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13 Major Economic Landmarks of Independent India

  The Indian economy has come a long way since achieving independence. In 1950-51, the country's economy was tottering with a GDP of a mere Rs. 2.7 lakh crore. In 2017-18, it has grown in Rs. 170 lakh crore in behemoth. Amarendra Singh

The Indian economy has come a long way since achieving independence. In 1950-51, the country’s economy was tottering with a GDP of a mere Rs. 2.7 lakh crore. In 2017-18, it has grown in Rs. 170 lakh crore in behemoth. Recently, the Indian economy has also become the world’s sixth largest economy, with US$2.597 trillion in size, and is projected to become the world’s fourth-largest economy by year 2022, according to projections by the International Monetary Fund. To celebrate this achievement, and our 72nd Independence Day, let us have a look at some of the biggest socio-economic milestones in the country’s journey so far that made this feat possible.

1967: Green revolution
Post independence, Indian population growth outpaced the food production, which was erratic and stagnant (total food grain production in India was 76.67 million tons in 1959-60, and 74.23 million tons in 1966-67). As a result India was a net importer of food grains (India imported over 10 million tonnes of food grain in 1965-66 and a similar amount the previous year).
This called for urgent measures to improve crop yield in the form of new technology adoption, developing and using high yielding crop varieties, and application of chemical infused fertilizers. This decade of revolutionized approach to agriculture is known as the Green Revolution of India. In just under a decade, India’s food grain production reached 121.03 million tons. The Green Revolution helped India become a food grain surplus nation. India has also shown a steady average nationwide annual increase in the kilograms produced per hectare for some agricultural items. India’s food grain production is expected to increase 277.49 million tonnes, exceeding the previous record of 275.11 million tonnes during 2016-17.
While it was great for food grain production, the Green Revolution was not without drawbacks and limitations. Its biggest drawbacks were its limitation to just a few states, promotion of mono-cropping and excessive use (rather misuse) of chemical fertilisers. Also, despite producing so much food grains, India has still not been able to provide food security to her people – there are almost 195 million undernourished people in India (25% of the world’s hunger burden). India currently ranks 74th out of 113 major countries in terms of food security index.

1968: National Policy on Education
At the time of independence, the literacy rate in India was around 12%. Since then, Indian governments launched and sponsored a variety of programmes to increase education and literacy in both rural and urban India. Development of high-quality scientific education institutions such as the Indian Institutes of Technology, and formation of National Council of Educational Research and Training (NCERT) to advise governments on formulating and implementing education policies were the result of these efforts. However, the outcome was not as desired.
In 1968, the first National Policy on Education (NPE) was announced with the objectives of ‘radical restructuring’ and providing ‘equal educational opportunities’ to all. The policy called for compulsory education for all children up to 14 years, better training and qualification of teachers, and focus on learning of regional languages (‘three language formula’) at the secondary education to reduce gaps in communication and idea exchange.
The NPE was far reaching, and has retained its basic structure since then. It was modified in 1986, to remove disparities and to equalise educational opportunity for Indian women, Scheduled Tribes and the Scheduled Caste communities. In 1992, it was again modified to include common entrance examination on all India basis for admission to professional and technical programmes in the country.
Presently, the Gross Enrolment Ratio (GER)1  in higher education is 25.2% (against the desired level of 30% by year 2020). China’s GER is 43.4%, and USA’s is 85.8%. The literacy rate improved to 80% in 2017, from 12% in 1947. In 2014-15, there were about 26 crore students enrolled up to secondary education, with girls making 48% of the total enrolments2. As per All India Survey on Higher Education (AISHE), India’s 59.34% colleges are located in rural areas, 9.3% colleges are exclusively for girls. At the Under-graduate level, girls make 47.3% of all the students enrolled in higher education.

1969: Nationalisation of Banks
The measure of Bank nationalisation came in to effect on 19th July, 1969 following the Banking Companies (Acquisition and Transfer of Undertakings) Ordinance that transferred the ownership of 14 of India’s largest commercial private banks, estimated to control over 70% of all deposits in the country at that time, to the government. In the first decade of independence, more than 360 private banks failed across the country, resulting in depositors losing their entire money. Additionally, private commercial banks were seen as only helping the large industries and businesses, completely ignoring agriculture sector. The move helped the nationalised banks to become the majority lenders in the Indian economy, and penetrated the Indian hinterlands with their widespread networks.
At present, India has the highest number of bank branches in the world. As per RBI and IMF, there were more than 1.26 lakh bank branches in India in 2015—the highest in the world. The objective of geographical reach was also met as the overall spread between the rural (34%), semi-urban (28%) and the urban areas (38%) is fairly even. The nationalised banks have over 30% branches in rural areas, while private sector banks largely (80%) cater to the urban and semi-urban population.
One of the primary ideas behind that move was to increase general public’s confidence in the banking system and encourage them to save and invest. While India’s formal banking sector has soared to US$ 1.7 trillion, it is also struggling with the recovery of US$ 210 billion problem loans. Some regional banks have also been ensnared in fraud scandals. Collectively, these issues can negatively impact India’s growth outlook in future.

1970: Operation Flood
Also known as the ‘White Revolution’, the Operation Flood was a project undertaken by the National Dairy Development Board (NDDB). As the world’s biggest dairy development programme, it transformed India from a milk-deficient country, to the world’s largest milk producer. The scale of milk production changed from just 17 million tons in 1950-51 to 165 million tons in 2016-17. The project not only multiplied per capita availability of milk in India (from over 50 gm/day in 1950-51 to 351 gm/day in 2016-17), but also made dairy farming the largest self-sustainable rural employment generator in India. As per the report by Edelweiss Securities, the Dairy industry in India was estimated to be over Rs. 5.4 lakh crore in value in 2016, and is expected to expand to Rs. 9.4 lakh crore trillion by year 2020.
The industry is not immune to malpractices. An investigation by the Federation of Indian Animal Protection Organisations (FIAPO) found that dairy animals, especially in the urban areas, are unfairly treated. A majority (64%) of dairy animals were found to be ill, injured or distressed. Practices such as illegal use of drugs and hormones to increase the milk let-down were found to be prevalent.

1983: Launch of Maruti and growth of Indian Automotive sector
While the Indian automotive industry started developing in the 1940s, a distinct growth started only in the 1970s. Cars were considered ultra luxury products; their manufacturing was strictly licensed, expansion was limited and there was a restrictive tariff structure. As a result, India was also lagging on the technological and engineering of automotives. However, things started to change and the government recognised the importance of having a home grown car manufacturer and amending the policies for the same. In 1982, license and JV agreement was signed between Maruti Udyog and Suzuki Motor of Japan wherein Maruti had the license to produce 40,000 cars per year.
Things changed with the Motor Vehicles Act (1988), Central Motor Vehicles Rules (1989) and economic liberalisation of 1991, which de-licensed Indian Automotive Industry, and allowed foreign automobile manufacturers in the Indian market. In the financial year 2017-18, the Indian passenger vehicle industry produced 4 million vehicles (cars, utility vehicles and vans) annually. Out of these 4 million units, Maruti alone contributes 1.56 mn. Units and commands the largest market
share in terms of volumes. Currently, there are 12 Indian manufacturers, 7 joint venture manufacturers, and 14 foreign owned manufacturers in India. The industry presently accounts for more than 7% of the Indian economy.

 

1984: Information Technology (IT) industry comes of age
Origins of the Indian IT Sector can be traced back to late 1960s when Tata Consultancy Services (TCS) was started by the TATA group for software development services. TCS developed punch-card facilities for TATA Steel. However, in 1974, Burroughs Corporation, a mainframe manufacturer based in USA, offered TCS to export programmers for the installation of system software. Around the same time, Wipro and Patni Computer System started developing software and providing services. In 1981, Infosys started with a focus on providing software services and also developed an IT business model, which was later adopted by most of the Indian IT companies.
However, till 1984, IT was not considered an industry and was not given any subsidies. In 1984, some strategic reforms were made, which designated IT as an industry. The government formed New Computer Policy of 1984, which lowered the import tariffs on hardware and software, recognised the software exports as a ‘de-licensed industry’ making it eligible for bank finances, freed it from the license-permit, and allowed it to set up offshore units of foreign companies in India. Later on, in 1986 Policy on Computer Software Export, Software Development, and Training set out the objective of expanding the Indian software export and development through data communication links. Post the 1991 liberalisation, the growth was rapid.
At present, IT industry is an important sector of the Indian economy and has emerged as an important contributor to its growth. The IT sector’s size has increased at a rate of 35% per year during the last decade, with the aggregated revenues of US$ 160 billion in 20173. The share of IT industry is around 7% in Indian GDP in 2016-17, up from 1.2% in 1997-98. IT sector is also one of the biggest job-creators in the country, adding over 1 lakh jobs last year.

1991: Economic Liberalisation of India
During the mid-80s, India was staring at severe currency devaluation, low investor confidence and balance of payments problems on the back of high imports and large fiscal deficit. By the end of 1990 India had foreign exchange reserves that could barely finance 3 weeks’ worth of imports. The Indian government also came close to defaulting on its loan. This forced the government to pledge 67 tons of gold to the International Monetary Fund (IMF) in exchange for an emergency loan of US$ 2.2 billion to cover the balance of payment debts. This situation led the ouster of Chandra Shekhar government, and election of PV Narasimha Rao led government.
Faced with hard choices, the new government allowed economic reforms that opened up the Indian economy for the outsiders through FDI, ended the Licence Raj and public monopolies, reduced tariffs and interest rates. This tone change in Indian economy allowed the country to progress towards a free-market economy model, substantial reduction in state control over the economy and increased financial liberalisation.
India’s GDP stood at Rs 5.86 lakh crore in 1991, which has swelled to Rs. 170 lakh crore in 2017. Whereas, the annual GDP growth rate averaged 4.4% during the 1970s and 80s, it accelerated to 5.5% during the 1990s and early 2000s, and further to 7.1% in the past decade. When compared with the largest emerging global economies, this India’s growth stands out as being unique.

1995: WTO agreement
India became a member of the World Trade Organization (WTO) on 1st January, 1995, and opened up India’s global trade. Following the liberalisation and structural reforms of 1991, country was ready to reform its trade practices. Under WTO, which now claims 196 countries, there are three specific benefits that are accorded to its members –
The WTO grants each member ‘Most Favored Nation’ status, which means that WTO members treat each other the same and do not give preferential trade benefit to any one specific member. WTO members have lower trade barriers with each other, which includes tariffs, import quotas, and regulations. This helps expand market for any product, leading to greater sales, more jobs, and faster economic growth. Lastly, as a majority of WTO members are developing countries, they can access ‘developed markets’ at lower tariffs. India gained a lot from these provisions, as the country’s exports grew from US$ 26.33 billion in 1994-95 to US$ 302.84 billion in 2017-18, registering a CAGR of more than 11%.
While beneficial for trade, the WTO also poses some serious challenges to some of the Indian industries, esp. the agriculture. WTO has issued a food subsidy cap of 10%, which could jeopardise the food subsidies given to poor farmers under the ‘minimum support price (MSP)’. India has also ratified the Trade Facilitation Agreement and can not deny market access to other countries, making it very challenging for domestic farmers to compete with foreign players due to their limitations of technical know-hows, production, quality etc.

1995: Pulse Polio Immunisation programme
Until the early 1990s, India was hyper-endemic for Polio; it is estimated that on an average, 500-1000 children were paralyzed daily due to the disease. Polio vaccination against polio started in 1978, which covered around 60% infants till 1984. Vaccine efficiency was low, and Uttar Pradesh and Bihar were the biggest suffering states.
In 1995, India launched Pulse Polio immunisation programme, which aimed at 100% coverage. Under this programme, the transmission of polio virus was finally interrupted with sustained and extraordinary efforts. Since 2004, the annual pulse polio vaccination campaigns were conducted 10 times each year, and virtually every child was tracked and vaccinated. The last reported cases of wild polio in India were in West Bengal and Gujarat on 13th January, 2011. On 27th March, 2014, the World Health Organization (WHO) declared India a polio free country, as no cases of wild polio were reported for three years.
A research4 published in 2015, estimated that India’s Polio eradication programmes averted over 3.94 million paralytic polio cases, more than 3.9 lakh polio deaths, and over 1.48 billion disability adjusted life years. The research also estimated that the programme contributed a US$ 1.71 trillion (Rs. 76.91 trillion) gain in Indian economic productivity between 1982 and 2012. Life expectancy grew up to be 68.89 years, which was only 32 years at the time of independence.

1998: National Highways Development Project (NHDP)
The National Highways Development Project (NHDP) was a project to upgrade major highways in India to higher standards, which included their rehabilitation and widening. Although, national highways account for only about 2% of the total road length in India, they carry about 40% of country’s total traffic.
The project was started in 1998 and managed by the National Highways Authority of India (NHAI). It represents 49,260 kms. of roads and highways work and construction in order to boost economic development of the country.
A research conducted by Asian Institute of Transport Development (AITD) for NHAI found that proximity to national highways has positive impact on the rural populace. Governments can form efficient anti-poverty policies; it increases rural population’s overall well-being, mobility, and provides better access to amenities like electricity, drinking-water, sanitation, and so on. The government has planned to end the NHDP programme in year 2018, and consume the ongoing projects under a much larger Bharatmala project.

2014: Foreign Direct Investment (FDI) in several sectors
Foreign investments are considered extremely crucial for the Indian economy, which needs in excess of US$ 1 trillion to overhaul its infrastructure such as ports, airports and highways to boost growth. A strong inflow of foreign investments will help improve the country’s balance of payments, boost investor sentiments and strengthen the rupee exchange rates against global currencies, including USD and Euro.
Since the beginning of year 2015, the Indian government has relaxed FDI rules and opened up food retail, airlines, private security firms, and defence sectors to foreign investment. Other sectors in which FDI norms have been relaxed include e-commerce in food products, broadcasting carriage services, private security agencies and animal husbandry.
Presently, up to 100% FDI is allowed in the Defence Sector, 74% in brown-field Pharmaceuticals, 100% in brown-field Airport projects, 100% Civil Aviation, 100% under automatic route for cable networks, DTH and mobile TV, 49% in insurance sector. Government also launched the ‘Make in India’ initiative under which FDI for 25 sectors was further liberalised.
The government claims that FDI in India increased to US$ 61.96 billion in 2017-18, from US$ 60 billion in 2016-17. However, according to the United Nations Conference on Trade and Development (UNCTAD) report, FDI to India decreased to US$ 40 billion in year 2017 from US$ 44 billion in year 2016.

2015: Paris Agreement and India’s Renewable Energy push
In December 2015, the Paris Agreement (within the United Nations Framework Convention on Climate Change (UNFCCC)), dealing with greenhouse-gas emissions mitigation and related issues was signed. The Agreement’s long-term goal is to limit the global average temperature increase to 1.5 °C, lest risk serious effects of adverse climate change. India was responsible for contributing over 6% of the global CO2 emissions, and was the world’s fourth-largest carbon emitter following China, USA, and the European Union.
In its nationally-determined contributions (NDCs), India promised to reduce its emissions intensity (Greenhouse gas emissions per unit of GDP) by 33% to 35% below 2005 levels by the year 2030. It also promised to ensure that at least 40% of its energy in year 2030 would be generated from non-fossil fuel sources, such as Solar, Wind or Bio-fuels. Additionally, the country would rapidly increase its forest cover so that an additional carbon sink of 2.5-3 billion tonnes of CO2 equivalent is created by the year 2030.
To achieve this, India will have to shift from coal-based power generation to renewable energy sources that include 100 GW from Solar, 60 GW from Wind, 10 GW from Biomass and 5 GW from small hydropower by year 2022. In June 2018, India had an installed capacity of 343.90 GW, out of which more than 35% was from non-fossil-fuel sources. 21.65 GW comes from Solar, 34.05 GW from Wind, 8.70 GW from Biomass and 4.48 GW from small hydropower.
According to a report5, India was on course to achieve the promises made in the NDCs for the year 2030. It also says that the projections made in India’s draft National Electricity Plan (2016), which talks about stabilisation of coal-powered electricity to 250 GW over the next decade and an expansion of renewable energy to 275 GW by 2026-27 would, if implemented, were expected to have substantial impact on its emissions. It is also estimated6 that the growth in India’s renewable energy sector could generate more than 3.30 lakh new jobs over the 2017-2022 period.

2017: Goods and Services Tax (GST)
A widely debated move, the implementation of the Goods and Services Tax (GST) has been India’s one of biggest economic reforms. It was also very complex to achieve—from amendment of Constitutional division of tax base between the Centre and the states, to building political consensus across the federal spectrum. It is also country’s first value-added tax that functions entirely on IT!
The primary objective of GST was to bring all indirect taxes and services under juts one overarching integrated tax. The introduction of GST did away with the multitude of taxes and levies and subsumed them under Central GST (CGST) and State GST (SGST), which enabled the introduction of a standard tax rate across the country. Prior to GST, goods moved around India as if they were transiting through different countries, rather than through various states under the same federal union.
Second objective was to prevent rampant tax evasion. With a transparent rule there is strong belief that tax payers’ behaviour will alter favourably. The Economic Survey of India 2018 claimed that post GST, the number of unique indirect taxpayers increased by 34 lakh, and by June 2018, it increased to 54 lakh. Obviously, the implementation of GST will make the Indian economy more efficient, compliant, and beneficial. 

1 Gross Enrolment Ratio is a statistical measure for determining the number of students enrolled in Under-graduate, Post-graduate and Research level studies as a percentage of the entire population
2Ministry of Human Resources Development report
3NASSCOM estimates

4“The Estimated Health and Economic Benefits of Three Decades of Polio Elimination Efforts in India” – Arindam Nandi, Devra M. Barter, Shankar Prinja, T. Jacob John

5Report was jointly prepared by the NewClimate Institute, Netherlands; Environmental Assessment Agency; and the International Institute for Applied Systems Analysis
6As per ‘Council on Energy, Environment and Water and the Natural Resources Defense Council’ estimates