History of indian Economy

History of indian Economy

patch. Especially alarming are the rise in grassroots violence, heightened communalism, and the
clampdown on press freedom. In addition, there was the disastrous policy mistake of
demonetization in November 2016, which slowed growth, hurt the poor and the informal sector,
and damaged jobs. But the reason for my optimism is that I expect all this to pass. I expect the
recent regressive tendencies to be contained. This can happen either through introspection and
policy change at the level of top political leadership in the nation or via a future election. Over the
last year or so, there has been visible disquiet in the common person about the nation’s state of
affairs. This is a reason to expect a change of course, and is the basis of my optimism for where
India will be a quarter-century from now. This is the point forecast. A run of 9 per cent annual
growth, which began in 2005 but has slackened off since then, maintained over a 20-year period is
not a pipe dream; and if India can get back onto such a growth path in five years from now, it will
be a transformed country by 2043. Given that it is a nation that made some sophisticated choices
in terms of its politics earlier than almost any other nation achieving independence, with a
substantial economic growth to back this up, India could be a global leader in several senses (and
hopefully a force for the good).
But, even if we put aside the political risks that I mentioned above, there are other dangers. And
in peering into the future, one would be remiss not to point to some of these potential pitfalls.
Despite India’s remarkable growth performance over the last decade and a half, there are still many
vulnerabilities. First, agriculture as a share of value-added in GDP has over the last 50 years
become quite small but it is still a vital sector that employs around half of the nation’s labour force.
Even a small decline in its production can cause food inflation, large welfare losses among the
poor, and even political instability. Therefore, agriculture as a sector will continue to need nurture.
Second, as pointed out above, while technology will eventually create a global challenge that will
affect India as well, for some time still to come India will be able to take advantage of its cheap
labour and boost its manufacturing sector, which is a powerful absorber of labour. But to nurture
this sector more investment is needed in infrastructure, the reduction of bureaucratic costs, and
also good macroeconomic policy, because a wrong exchange rate policy can blight the nation’s
scope for greater manufacturing exports. This opportunity to occupy the space abandoned by
high- and upper-middle-income countries because of rising labour costs and greater automation
(including the arrival of robotics) will be with India for another 10 or 15 years. But thereafter, as
India’s own labour costs rise and artificial intelligence and robotics arrive in a big way, the country’s
(along with the whole world’s) growth strategy will have to change. For this it will need major
upgradation in the quality of education. Clearly, all drudge work will be taken by new-generation
machines, and human beings will have to find work in research, innovation, and creative fields like
art and philosophy. India had a head start in higher education soon after Independence, but it has
since lost ground. The nation will need new investments in this.
Third, and a closely related problem, is the matter of inequality. If the working classes are not
endowed with more creative skills, there is the danger that, even if India continues to grow, all its
growth will be concentrated at the top end. As Ghatak (2017) points out, India does have a growing
inequality problem, and unless it invests in health and education, and also taxes the rich and curtails
dynastic inter-generational transfers in a more comprehensive way, it may have growth but at the
cost of true development. This will be a problem for India for some time to come. While the
growth story has been exemplary, various indicators show that growth has not been distributed
well across society (see Subramanian 2016). This shows up clearly if we compare two countries
that have had similar growth, Viet Nam and India. In terms of child malnutrition, for example,
India has performed markedly less well than Viet Nam (Ray 2008), showing that the spoils of
growth may not have been shared well at all. Yet, as Viet Nam’s experience also shows, this is not


  1. Reply

    Good article

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  6. Profile photo ofItz Kvng Twitch


    Very interesting

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    Very nice

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  12. Profile photo ofSommycruz


    Thanks for this information

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    Interesting to know

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    That’s a great update

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    Thanks for sharing

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    Nice content

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    Thanks for the information

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    Nice piece thanks for sharing

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    Good sharing

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    Indian Economy is such a wonderful one

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    Cool information…..thanks for the update

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