Economic reforms in India should be viewed in terms of a number of distinct eras. Under normal conditions, economic reform in India describes post 1991 consequences of various economic practices.
The Pre-British Era
The most significant event of this era is the fact that an appreciable amount of land areas were brought under the control of a single entity like the Suris, the Lodhis or the Mughals. The G.T. Road (Grand Trunk Road) and the structures like Taj Mahal, Fatehpur Sikri were built in this era. Urbanization started growing from this era.
The British Period
India became united under the British rule. The British government in India formulated some economic policies to enhance the trading activities with foreign countries. This led to large scale trading with other foreign countries and accordingly developed major industries like steel and textile. An oil refinery in Assam was also set up in this period. The development of industry started on an extensive scale in notable places like Calcutta (presently Kolkata), Bombay (presently Mumbai) and Madras (presently Chennai).
During the period 1870 to 1900, the British rule in India suffered severe economic break down.
Economic reforms and Indian economy: A discussion
India attained it's reputation and became a prosperous nation during 1700s. During this period, India bettered it's economic status in the major areas like food and crop production, textiles, glass and metallurgy. The per capita income was also raised to a comfortable limit.
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The British rule after 1757, began to control and formulate new trading policies. These policies caused troubles for local farmers and craftsmen. The production, specifically in textile and food started deteriorating, which promoted increases in imports rather than exports. During this period, an approximate amount of about $1 trillion was shifted from India to other British dominated regions.
After independence in 1947, a Planning Commission was set up to plan and control Indian economy. A Five Year Plan was generated to estimate and project various economic policies. The first plan primarily aimed at developing agricultural and industrial sectors.
The economic scenario of India began to change in a dramatic way, after Indira Gandhi became the Prime Minister of India. During that period, the Government of India started promoting private participation. One of the significant steps taken by the Indian government was the nationalization of foreign companies, specifically the petroleum companies and banks. The State Bank of India became the parent organization for other banks in India and all the banks were under the control of Reserve Bank of India.
The economic liberalization started working from 1991, when P.V. Narasimha Rao became the prime minister of India. Since then, India has come out as one of the most affluent economies in the world.
In 1980, the share of agriculture in national income declined to 38 per cent, which became 31% in 1990 and 24.7% in 2001.
From 2003 the Indian economy started showing a sustainable growth rate. The GDP (Gross Domestic Product) grew at the rate of 8.6 % per year followed by 7.6% in 2004.
The annual growth rate of GNP(Gross National Product)
In 1985: 4.5%
In 1986: 4.1%
In 1987: 3.6%
In 1988: 10.1%
In 1989: 6.7%
In 2000: 4.0%
In 2001: 5.9%
In 2002: 3.9%
In 2003: 8.6%
In 2004: 7.6%
The abrupt strong increase of growth rate of the national income in India influenced the real economy.
The Index of production of food grain(1981=100)
In 1990
Rice:149
Wheat: 156
All other grains: 143
In 1999
Rice: 180
Wheat: 217
All other grains:169
In 2004
Rice:171
Wheat:204
All other grains: 164