Five big economic landmarks since independence
Of late, India has also emerged as an assertive voice of the developing economies of the world.
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The Indian economy has come a long way since independence in 1947. It was tottering at a GDP of Rs 2.7 lakh crore in 1950-51 but has morphed into a Rs 57 lakh crore economy in 2013-14. A look at five big economic milestones in the country’s journey so far.
1969: Nationalisation of banks
The government of India issued an ordinance leading to the nationalisation of 14 of India's largest commercial banks, that handled 85 per cent of the bank deposits in the country. A second round of nationalisation followed in 1980. The idea was to instil public confidence in the banking sector and encourage them to save and invest. However, public sector banks have borne the brunt of political interferences and are straddled with bad loans to the tune of Rs 2.55 lakh crore, as on March 2015.
1983: Launch of Maruti 800
Maruti Udyog Ltd, (now Maruti Suzuki) started commercial production of cars in 1983, with the Maruti 800, making it the first modern car to be indigenously made. The car was made in collaboration with Japan's Suzuki. Although the government originally owned 74 per cent stake in the company, it later exited completely. At present, Suzuki owns a little over 56 per cent in Maruti Suzuki, India's largest car maker with a 37 per cent share. The company is a perfect example of how government entry and exit at an appropriate time can help create an enduring enterprise.
With the idea of making the economy more market oriented and expanding the role of private and foreign invesment, economic liberalisation was initiated. The move included a reduction in import tariffs, deregulation of markets, reduction in taxes and greater foreign investment. The immediate trigger to liberalise was a balance of payments crisis, which forced the country to sign a bail out package with the International Monetary Fund. The reforms, unleashed under PV Narasimha Rao, the then Prime Minister, with Manamohan Singh as the Finance Minister, led to higher economic growth, although critics say it has resulted in higher inequality and poverty.
1967-78: Green revolution
In the years following independence, India's population continued to grow much faster than food production, calling for a drastic action to improve yield. With the Green Revolution, India increased its yields using high yielding crop varieties and applying modern techniques in agriculture. Higher yielding varieties of wheat were developed by scientists including MS Swaminathan. The period also saw an increase in the use of chemical fertilisers and irrigation. The efforts led to self sufficiency of food grains in India, with the government now able to create a buffer stock of grains.
1995 : WTO agreement
India became a member of the World Trade Organisation on January 1, 1995, a move which has opened up the country’s global trade. Before India entering the WTO, India had been largely a closed economy. By 1991, with the winds of liberalisation and structural reforms, the urge to embrace trade reforms grew within the country. Of late, India has also emerged as an assertive voice of the developing economies of the world. India was 19th top exporter in the world with exports of $3.42 trillion in 2014.