1.1% but after 1991 reforms GDP growth rate increased year on year. Since 1991, India has firmly established itself as a lucrative foreign investment destination, and FDI equity inflows in India in 2019–20 (till August) stood at $19.33 billion.
Modern day economy
India has emerged as the most sort after destination for information technology services. During the 90s, India embraced the technology which gave rise to companies like Infosys, Wipro, HCL, and much more. Present day there is no sector that is untouched by technology, everything is getting connected and digitized. This has made government and private services more accessible and to some extent corruption free. Initiatives like digital banking, JAM trinity, direct benefit transfer (DBT), Aadhar, faceless assessment of income tax have completely changed the way the common man had interacted with the government.
Another variant of privatization which government is currently driving is disinvestment. The aim of disinvestment is to raise resources through the sale of PSUs and direct them towards social welfare expenditures. It also helps in raising the efficiency of PSUs through increased competition, increasing consumer satisfaction with better quality goods and services, upgrading technology, and most importantly removing political interference along with the autonomy in the decisions.
Conclusion
Throughout history, India had been a strong economy with many great artisans, traders, and local traditions. But with the advent of Europeans, Britishers had crippled India’s economy and India’s share in the world’s GDP came down from 24.4% in 1700 to 4.2% in 1950. Post-independence India has taken long strides in economic growth by rebuilding its industries. India’s economic development can also be seen from the lifestyle of the common man as compared to 70 years ago.
Yet there is a section of society that is struggling to meet its basic needs. India is facing poverty, hunger, malnutrition, and most important unemployment among youngsters. It is imperative India revamp its skill-building and education system in order to make youngsters employable for jobs. Government cannot provide jobs to everyone nor it is supposed to but in order to benefit from the demographic dividend, India shall take steps to make education aligned with the industry needs.
India is a diverse country with many diverse cultures and such a country requires the diverse form of schemes targeting different segments and their problems. Today, due to technological advancements people in the rural areas are also aware of India’s economic growth and it is important to involve them in the growth process to ensure no one is left behind.
