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Economic history of India

History of South Asia


History of India

Stone Age before 3300 BCE

- Mehrgarh Culture 7000–3300 BCE

Indus Valley Civilization 3300–1700 BCE

- Late Harappan Culture 1700–1300 BCE

[show]Iron Age 1200–180 BCE


Vedic Period 1500–500 BCE
Maha Janapadas • 700–300 BCE
Magadha Empire • 684–424 BCE
Nanda Empire • 424-321 BCE
Chera Kingdom • 300 BCE–1200 CE
Chola Empire • 300 BCE–1279 CE
Pandyan Kingdom • 300 BCE–1345 CE
Maurya Empire • 321–184 BCE
Pallava Kingdom • 250 BCE–800 CE
Sunga Empire • 185-73 BCE
Kanva Empire • 75-26 BCE
Kharavela Empire • 209–170 BCE
Kuninda Kingdom • 200s BCE–300s CE
Indo-Scythian • 200 BC–400 CE
Kingdom
Satavahana Empire • 230 BCE–220 CE
Indo-Greek Kingdom • 180 BCE–10 CE
[show]Middle Kingdoms 1CE–1279 CE
Indo-Parthian Kingdom • 21–130s CE
Western Satrap Empire • 35–405 CE
Kushan Empire • 60–240 CE
Indo-Sassanid Kingdom • 230–360 CE
Vakataka Empire • 250–500 CE
Kalabhras Kingdom • 250–600 CE
Gupta Empire • 280–550 CE
Pallava Kingdom • 275–800 CE
Kadamba Empire • 345–525 CE
Western Ganga Kingdom • 350–1000 CE
Vishnukundina Empire • 420-624 CE
Huna Kingdom • 475-576 CE
Rai Kingdom • 489–632 CE
Chalukya Empire • 543–753 CE
Harsha Empire • 590-647 CE
Shahi Kingdom • 565-670 CE
Eastern Chalukya Kingdom • 624-1075 CE
Pratihara Empire • 650–1036 CE
Pala Empire • 750–1174 CE
Rashtrakuta Empire • 753–982 CE
Paramara Kingdom • 800–1327 CE
Yadava Empire • 850–1334 CE
Solanki Kingdom • 942–1244 CE
Western Chalukya Empire • 973–1189 CE
Hoysala Empire • 1040–1346
CE
Sena Empire • 1070–1230
CE
Eastern Ganga Empire • 1078–1434
CE
Kakatiya Kingdom • 1083–1323
CE
Kalachuri Empire • 1130–1184
CE
Islamic Rulers 1206–1707 CE

- Delhi Sultanate 1206–1526 CE

- Deccan Sultanates 1490–1596 CE

Vijayanagara Empire 1336–1646 CE

Mughal Empire 1526–1707 CE

Maratha Empire 1674–1818 CE

Durrani Empire 1747–1823 CE

Sikh Empire 1799–1849 CE

[show]Regional Kingdoms 1200–1800 CE


Ahom Kingdom 1228–1826 CE
Mysore Kingdom 1399–1947 CE
Thondaiman dynasty 1650–1948 CE
Madurai Nayak Kingdom 1559 –1736 CE
Thanjavur Nayak Kingdom 1572–1918 CE
Sethupathy of Ramnad 1600–1750 CE
Company rule in India 1757–1858 CE

British India 1858–1947 CE

Partition of India 1947 CE

Nation histories

Afghanistan • Bangladesh • Bhutan • India


Maldives • Nepal • Pakistan • Sri Lanka

[show]Regional histories
Assam • Bihar • Balochistan • Bengal
Himachal Pradesh • Uttar Pradesh
Pakistani Regions • Punjab • NWFP
Orissa • Sindh • South India • Tibet
Specialised histories

Coinage • Dynasties • Economy


Indology • Language • Literature • Maritime
Military • Science and Technology • Timeline

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The known Economic history of India begins with the Indus Valley civilization. At this time,
India had the first known cities.
Ancient and medieval India exported textiles, steel and iron works to Europe, the Middle East
and South East Asia in exchange for gold and silver.
During the Maurya Empire, trade routes became more secure and the road system was expanded.
Mughal India had one of the largest economies in the world at the time. It had a tax and
administrative system for the whole of India.
India has followed socialist-inspired policies for most of its independent history, which have
included extensive public ownership, regulation, red tape, and trade barriers.[1][2] India slipped
behind many other Asian countries.
After the 1991 economic crisis, the central government launched economic liberalization. India
has turned towards a more capitalist system and has emerged as one of the fastest growing large
economies of the world.[1][3]
Contents
[hide]
• 1 Indus Valley Civilization
• 2 Ancient and Medieval Characteristics
○ 2.1 Religion
○ 2.2 Family business
○ 2.3 Organizational entities
○ 2.4 Coinage
○ 2.5 Exports
○ 2.6 GDP estimate
• 3 Maurya Empire
• 4 Mughal Empire
○ 4.1 1526
○ 4.2 1600[dubious – discuss]
○ 4.3 1700
• 5 Nawabs, Marathas & Nizams
○ 5.1 1725 - 1750
○ 5.2 1750 - 1775
• 6 British Rule
○ 6.1 GDP estimates
○ 6.2 The fall of the Rupee
○ 6.3 British East India Company rule
○ 6.4 British Raj
• 7 Republic of India
○ 7.1 Hindu rate of growth
○ 7.2 Socialist Reforms (1950-1975)
○ 7.3 Economic liberalization
○ 7.4 2000 - Present
• 8 See also
• 9 References
• 10 Bibliography
• 11 Bibliography
• 12 External links
[edit] Indus Valley Civilization
The Indus Valley civilization, the first known permanent and predominantly urban settlement
that flourished between 2800 BCE to 1800 BCE boasted of an advanced and thriving economic
system. Its citizens practiced agriculture, domesticated animals, made sharp tools and weapons
from copper, bronze and tin and traded with other cities. Evidence of well laid streets, layouts,
drainage system and water supply in the valley's major cities, Harappa, Lothal, Mohenjo-daro
and Rakhigarhi reveals their knowledge of urban planning. One of the theories about their end is
that they eventually overused their resources, and slowly died out. There have been few weapons
found in the Indus Valley, showing that they were peaceful people, and they did not get
slaughtered by the Aryans[citation needed].
[edit] Ancient and Medieval Characteristics
Though ancient India had a significant urban population, much of India's population resided in
villages, whose economy was largely isolated and self-sustaining. Agriculture was the
predominant occupation of the populace and satisfied a village's food requirements besides
providing raw materials for hand based industries like textile, food processing and crafts. Besides
farmers, other classes of people were barbers, carpenters, doctors (Ayurvedic practitioners),
goldsmiths, weavers etc.
[edit] Religion
Religion, especially Hinduism, played an influential role in shaping economic activities. The
Indian caste system castes and sub-castes functioned much like medieval European guilds,
ensuring division of labour and provided for training of apprentices. The caste system restricted
people from changing one's occupation and aspiring to an upper caste's lifestyle. Thus, a barber
could not become a goldsmith and even a highly skilled carpenter could not aspire to the lifestyle
or privileges enjoyed by a Kshatriya (person of a warrior class). This barrier to mobility on
labour restricted economic prosperity to a few castes.
Pilgrimage towns like Allahabad, Benares, Nasik and Puri, mostly centred around rivers,
developed into centres of trade and commerce. Religious functions, festivals and the practice of
taking a pilgrimage resulted in a flourishing pilgrimage economy.
[edit] Family business
In the joint family system, members of a family pooled their resources to maintain the family and
invest in business ventures. The system ensured younger members were trained and employed in
the family business and the older and disabled persons would be supported by the family. The
system, by preventing the agricultural land from being split ensured higher yield because of the
benefits of scale. The system curbed members from taking initiative because of the support
system and family or work.
[edit] Organizational entities
Along with the family-run business and individually owned business enterprises, ancient India
possessed a number of other forms of engaging in business or collective activity, including the
gana, pani, puga, vrata, sangha, nigama and sreni. Nigama, pani and sreni refer most often to
economic organizations of merchants, craftspeople and artisans, and perhaps even para-military
entities. In particular, the sreni was a complex organizational entity that shares many similarities
with modern corporations, which were being used in India from around the 8th century BC until
around the 10th century AD. The use of such entities in ancient India was widespread including
virtually every kind of business, political and municipal activity.[4]
The sreni was a separate legal entity which had the ability to hold property separately from its
owners, construct its own rules for governing the behavior of its members, and for it to contract,
sue and be sued in its own name. Some ancient sources such as Laws of Manu VIII and
Chanakya's Arthashastra have rules for lawsuits between two or more sreni and some sources
make reference to a government official (Bhandagarika) who worked as an arbitrator for
disputes amongst sreni from at least the 6th century BC onwards.[5] There were between 18 to
150 sreni at various times in ancient India covering both trading and craft activities. This level of
specialization of occupations is indicative of a developed economy in which the sreni played a
critical role. Some sreni could have over 1000 members as there were apparently no upper limits
on the number of members.
The sreni had a considerable degree of centralized management. The headman of the sreni
represented the interests of the sreni in the king’s court and in many official business matters.
The headman could also bind the sreni in contracts, set the conditions of work within the sreni,
often received a higher salary, and was the administrative authority within the sreni. The
headman was often selected via an election by the members of the sreni, who could also be
removed from power by the general assembly. The headman often ran the enterprise with two to
five executive officers, who were also elected by the assembly.
[edit] Coinage
Punch marked Silver Ingots, in circulation around 5th century BC and the first metallic coins
were minted around 6th century BC by the Mahajanapadas of the Gangetic plains were the
earliest traces of coinage in India. While India's many kingdoms and rulers issued coins, barter
was still widely prevalent.[6] Villages paid a portion of their agricultural produce as revenue
while its craftsmen received a stipend out of the crops at harvest time for their services. Each
village, as an economic unit, was mostly self-sufficient.
[edit] Exports
Surplus of Indian manufactures, like the muslin of Dacca, calicos of Bengal, shawls of Kashmir,
steel and iron works, silk, and other textiles and handicrafts, agricultural products like pepper,
cinnamon, opium and indigo were exported to Europe, Middle East and South East Asia in return
for gold and silver.
[edit] GDP estimate
According to economic historian Angus Maddison in his book The World Economy: A
Millennial Perspective, India had the world's largest economy from the 1st to 11th century, and
in the 18th century, with a (32.9%) share of world GDP in the 1st century to (28.9%) in 1000
CE, and in 1700 CE with (24.4%)[7].
[edit] Maurya Empire
During the Maurya Empire (c. 321-185 BC), there were a number of important changes and
developments to the Indian economy. It was the first time most of India was unified under one
ruler. With an empire in place, the trade routes throughout India became more secure thereby
reducing the risk associated with the transportation of goods. The empire spent considerable
resources building roads and maintaining them throughout India. The improved infrastructure
combined with increased security, greater uniformity in measurements, and increasing usage of
coins as currency enhanced trade. During this time, the Arthasastra ("science of the state") was
written by the Chanakya, an adviser to Chandragupta Maurya. The Arthasastra is one of the most
important ancient texts on economics, politics and administration. It was a treatise on how to
maintain and expand power, obtain material gain, and administer an empire. It covers both
theory and implementation and contains many clear and detailed rules regarding the governing of
an empire. The exhaustive account of the economic ideas embedded in the Arthasastra has been
given by Ratan Lal Basu in his famous work ANCIENT INDIAN ECONOMIC THOUGHT,
RELEVANCE FOR TODAY[8] In course of an International Conference held in 1902 at Oriental
Research Institute, Myore, India to celebrate the Centenary of discovery of the manuscript of the
Arthsastra by Shamasastry, eminent Kaulilya experts from all over the world had discussed
various aspects of Kauliya's thought in the light of present day scenario. Most of the papers
presented in the Conference have been compiled in an edited volume by Raj Kumar Sen and
Ratan Lal Basu.[9]

The economic situation in the Maurya Empire is comparable to the Roman Empire several
centuries later, which both had extensive trade connections and both had organizations similar to
corporations. While Rome had organizational entities which were largely used for public state-
driven projects, Maurya India had numerous private commercial entities which existed purely for
private commerce. This was due to the Mauryas having to contend with pre-existing sreni hence
they were more concerned about keeping the support of these pre-existing private commercial
entities. The Romans did not have such pre-existing entities to contend with; hence, they were
able to prevent such entities from developing.
[edit] Mughal Empire
[edit] 1526
During this period, Mughal India was the second largest economy in the world. The gross
domestic product of India in the 16th century was estimated at about 24.5% of the world
economy, in comparison to Ming China's 25% share.[10][11]
[edit] 1600[dubious – discuss]
An estimate of India's pre-colonial economy puts the annual revenue of Emperor Akbar's
treasury in 1600 at £17.5 million, in contrast to the entire treasury of Great Britain in 1800,
which totalled £16 million. The gross domestic product of Mughal India in 1600 was estimated
at about 22.6% the world economy, in comparison to Ming China's 29.2% share.[10][11]
[edit] 1700
By this time, the Mughal Empire expanded to almost 1,000 million acres (4,000,000 km2), or 90
per cent of South Asia, and a uniform customs and tax administration system was enforced.
Annual revenue reported by the Emperor Aurangzeb's exchequer exceeded £100 million in 1700
(twice that of Europe then). Thus, India emerged as the world's largest economy, followed by
Manchu China and Western Europe.[10][11]
[edit] Nawabs, Marathas & Nizams
[edit] 1725 - 1750
During this period, Mughals were replaced by the Nawabs in north India, the Marathas in central
India and the Nizams in south India. However, the Mughal tax administration system was left
largely intact. China was the world's largest economy followed by India and France. The gross
domestic product of India in 1750 was estimated at about 80 per cent that of China.
[edit] 1750 - 1775
During this period, about two-thirds of the civil service in India was still dominated by Muslim
officers though the Maratha empire expanded to almost 250 million acres (1,000,000 km2), or 34
per cent of Indian landscape, while the Nizam's dominion expanded to almost 125 million acres
(510,000 km2), or 17 per cent of Indian landscape. China was the world's largest economy
followed by India and France. The gross domestic product of India in 1775 was estimated at
about 70 per cent that of China. Nevertheless, a devastating famine broke out in the eastern coast
in early 1770s killing 5 per cent of the national population.
[edit] British Rule
The British colonial rule created an institutional environment that did stabilize the law and order
situation to a large extent. The British foreign policies however stifled the trade with rest of the
world. They created a well developed system of railways, telegraphs and a modern legal system.
The infrastructure the British created was mainly geared towards the exploitation of resources of
India. By the end of the colonial rule India inherited an economy that was one of the poorest in
the world and totally stagnant, with industrial development stalled, agriculture unable to feed a
rapidly accelerating population. They were subject to frequent famines, had one of the world's
lowest life expectancies, suffered from pervasive malnutrition and were largely illiterate.
[edit] GDP estimates
An estimate by Angus Maddison, formerly of Groningen University, reveals that India's share of
the world income went from 24.4% in 1700, comparable to Europe's share of 23.3%, to a low of
3.8% in 1952. While Indian leaders during the Independence struggle and left-nationalist
economic historians have blamed the colonial rule for the dismal state of India's economy, a
broader macroeconomic view of India during this period reveals that there were segments of both
growth and decline, resulting from changes brought about by colonialism and a world that was
moving towards industrialization and economic integration.
Price of Silver - Rate of Exchange: 1871-72 to
1892-93

Price of Silver
Rupee exchange
Period (in pence per
rate (in pence)
Troy ounce)

1871-
60½ 23 ⅛
1872

1875-
56¾ 21⅝
1876

1879-
51¼ 20
1880

1883-
50½ 19½
1884
1887-
44⅝ 18⅞
1888

1890-
47 11/16 18⅛
1891

1891-
45 16¾
1892

1892-
39 15
1893

Source: B.E. Dadachanji. History of Indian


Currency and Exchange, 3rd enlarged ed.

(Bombay: D.B. Taraporevala Sons & Co,


1934), p. 15.

[edit] The fall of the Rupee


See also: The crisis of silver currency and bank notes (1750–1870)
After its victory in the Franco-Prussian War (1870-71), Germany extracted a huge indemnity
from France of £200,000,000, and then moved to join Britain on a gold standard for currency.
France, the U.S. and other industrializing countries followed Germany in adopting a gold
standard throughout the 1870s. At the same time, other countries, such as Japan, which did not
have the necessary access to gold or those, such as India, which were subject to imperial policies
that determined that they did not move to a gold standard, remained mostly on a silver standard.
A huge divide between silver-based and gold-based economies resulted. The worst affected were
economies with a silver standard that traded mainly with economies with a gold standard. With
discovery of more and more silver reserves, those currencies based on gold continued to rise in
value and those based on silver were declining due to demonetization of silver. For India which
carried out most of its trade with gold based countries, especially Britain, the impact of this shift
was profound. As the price of silver continued to fall, so too did the exchange value of the rupee,
when measured against sterling.
[edit] British East India Company rule
1775 - 1800
During this period, the East India Company began tax administration reforms in a fast expanding
empire spread over 250 million acres (1,000,000 km2), or 35 per cent of Indian domain. Indirect
rule was also established on protectorates and buffer states. China was the world's largest
economy followed by India and France. The gross domestic product of India in 1800 was
estimated at about 60 per cent that of China.
The Company treasury reported annual revenue of £111 million in circa 1800 thus registering an
average annual growth of merely 0.1 per cent throughout the turbulent 18th century. Almost all
of the Indian land revenues were diverted by the Company to help the British Crown defend
herself in the Napoleonic Wars.
1800 - 1825
China was the world's largest economy followed by India and France. The gross domestic
product of India in 1825 was estimated at about 50 per cent that of China. British cotton exports
reach 3 per cent of the Indian market by 1825.(pdf)
1825 - 1850
China was the world's largest economy followed by the UK and India. Industrial revolution in
the UK catapulted the nation to the top league of Europe for the first time ever. During this
period, British foreign and economic policies began treating India as an unequal partner for the
first time.[12] English replaced Persian as the official language of India. The gross domestic
product of India in 1850 was estimated at about 40 per cent that of China. British cotton exports
reach 30 per cent of the Indian market by 1850.(pdf)
[edit] British Raj
1850 - 1875
The formal dissolution of the declining Mughal Dynasty heralded a change in British treatment
of Indian subjects. During the British Raj, massive railway projects were begun in earnest and
government jobs and guaranteed pensions attracted a large number of upper caste Hindus into the
civil service for the first time. China was the world's largest economy followed by the USA, UK
and India. The gross domestic product of India in 1875 was estimated at about 30 per cent that of
China (or 60 per cent that of the USA). British cotton exports reach 55 per cent of the Indian
market by 1875.(pdf)
1875 - 1900
USA was the world's largest economy followed by China, UK, Germany and India. Collapse of
the central authority of the Qing Dynasty and the resultant chaos triggered China's short but rapid
decline on the world stage. The gross domestic product of India in 1900 was estimated at about
20 per cent that of the USA.
The Crown treasury reported annual revenue of £122 million in circa 1900 thus registering an
average annual growth of merely 0.1 per cent throughout the turbulent 19th century.
1900 - 1925
USA was the world's largest economy followed by the UK, China, France, Germany, India and
the USSR. The gross domestic product of India in 1925 was estimated at about 10 per cent that
of the USA.
Zoroastrian business conglomerates like Tata and Godrej begin to dominate textile, mining and
durable goods industries.
The Crown treasury reported annual revenue of £125 million in 1925 thus registering an average
annual growth of merely 0.1 per cent during the turbulent first quarter of 20th century.
During this period, India became a net importer from net exporter of foodgrains. A US Dollar
was exchanged at 2.76 Rupees.
1925 - 1950
USA was the world's largest economy followed by the USSR, UK, China, France, Germany and
India. The gross domestic product of India in 1950 was estimated at about 7 per cent that of the
USA.
The Great Depression of 1929 had a very severe impact on India, which was then under the
British. During the period 1929–1937, exports and imports fell drastically crippling seaborne
international trade. The railways and the agricultural sector were the most affected.
The international financial crisis resulted in the soaring prices of commodities. The discontent of
farmers manifested itself in rebellions and riots. The Salt Satyagraha of 1930 was one of the
measures undertaken as a response to heavy taxation during the Great Depression.
The Great Depression and the economic policies of the Government of British India worsened
the already deteriorating Indo-British relations. When the first general elections were held
according to the Government of India Act 1935, anti-British feelings resulted in the Indian
National Congress winning in most provinces with a very high percentage of the vote share.
The newly independent but weak Union government's treasury reported annual revenue of £334
million in 1950 thus registering an average annual growth of almost 4 per cent during the second
quarter of 20th century. In contrast, Nizam Asaf Jah VII of south India was widely reported to
have amassed a fortune of almost £668 million then. [13]
About one-sixth of the national population were urban by 1950.[14] A US Dollar was exchanged
at 4.79 Rupees.
[edit] Republic of India
[edit] Hindu rate of growth

Compare India (orange) with South Korea (yellow). Both started from about the same income
level in 1950. The graph shows GDP per capita of South Asian economies and South Korea as a
percent of the American GDP per capita.
The Hindu rate of growth is used to refer to the low annual growth rate of the economy of India
before 1991. It stagnated at around 3.5% from 1950s to 1980s, while per capita income growth
averaged extremely low 1.3% a year.[15] At the same time, Pakistan grew by 8%, Indonesia by
9%, Thailand by 9%, South Korea by 10% and in Taiwan by 12%.[16] The term, was coined by
Indian economist Raj Krishna.
[edit] Socialist Reforms (1950-1975)
USA was the world's largest economy followed by the USSR, Japan, Germany and China. The
gross domestic product of India in 1975 was estimated at about 5 per cent that of the USA.
Before independence a large share of tax revenue was generated by the land tax, which was in
effect a lump sum tax on land. Since then land taxes have steadily declined as a share of
revenues and completely replaced by sales taxes. [1]
Moreover, the structural economic problems inherited at independence were exacerbated by the
costs associated with the partition of British India, which had resulted in about 2 to 4 million
refugees fleeing past each other across the new borders between India and Pakistan. The
settlement of refugees was a considerable financial strain. Partition also divided India into
complementary economic zones. Under the British, jute and cotton were grown in the eastern
part of Bengal, the area that became East Pakistan (after 1971, Bangladesh), but processing took
place mostly in the western part of Bengal, which became the Indian state of West Bengal in
1947. As a result, after independence India had to employ land previously used for food
production to cultivate cotton and jute for its mills.
India's leaders—especially the first prime minister, Jawaharlal Nehru, who introduced the five-
year plans -- agreed that strong economic growth and measures to increase incomes and
consumption among the poorest groups were necessary goals for the new nation. Giving utmost
importance to the economy, Nehru appointed R. K. Shanmukham Chetty, a person who did not
participate in the mainstream Indian Independence Movement as the finance minister, since he
believed that more than ideology, having the right person in the right job was important.
Government was assigned an important role in the process of alleviating poverty, and since 1951
a series of plans had guided the country's economic development. Although there was
considerable growth in the 1950s, the long-term rates of real growth were less positive than
India's politicians desired and much less than those of many other Asian countries.
Nehru's industrial policies were intended to encourage the growth of diverse manufacturing and
heavy industries, yet because of state planning, controls and regulations the result was
impairment of productivity, quality and profitability. The Indian economy lumbered along with
an anemic rate of growth, and chronic unemployment amidst entrenched poverty continued to
plague the population.
Toward the end of Nehru's term as prime minister, India would continue to face serious food
shortages despite hoped for progress and increases in agricultural production. There was mass
starvation in states like Bihar due to socialist controls on the economy. Farmers as well as
industrialists were ham-strung with controls (License Raj) on their freedom to run their
respective businesses.
Despite such atrocious conditions in the country Nehru's popularity remained unaffected because
of the larger-than-life image and the personality cult that was promoted by the state controlled
mass media.
Since 1950, India ran into trade deficits that increased in magnitude in the 1960s. The
Government of India had a budget deficit problem and therefore could not borrow money from
abroad or from the private sector, which itself had a negative savings rate. As a result, the
government issued bonds to the RBI, which increased the money supply, leading to inflation. In
1966, foreign aid, which was hitherto a key factor in preventing devaluation of the rupee was
finally cut off and India was told it had to liberalise its restrictions on trade before foreign aid
would again materialise. The response was the politically unpopular step of devaluation
accompanied by liberalisation. The Indo-Pakistani War of 1965 led the US and other countries
friendly towards Pakistan to withdraw foreign aid to India, which further necessitated
devaluation. Defence spending in 1965/1966 was 24.06% of total expenditure, the highest in the
period from 1965 to 1989. This, accompanied by the drought of 1965/1966, led to a severe
devaluation of the rupee. Current GDP per capita grew 33% in the Sixties reaching a peak
growth of 142% in the Seventies, decelerating sharply back to 41% in the Eighties and 20% in
the Nineties.
From FY 1951 to FY 1979, the economy grew at an average rate of about 3.1 percent a year in
constant prices, or at an annual rate of 1.0 percent per capita (see table 16, Appendix). During
this period, industry grew at an average rate of 4.5 percent a year, compared with an annual
average of 3.0 percent for agriculture. Many factors contributed to the slowdown of the economy
after the mid-1960s, the main one was the socialist policies pursued by Nehru and his cabinet.
They managed to tamp down on the natural business acumen and abilities of the population, yet
some economists differed over the relative importance of those factors.
Structural deficiencies, such as the need for institutional changes in agriculture and the
inefficiency of much of the centrally directed industrial sector, also contributed to economic
stagnation. Some other excuses that were generally offered were - War with China in 1962 and
with Pakistan in 1965 and 1971; a flood of refugees from East Pakistan in 1971; droughts in
1965, 1966, 1971, and 1972; currency devaluation in 1966; and the first world oil crisis, in 1973-
1974, all jolted the economy.
This is a chart of trend of gross domestic product of India at market prices estimated by Ministry
of Statistics and Programme Implementation with figures in millions of Indian Rupees. See also
the IMF database.

Per Capita
Year Gross Domestic Product US Dollar Exchange[2] Income
(as % of USA)

1950 100,850 4.79 Indian Rupees 3.02

1955 110,300 4.79 Indian Rupees 2.33

1960 174,070 4.77 Indian Rupees 2.88

1965 280,160 4.78 Indian Rupees 3.26

1970 462,490 7.56 Indian Rupees 2.23

1975 842,210 8.39 Indian Rupees 2.18

[17]
The Union government treasury reported annual revenue of £5-6 billion in 1975 thus
registering a average annual growth of almost 12 per cent during the third quarter of 20th
century. Nevertheless, prime minister Indira proclaimed emergency and suspended the
Constitution in 1975. About one-fifth of the national population were urban by 1975.[18]
[edit] Economic liberalization
Main article: Economic liberalization in India

Service markets which would enjoy much lighter burden of regulation and other obstacles
became more successful than still regulated sectors. For example, world-famous business process
services are very lightly regulated.[1]
Economic liberalization in India in the 1990s and 2000s led to large changes in the economy.
This is a chart of trend of gross domestic product and foreign trade of India at market prices
estimated by Ministry of Statistics and Programme Implementation with figures in millions of
Indian Rupees. See also the IMF database.

Per Capita
Gross Domestic US Dollar Inflation Index Income
Year Exports Imports
Product Exchange[3] (2000=100) (as % of
USA)

8.39 Indian
1975 842,210 2.18
Rupees

7.86 Indian
1980 1,380,334 19,290 135,960 18 2.08
Rupees

12.36 Indian
1985 2,729,350 149,510 217,540 28 1.60
Rupees
17.50 Indian
1990 5,542,706 406,350 486,980 42 1.56
Rupees

1,307,33 1,449,53 32.42 Indian


1995 11,571,882 69 1.32
0 0 Rupees

2,781,26 2,975,23 44.94 Indian


2000 20,791,898 100 1.26
0 0 Rupees

[17]
About one-fourth of the national population were urban by 2000.[19]
[edit] 2000 - Present
The gross domestic product of India in 2007 was estimated at about 8 per cent that of the USA.
National Democratic Front led by BJP, was in helm of economic affairs from 1998-2004. During
this period there were two finance ministers, viz., Yashwant Sinha (1998-2003) and Jaswant
Singh (2003-2004). The main economic achievement of the government was the universal
license in telecom field, which allows CDMA license holders to provide GSM services and vice
versa. NDA started off the Golden Quadrilateral road network connecting main metros of Delhi,
Chennai, Mumbai and Kolkata. The project, still under construction, was one of the most
ambitious infrastructure projects of independent India. Simultaneously, North-South and East-
West highway projects were planned and construction was started.
Education for all is still an unrealised dream in India. This was made a fundamental right by
amending the constitution of India and huge amount of money was pumped into the project
under the name of Sarva Shiksha Abhiyan. This project met with limited success. Graduate
unemployment was estimated at 34 million nationwide.
Currently, the economic activity in India has taken on a dynamic character which is at once
curtailed by creaky infrastructure, for example dilapitated roads and severe shortages of
electricity, and cumbersome justice system[20] yet at the same time accelerated by the sheer
enthusiasm and ambition of industrialists and the populace. The upward economic cycle in India
is expected in short time to effectively address the short comings and bottlenecks of the
infrastructure. The fast changing, seemingly chaotic and unsettled situation is much more
hopeful and reassuring than the socialist morass that was the Nehru and Indira Gandhi legacy.
This is a chart of trend of gross domestic product and foreign trade of India at market prices
estimated by Ministry of Statistics and Programme Implementation with figures in millions of
Indian Rupees. See also the IMF database.

Per Capita
Gross Domestic US Dollar Inflation Index Income
Year Exports Imports
Product Exchange[4] (2000=100) (as % of
USA)
2,781,26 2,975,23 44.94 Indian
2000 20,791,898 100 1.26
0 0 Rupees

44.09 Indian
2005 34,195,278 121 1.64
Rupees

[17]
For purchasing power parity comparisons, the US Dollar is exchanged at 9.46 Rupees only.
Despite steady growth and continuous reforms since the Nineties, Indian economy is still mired
in bureaucratic hurdles from coast to coast. This was confirmed by a World Bank report
published in late 2006 ranking Pakistan (at 74th) well ahead of India (at 134th) based on ease of
doing business [5]
The Union government treasury reported annual revenue of £51-52 billion in 2005 thus
registering a average annual growth of almost 22 per cent since 2000. India imported about 85
per cent of oil and 15 per cent of gas consumption by 2005.
[edit] See also
• Timeline of the economy of India
• History of agriculture in India
• List of countries by past GDP (PPP)
• List of countries by past GDP (nominal)
• Ram Sharan Sharma economic history of ancient India
• Rajnarayan Chandavarkar historian
[edit] References
1. ^ a b c "Economic survey of India 2007: Policy Brief". OECD.
http://www.oecd.org/dataoecd/17/52/39452196.pdf.
2. ^ "Industry passing through phase of transition". The Tribune.
http://www.tribuneindia.com/50yrs/kapur.htm.
3. ^ Ranjit V. Pandit (2005). "Why believe in India". McKinsey.
http://www.mckinseyquarterly.com/Why_believe_in_India_1663.
4. ^ Khanna (2005).
5. ^ Jataka IV.
6. ^ http://tamilartsacademy.com/books/coins/chapter01.xml
7. ^ The World Economy: Historical Statistics, Angus Maddison
8. ^ Ratan Lal Basu & Rajkumar Sen: Ancient Indian Economic Thought, Relevance for
Today, ISBN 81-316-0125-0, Rawat Publications, New Delhi, 2008.
9. ^ Raj Kumar Sen & Ratan Lal Basu (eds): Economics in Arthasastra, ISBN 81-7629-
819-0, Deep& Deep Publications Pvt. Ltd., New Delhi, 2006
10. ^ a b c Angus Maddison (2001). The World Economy: A Millennial Perspective, OECD,
Paris
11. ^ a b c Angus Maddison (2003). The World Economy: Historical Statistics, OECD, Paris
12. ^ Broadberry, Stephen; Bishnupriya Gupta (23-25 June 2005). "COTTON TEXTILES
AND THE GREAT DIVERGENCE: LANCASHIRE,INDIA AND SHIFTING
COMPETITIVE ADVANTAGE, 1600-1850". Proc The Rise, Organization, and
Institutional Framework of Factor Markets. Utrecht.
13. ^ His Fortune on TIME
14. ^ One-sixth of Indians were urban by 1950
15. ^ Redefining The Hindu Rate Of Growth. The Financial Express
16. ^ "Industry passing through phase of transition". The Tribune India.
http://www.tribuneindia.com/50yrs/kapur.htm.
17. ^ a b c ^ Lawrence H. Officer, "Exchange rate between the United States dollar and forty
other countries, 1913 -1999." Economic History Services, EH.Net, 2002. URL:
http://eh.net/hmit/exchangerates/
18. ^ One-fifth of Indians were urban by 1975
19. ^ One-fourth of Indians were urban by 2000
20. ^ http://www.business-anti-corruption.com/country-profiles/south-asia/india/corruption-
levels/judicial-system/
[edit] Bibliography
Articles
• Dr. Nupam P. Mahajan, (1999) India's First Coinage. Retrieved Feb. 24, 2005.
Books

• This article incorporates public domain material from websites or documents of the
Library of Congress Country Studies.
• Adam Smith, The Wealth of Nations.
• Jawaharlal Nehru, The Discovery of India
• Max Weber, The Religion of India: The Sociology of Hinduism and Buddhism
• Micklethwait, John & Wooldridge, Adrian (2003). The Company: a short history of a
revolutionary idea. Modern library chronicles. ISBN 0-679-64249-8.
• Sankaran, S (1984). Indian Economy: Problems, Policies and Development (7th ed.
(1994)). Margham Publications.
• Datt, Ruddar & Sundharam, K.P.M. (1965). Indian Economy (51st Revised ed. (2005)).
S.Chand. ISBN 81-219-0298-3.
• Limca Book of Records (1993). Bisleri Beverages Limited. ISBN 81-900115-6-1.
Papers
• Khanna, Vikramaditya S. (2005). The Economic History of the Corporate Form in
Ancient India. University of Michigan.
• Pearce, H. Thomas (Spring 2003). Weber's study of the Hindu ethic and the caste system.
News
• "Manmohan Singh's address at the Oxford in July 2005".
http://www.hindu.com/2005/07/10/stories/2005071002301000.htm. Retrieved December
10 2005.
• http://livesharemarkets.com/2008/04/04/inflation-at-3-years-hightouches-7-markets-
down-by-490-points/
[edit] Bibliography
• G. Balachandran, ed. India and the World Economy, 1850-1950 Oxford University Press,
2005. ISBN 0-19-567234-8.
• Chaudhuri, K. N.Trade and Civilisation in the Indian Ocean: An Economic History from
the Rise of Islam to 1750 (1985)
• Ludden, David, ed. New Cambridge History of India: An Agrarian History of South Asia
(1999).
• Habib, Irfan. Agrarian System of Mughal India (1963, revised edition 1999).
• Habib, Irfan. Atlas of the Mughal Empire: Political and Economic Maps (1982).
• Habib, Irfan. Indian Economy, 1858-1914 (2006).
• Raychaudhuri, Tapan and Irfan Habib, eds. The Cambridge Economic History of India:
Volume 1, c. 1200-c. 1750 (1982).
• Kumar, Dharma and Meghnad Desai, eds. The Cambridge Economic History of India:
Volume 2, c.1751-c.1970 (1983).
• Tomlinson, B. R. et al.The Economy of Modern India, 1860-1970 (1996) (The New
Cambridge History of India)
• Lal, Deepak. The Hindu Equilibrium: India C.1500 B.C.-2000 A.D. (2nd ed. 2005).
• Frankel, Francine R. India's Political Economy, 1947-1977: The Gradual Revolution
(1978).
• Rudolph, Lloyd I. In Pursuit of Lakshmi: The Political Economy of the Indian State
(1987).
• Roy, Tirthankar. The Economic History of India 1857-1947 (2002, 2006).
• Larue, C. Steven. The India Handbook (1997) (Regional Handbooks of Economic
Development).
• Das, Gurcharan. India Unbound: The Social and Economic Revolution from
Independence to the Global Information Age (2002).
[edit] External links
• Economic History of India Precolonial times to present
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