History of Indian Economy

The 12th largest economy in the world in terms of the market exchange rate, the Indian economy
has come a long way to become one of the fastest growing economies. In order to have an idea of
the various economic stages, one needs to make an analysis of the Indian economy's history.
The pre colonial era of Indian economy
India is one of the world's oldest civilizations. The main source of economy and income for the
people in the ancient ages was agriculture. The fertile plains, rivers and water bodies and a
favorable climate provided a wonderful scope for agricultural produce in the country.
The ancient civilizations of India like Indus Valley, the Aryan civilization, Mauryan Empire,
Gupta Empire and most other dynasties had a planned economic system. In some dynasties, even
coins were issued. However, the chief form of trading in those times was the barter system.
According to the economic rule, the farmers and villagers were required to provide a part of their
crops or produce to the kings or the landlords.
Even in the Muslim rule, the economy of India was mainly based on agricultural produce.
Towards the later part of the Mughal period, some trade relations were established between the
Mughal Empire and the British, French and Portuguese merchants. Eventually, after the Battle of
Plassey, the British East India Company eventually came into power. Thus the colonial rule in
India started.
During the Colonial Era
The colonial era of India is a significant part of the India Economy history. It brought a
considerable change in the process of taxation from the revenue taxes to the property taxes which
resulted in large scale economic breakdown. In fact a number of industries like the Indian
handicrafts industry suffered huge losses. During India's freedom struggle, the Indian
Nationalists advocated for the Swadeshi Movement in which the British products were
boycotted.
However, the British rule also developed the country to a great extent. The financial and banking
system as well as free trade was established, a single currency system with exchange rates was
brought into being, standardization of weights and measures took place and also a capital market
came into existence. Stress was also given to the development of infrastructure and new
telegraph lines were laid, railway lines were constructed and roads were made.
Post Independence to the 1990s
After India gained independence, stress was given to stabilize the economic system of the
country. Wide scale development was made in sectors such as agriculture, village industries,
mining, defense and so on. New roads were built, dams and bridges were constructed, and
electricity was spread to the rural areas to improve the standard of living.
In the subsequent Five Year Plans, a number of economic reforms and policies were formulated.
Public and rural sectors were developed, emphasis was given to increase the quantity and quality
of the export items, making the country self sufficient and minimize imports and other related
reforms. The political leaders also put stress on business regulations, central planning and
nationalization of the industries in mining, electricity and infrastructure.
Another major economic reform that was initiated in the 1960s was to make India self sufficient
in food grain production. In this regard, the ‘Green Revolution' movement was initiated for
aforestation, more irrigational projects, improved seed usage, better farming techniques and use
of fertilizers and lots more.
In the 1980s, the first step towards market liberalization was undertaken by the then government
headed by Rajiv Gandhi. In his tenure, restrictions on a number of sectors were eased, pricing
regulations were abolished and efforts were made to improve the GDP of the country.
From 1990s to the present times
India's economic condition in the initial stage of the 1990s was dismal. The main trading partner,
the Soviet Union was dissolved and India faced huge balance of payment problems. The loans
kept on increasing and the IMF asked for a bailout loan. In this situation, Manmohan Singh, the
then Finance Minister initiated the liberalization plan. This is one of the milestones in the history
of the Indian Economy. In the liberalization plan, foreign direct investments were welcomed,
public monopolies were abolished and banking, service and tertiary sectors were developed.
Boost was also given to develop the money and capital market.
Since the open market plan in the 1990s, India has experienced favorable economic growth.
Today it has become one of the fastest growing economies in the world with a GDP growth rate
of around 6-7 %. To complement the growing GDP, the country has also experienced growth in
per capita income, standard of living and industrial development. The GDP of India in 2007 was
estimated at about 8 percent that of the US. The government started the Golden Quadrilateral
road network connecting Delhi, Chennai, Mumbai and Kolkata with various Indian regions. The
project, completed in January 2012, was the most ambitious infrastructure project of independent
India. The top 3% of the population still earn 50% of GDP.
Coronavirus Economic Bust (March 2020- 2021)
The 28-year economic boom cycle ended in 2020. The coronavirus pandemic led to a temporary
recession in the Indian economy. The 2nd and 3rd quarter of the 2020 financial year had GDP
drops of 23.9% and 8.6% respectively. The economic impact of the COVID-19 pandemic in
India has been largely disruptive. India's growth in the fourth quarter of the fiscal year 2020 went
down to 3.1% according to the Ministry of Statistics.
The Government of India announced a variety of measures to tackle the situation, from food
security and extra funds for healthcare and for the states, to sector related incentives and tax
deadline extensions. And all these measures are hereby helpful and India will again catch-up the
economic boom.

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History of Indian Economy

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The 12th largest economy in the world in terms of the market exchange rate, the Indian economy

The pre colonial era of Indian economy

During the Colonial Era

From 1990s to the present times

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