Since independence Indian economy has seen many ups and downs. With the end of British era and establishment of a new democratic republic India has been a nation which has been developing at a good pace in various sectors of economy. Whether its agriculture, industries (both small scale and large scale), services and what not India has made its mark in the global arena. And today India is one of the largest developing economies of the world.
Now when we talk of economy how can we forget international trade which adds a lot of revenue to our booming economy. If we compare the situation 30 years back with the contemporary era there has been striking differences in the way our economy ran. Earlier doing trade was not an easy task for either India or the rest as there used to lot of trade tariffs involved. The License Raj system allowed very limited things to be imported inside or exported outside. Very few licenses were selected for various foreign investors to invest or set up enterprise in the country. This system helped the economy initially with high growth rates and social expenditure awareness but by 1980s it proved to be a big loss with slow growth rates and image of being a restrictive state. Until 1990, when the Liberalization Privatization and Globalization (LPG) policy came to India it opened all new gates for international trade. In a new globalized scenario lots of foreign investments came in, many trade tariffs on import and export of goods were lifted and many of our cities like Mumbai , Chennai and Kolkata became important economic hubs. Privatization not only reduced the economic burden from the government but also allowed more collaborations and joint ventures with foreign companies which boosted the production of goods and services. Today many Indians have access to all modern equipment in their day to day life starting from clothes to gadgets to vehicles. India is also a military superpower and is on the verge of becoming economic superpower by 2030.
But that is just one side of the coin. India is an agriculture based economy which has 52% workforce but accounts to only 18% of the GDP. With the more and more foreign investments the indigenous sectors have taken a setback. India exports many agricultural products like rice, wheat, vegetables and meat of which the lowest quality is left for the home market. Farmers are not benefiting from this as the price at which they sell their produce is often low compared to the rates at which it is sold in both home and foreign markets. Moreover the subsidies for farmers has also become limited which has limited the produce. This has led to inflation as demand is exceeding supply. This may not be big problem for the middle class but is a nasty hit to the poor. The result poor is getting poorer and the rich who deal with export of the products are getting richer. With population growing at a fast pace it will be difficult for supplying food to all sections of the society. Unemployment in rural areas has become obvious with people less exposed to modern world and growing burden on the agricultural sector. Even if people are employed but the basic wages are often low to earn the basic amenities.
Not only the agricultural sector but many small scale industries like cotton mills have also taken a setback because of growing demand for foreign products. In urban areas, foreign investments in various sectors such as in retail has reduced the demand of local markets to a large extent. The result slow downfall of indigenous industries and many people getting engaged in informal sectors which is in turn loss to the government as no tax is paid by these sectors.
Hence we can say that until the balance between the two situations is not maintained it is not really a great success for the economy in which majority of the money stays in the hand of handful of people.
Now when we talk of economy how can we forget international trade which adds a lot of revenue to our booming economy. If we compare the situation 30 years back with the contemporary era there has been striking differences in the way our economy ran. Earlier doing trade was not an easy task for either India or the rest as there used to lot of trade tariffs involved. The License Raj system allowed very limited things to be imported inside or exported outside. Very few licenses were selected for various foreign investors to invest or set up enterprise in the country. This system helped the economy initially with high growth rates and social expenditure awareness but by 1980s it proved to be a big loss with slow growth rates and image of being a restrictive state. Until 1990, when the Liberalization Privatization and Globalization (LPG) policy came to India it opened all new gates for international trade. In a new globalized scenario lots of foreign investments came in, many trade tariffs on import and export of goods were lifted and many of our cities like Mumbai , Chennai and Kolkata became important economic hubs. Privatization not only reduced the economic burden from the government but also allowed more collaborations and joint ventures with foreign companies which boosted the production of goods and services. Today many Indians have access to all modern equipment in their day to day life starting from clothes to gadgets to vehicles. India is also a military superpower and is on the verge of becoming economic superpower by 2030.
But that is just one side of the coin. India is an agriculture based economy which has 52% workforce but accounts to only 18% of the GDP. With the more and more foreign investments the indigenous sectors have taken a setback. India exports many agricultural products like rice, wheat, vegetables and meat of which the lowest quality is left for the home market. Farmers are not benefiting from this as the price at which they sell their produce is often low compared to the rates at which it is sold in both home and foreign markets. Moreover the subsidies for farmers has also become limited which has limited the produce. This has led to inflation as demand is exceeding supply. This may not be big problem for the middle class but is a nasty hit to the poor. The result poor is getting poorer and the rich who deal with export of the products are getting richer. With population growing at a fast pace it will be difficult for supplying food to all sections of the society. Unemployment in rural areas has become obvious with people less exposed to modern world and growing burden on the agricultural sector. Even if people are employed but the basic wages are often low to earn the basic amenities.
Not only the agricultural sector but many small scale industries like cotton mills have also taken a setback because of growing demand for foreign products. In urban areas, foreign investments in various sectors such as in retail has reduced the demand of local markets to a large extent. The result slow downfall of indigenous industries and many people getting engaged in informal sectors which is in turn loss to the government as no tax is paid by these sectors.
Hence we can say that until the balance between the two situations is not maintained it is not really a great success for the economy in which majority of the money stays in the hand of handful of people.
