Introduction
The first Indian Prime Minister declared India as an Independent country on 15th August 1947. This year India completes 75 years of Independence.
Throughout all these years India’s economic journey has been incredible. Today let’s see what India has achieved in the last 75 years and how it has grown.
So before colonial rule, India was a self-sufficient and flourishing economy.
It was the world's largest economy ahead of China and western Europe; however, following the European Industrial Revolution and subsequent colonization of India, the Indian Company experienced a significant decline.
According to some experts, India’s share in the global economy decreased from 24.4 percent and 1700 to 4.2 in 1950.
After 200 years of British rule, India achieved independence in 1947 and this is the story where modern India begins.
After independence economic condition of India
In the initial years after independence, economic growth mostly stagnated, the government adopted a centrally planned economic structure and a five-year development model that was essentially a copy of the Soviet-era economic development plan.
In this plan, the government made most economic decisions regarding the manufacturing and distribution of products with a lot of import barrier licenses and low private participation.
Because of this, the Indian economy was growing at a slower pace.
This continued until the 80's then in 1991 the Soviet Union collapsed, which was India's largest trading partner, and oil prices also rose dramatically because of the gulf war.
Because of all this, the Indian economy suffered, and India faced a balance of payment crisis in 1991.
Economic Crisis 1991
To get out of these tough times, India implemented structural reforms in the economy. In 1991 India started to open up its economy to the world.
The country took steps like reducing import tariffs, deregulating markets, and reducing taxes. Doing this, increased foreign investment and helped India grow its economy in the 90’s and 2000’s.
Higher FDI and consumer sector growth are reflected in the country’s GDP which grew at a 7% to 8% annual rate from 2003 to 2007.
Following 1991 economic reforms and the introduction of the internet in 1995 India’s IT sector grew, and it became an 8 billion industry in 2001 which was only a 100-million-dollar sector in 1990.
One reason behind this growth was the y2k problem in 2000.
Many Indian companies came up to solve this problem, and it showed India’s capability to the world also the government provided easy access to satellite links to major IT developers which enables them to transmit the work done in India worldwide.
Business process outsourcing and other IT companies benefitted from it. Today thousands of jobs have been created because of this industry and it has attracted significant foreign investment.
The economic boom after 1995
Apart from the IT sector, India has a huge industrial sector too. Major industries include pharmaceutical, Chemical automobile industry, and also electronics manufacturing.
India is becoming an electronic manufacturing hub. Many big companies have already set up their facilities in India.
The government's production-linked incentive schemes are particularly attracting many international companies.
According to government sources these companies could produce mobile phones and other electronic components worth over 143 billion dollars over the next 5 years.
To help these industries further, India is going digital whether it be documentation or banking-related work India is progressing towards digitization.
One of the biggest beneficiaries of this is that people from rural India with the help of India's unified payment interface money can be instantly transferred between two banks just using your mobile phone.
By doing so, India has already surpassed the entire generation of credit card bureaucracy and has transitioned to a more modern system of paperless transactions.
With the exceptional growth of UPI, India has surpassed China and the United States to become the world’s largest real-time payment market with 25.5 billion annual transactions in 2020 alone.
Digital Transformation of India
Along with the banking sector, India’s start-ups are also benefitting from the digital transformation with easily accessible internet, the rate of internet penetration in India is rapidly increasing.
Today, internet penetration has reached 50% up from 27% just five years ago, and the availability of cheap mobile phones in the market is creating a wave in the start-up ecosystem.
After the first generation of start-ups like Infosys, TCS, and Wipro, the digital revolution is helping the second-generation start-ups in the country.
Start-ups like Flipkart, Paytm, and Zomato have turned into multi-billion-dollar businesses in India.
In today’s time, India has already created over 100 unicorn start-ups.
The country's start-up ecosystem is still in its infancy as the number of internet users in the country grows.
So, will the opportunities for start-ups and their services with the help of low internet costs and the upcoming 5G revolution India will have the most active internet users in the world.
Conclusion
Today India has not only a bigger market but also a lot of educated young workforce. It is a country that produces over 1.5 million engineers every year.
Today their main efforts are to go towards the manufacturing sector India is trying to benefit from China's plus one strategy by creating a business-friendly environment and launching different schemes to attract foreign investments from electronics to textiles and automobiles to pharmaceuticals.
India is providing generous subsidies to a variety of industries to boost its manufacturing capabilities as you know manufacturing industries require a lot of young and cost-effective workers.
Right now, India's median population is still under 30 and the country has at least three decades before its population ages.
If India takes advantage of this opportunity over 500 million people could join the middle class in the coming decades, this could be the world's largest increase in the middle class.
What India needs to do is implement broad-based structural reforms to make doing business easier to improve its infrastructure and most importantly use changing geopolitical shifts to alter its trading relationship with the world.
So, from just a 37-billion-dollar economy in 1960 to a 3.2 trillion-dollar economy today. India has really come a long way from 1947 till today.
In the past 75 years India has made tremendous progress and if India plays its card right further, then in the following decades this country could truly be a game changer.