History of Indian Economy-

There was a time when India considered as Sparrow of Gold. It was the wealth of India,
which attracted so many invaders and foreign rulers towards the country at that time.
During ancient time when other countries had limited trade activities, India enjoyed a
very well developed trade and commerce. The famous sil route of India is very well
nown even today.
!fter the advent of "ritish #ast India $ompany in %&'', trade activities were in favor of
India till %()(.
"ut in the *eginning of %+
th
$entury when industrial revolution emerged in #ngland,
"ritish used India as producer of raw material for their industries on one hand and
e,ploited the country as potential mar for various goods produced into factories of
#ngland.
Gradually till %+%- handloom and craft *usiness of India totally ruined *y "ritish for their
personal advantages.
Dada "hai .arojee e,posed the drain of wealth from India in his famous wor
After Independence-
Independence came with pain of partition to India. /ence it was not easy to put the country
on path of rapid development. Indian Govt. opted for planned economy 0a type of economy
where economic planning plays very crucial role in the socio1economic development of
country2.
G3I came up with idea of 4ive 5ear 6lans. %
st
4ive year plan was formulated for period from
%7)% to %7)&.
New Economic Policy-
The initial idea of planned economy did not wor as well as it was e,pected. It resulted into heavy
*urden of e,ternal de*t on India. /ence G3I came with new economic policy in 1991. The -
main o*jectives of this new economic policy was as follows1
1. Globalization 08nrestricted movement of goods and technology across glo*e2
2. Liberalization 0Government $ontrol on industries has *een rela,ed. 9ore and 9ore Sectors
gradually opened for commerciali:ation2
3. Priatization 0/andover of pu*lic sector to private sector, Disinvestment2
!hat is Policy of Laissez "aire-#
;aisse: 4aire is a 4rench term and it literally means no interference$
It is a doctrine which states that govt. generally should not intervene in the economic activities and
economy should *e maret oriented *ased upon demand and supply principle.
Economics-#
1is the study of how people choose to use their availa*le resources in most efficient way. #conomics is
not only a*out managing money and finance. It is much more than that in contemporary conte,t.
#conomics is the social science that e,amines how people choose to use limited or scarce resources in
attempting to satisfy their unlimited wants
!cc. to ;ionel <o**ins in a %7-= essay1 the science which studies human *ehavior as a relationship
*etween ends and scarce means which have alternative uses
#conomics aims to e,plain how economies wor and how economic agents interact. #conomic analysis
is applied throughout society, in *usiness, finance and government, *ut also in crime, education,
family, health, law, politics, religion, social institutions, war, and even to science
3ver all we can say that #conomics is the *ranch of social science that studies the production,
distri*ution, and consumption of goods and services in a society
3n the *asis of a*ove definition, we can *rea down the study of economics into two *road categories
1$ %icroeconomics
&$ %acroeconomics
!hat is %icroeconomics-#
This is a su* *ranch of economics that deals with economics decisions made at a low, or micro, level.
/ow does the change of a price of good influence a family>s purchasing decisions1? If my wages rise,
will I *e inclined to wor more hours or less hours1?
!hat is %acroeconomics-#
Deals with a larger@*roader level of economy. Deals with issues such as
'etermination of national income( sain)s( inestment( employment at a))re)ate leels(
ta* collection( )oernment e*pendit+re( forei)n trade( money s+pply and price leel etc
Adam smith is considered as father of %odern Economics. /e wrote The nature A
causes of wealth of the .ations in %((&. /e stressed upon wealth aspect of economy
!fter that 6rofessor 9arshall wrote 6rinciples of #conomics in %+7'. /e stressed upon
welfare aspect of economy
G'P
GNP
PPP
,+rrent -tat+s of Indian Economy-
Indian #conomy is the
1&
th
lar)est economy in the world by mar.et e*chan)e rates
/
th
lar)est economy in the world by Nominal G'P$ GD6
0
rd
lar)est economy of world by p+rchasin) power parity 1PPP2 666
as per the latest report of Borld "an.
Despite recent glo*al economic recession, In ='%%, Indian #conomy has replaced C!6!. A now is the
0 lar)est Economy in the !orld after 3-A 4 ,HINA
In ='%-1%D, GD6 growth rate of India 5$56$ 1As per 78I2
In ='%D , now is growing at a rate of around &E .
/owever, Indian #conomy is still lagging *ehind in many spheres lie more than &'E of India>s total
woring population is still engaged into agricultural activates, while its contri*ution into GD6 is only
around %D E . India is a la*or surplus country and pro*lem of sectional unemployment still a matter of
concern for G3I.
India was under social democratic1*ased policies from %7D( to %77%. The economy was characteri:ed *y
e,tensive regulation, protectionism, and pu*lic ownership, leading to pervasive corruption and slow
growth. Since %77%, a revival of economic reforms and *etter economic policy in ='''s accelerated
India>s economic growth rate. Indias large service industry accounts for 54% of the countrys GDP while
the industrial and agricultural sector contribute 29% and 1% res!ectively.
!griculture, in India, accounts for a*out &'E of employment.
Service sector maes up a further =+E
Industrial sector around %=E.
The la*or force totals half a *illion worers. India raned -%
st
in 4inancial development inde,1=''7
produced *y Borld #conomic 4orum
GD6 growth in =''(1='%= +.)E 0targeted2 (.7E 0achieved2
%=
th
4ive year plan GD61 7.)E 0targeted2
6er $apita Income1 F%'(' 0<an %D=
nd
2
;a*or 4orce1 /uge 0Surplus2
Inflation G$6IH +.&E in !pril ='%D, increasing every day
6opulation "6; =7.+ E in =''71%'
!cc. to T#.D8;I!< 63J#<T5 ;I.# 9#T/3D3;3G5
,+rrent ,hallen)es before Indian Economy -
9aintaining consistent growth rate of 7E
<educing widening gulf *etween rich and poor
$ontrol on increasing population
6roducing new employment opportunities
/arnessing potential of human power
3ptimal usage of .atural Sources along with sustaina*le development
Increasing Indian Share into 4oreign Trade
-+stainable 'eelopment-# %eans
9eeting needs of 6resent without compromising the a*ility of future generations to meet their needs.
The concept of Sustaina*le Development is popular in present conte,t of development
Microcredit & SHG
!hat is concept of %icrocredit-#
In common meaning 9icro credit is ;oan of very small amount. It can *e defined as provision of
parsimony, credit and other financial services and products of very small amount to the poor in rural,
semi1ur*an and ur*an areas for ena*ling them to raise their income levels and improve living
standards. The institutions that provide 9icro $redit are called 9icro $redit Institutions. 9icro $redit
is provided to those individuals that lac collateral, steady employment and a verifia*le credit history
and therefore cannot meet even the most minimal Kualifications to gain access to traditional credit.
This group of individuals includes artisans, tiny and small industries, grocers, vegeta*le vendors,
ricshaw pullers, roadside retailers and the lie. 3ther activities include farming, poultry, cattle
rearing, piggery, fishery etc.
The innovative idea of 9icrocredit originated with the Grameen "an in "angladesh. In %7(& 6rofessor
9uhammad 5unus launched a research project to e,amine the possi*ility of designing a credit delivery
system to provide *aning services targeted to the rural poor. The Grameen "an is a microfinance
organi:ation and community development *an started in "angladesh that maes small loans nown
as microcredit. The organi:ation and its founder, 9uhammad 5unus, were jointly awarded the .o*el
6eace 6ri:e in =''&L the organi:ation>s ;ow1cost /ousing 6rogramme won a Borld /a*itat !ward in
%77+. The 8nited .ations declared &995 the International :ear of %icrocredit$
"efore the nationali:ation of *ans in India in %7&7, co1operative *ans were the main dispensers of
small loans in the organi:ed sector. $ommercial *ans were not easily accessi*le to small *orrowers.
Those were the days of security1oriented approach. .o*ody could thin of a loan, *ig or small, without
a guarantor or mortgage of immova*le property. 6rofit was the only motive of the *aning. /owever
.ationali:ation changed the picture and the nationali:ed *ans opened *ranches in the remotest
corners of the country. They were to implement various government schemes lie the Twenty 6oint
6rogram, !ntyodaya 6rogram, su*sidi:ed Differentiated <ate of Interest loan etc. which aimed at
uplifting the poorest of the poor with the help of micro credit.
Gradually there was esta*lishment of <egional <ural "ans G<<"sH, Deposit Insurance and $redit
Guarantee $orporation GDI$G$H, .ational "an for <ural and !gricultural Development G.!"!<DH,
Small Industrial Development "an of India GSID"IH, #,port $redit Guarantee $orporation G#$G$H
and the latest $redit Guarantee 4und Trust for 9icro A Small #nterprises G$GT9S#H. The $GT9S#
covers collateral1free credit up to <s. )' lahs. These institutions play supportive roles to ensure
uninterrupted flow of credit to small time *orrowers. 8nder the present directive of the <"I, the
priority sectors must get a minimum of D'E share of a commercial *ans> total lending. This includes
%&E for the agriculture sector.
-ome Iss+es-
In spite of all these measures the performance of micro finance in India has neither *een Kuite
satisfactory Kuantitatively nor Kualitatively.
The money dis*ursed has not *een adeKuate, nor has it yielded the desired results.
Instead of *eing recycled, the major portions of loans have *een lost as *ad de*t.
-elf-Help Gro+ps ;-HGs<-
1 ! Self1/elp Group GS/GH is a re)istered or +nre)istered )ro+p of micro entreprene+rs
*elonging to homogenous social and economic *acground voluntarily, who come together to save
small amounts regularly, to mutually agree to contrib+te to a common f+nd and to meet their
emergency needs on mutual help *asis
1 S/G proides stren)th to an economically poor indiid+al as part of a )ro+p.
1 4inancing through S/Gs red+ces transaction costs for both lenders and borrowers.
-HG-ban. lin.a)e Pro)ramme-
To facilitate smoother and more meaningful *aning with the poor
1 ! pilot project for purveying micro credit *y lining Self1/elp Groups GS/GsH with *ans was
launched *y .!"!<D in %77%17=.
1 <"I had then advised commercial *ans to actively participate in this linage programme. The
scheme has since *een e,tended to <<"s and co1operative *ans.
1 9ore than 7' per cent of the groups lined with *ans are e,clusive women groups.
1 S/G1*an linage programme has emerged as the dominant micro finance dispensation model in
India.