Role of Policies in India’s Economic Development


We all know that the Indian stock market and the country’s economy are closely connected. The stock market is a system where individuals, FIIs, and DIIs buy and sell their stakes in companies through shares.

Upon listing, companies raise money from the stock market and use that raised funds to start new projects and grow their business.

The government’s economic policies and the state of the economy affect the stock market, either directly or indirectly. These rules have helped India become the world’s fifth-largest economy. India’s economy is now even bigger than the economy of the United Kingdom, which used to rule India.

Indian Economy at the Time of Independence

The Indian economy was managed in a controversial manner during British rule. Foreign merchants had control over Indian trade and industry, causing the Indian economy to become quite weak. Poverty was widespread, and inequality was a pressing issue before India gained independence. Do you want to know about India’s economic conditions back then? Let us share the details.

When India became independent, the country’s total income or GDP was Rs 2.7 lakh crore, and the population was about 34 crores. Fast forward to June 2023, the Finance Ministry reports that India’s GDP had grown to $3.75 trillion. It is important to note that today, India’s population has surpassed 1.3 billion.

According to India Today, historically, it is believed that on August 15, 1947, one Indian rupee was equivalent to one US dollar. However, presently, it takes more than Rs 80 to match a dollar’s value. While India’s exports and imports were minimal during independence, verifying the exact figures is challenging. A key point to remember is that until 1966, the Indian rupee’s value was tied to the British pound, not the US dollar. After the devaluation in 1966, the rupee’s value was set at around Rs 7.50 per US dollar.

In 1947, 10 grams of gold cost about Rs 88.62. Nowadays, the same amount of gold could cost you more than Rs 55,000.

Six Important Economic Policies After Independence

India has made remarkable progress after gaining independence, overcoming various challenges along the way. During this period, the Indian government adopted crucial policies, including Five Year Plans, liberalisation, privatisation, and the Make in India campaign.

Five-Year Plans: Starting in 1951, India implemented a series of Five Year Plans to develop different sectors of the economy systematically. These plans aimed to achieve balanced economic growth, industrialisation, and improved living standards. The focus was on sectors like agriculture, industry, infrastructure, and education, prioritising reducing poverty and inequality.

Green Revolution: Launched in the 1960s, the Green Revolution was a pivotal agricultural policy. Its purpose was to enhance food production by introducing high-yield crop varieties, modern irrigation techniques, and better farming practices. This initiative played a key role in making India self-sufficient in food, eliminating hunger, and reducing poverty.

Nationalisation of Banks: In 1969, the Indian government took control of 14 major private banks to bring them under public ownership. This move aimed to extend banking services to rural and underprivileged areas promote financial inclusion, and direct banking resources toward crucial development sectors. Later, in the 1980s, seven more banks were also nationalised.

Liberalisation, Privatisation, and Globalisation: In the early 1990s, India carried out a series of economic reforms that opened the country to international trade and investment. This policy shift aimed to liberalise markets, privatise government-owned enterprises and integrate India into the global economy. These reforms resulted in robust economic growth, increased foreign investment, and technological progress.

Make in India: Launched in 2014, the Make in India initiative focuses on bolstering manufacturing and attracting foreign investment in sectors like electronics, automobiles, and textiles. This initiative aims to turn India into a global manufacturing hub, generate employment, and enhance economic growth by encouraging domestic and foreign investment in the manufacturing sector.

Goods and Service Tax (GST): On July 1, 2017, India introduced the GST system. It is a single tax applied to the supply of goods and services. The main goal was to simplify and unify India’s tax structure. Before GST, the tax system was complicated, with businesses dealing with various taxes at different stages. GST has streamlined this system.

These policies have played a major role in India’s progress, growth, and global integration. They have also reshaped the country’s economic landscape.

What’s Next?

Looking ahead to India’s economic future, the International Monetary Fund (IMF) has adjusted its GDP growth predictions for 2023-24. The IMF has raised its estimate for India’s GDP growth by 0.20%, now projecting it to be 6.1%. Additionally, the IMF has projected India’s GDP to reach 6.3% in the year 2025.

That’s it for today. We hope you’ve found this article informative. Remember to spread the word among your friends. Until we meet again, stay curious!

*The article is for information purposes only. This is not an investment advice.

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