POLITICAL ECONOMY : INDIA EMERGING AS A GLOBAL POWER

Political Systems describe the process by which

decisions are made determine who chooses the leaders of the

country the process by which laws are made how much control do people have and checks

and balances in terms of power

Economic Systems describe how goods (services and

products) are produced and distributed. determine who owns industry how much of one product is produced how consumers purchase or receive the product how are prices determined, how many products

are produced and when A study of how political systems interact

with economic systems is called political economy.

HISTORY

Indus valley civilization. British colonial rule. British infrastructure. Deterioration of economy. Dumping ground. Taxes Early independence

History (Pre 1947) The known Economic history of India begins with

the Indus Valley civilization From 300 B.C. to 1200 A.D. the Maurya

Empire united most of the Indian subcontinent. The political unity and military security allowed

for a common economic system and enhanced trade and commerce.

During this period India is estimated to have had the largest economy of the ancient and medieval world.

Between the 1st and 17th centuries A.D., controlling between one third and one fourth of the world's wealth.

Indus Valley Civilization

Flourished between 2800 BC and 1800 BC

Agriculture, Animal Husbandary Used tools and weapons Import-Export Trade Perfect Urban planning

Pre-Colonial Period

Assessment of India's pre-colonial economy is mostly qualitative, owing to the lack of quantitative information

In 1600, During Akbar’s reign in the Mughal Empire the revenue reached upto 1500M Rs whereas Britain at that time totaled just  £16M

After the fall of the Mughals, India was administered by Maratha Empire and the revenue of India was just 100M Rs

After the loss of Panipat, it reduced to 30M Rs

India has been integrated into the world economy since the 14th century

Its world economy became global after 1500

Specific routes and points of contact became critical by 1800: especially the coasts and northwest interior

In the 1800s, The British Empire produced a new territorial domain for the evolution of

modern state power

British colonial rule

India had 32.9% gdp of the world. Company rule in 1757. Institutional environment and

infrastructure of railways and telegraph. Foreign policies aimed at exploitation.

Contd..

Severe famines,droughts and heavy taxes India was made a dumping ground. Indian industries were inundated.

Colonial Period Taxation

Environment Institutional

Environment Standardized

Weights Capital Markets Developed system of

Railways and Telegraphs

Single currency with fixed exchange rates

Colonial rule brought a major change in the taxation environment from revenue taxes to property taxes

At the end of colonial rule, India inherited an economy that was one of the poorest in the developing world

Historical Share of Global GDP

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Early independence

Protection of home industry. Public sector and nationalisation. High Import tariffs,import substitution. Encouragement to small and cottage

industries. Finance infrastructure.

INDUSTRIAL POLICY AND GROWTH SINCE 1947

Ambitious plan of industrial development and encouraged the setting up of new industries and the expansion of existing industries.

India used its import policy for the healthy development of local industries.

Restrictions were imposed on the import of industrial goods.

The effort of the Government was to encourage the production of industrial goods indigenously which were restricted from import.

Local industries were encouraged to have foreign collaborations and to import the technical know-how.

Some Plans Undertaken by Government for Industrial Growth

The Second and Third plans emphasized on the development of capital goods industries.

Apart from strict control over imports and the physical ban on the imports of many products, customs tariffs were raised in some cases to 200 to 300% on imported products/goods.

To provide the financial infrastructure necessary for industry, the Government set up a number of development banks like ICICI, IDBI, LIC, UTI.

Regulations under the Foreign Exchange and Regulation Act (FERA) restricted foreign investment in a company to 40%.

GDP GROWTH RATE IN INDIA

As per the estimate by Ministry of Statistics and Programme Implementation, GDP of India in the year 1990 stood at 5,542,706 in comparison with 842,210 in 1975.

Information technology, telecommunications, electronics and hardware, pharmaceuticals, biotechnology, consumer durables, retail, infrastructure, airlines, hospitality, power, etc are sectors which contributed to the success of India GDP history post 1990s.

Employment scenario in India

The real challenge facing the developing countries during the current and future decade is now recognized as one of providing employment opportunities for all those who want to work.

It is also widely recognized now that economic growth does not automatically ensure the growth in employment opportunities adequate to match the growth in labour force.

Growth and decline of employment in India

From 1950 to the mid 1970’s employment in India was more concentrated in the rural areas i.e. 65%–70% of the population was in the agriculture sector.

The trend slowly started changing in the 1980’s, and with the economic liberalization taking place in the 1990’s the employment started moving to the other sectors, i.e. the manufacturing and service sector

Poverty

Meaning- Poverty is the lack of basic human needs, such as clean water, nutrition, health care,education, clothing and shelter, because of the inability to afford them.

Trends in Poverty, 1973 to 2005

Steps for elimination

Public distribution TRYSEM Small farmer’s development programme National rural employment programmes Minimum needs programmes.

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