India’s Economic HistorySince Independence

GDPPovertyEmployment Industrial Growth

Group 1 - B-Ashwini S. Rao -Aditi U.Gowda-Guruprasad N. Patel -Likith R. Prakash -Nithya-Sachin

HISTORY

Indus valley civilization. British colonial rule. British infrastructure. Deterioration of economy. Dumping ground. Taxes Early independence

British colonial rule

India had 32.9% gdp of the world. Company rule in 1757. Institutional environment and

infrastructure of railways and telegraph.

Foreign policies aimed at exploitation.

Contd..

Severe famines,droughts and heavy taxes

India was made a dumping ground. Indian industries were inundated.

Early independence

Protection of home industry. Public sector and nationalisation. High Import tariffs,import

substitution. Encouragement to small and

cottage industries. Finance infrastructure.

INDUSTRIAL POLICY AND GROWTH SINCE 1947

Ambitious plan of industrial development and encouraged the setting up of new industries and the expansion of existing industries.

India used its import policy for the healthy development of local industries.

Restrictions were imposed on the import of industrial goods.

The effort of the Government was to encourage the production of industrial goods indigenously which were restricted from import.

Local industries were encouraged to have foreign collaborations and to import the technical know-how.

Some Plans Undertaken by Government for Industrial Growth

The Second and Third plans emphasized on the development of capital goods industries.

Apart from strict control over imports and the physical ban on the imports of many products, customs tariffs were raised in some cases to 200 to 300% on imported products/goods.

To provide the financial infrastructure necessary for industry, the Government set up a number of development banks like ICICI, IDBI, LIC, UTI.

Regulations under the Foreign Exchange and Regulation Act (FERA) restricted foreign investment in a company to 40%.

What is GDP

GDP(Gross domestic product)Aggregate monetary value of of all the goods and services produced in the country during a period of time.

Calculation

3 ways Supply/production side Income side Demand/expenditure side

Supply/production side

We broadly classify the whole economy into distinct water-tight segments.From here we estimate the total value of output and the corresponding value of inputs of raw materials and services used for production, after getting the necessary estimates the value added of each sector as a total value of output minus the value of inputs raw materials and services is attained. A similar exercise is carried out for services too and estimate of GDP is arrived at.

Income side

The income generated during the production of goods and services is distributed between two primary factor inputs, labour and capital.Income is distributed among people who own the capital and people putting their labour.

Demand /expenditure side

The income generated at the production stage finally will be spent taking the form of final expenditure. Final expenditure is then classified into Private Final Consumption Expenditure(PFCE), Govt Final Consumption expenditure(GFCE) and Gross Fixed Capital Formation(investment).

Contd..

PFCE would include all household expenditure on goods and services except on land and buildings.

GFCE would include the amt Govt pays to its employees, the remaining part i.e., gross fixed capital formation would include various kinds of investments. Adding all three expenditures would give the estimate of GDP.

GDP GROWTH RATE IN INDIA

As per the estimate by Ministry of Statistics and Programme Implementation, GDP of India in the year 1990 stood at 5,542,706 in comparison with 842,210 in 1975.

Information technology, telecommunications, electronics and hardware, pharmaceuticals, biotechnology, consumer durables, retail, infrastructure, airlines, hospitality, power, etc are sectors which contributed to the success of India GDP history post 1990s.

Since 1997, Indian economy has registered an average growth rate of more than 7%.though in 2009 there was a dip to7.4% and to 6.5% in 2010.

India’s GDP has grown at a slow but steady pace

Where India stands?

In terms of GDP India stands 12th

In terms of agricultural output India is the second largest

In terms of factory output India ranks 14th in quantity produced by industrial sector

Factors contributing to GDP.

For the elevation in the production volume in Indian agriculture various five year plans should also be given due credit, as each year they concentrated on each of the sectors that needed attention.

Improvements in irrigation methods as well as usage of modern technologies have also added value to the agriculture processes. 

Gas, mining, electricity and quarrying industries also play major developmental roles and contribute in a major way to the GDP.

But off late service industry has contributed the most to GDP around 54 %, though majority of the employed population is in the agricultural sector.

Employment scenario in India

The real challenge facing the developing countries during the current and future decade is now recognized as one of providing employment opportunities for all those who want to work.

It is also widely recognized now that economic growth does not automatically ensure the growth in employment opportunities adequate to match the growth in labour force.

Growth and decline of employment in India

From 1950 to the mid 1970’s employment in India was more concentrated in the rural areas i.e. 65%–70% of the population was in the agriculture sector.

The trend slowly started changing in the 1980’s, and with the economic liberalization taking place in the 1990’s the employment started moving to the other sectors, i.e. the manufacturing and service sector

Salient Features of Employment in India:

7% of the total employed are in the organised sector i.e., unorganised sector dominates in the employment scenario.

Additional employment generation in the organised sector is not significant i.e., scope for additional wage employment in the organised sector continued to be less.

Significant employment generation took place in the tertiary sector particularly in services industries.

Substantial employment growth was observed in the small and unorganised sector, i.e., in small and tiny enterprises.

Self-employment and casual labour continued to play a pivotal role in rehabilitation of the unemployed.

The Government has taken a number of steps to curb the unemployment

Prime Minister’s Rojgar Yojna(1993)

Rural Employment Generation Programme(1995)

Swarna Jayanthi Gram Swarojgar Yojna(1999)

Sampoorna Grameen Rojagar Yojna(2001)

Mahathma Gandhi National Rural Employment Guarantee Act 2005.

POVERTY

Poverty

Meaning- Poverty is the lack of basic human needs, such as clean water, nutrition, health care,education, clothing and shelter, because of the inability to afford them.

Trends in Poverty, 1973 to 2005

Causes

Dependence on primitive methods Population Illiteracy Regional inequalities

Steps for elimination

Public distribution TRYSEM Small farmer’s development

programme National rural employment

programmes Minimum needs programmes.