Image Source : FILE PHOTO Representative Image
Union Finance Minister Nirmala Sitharaman tabled the Economic Survey in Parliament on Tuesday. The Economic Survey is an annual document which reflects the picture of the nation’s financial condition in the last fiscal year. The document provides an overview of the short-to-medium-term prospects of the economy. The document is presented ahead of the union budget. The latest economic survey of FY24 projected GDP growth of 6.5-7 per cent in FY25. Moreover, India’s consumer price inflation will progressively align towards the inflation target in FY26. Amid these promising figures, it is imperative to take a look at the timeline of the Indian economy and understand how it evolved over time.
Mahalanobis and Planned economy (1953)
After independence, it was the need of the hour to take firm steps towards strengthening the Indian economy, which Britisher exploited. The Indian government under Jawahar Lal Nehru decided to go with a planned economy akin to what was followed in the USSR. After the first five-year plan with a key focus on agriculture, India adopted Mahalanobis model in the second five-year plan and set up a Planning Commission.
The model was created by Indian statistician Prasanta Chandra Mahalanobis in 1953. According to Mahalanobis model, investment in heavy industries and capital goods would eventually increase employment and make the economy strong. As a result, Navratna and Maharatna companies like BHEL, BEL, SAIL among others came into existence.
Green Revolution (1965)
India is highly dependent on agriculture and farming. It was in India’s best interest to make strides in increasing productivity so as to boost the national economy. In 1965 under PM Lal Bahadur Shashti, Indian agriculture got industrialised. Under M Swaminatan’s supervision, a high-yielding variety of seeds (HYV) was introduced and modern Agri-tools usage like tractors, good quality pesticides, fertilizers were promoted. With the green revolution, farmer’s income increased by 70 per cent. The areas like Punjab, Haryana and Uttar Pradesh which were highly dependent on farming benefitted the most.
Nationalisation of Banks (1969)
In 1969, Prime Minister Indira Gandhi took the biggest economic nationalising the 14 biggest commercial lenders. The nationalisation made the banks more accessible for the people especially farmers as the opening of branches started on a wide scale.
Economic Reforms (1991)
The economic reforms of 1991 opened the Indian economy for liberalisation, privatisation and globalisation. The reforms were undertaken because India was reeled by a huge fiscal deficit. Under the reforms, INR was devalued to 18-19 per cent, easing the Balance of Payment crisis. The reforms were significant as they opened doors to foreign investors and abolished the ‘License Raj’. Due to the privatisation, India managed to tackle unemployment effectively while its economy soared to new heights.
Demonetisation (2016)
In 2016, the popular PM Modi-led government announced demonetisation of Rs 500 and Rs 1000 currency notes. The impromptu announcement shocked the citizens as the Indian economy is most dependent on cash transactions. The two aims of demonetisation were to curb black money circulation and make India a cashless economy. The decision moved people towards cashless transactions which eventually made India the leader in public digital infrastructure in online transactions.
Tax reforms (2017)
A successor of Value Added Tax (VAT), the Goods and Services Tax (GST) was introduced in July 2017 which has tax slabs the same as VAT but is more comprehensive and subsumes almost every indirect tax except some state taxes. It is one of the most significant and major measures taken towards tax reforms. The implementation of ‘One tax, One nation’ made the realm of indirect taxes digital, eliminating the chances of corruption and promoting transparency. After the implementation of GST, the collection of indirect taxes has witnessed record heights. Moreover, the single tax regime registered a positive impact on ‘ease of doing business.’
