Vidhan Bharat

( Part 1 )

Chinese philanthropist Jack Ma once remarked, “India’s economy is a sleeping giant. Once it awakens, it will be a force to be reckoned with.” India currently holds the 5th position in the world’s GDP ranking. Understanding the growth trajectory of the Indian economy requires an analysis of various sectors. While The Economic Survey of India generally supports the government in this undertaking, the survey will be released after the general elections this year. However, the Department of Economic Affairs has published a report titled “Indian Economy – A Review,” which provides insights into India’s economic journey over the past decade. This blog discusses the highlights of the report. 

The Indian Growth Story (1950 to 2014)

Period	Economic Strategy & Characteristics	Decadal Average Growth Rate
1952-1960	Rapid industrialization, investment in state-owned enterprises	3.9%
1960s	Impact of wars, drought, high taxation, economic control	4.1%
1970s	Devaluation of rupee, political instability, Emergency, global oil shock	2.9%
1980s	Reform measures, liberalization, promotion of exports, GDP growth	5.7%
1990s	Growth momentum, East Asian financial crisis, structural reforms	5.8%
1990-1991	Balance-of-Payments crisis, reforms, removal of regulations	1.06%
2000s	Sustained domestic economic activity, reforms, global financial crisis	6.3%
2009-2014	High fiscal deficits, loose monetary policy, high inflation, rupee depreciation	7.86% to 7.41%

The table outlines key economic periods in India’s history and their defining features. From industrialization efforts in the 1950s to liberalization in the 1980s and subsequent growth in the 1990s, each era shaped India’s economic trajectory. Challenges such as geopolitical instability and fiscal deficits marked the 1970s and 2000s. Despite setbacks, India’s economic journey reflects a mix of internal reforms and global influences, impacting its average growth rates over decades.

Lessons from the Growth Experience (Till 2014)

Key Lessons	Description
Transition to an Open Economy	Import substitution, and export subsidies, followed by pro-business reforms post-1980. This led to unsustainable investments and the 1990-91 Balance of Payments crisis.
Shift to Public-Private Investment	The public sector’s reliance on savings proved incorrect; The private sector became the primary growth engine from the 1990s onwards.
Technology as a Growth Driver	Pre-1980s: Limited foreign technologies; since then, technology adoption transformed India’s economy.
Economic Challenges by 2014	Sub-5% GDP growth (2012-13, 2013-14), Higher food inflation, and structural constraints: project delays, subsidies, low manufacturing, informal sector, agricultural issues.

This concise table highlights India’s economic evolution, challenges, and significant shifts in policy and growth drivers until 2014. 

A Decade of Transformative Growth (2014 to 2024)

Section	Key Developments
Transformative Growth (2014-2024)	Structural reforms strengthen macroeconomics – India leads G20 growth.Post-pandemic recovery: GDP grows at 9.1% (FY22), 7.2% (FY23), and 7.3% (FY24).Urban unemployment is down to 6.6%.Extension of Pradhan Mantri Garib Kalyan Anna Yojana until December 2028.Record pace expansion of infrastructure.Increase in universities and higher education enrollment.
Economic Recovery and Mitigation	Recovery and mitigation through fiscal, monetary, and health responses. Management of crude oil purchases. Provision of interest-free loans to states for infrastructure. Increased capital expenditure by states.Utilization of loans for infrastructure development. States’ capital expenditure is up 47% (Apr-Sep 2023 vs. Apr-Sep 2022).
Drivers of India’s Growth (2014-2024)	Restoration of financial stability.Simplification of regulatory frameworks.Tax policy reforms and increased private-sector participation.Support for MSMEs and decriminalization of offenses.
Public Spending and Infrastructure	Large-scale public spending on infrastructureDedicated programs for road, port, electrification, and airportNational Logistics Policy 2022 supporting logistics
Digitalization Reforms and Inclusive Growth	Digitalization reforms promoting financial inclusion and formalization Inclusive growth policies targeting traditionally excluded sections of society

The table visually summarizes key developments across different sections of India’s economic growth and policies. Each section represents distinct aspects, including transformative growth, economic recovery, drivers of growth, public spending, infrastructure, digitalization reforms, and inclusive growth. The table enables a concise comparison of the summarized information, facilitating an understanding of India’s economic trajectory and policy initiatives.

Challenges Confronting the Indian Economy

Challenges	Brief Description
Global Economic Fragmentation	Changes in global trade patterns impact India’s growth outlook.
Energy Security vs. Transition to Renewables	Balancing energy security with the transition to renewable sources poses geopolitical and policy challenges.
Artificial Intelligence (AI) Impact	AI poses employment challenges, requiring investment in digital skills and infrastructure.
Domestic Priorities	Ensuring a skilled workforce, improving education, and promoting population health for economic growth.

The table highlights challenges for India’s economy: global trade shifts, energy transition complexities, AI’s impact on employment, and domestic priorities like skilled labor, education, and health.

In Conclusion, the report “Indian Economy – A Review” informed that India has demonstrated resilience and progress during global economic uncertainties. Timely policy actions focused on macro stability and infrastructure development have strengthened the economy. With ongoing reforms and investments, India’s economic outlook is promising. The nation approaches the future with confidence, viewing challenges as opportunities for growth and inclusive development. 

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Reference

V. A. Nageswaran. (2024). Indian Economy – A Review. Department of Economic Affairs, Ministry of Finance. Government of India. Retrieved from https://www.dea.gov.in/sites/default/files/The%20Indian%20Economy%20-%20A%20Review_Jan%202024.pdf

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