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Politecnico Di Torino POLITECNICO DI TORINO Corso di Laurea Magistrale in Engineering Management Tesi di Laurea Magistrale The Indian Economy Since Independence Academic Supervisor Candidate Prof. Luigi Benfratello Sourav Kumar Parida S238315 A.A. 2019-20 1 | P a g e ABSTRACT India, after being ruled and colonized by foreign powers, on 15th August 1947 got its independence. In this work the focus is on the economy of India especially after the independence. Currently India is one of the most attractive market. According to 2019 report, India is the fifth largest economy in terms of nominal GDP and third largest in terms of Purchasing Power Parity. At the time of independence, the country was not even self-sufficient in terms of food although it was an Agrarian economy and now it is one of the largest economies. The project includes five parts. The part one illustrates a border picture and introduction of India. The Second part focuses on the economic history of India trough different period in history including the famous foreign power rules such as Mughal and British, analysis of Pre- independence economic situation with Drain of Wealth Theory and a closer look towards the economic situation of India at Independence. The third part elaborates economic planning of India such as Five-year Plans of India and has a depth analysis of green revolution and white revolution which made India a self-Sufficient and Self-reliable country in terms of food and dairy products. In the fourth part, the work focuses on economic reforms of India i.e. LPG reform and liberalization of Indian economy in 1991, demonetization of 2016 and its effects and forth part is a conclusion with some necessary remarks about the Indian economy. As an Indian this project is very close to my heart. The country was called “Soney Ki Chidiya” (Golden Bird) in one time but was struggling for survival when it got its independence. But merely 73 years after independence it achieved a lot in terms of economy. This economic advancement through various thick and thin was an amazing one. India, a country who gave up its gold reserve in early 2000s just to maintain its necessary and basic imports, now, in less than 30 years of that incident, has little less than 500 billion-dollar foreign reserves. The republic of India adopted a central planning system for most of its Independent period. The 1991 economic crisis led government to liberalize its economy and open its market. This report focusses on that journey of India and a depth analysis of the economic planning and reforms of the Republic of India. 2 | P a g e Table of Contents I. Part 1: Introduction of India .......................................................................................... 7 A. Introduction of India ............................................................................................... 8 B. History .................................................................................................................... 9 C. Geography .............................................................................................................. 9 D. Demography ......................................................................................................... 10 E. Economy and Industries ........................................................................................ 12 F. India in Numbers ...................................................................................................... 14 II. Part 2: Economic History of India till Independence ................................................ 22 A. Economy of India from 10th century to 15th century ............................................. 23 B. Mughal Era ........................................................................................................... 24 C. British Rule ........................................................................................................... 26 D. Drain of Wealth Theory ........................................................................................ 27 1. Proof of concept of the theory: ........................................................................................ 28 E. Indian economy at independence ........................................................................... 31 III. Part 3: Economic Planning, Green revolution, White revolution .............................. 33 A. India’s five-year plan ............................................................................................ 34 B. Planning Commission: .......................................................................................... 35 C. First Plan (1951–1956) .......................................................................................... 37 D. Second Plan (1956–1961) ..................................................................................... 39 1. Mahalanobis Strategy ...................................................................................................... 39 3 | P a g e E. Third Plan (1961–1966) ........................................................................................ 40 F. Plan holidays (1966-1969) ........................................................................................ 41 G. Fourth Plan (1969-1974) ....................................................................................... 41 1. Nationalization of Banks, 1969 ......................................................................................... 42 H. Fifth Plan (1974-1979) .......................................................................................... 43 1. Minimum Needs Program ................................................................................................ 43 I. Rolling Plan (1978-1980) ......................................................................................... 44 J. Sixth Plan (1980-1985) ............................................................................................. 45 K. Seventh Plan (1985-1990) ..................................................................................... 46 L. Annual plans (1990-1992) ..................................................................................... 47 M. Eighth plan (1992-1997) ....................................................................................... 47 N. Ninth Plan (1997-2002) ......................................................................................... 48 O. Tenth Plan (2002-2007) ........................................................................................ 50 P. Eleventh Plan (2007-2012) ....................................................................................... 50 Q. Twelfth Plan (2012-2017) ..................................................................................... 51 R. Green revolution ................................................................................................... 52 S. White revolution in India .......................................................................................... 53 1. Aftermath ......................................................................................................................... 55 T. Hindu Rate of Growth ........................................................................................... 56 U. NITI Aayog .......................................................................................................... 57 V. Role of RBI In Indian Economy ............................................................................ 59 IV. Part 4: Economic Reforms........................................................................................ 63 4 | P a g e A. Pre-liberalization Policies of India and Effect ........................................................ 64 B. 1991 Indian Economic Crisis ................................................................................ 64 1. Reasons ........................................................................................................................... 65 2. Recovery .......................................................................................................................... 66 3. Aftermath ........................................................................................................................ 67 C. Economic Reforms in India ................................................................................... 68 1. Structural Reforms ........................................................................................................... 68 2. Stabilization Measures (LPG) ............................................................................................ 69 3. Later Reforms .................................................................................................................. 72 D. Effects of Liberalization of economy ..................................................................... 73 1. GDP Growth rate .............................................................................................................. 73 2. Impact on different sectors .............................................................................................. 74 3. Impact on Industry ........................................................................................................... 79 4. Impact on SME ................................................................................................................. 79 5. Impact on agriculture ......................................................................................................
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