Today,Aug 15, India celebrates its 72nd Independence Day. Since 1947, India has come a long way in the economic front. When Britishers left India, its economy was in tatters with the size of Gross Domestic Product (GDP) around being 2.7 lakh crore. Since then, the Indian economic development has been one of the significant stories with its GDP standing more than Rs 65 lakh crore. In a span of just 72 years of its independence, India is now the third largest economyafter the United States and China in GDP terms.
Here are 5 major economic decisions taken by India since its independence:-
1. Abolition of Zamindari act
The land is considered the most valuable asset for an individual. At the time of independence, there was a huge contrast in the landholding pattern with wealthy landlords having acres of lands and on the other hand small and tenant farmers holding a very piece of land. The first major reform was the Abolition of zamindari act in 1951 where the ceiling on the land holdings was introduced and land became a fundamental right under article 19 and 31 of the Indian constitution. The objective of this act gave economic freedom to the landless farmers and labours.
2. Nationalisation of banks
Prime Minister Indira Gandhi took a bold economic step in the history of independent India by nationalising 14 banks in 1969. The economy was witnessing a shortage of sufficient credit and the country's economy was not picking up the pace even after the green revolution of mid-1960s. Today, it is just because of this major step, we are witnessing a surge in private players entering the banking sector and setting up Non-Banking Financial Institutions (NBFCs) and Banking Financial Institutions (BFIs)
3. Economic Liberalisation
Hailed as the most important economic reform of modern India, the LPG reforms (Liberalisation, Privatisation and Globalisation) of 1991 made the Indian economy more market-oriented. Specific changes were introduced which include - reduction in import tariffs, deregulation of markets, reduction of taxes, and greater foreign investment. The inward-looking economy was thrown open to the global players. This step created a new economic class in Indian- middle class.
4. FDI in several sectors
Over the period of time, the India government has relaxed the FDI norms, which once was considered very stringent in the Indian economy. Since 1991, the government announced fresh liberalisation of FDI rules throwing open food retail, airlines, private security firms, and defence companies to higher overseas investment. Additionally, from the beginning of 2015, other sectors in which FDI norms have been relaxed include e-commerce in food products, broadcasting carriage services, private security agencies and animal husbandry.
5. Introduction of Goods and Service Tax (GST)
The GST is considered as the 2nd major economic decision after LPG reforms of 1991. Recommended by Kelkar task force in 2004 the GST took a long time to be materialized. It took almost 12 years for the uniform tax structure across India. However, considering the complex nature of the Indian economy, the government decided to introduce 4 slabs in GST viz. 5, 12, 18 and 28. The GST is expected to include the major chunk of informal sectors of the economy to formal sectors.