Indian Independence 15th August: Sixty Seven Years Journey

Indian Independence proved a turning point for world order, after Ireland and India large number of countries became Independent,  Indian independence proved the last nail to the sinking colonial ship. After Independence, the Indian democracy is an outstanding example for democracies around the world. India is an ethnically most different country in the world, and today it is an example of “Unity in Diversity.” India is doing exceptionally well in empowering men and women of their civil and political rights and improving the lives of millions of Indians every year by bringing them out of poverty. Perhaps millions of Indians still live in poverty, and it is a country where rich and poor live side by side.

Pre Independence Indian Economic Growth

Well-known British economic historian Angus Maddison wrote in his book “Contours of the world economy” outlined India’s macro-economic history that India was the world's largest economy during the 1 AD and 1000 AD.

Maddison writes that the annual revenue of the Emperor Akbar's treasury was in 1600 at £17.5 million (in contrast to the entire treasury of Great Britain two hundred years later in 1800, which total £16 million).

World’s GDP from 1 AD to 2003 Source: Angus Maddison’s estimates

Angus Maddison further writes that India's share of the world income went from 27% in 1700 (compared to Europe's share of 23%) to 3% in 1950.

Modern economic historians blamed the colonial rule (British Raj) for the dismal state of India's economy, investment in Indian industries was limited since it was a colony.

Post-Independence Indian Economic Growth

Self-reliance and promotion of indigenous cottage industries was the agenda adopted by Mahatma Gandhi and leaders of the freedom movement in India. After independence, India adopted a five-year development plan and priorities for industrialization to generate a large number of jobs, education and health were also on priority. Unfortunately, the country was forced to fight four wars with Pakistan (1947, 1965, 1971 and 1999) and one war with China (1962). Believe that due to these conflicts India was not in a position to provide adequate resources to improve agricultural production and reduce poverty. In the 1970s, India focused on green revolution and a programme to reduce poverty.

The scholars’ view that India was practising a highly restrictive policy, due to historical reasons foreign investors and companies not allowed in the Indian market; therefore, Indian industries prevented from modern technologies and global competition, this also impacted industrial growth.

After Independence first twenty years, India’s achievements were remarkable. It was able to build big dams, public sector industries. A nationwide chain of educational institutions, including renowned engineering, medical and research institutions established. These initiatives placed India as one of the largest pool of skilled workforce in the world. However, now these initiatives are proving insufficient due to various reasons including cast based reservation system which is counterproductive for the qualitative development of the nation.

The growth of Indian economy up to 1980, was slow but steady. In the 1950s the average growth rate was 4.1%, in the 1960s the average growth rate was 3.8% and 3.3% in the 1970s. There was a steady decline in productivity as well due to the absence of internal or external competition. India’s share in global export declined from 2% in the 1950s to 0.4% in the 1980s. An attempt was made to open the Indian economy in the 1980s, and however trade policy remained unchanged. During 1980s decade GNP was growing by 5.6% yearly.

Prime Minister  V. P. Singh not only proved disastrous Prime Minister for the social cohesion of Indian society but also for the Indian economy as a gross fiscal deficit of the Union Government increased from 6.2% of GDP to 8.3%. The external debt doubled, and the debt service ratio rose from 13.6% in 1984-85 to 30.9% in 1989-90.

The 1990s started with severe crises in foreign reserves in India, Indian trade and economic policies were moved 360 degrees from controlled license raj (socialist market) towards liberal free economic policies, the Indian market seen as a limited opening for global trade and economy.

The foreign investment rules liberalized. Majority FDI was allowed in most of the private sector industries and 100% FDI is allowed in export-related industries, ITC, some infrastructure sector, and technology parks.

The new economic liberalization policies accelerated India's growth. The first three-year growth rate was over 7%, and Exports grew with double-digit during 1991-1996. Domestic savings increased from 23% of GDP to 26% during 1991-1996. The inflation has been under control between 3 and 7 per cent.

Currently, India is the 10th largest economy in the world by GDP and the third largest economy by purchasing power parity (PPP). India was the 19th largest merchandise and the 6th largest services exporter in the world in 2013. It imported a total of $616.7 billion worth of merchandise and services in 2013, as the 12th largest merchandise and the 7th largest services importer. India's economic growth slowed to 4.7% for the 2013–14 fiscal year, in contrast to higher economic growth rates in the 2000s. The agriculture sector is the largest employer in India's economy, but it contributes to a declining share of its GDP (13.7% in 2012-13). Its manufacturing industry has held a constant share of its economic contribution, while the fastest growing part of the economy has been its services sector - which includes construction, telecom, software and information technologies, infrastructure, tourism, education, health care, travel, trade, banking and other components of its economy.

The United Progressive Alliance (UPA) government headed by an economist Prime Minister Manmohan Singh, who initiated economic liberalization in 1991, has failed to a large extent as the country suffered from policy paralysis and economic slowdown under his last five years regime.  Now the Nehruvian model of socialism looks outdated. The people of India, both rural and urban, loudly arguing that economic growth and actual development will do more to improve their lives than ever more public spending. There remain ample scope and broad consensus in the country that liberalization should be pursued further with caution.

Contrary to western economies, some Latin American and South East Asian countries, the Indian government continues to play an essential role in macroeconomic policymaking. It will continue to pursue self-reliance in the strategic sectors of the economy for inclusive growth and development.  

Democratic values

After independence, India has gained remarkable achievement in the field of political freedom and democracy. To run the largest democracy in the world, in a society that is culturally, ethnically, religiously and linguistically most heterogeneous in the world. It is a miraculous example of the integration and coexistence of communities and civilizations.

The general election of 2014 was held to constitute the 16th Lok Sabha (Lower House), electing members of parliament for all 543 parliamentary constituencies of India. These elections conducted in nine phases from 7 April to 12 May 2014 was the longest election in the world and country's history. According to the Election Commission of India, 814.5 million people were eligible to cast their votes, with an increase of 100 million voters since the last general election in 2009. Around 23.1 million or 2.7% of the total eligible voters were aged 18–19 years — a total of 8,251 candidates contested for the 543 Lok Sabha seats. The average election turnout overall in nine phases was around 66.38%, the highest ever in the history of Indian general elections.

The Indian democracy has stood the test of time, and it is flourishing with the time. Democracy has brought significant changes in the country and, in the process, have also been responsible for social cohesion and national unity. The democratic process has brought about a shift of political power from the middle and higher classes of urban society to backward classes. There are limited examples in recent history of such a visible shift of political power, involving such a large number of people, taking place in a short period, without violence and through a democratic way. This only a miracle, propelled by the power of democracy.

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Prashant Shukla is an independent writer and business partner in East West Enterprises Limited, living in Dublin, Ireland, Email at: ps@agnotech.ie