Indian Economy After 15 Years - Presentation Transcript
1. INDIAN ECONOMY AFTER 15 YEARS It has been an eventful 15 years,the economy has swung upwards in fits and starts,helped by a reform policy that opened india and its people to theworld .the main cause behind the resurgence of our economy is the reform policy ,which is possible only due to new industrial policy, which had announced by P.V.Narsimha Rao government on 24 th july 1991.The new industrial policy had altered the rulesof doing business in india . In 1991 Prime minister P.V.Narsimha Rao had bid good bye to Nehruvian 'socialism'.In fact Rao's simple words ,Industrial licensing will henceforth be abolished for all industries except those specified ,irrespective of level of investment had singled the end of an era and beginning of another one. The same policy statement also made it clear that foreign investment would not just be welcomed but wooed ,that the public sector once envisioned as attaining the commanding heights of the economy would be asked to compete with private rivals in most sectors and that some equity in PSUs would be divested .Later in a day Manmohan Singh ,then Finance Minister in his budget speech would announce that the peak customs rate would be cut from 300 to 150% .He also shocked the politicians across the board by freeing the pricing of several fertilisers and hiking urea prices by 40%. The era of economic reforms had begun..Fifteen years on ,we have been through four other prime ministersand three other finance ministers .More significantly ,not one of the subsequent government has been a singlty government, but the reforms have carried on .the pace may have varied , but the direction has not even when there have been government supported by the left as in 1996-98 and since MAY 2004 . The macroeconomic no.s do not make you feel to bad either .in JUNE 1991, the forex reserve could barerly pay for two weeks of imports . Today India could fund on entire years imports from its reserves.That is despite the imports having risen almost six fold in this fifteen years .Inflation which was at double digit levels then ,now touches 5% in a bad year. But not all of the early promise has been transelated into action on the ground .Disinvestment for instance having built up steam initially has been in a cold storage for the last few years . Labour reforms have not even really begun.The extent of FDI in various sectors steel remains contetious.Perhaps most importantly, the push that the reforms should have given to physical and social infrasructure buiding has been feeble at best. Fiscal correction after regorous start has often falterd, infact even come to a grinding halt at times . 15 Years of reforms have transformed India into an active economy . It has got confidence while changing India's image globally. But there is lots more to
ndia economy, the third largest economy in the world, in terms of purchasing power, is going to touch new heights in coming years. As predicted by Goldman Sachs, the Global Investment Bank, by 2035 India would be the third largest economy of the world just after US and China. It will grow to 60% of size of the US economy. This booming economy of today has to pass through many phases before it can achieve the current milestone of 9% GDP. The history of Indian economy can be broadly divided into three phases: Pre- Colonial, Colonial and Post Colonial. Pre Colonial: The economic history of India since Indus Valley Civilization to 1700 AD can be categorized under this phase. During Indus Valley Civilization Indian economy was very well developed. It had very good trade relations with other parts of world, which is evident from the coins of various civilizations found at the site of Indus valley. Before the advent of East India Company, each village in India was a self sufficient entity. Each village was economically independent as all the economic needs were fulfilled with in the village. Then came the phase of Colonization. The arrival of East India Company in India ruined the Indian economy. There was a two-way depletion of resources. British used to buy raw materials from India at cheaper rates and finished goods were sold at higher than normal price in Indian markets. During this phase India's share of world income declined from 22.3% in 1700 AD to 3.8% in 1952. After India got independence from this colonial rule in 1947, the process of rebuilding the economy started. For this various policies and schemes were formulated. First five year plan for the development of Indian economy came into implementation in 1952. These Five Year Plans, started by Indian government, focused on the needs of Indian economy. If on one hand agriculture received the immediate attention on the other side industrial sector was developed at a fast pace to provide employment opportunities to the growing population and to keep pace with the developments in the world. Since then Indian economy has come a long way. The Gross Domestic Product (GDP) at factor cost, which was 2.3 % in 1951-52 reached 9% in financial year 2005-06
These challenges can be overcome by the sustained and planned economic reforms. population of India in 2001 was 1. introduction of new technology.610. Introduction of reforms in labour laws to generate more employment opportunities for the growing population of India.Trade liberalization. Though this figure has decreased in recent times but some major steps are needed to be taken to eliminate poverty from India.
. growing at a rate of 2. 36% of the Indian population was living Below Poverty Line in 1993-94. Challenges before Indian economy:
Population explosion: This monster is eating up into the success of India. financial liberalization. which helped Indian economy to gain momentum. Thus India has to control its burgeoning population. Rural urban divide: It is said that India lies in villages. Indian economy has to overcome many challenges. There is a very stark difference in pace of rural and urban growth. Introduction of financial reforms including privatization of some public sector banks. and Self Employment Scheme for Educated Unemployed Youth (SEEUY). proved to be the stepping-stone for Indian economic reform movements. Poverty: As per records of National Planning Commission. Indian government has started various schemes such as Jawahar Rozgar Yojna. Unless there isn't a balanced development Indian economy cannot grow. tax reforms and opening up to foreign investments were some of the important steps. then Finance Minister in the government of P V Narsimha Rao.328.11% approx. But these are proving to be a drop in an ocean. The Economic Liberalization introduced by Man Mohan Singh in 1991. Such a vast population puts lots of stress on economic infrastructure of the nation. Unemployment: The increasing population is pressing hard on economic resources as well as job opportunities. These include:
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Maintaining fiscal discipline Orientation of public expenditure towards sectors in which India is faring badly such as health and education. Reorganization of agricultural sector. To maintain its current status and to achieve the target GDP of 10% for financial year 2006-07. According to 2001 census of India.028. reducing agriculture's dependence on monsoon by developing means of irrigation. even today when there is lots of talk going about migration to cities. 70% of the Indian population still lives in villages.