Role of Government and State Financial Institutions in Indian Economy
Role of Government and State Financial Institutions in Indian Economy
Introduction
* The Economy of India is the ninth largest in the world by nominal GDP and the fourth largest by purchasing power parity(PPP). The country is one of the G-20 major economies and a member of BRICS. The country's per capita GDP (PPP) was $3,408 (IMF, 129th in the world) in 2010, making it a lower-middle income economy. * The independence-era Indian economy (before and a little after 1947) was inspired by the economy of the Soviet Union with socialist practices, large public sectors, high import duties and lesser private participation characterizing it, leading to massive inefficiencies and widespread corruption. However, later on India adopted free market principles and liberalized its economy to international trade under the guidance of Manmohan Singh, who then was the Finance Minister of India under the leadership of P.V.Narasimha Rao the then Prime Minister. * Communist policies governed India for sometime after India's Independence from the British. The economy was then characterised by extensive regulation, protectionism, public ownership, pervasive corruption and slow growth. Since 1991, continuing economic liberalisation has moved the country towards a market-based economy.
Early Policy Developments * Many early post independence leaders, such as Nehru, were influenced by socialist ideas and advocated government intervention to guide the economy, including state ownership of key industries. * The objective was to achieve high and balanced economic development in the general interest while particular programs and measures helped the poor. * India's leaders also believed that industrialization was the key to economic development. This belief was all the more convincing in India because of the country's large size, substantial natural resources, and desire to develop its own defence industries. * The Industrial Policy Resolution of 1956 greatly
Introduction
* The Economy of India is the ninth largest in the world by nominal GDP and the fourth largest by purchasing power parity(PPP). The country is one of the G-20 major economies and a member of BRICS. The country's per capita GDP (PPP) was $3,408 (IMF, 129th in the world) in 2010, making it a lower-middle income economy. * The independence-era Indian economy (before and a little after 1947) was inspired by the economy of the Soviet Union with socialist practices, large public sectors, high import duties and lesser private participation characterizing it, leading to massive inefficiencies and widespread corruption. However, later on India adopted free market principles and liberalized its economy to international trade under the guidance of Manmohan Singh, who then was the Finance Minister of India under the leadership of P.V.Narasimha Rao the then Prime Minister. * Communist policies governed India for sometime after India's Independence from the British. The economy was then characterised by extensive regulation, protectionism, public ownership, pervasive corruption and slow growth. Since 1991, continuing economic liberalisation has moved the country towards a market-based economy.
Early Policy Developments * Many early post independence leaders, such as Nehru, were influenced by socialist ideas and advocated government intervention to guide the economy, including state ownership of key industries. * The objective was to achieve high and balanced economic development in the general interest while particular programs and measures helped the poor. * India's leaders also believed that industrialization was the key to economic development. This belief was all the more convincing in India because of the country's large size, substantial natural resources, and desire to develop its own defence industries. * The Industrial Policy Resolution of 1956 greatly