75 Years of Indian Economy

It was the midnight of 15th of August 1947, when the First Indian prime minister declared India as an independent country. This year India completes 75 years of its independence. 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 economy experienced a significant decline. According to some experts, India's share of the global economy decreased from 24.4 percent in 1700 to 4.2 percent in 1950. Then finally after 200 years of British rule, India achieved independence in 1947. And this is where modern India's story begins. The initial years after independence, economic growth mostly stagnated. The government adopted a centrally planned economic structure and 5-year development model. Much of this development model was essentially a copy of the Soviet-era economic development plan, where the government makes the majority of economic decisions regarding the manufacturing and the distribution of products. With a lot of import barriers, license raj, and low private participation, the Indian economy was growing at a slower pace. This continued until the 80s. In 1991 the Soviet Union collapsed, which was India's largest trading partner. Also the oil prices rose dramatically due to the Gulf War. As a result the Indian economy began to suffer greatly, and India faced a balance of payment crisis in 1991. To get out of these tough times India managed to implement structural reforms in the economy. From 1991, India started to open up its economy to the rest of the world. Doing this increased foreign investments and helped India grow its economy in the 90s and 2000s. Higher FDI and the consumer sector growth reflected in the country's GDP, which grew at a 7-8% annual rate from 2003 to 2007.
Now following the 1991 economic reforms and the introduction of internet in 1995, India's IT sector started to grow. This became an $8 billion industry in 2001 which was only a $100 million industry in 1990.
Apart from the IT sector. India has a huge industrial sector too. Major industries include Pharmaceutical, chemical, the automobile industry, and also electronics manufacturing.
Speaking of this, India is becoming an electronic manufacturing hub. Many big companies have already set up their production lines in India. The Government's PLI schemes are particularly attracting many international companies. According to government sources, these companies could be producing smartphones and other electronics components worth more than $143 billion over the next five years. And to help these industries further, India is going digital. Whether it be documentation or banking-related work, India is progressing toward digitalization. One of the biggest beneficiaries of this is people from rural India. With the help of India's unified payment Interface, money can be instantly transferred between two bank accounts just using your mobile phone. With the exponential 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.
Along with the banking sector, India's startups are also benefitting by the digital transformation. The easily accessible internet, The rate of internet penetration in India is rapidly increasing. Today, internet penetration in India has reached 50%, up from 27% just five years ago. In today's time, India has already created more than 100 unicorn startups. The country's startup ecosystem is still in its infancy. As the number of internet users in the country grows, so will the opportunities for startups and IT services. With the help of low internet costs and the upcoming 5g revolution, India will have the most active internet users in the world.
Today India does not only have a bigger market but also has a lot of educated young workforce. India is a country that produces over 1.5 million engineers year after year. Today their main efforts are to go toward the manufacturing sector. They are trying to benefit from China plus one strategy by creating a business friendly environment and launching different schemes to attract foreign investments. What India needs to do is implement broad-based structural reforms to make doing business easier, improve its infrastructure.
So, from just a $37 billion economy in 1960 to almost an $3.2 trillion economy today. India has really come a long way. From 1947 till today, that is in the past 75 years, India has made tremendous progress. And if India played its cards right further then the next decades this country truly could be a game changer.
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