Indian economy has drastically grown in the last five decades. A lot of Indian nationalists believed that the best way to eliminate mass poverty was the rapid industrialization that is led by the state.
After a long stagnation, the economy accelerated in the 1950s and Vallabhbhai Patel ensured that the private sector was not pushed into a corner while the public sector played an important role in the newly independent India.
The industrial policy resolution played a major role in the growth of the country. Not many know that the industrial production grew in double digits due to the push was given to the economic growth which was led by the massive structural change in the economy. The Indian economy was more open to foreign trade as well as the foreign investment even though there was a collapse of global commodity prices in the decade.
When Lal Bahadur Shastri took over in 1964, he noticed soaring food prices which convinced him that there was a need to focus on agriculture. The resources were allocated based on physical controls instead of financial initiatives and this called for a higher investment in the private sector. He was succeeded by Indira Gandhi who took a decision to devalue the rupee. The economy was choked due to the maze of controls which were used by the political parties. It was the government that controlled everything. The controls were tightened and there was industrial stagnation. India was hit by a rise in the global oil prices and two consecutive droughts. Inflation was at an all-time high.
By then, Indira Gandhi had learned her lessons and made her peace with the business houses in India. Taxes came down and it was possible to expand the industrial capacity as well. The next five-year plan focused on productivity and helped the existing businesses increase efficiency. The economic growth took a structural break in 1980. There was expansion in fiscal deficit and a severe balance of payment crises after the invasion of Kuwait by Saddam Hussein. There was a new minority government led by P.V.Narasimha Rao which ended industrial licensing and thus, opened the economy for international trade. The progress of reforms since then has been in fits and the story is well known.
India saw major industrial reforms and growth during this period. Congress was a ruling party for almost ten years which was followed by the BJP taking over with Narendra Modi as the Prime Minister. He reformed the private and the public sector and made two major changes in the economy- Demonetization and Goods and Services Tax. He removed the multiple taxation systems and introduced the GST which aims to make it simpler and easier for manufacturers and service providers to charge and file taxes. The nation has significantly grown over the years and become stronger in more than one way. Keeping inflation aside, the country has had a strong positive decade and hopefully the same will continue in the coming years.