The economic history of India since Indus Valley
Civilization to 1700 AD can be categorized under this phase. During Indus
Valley Civilization Indian economy was very well developed. It had very good
trade relations with other parts of world, which is evident from the coins of
various civilizations found at the site of Indus valley.
Before the advent of East India Company, each village in
India was a self sufficient entity. Each village was economically independent
as all the economic needs were fulfilled with in the village.
Then came the phase of Colonization. The arrival of East
India Company in India ruined the Indian economy. There was a two-way depletion
of resources. British used to buy raw materials from India at cheaper rates and
finished goods were sold at higher than normal price in Indian markets. During
this phase India's share of world income declined from 22.3% in 1700 AD to 3.8%
in 1952.
After India got independence from this colonial rule in
1947, the process of rebuilding the economy started. For this various policies
and schemes were formulated. First five year plan for the development of Indian
economy came into implementation in 1952. These Five Year Plans, started by
Indian government, focused on the needs of Indian economy.
If on one hand
agriculture received the immediate attention on the other side industrial
sector was developed at a fast pace to provide employment opportunities to the
growing population and to keep pace with the developments in the world. Since
then Indian economy has come a long way. The Gross Domestic Product (GDP) at
factor cost, which was 2.3 % in 1951-52 reached 9% in financial year 2005-06
Trade liberalization, financial liberalization, tax reforms
and opening up to foreign investments were some of the important steps, which
helped Indian economy to gain momentum. The Economic Liberalization introduced
by Man Mohan Singh in 1991, then Finance Minister in the government of P V
Narsimha Rao, proved to be the stepping-stone for Indian economic reform
movements.
To maintain its current status and to achieve the target GDP
of 10% for financial year 2006-07, Indian economy has to overcome many challenges.
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