~Shrishti Sharma
The tussle between Nyay Patra and Modi ki Guarantee has arrived on its judgement day. However, the outcome has been on a flip-side against what was predicted by the exit polls.
As the Parliament is set to induct members of the 18th Lok Sabha, here’s a look at the decades-long history of how the choices of our leaders sculpt the economic landscape we navigate today?
The growth story began when the country broke free from colonial rule, with Jawaharlal Nehru of the Indian National Congress becoming the first Prime Minister of an independent India.
With the ebb and flow of political tides, the question remains: who holds the key to India’s economic prosperity? Perhaps, what lies on the horizon for India’s economy in the 2020s and beyond?
Post-Independence Era (1947-1960s)
The First General Elections in 1952
Economic Policies:
Following the first general elections in 1952, India established a mixed economy with substantial state intervention. The Planning Commission was created, and Five-Year Plans were implemented to focus on heavy industries and infrastructure development.
Impact on GDP:
During this period, India experienced a GDP growth averaging around 3.5% annually, a rate often referred to as the “Hindu rate of growth” (Economic Survey of India, 1960). The emphasis was on initial steps towards industrialisation, with public sector enterprises playing a pivotal role (Ministry of Statistics and Programme Implementation).
Employment Rates:
The government-driven employment strategy focused on generating jobs in heavy industries and public infrastructure projects (Ministry of Labour and Employment).
FDI:
Foreign Direct Investment was limited due to restrictive policies and a focus on self-reliance (Reserve Bank of India, FDI Statistics).
Green Revolution and Economic Diversification (1970s-1980s)
The fifth Lok Sabha Election of 1971, also the year when India won the war against Pakistan.
Economic Policies:
Indira Gandhi’s return to power in 1971 marked the beginning of the Green Revolution, aimed at boosting agricultural productivity. Additionally, the nationalisation of 14 major banks in 1969 extended banking services to rural areas and enhanced credit availability (RBI Annual Report, 1970).
Impact on GDP:
The Green Revolution led to an increase in agricultural productivity, resulting in more stable economic growth. The GDP growth rate improved to around 4-5% annually during the late 1970s and 1980s (Economic Survey of India, 1980).
Employment Rates:
There was a significant increase in agricultural and public sector jobs, with an enhanced focus on rural development and employment (Ministry of Agriculture & Farmers’ Welfare).
FDI:
FDI saw a modest increase but remained controlled, focusing on protecting domestic industries (DPIIT FDI Data).
Economic Liberalisation (1990s)
P.V. Narasimha Rao’s Government in 1991
Economic Policies:
The 1991 elections brought P.V. Narasimha Rao to power, with Dr. Manmohan Singh as the Finance Minister. This period saw the introduction of liberalisation, privatisation, and globalisation (LPG reforms). Trade barriers were reduced, industries deregulated, and private and foreign investments were encouraged (Economic Survey of India, 1991).
Impact on GDP:
The GDP growth rate accelerated significantly, averaging around 6% annually through the 1990s (World Bank Data). This period marked a transition from an agrarian economy to a service-oriented one.
Employment Rates:
There was a shift towards private sector and service industry jobs, with expansion of employment opportunities in IT and manufacturing sectors (NASSCOM Reports).
FDI:
FDI surged, particularly in BFSI, technology, and infrastructure sectors. FDI inflows grew from $129 million in 1991 to over $2000 million by the late 1990s, peaking to $ 3557 Million in 1998 (DPIIT FDI Statistics).
Technology and IT Boom (2000s)
Atal Vihari Vajpayee’s term in 1999 and the year of Kargil War
Economic Policies:
The Vajpayee government emphasised the Information Technology and software services sector, along with infrastructure development initiatives like the Golden Quadrilateral highway project (Economic Survey of India, 2000).
Impact on GDP:
India witnessed robust GDP growth during this period, with rates averaging around 7-8% annually (World Bank Data). The IT sector became a major contributor to GDP and exports.
Employment Rates:
There was significant growth in IT and service sector jobs, leading to the creation of high-skill jobs in urban centers (NASSCOM Reports).
FDI:
FDI in technology and financial sectors increased substantially, with technology-driven sectors attracting significant foreign capital (DPIIT FDI Statistics).
Financial Reforms and Globalisation (2010s)
NDA coming into power and the making of Narendra Modi’s Government in 2014
Economic Policies:
The Modi government implemented major reforms such as Demonetisation in 2016 and the Goods and Services Tax (GST) in 2017 (Ministry of Finance). Banking sector reforms included the Insolvency and Bankruptcy Code (IBC) and recapitalisation of public sector banks (RBI Annual Report, 2017).
Impact on GDP:
GDP growth rates fluctuated, with a high of 8.2% in 2016-17 and subsequent moderation to around 6-7% (Economic Survey of India, 2019).
Employment Rates:
Employment rates varied, with new opportunities in the organised sectors but challenges in informal sectors due to structural reforms. The push towards formalisation of the economy aimed to create jobs in sectors like digital services (Ministry of Labour and Employment).
FDI:
FDI saw growth in fintech and startups. FDI inflows reached $74.39 billion in 2019, showcasing robust investor confidence (DPIIT FDI Statistics).
Current Scenario and Future Projections (2020s and Beyond)
Elections of 2024
Economic Policies:
Future economic policies remain speculative, based on party manifestos and previous trends.
Impact on GDP:
With stable policies, there is potential for sustained GDP growth rates of 6-8% annually (IMF Projections).
Employment Rates:
Emphasis is likely to be on job creation in new sectors such as technology, renewable energy, and advanced manufacturing. The expansion of the digital economy could lead to new employment opportunities (Ministry of Labour and Employment).
FDI:
FDI is expected to increase in tech-driven sectors and BFSI expansion, continuing to attract foreign investments, particularly in emerging sectors (DPIIT FDI Projections).
