1950 – 1960 GDP from ₹ 224,000Cr grew to ₹ 300,000Cr
In the aftermath of World War II and a violent partition of India, the focus was on rebuilding. At this time the constitution of India mandated providing free and compulsory education to all children until the age of 14. Little did anyone know that it would take more than 50 Years before the government revenue will be large enough for this to turn into a reality. The implementation could not be done as there was no schools in many areas and the erstwhile British Government had completely destroyed the Gurukul system. The major focus of the 5 year plans during this time was agriculture sector and increase India’s food sustainability. Some major developments during this time were the nationalization of banks and some other key institutions. Imperial Bank of India became State bank of India.
Prime Minister: Jawaharlal Nehru Finance Minister: C D Deshmukh
1960 – 1970 GDP from ₹ 310,000Cr grew to ₹ 451,000 Cr
One of the most difficult times for India; Wars with Pakistan and China coupled with high Inflation and famine. India increased its defence expenditure from 1.5% to almost 4.5%. The wars curtailed capital spending. Due to the aforementioned factors, the third Five-year plans (1961-66) failed miserably and prices rose 36% in 5 years and the government announced 3 annual plans. The focus was on Green revolution, increasing agriculture productivity. Trade and budget deficits widened and the government resorted to rupee devaluation, I am not clear whether the devaluation was forced or the 36% inflation that caused it. But the government needed money and for the first time Reserve bank of India Started Issuing Bonds. The period also saw funds moving out of India for the first time (The wealthy did not believe in the Indian Rupee).
Prime Minister: Jawaharlal Nehru, Finance Minister: TT Krishnamachari, and Moraji Desai
1970 – 1980 GDP from ₹ 470,000 Cr grew to ₹ 600,000 Cr
Some of the chief concerns were inclusive growth and Inflation. There was not much vision and thought in the budget and the big plans were never executed. During this time the government sought to increase its revenues by foolishly increasing Tax rates which brought about no marginal improvements to the current state of affairs. The Marginal rate of Tax had moved up to 93.5% for income more than 2 Laks. Around 10 million refugees from present day Bangladesh added to the economic stress which was already battered by India Pakistan war. Black money in the system saw an exponential rise with the rising tax rates. In 1971 the then Finance Minister Yashwant Rao Chavan presented three budgets in the span of 9 months. Inflation was at its peak and India needed economic growth badly. Post emergency the Country elected the first Non Congress Political party the Janata Party. HM Patel became the finance Minister. The Budget speech laid out by him gave out brief achievements of India but more importantly the lack of Economic growth. The budget speech had Patel explaining the deteriorating management of Public utilities and services. The period also saw wealth getting concentrated to a few states. Mr HM Patel gave a broad outline and direction towards a reformist economy.
Prime Minister Indira Ghandi Finance Minister C Subramanium, Chavan and HM Patel.
1980 – 1990 GDP from ₹ 600,000 Cr grew to ₹ 1,000,000 Cr
Fiscal discipline had taken a backseat India’s Budget deficit was on the rise. Some steps were taken towards dismantling the license raj, including abolishing certain regulations after India’s GDP contracted 3%. India had to take the help of IMF. In the 1980’s the rural employment guarantee program was launched to rejuvenate the rural economy but the implementation took its own snail’s pace bringing about no significant changes. Finance Ministers started increasingly pushing for more liberalization. The corruption at the bureaucratic level had quadrupled. Now known as license Raj had its birth during these times. The budget had started partial de-licensing towards the end. Benefits to target groups continued widening the gap between the rich and the poor. By the end of the decade fiscal deficits had reached unsafe levels, though economic growth picked up.
Prime Minister Indira Ghandi, Charan Sing, Finance Minister Pranab Mukherjee
1990 – 2000 GDP from ₹ 1,000,000 Cr grew to ₹ 1,700,000 Cr
The era of Reforms as it is formerly remembered the crisis which had been boiling on hit its peak, India was forced to sell her Gold Deposits to raise funds. The then Finance Minister ushered in Reforms which was the need of the hour. Reformist plans which were on paper for several decades finally saw the light of the day. Big changes were made in the financial sector. Stifling controls on foreign markets industries and Banking sector were loosened. It took a while for the benefits to permeate but the difference by the end of the decade was quite impressive. Tax rates were brought down and made broader and easy to implement. The complexity in Indirect taxes was taken out. Significant tax breaks for the housing sector also saw the construction sector booming. The reform process ushered in By Manmohan Sing, Chidambaram and Yashwant Sinha hold well to this day.
Prime Minister PV Narasimha Rao, Atal Bihari Vajpayee Finance Minister Manmohan Sing, Vhidambaram, Yashwant Sinha
2000 – 2010 GDP from ₹ 1,700,000 Cr grew to ₹ 4,400,000 Cr
The growth moved towards a new improved trajectory. Entrepreneurial spirit was on a rise. India started to be known as the next IT destination after Silicon Valley. Influx of international capital and open markets with removal of FERA Act and MRTP act saw a boom in the private sector. Unemployment rates started falling considerably and the gap between the rich and poor started getting filled up with the Middle class. The economic growth saw the government announcing fresh subsidies in a move of populist measures, thereby increasing budget deficits to all time highs. But the high growth momentum for the time being and self sustaining private sector could give the necessary support to the burgeoning fiscal deficit.
Prime Minister: Manmohan Sing Finance Minsiter Chidambaram, Pranab Mukherjee
Fact reporting no conclusions
Key Words: Manmohan Sing, Chidmbaram, Finance Minister, India GDP, Atal Bihari Vajpayee, Budget, Gross Domestic Product.
No comments:
Post a Comment