By Aditya Sarda:
India, one of the oldest surviving civilizations of the world, was a major trading destination in the medieval times owing to its crucial location. It has had a great and complicated economic past and relationships with almost all the major civilizations of the world.
Indus Valley, an economically sound and urbanized civilization, thrived between 2800 BC and 1800 BC. The city states of Harappa, Mohenjo-Daro were not only well-planned but also had extensive trade relationships with other civilizations like that of the Mesopotamians, the Egyptians and the Sumerians.
India’s political history is as long as an epic and as gripping as an action movie. A number of dynasties rose from the ground, wrote histories and then disappeared in the rubble. Mauryas (322 BC- 185 BC), under the guidance of scholar-politician Chanakya, established a common currency and promoted the trade. Chanakya’s book, Arthshastra, a treatise on statecraft, economic policy and military strategy, is still read and followed by many business leaders around the world.
Centuries later India was visited by a Portuguese explorer Vasco da Gama in 1498. This commenced a new era in the history of India. Many foreigners visited India for trading. Britain, like others, came as a trader but soon colonized the country and became the ruler.
Before British rule, India was the perfect example of the self-sustainable village-centric economy. The goods and services were mainly developed for consumption in the village and barter was a popular mode of transaction. But British established infrastructure- rails and road networks, which facilitated trade but destroyed the balance and harmony.
After years of exploitation by the British, India found independence on August 15, 1947. Pandit Jawahar Lal Nehru, India’s first Prime Minister, influenced by the Soviet Union’s success, followed the social democratic policies which were characterized by extensive regulation, protectionism, public ownership and central planning. The targets were import substitution, large public sector presence, business regulation and industrialization. Though this helped in establishing the fundamentals of economy, the rate of growth was very slow and corruption was rampant.
1960s heralded a new chapter in Indian agriculture in the form of ‘Green Revolution’. Use of high yielding seeds, better fertilizers and irrigation facilities contributed to a bumper growth in the production and set India on the path of food independence.
But the industrial scenario remained bleak with red-tapism and license raj leading to high fiscal deficits and a poor current account. Collapse of Soviet Union, India’s main ally and trading partner, and Gulf war, which spiked the crude prices, caused a serious balance of payment crisis for India. At one point India faced the possibility of having to default on the loans. India asked for a huge loan from IMF which in turn demanded for major economic reforms.
In 1991, the then Finance Minister and current Prime Minister Dr. Manmohan Singh, initiated the liberalization process and India never looked back.
Today India is the 10th largest in the world by nominal GDP and 4th largest by purchasing power parity. It enjoys one of the best growth rates in the world. Almost all the major companies are either already doing business in India or planning their foray. India, known in the previous years as the country of farmers and shepherds, is today the biggest outsourcing destination offering IT/ITES services to thousands of companies across the globe.
Indian economy is no doubt booming and is touted as the next global growth engine along with China. But still there is a lot to achieve. There is a huge income disparity and very low per capita income. Millions still go hungry to sleep every night. Corruption still remains a big problem. But despite all this there is always a hope of a better future.
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