Yojana Magazine August 2023 - 2 | Current Affairs & Hindu Analysis: Daily, Weekly & Monthly - UPSC PDF Download

 Page 1


23 August 2023
ndia’s economic journey traces back 
to the early years, post-independence, 
when it adopted a mixed economy 
model, combining socialist policies with 
elements of a market economy. the focus was on 
nation-building, industrialisation, and achieving 
self-sufficiency through the establishment of public 
sector enterprises and import substitution. While 
these policies laid the foundation for industrial 
growth, they also led to unintended consequences 
such as bureaucratic inefficiencies, limited 
competition, and stifled innovation.
the 1990s (some think it started early in the 
eighties) marked a significant turning point for 
india’s economy. t he country faced macroeconomic 
imbalances during the late 1980s and early 1990s, 
prompting the government to introduce structural 
reforms in 1991. High combined deficits of the 
central and state governments, elevated inflationary 
pressures, and an unsustainable current account 
deficit triggered a balance of payments crisis. i n 
response, india embarked on a path of economic 
liberalisation and reforms.
I
the government implemented policies to 
dismantle the license raj, encourage foreign 
direct investment, and promote privatisation. 
the exchange rate was made flexible, allowing 
for depreciation as necessary to maintain 
competitiveness. the rupee became fully 
convertible on the current account and partially 
convertible on the capital account. this shift 
towards a market-oriented economy opened up 
avenues for growth, fostered entrepreneurship, and 
attracted global investments. t he real growth rates 
increased from an average of 5.5 per cent in the 
1980s to 6.3 per cent between FY1993 and FY2000. 
external trade experienced a significant boost, with 
the total goods and services trade-to-gDP ratio 
rising from 17.2 per cent in 1990 to 30.6 per cent 
in 2000.
the new millennium saw the continuation of 
these reforms, albeit with intermittent progress. 
Foreign direct investment was further liberalised 
in the early 2000s. t he new telecom Policy of 1999 
catalysed the it sector boom in i ndia, generating 
widespread benefits for other sectors as well. 
v anantHa nagEswaran The author is the Chief Economic Adviser, Government of India. Email: cea@nic.in
As nations progress and evolve, their economies play a crucial role 
in shaping their trajectory. The journey of the Indian economy, as 
it commemorates 75 years of independence, reflects the resilience, 
challenges, and opportunities that define India’s youthful, dynamic, and 
progressive nature. Over time, the Indian economy has experienced 
various highs and lows, navigating through obstacles and capitalising on 
opportunities to establish itself as the world’s fifth-largest economy.
IndIan eConomy
hIstorICaL perspe CtIve  
and the way forward
FocuS
Page 2


23 August 2023
ndia’s economic journey traces back 
to the early years, post-independence, 
when it adopted a mixed economy 
model, combining socialist policies with 
elements of a market economy. the focus was on 
nation-building, industrialisation, and achieving 
self-sufficiency through the establishment of public 
sector enterprises and import substitution. While 
these policies laid the foundation for industrial 
growth, they also led to unintended consequences 
such as bureaucratic inefficiencies, limited 
competition, and stifled innovation.
the 1990s (some think it started early in the 
eighties) marked a significant turning point for 
india’s economy. t he country faced macroeconomic 
imbalances during the late 1980s and early 1990s, 
prompting the government to introduce structural 
reforms in 1991. High combined deficits of the 
central and state governments, elevated inflationary 
pressures, and an unsustainable current account 
deficit triggered a balance of payments crisis. i n 
response, india embarked on a path of economic 
liberalisation and reforms.
I
the government implemented policies to 
dismantle the license raj, encourage foreign 
direct investment, and promote privatisation. 
the exchange rate was made flexible, allowing 
for depreciation as necessary to maintain 
competitiveness. the rupee became fully 
convertible on the current account and partially 
convertible on the capital account. this shift 
towards a market-oriented economy opened up 
avenues for growth, fostered entrepreneurship, and 
attracted global investments. t he real growth rates 
increased from an average of 5.5 per cent in the 
1980s to 6.3 per cent between FY1993 and FY2000. 
external trade experienced a significant boost, with 
the total goods and services trade-to-gDP ratio 
rising from 17.2 per cent in 1990 to 30.6 per cent 
in 2000.
the new millennium saw the continuation of 
these reforms, albeit with intermittent progress. 
Foreign direct investment was further liberalised 
in the early 2000s. t he new telecom Policy of 1999 
catalysed the it sector boom in i ndia, generating 
widespread benefits for other sectors as well. 
v anantHa nagEswaran The author is the Chief Economic Adviser, Government of India. Email: cea@nic.in
As nations progress and evolve, their economies play a crucial role 
in shaping their trajectory. The journey of the Indian economy, as 
it commemorates 75 years of independence, reflects the resilience, 
challenges, and opportunities that define India’s youthful, dynamic, and 
progressive nature. Over time, the Indian economy has experienced 
various highs and lows, navigating through obstacles and capitalising on 
opportunities to establish itself as the world’s fifth-largest economy.
IndIan eConomy
hIstorICaL perspe CtIve  
and the way forward
FocuS
24 August 2023
the policy on disinvestment and privatisation 
gained momentum during this period, with the 
establishment of a dedicated Ministry to drive these 
initiatives. structural policies were formulated to 
address macroeconomic imbalances. the Fiscal 
r esponsibility and Budget Management (FrBM) Act 
was passed to address the government’s historically 
high combined gross fiscal deficit. the banking 
system, burdened by bad debts accumulated 
during economic resurgence following the 1991 
reforms, was supported through the deregulation 
of interest rates and the enactment of the sArFAesi 
Act 2002, and these years of structural reforms 
strengthened the macro-economic foundation of 
the indian economy to enable a high growth period 
in the coming years. While global growth averaged 
4.8 per cent in 2003-2008, the indian economy 
achieved an average growth rate of over 8 per 
cent. sustained momentum in domestic economic 
activity, improved corporate performance, a healthy 
investment climate, and favourable global liquidity 
conditions and interest rates resulted in substantial 
capital inflows to i ndia from 2004 to 2008. Domestic 
credit growth, especially bank credit, doubled 
as a share of gDP. chapter 2 of the government’s 
economic survey for 2022-23 has more details on 
this.
this unsustainable credit boom in the 
millennium’s first decade increased banks’ non-
performing assets. As companies’ investments 
turned sour, their ability to repay bank loans 
declined. this triggered a prolonged period 
of repairing financial and non-financial sector 
balance sheets for which the government and the 
rBi implemented several policy initiatives to assist 
the financial sector in recovering from balance 
sheet stress. Amendments to the sArFAesi Act 
2002, the implementation of the insolvency and 
Bankruptcy code (iBc), the introduction of the 
‘Asset Quality r eview’ , the adoption of the prompt 
corrective action framework, recapitalisation 
of Public sector Banks (PsBs), and the merger 
of PsBs were among the measures that helped 
resolve the issues in banks’ and corporations’ 
balance sheets. 
New-age reforms
the balance sheet repair in the millennium’s 
second decade dampened india’s growth potential 
and dynamism. consequently, the government’s 
economic policy focus since 2014 has been to 
restore india’s growth potential by easing business 
conditions and significantly enhancing physical and 
digital infrastructure. t hese efforts aim to improve 
the overall business climate and strengthen the 
competitiveness of india’s manufacturing sector. 
Diverse economic reforms have been implemented 
to facilitate ease of doing business and improve the 
quality of life while enhancing governance systems 
and processes.
simplification of regulatory frameworks through 
reforms such as the insolvency and Bankruptcy 
code (iBc) and the real estate  (regulation and 
Development) Act (rer A) has enhanced the ease 
of doing business and thereby improved investor 
sentiment. t he iBc has helped clean up companies’ 
The country faced macroeconomic 
imbalances during the late 1980s 
and early 1990s, prompting the 
government to introduce structural 
reforms in 1991. High combined 
deficits of the central and state 
governments, elevated inflationary 
pressures, and an unsustainable 
current account deficit triggered 
a balance of payments crisis. In 
response, India embarked on a path of 
economic liberalisation and reforms.
Page 3


23 August 2023
ndia’s economic journey traces back 
to the early years, post-independence, 
when it adopted a mixed economy 
model, combining socialist policies with 
elements of a market economy. the focus was on 
nation-building, industrialisation, and achieving 
self-sufficiency through the establishment of public 
sector enterprises and import substitution. While 
these policies laid the foundation for industrial 
growth, they also led to unintended consequences 
such as bureaucratic inefficiencies, limited 
competition, and stifled innovation.
the 1990s (some think it started early in the 
eighties) marked a significant turning point for 
india’s economy. t he country faced macroeconomic 
imbalances during the late 1980s and early 1990s, 
prompting the government to introduce structural 
reforms in 1991. High combined deficits of the 
central and state governments, elevated inflationary 
pressures, and an unsustainable current account 
deficit triggered a balance of payments crisis. i n 
response, india embarked on a path of economic 
liberalisation and reforms.
I
the government implemented policies to 
dismantle the license raj, encourage foreign 
direct investment, and promote privatisation. 
the exchange rate was made flexible, allowing 
for depreciation as necessary to maintain 
competitiveness. the rupee became fully 
convertible on the current account and partially 
convertible on the capital account. this shift 
towards a market-oriented economy opened up 
avenues for growth, fostered entrepreneurship, and 
attracted global investments. t he real growth rates 
increased from an average of 5.5 per cent in the 
1980s to 6.3 per cent between FY1993 and FY2000. 
external trade experienced a significant boost, with 
the total goods and services trade-to-gDP ratio 
rising from 17.2 per cent in 1990 to 30.6 per cent 
in 2000.
the new millennium saw the continuation of 
these reforms, albeit with intermittent progress. 
Foreign direct investment was further liberalised 
in the early 2000s. t he new telecom Policy of 1999 
catalysed the it sector boom in i ndia, generating 
widespread benefits for other sectors as well. 
v anantHa nagEswaran The author is the Chief Economic Adviser, Government of India. Email: cea@nic.in
As nations progress and evolve, their economies play a crucial role 
in shaping their trajectory. The journey of the Indian economy, as 
it commemorates 75 years of independence, reflects the resilience, 
challenges, and opportunities that define India’s youthful, dynamic, and 
progressive nature. Over time, the Indian economy has experienced 
various highs and lows, navigating through obstacles and capitalising on 
opportunities to establish itself as the world’s fifth-largest economy.
IndIan eConomy
hIstorICaL perspe CtIve  
and the way forward
FocuS
24 August 2023
the policy on disinvestment and privatisation 
gained momentum during this period, with the 
establishment of a dedicated Ministry to drive these 
initiatives. structural policies were formulated to 
address macroeconomic imbalances. the Fiscal 
r esponsibility and Budget Management (FrBM) Act 
was passed to address the government’s historically 
high combined gross fiscal deficit. the banking 
system, burdened by bad debts accumulated 
during economic resurgence following the 1991 
reforms, was supported through the deregulation 
of interest rates and the enactment of the sArFAesi 
Act 2002, and these years of structural reforms 
strengthened the macro-economic foundation of 
the indian economy to enable a high growth period 
in the coming years. While global growth averaged 
4.8 per cent in 2003-2008, the indian economy 
achieved an average growth rate of over 8 per 
cent. sustained momentum in domestic economic 
activity, improved corporate performance, a healthy 
investment climate, and favourable global liquidity 
conditions and interest rates resulted in substantial 
capital inflows to i ndia from 2004 to 2008. Domestic 
credit growth, especially bank credit, doubled 
as a share of gDP. chapter 2 of the government’s 
economic survey for 2022-23 has more details on 
this.
this unsustainable credit boom in the 
millennium’s first decade increased banks’ non-
performing assets. As companies’ investments 
turned sour, their ability to repay bank loans 
declined. this triggered a prolonged period 
of repairing financial and non-financial sector 
balance sheets for which the government and the 
rBi implemented several policy initiatives to assist 
the financial sector in recovering from balance 
sheet stress. Amendments to the sArFAesi Act 
2002, the implementation of the insolvency and 
Bankruptcy code (iBc), the introduction of the 
‘Asset Quality r eview’ , the adoption of the prompt 
corrective action framework, recapitalisation 
of Public sector Banks (PsBs), and the merger 
of PsBs were among the measures that helped 
resolve the issues in banks’ and corporations’ 
balance sheets. 
New-age reforms
the balance sheet repair in the millennium’s 
second decade dampened india’s growth potential 
and dynamism. consequently, the government’s 
economic policy focus since 2014 has been to 
restore india’s growth potential by easing business 
conditions and significantly enhancing physical and 
digital infrastructure. t hese efforts aim to improve 
the overall business climate and strengthen the 
competitiveness of india’s manufacturing sector. 
Diverse economic reforms have been implemented 
to facilitate ease of doing business and improve the 
quality of life while enhancing governance systems 
and processes.
simplification of regulatory frameworks through 
reforms such as the insolvency and Bankruptcy 
code (iBc) and the real estate  (regulation and 
Development) Act (rer A) has enhanced the ease 
of doing business and thereby improved investor 
sentiment. t he iBc has helped clean up companies’ 
The country faced macroeconomic 
imbalances during the late 1980s 
and early 1990s, prompting the 
government to introduce structural 
reforms in 1991. High combined 
deficits of the central and state 
governments, elevated inflationary 
pressures, and an unsustainable 
current account deficit triggered 
a balance of payments crisis. In 
response, India embarked on a path of 
economic liberalisation and reforms.
25 August 2023
finances. o ut-of-court settlements in cases of loan 
default are increasing to avoid the procedures of 
iBc. rer A has transformed the real estate sector by 
making it more organised, resulting in increased 
new launches and sales of houses.
Additionally, significant changes have been 
made to the taxation ecosystem in india since 
2014. tax policy reforms, including the adoption of 
a unified g oods and services tax (gst ), reduction 
in corporate and income tax rates, exemption 
of sovereign wealth funds and pension funds 
from taxes, removal of the Dividend Distribution 
tax, and the abolishment of the retrospective 
tax, have reduced the tax burden on individuals 
and businesses. the implementation of gst has 
broadened the tax base, reduced compliance 
requirements, facilitated the free flow of goods 
across state borders, and contributed to the 
formalisation of the economy. t he gst system has 
exhibited improved buoyancy compared to the pre-
gst regime, with average monthly gross collections 
consistently rising from inr 0.9 lakh crore in FY18 
to inr 1.5 lakh crore in FY23 and inr 1.7 lakh crore 
in the first quarter of FY24. the number of gst 
taxpayers has also significantly increased, with a 
larger number of smaller businesses entering the 
gst regime.
Large-scale public spending has also been 
undertaken since 2014 to address the long-standing 
infrastructure gaps and logistics bottlenecks. 
the effective c apital expenditure by the union 
government has risen from 2.8 per cent of gDP in 
2013-14 to 3.8 per cent in 2022-23. t his investment 
has aimed to improve connectivity and modernise 
infrastructure in areas such as road connectivity 
(Bharatmala), port infrastructure (sagarmala), 
electrification, railways, and airports/air routes 
(uDAn). t he national Logistics Policy 2022 supports 
these initiatives by establishing an overarching 
logistics ecosystem.
r ecognising the need for consistent and long-
term efforts to improve infrastructure in a country 
as vast as india, the government has established the 
national infrastructure Pipeline (niP). t his forward-
looking approach to infrastructure investments 
projects around inr 111 lakh crore of investments 
spread over five years until 2024-25. c urrently, more 
than 9,000 niP projects, with a total investment of 
over inr 108 lakh crore, are at various stages of 
implementation across different sectors.
in addition, there have been many reforms 
and governance initiatives over the past nine years 
to improve the investment climate. Programmes 
such as ‘Atmanirbhar Bharat’ and ‘Make in india’ 
The government's economic 
policy focus since 2014 has been 
to restore India's growth potential 
by easing business conditions and 
significantly enhancing physical 
and digital infrastructure. These 
efforts aim to improve the overall 
business climate and strengthen 
the competitiveness of India's 
manufacturing sector. Diverse 
economic reforms have been 
implemented to facilitate ease of 
doing business and improve the 
quality of life while enhancing 
governance systems and 
processes.
Page 4


23 August 2023
ndia’s economic journey traces back 
to the early years, post-independence, 
when it adopted a mixed economy 
model, combining socialist policies with 
elements of a market economy. the focus was on 
nation-building, industrialisation, and achieving 
self-sufficiency through the establishment of public 
sector enterprises and import substitution. While 
these policies laid the foundation for industrial 
growth, they also led to unintended consequences 
such as bureaucratic inefficiencies, limited 
competition, and stifled innovation.
the 1990s (some think it started early in the 
eighties) marked a significant turning point for 
india’s economy. t he country faced macroeconomic 
imbalances during the late 1980s and early 1990s, 
prompting the government to introduce structural 
reforms in 1991. High combined deficits of the 
central and state governments, elevated inflationary 
pressures, and an unsustainable current account 
deficit triggered a balance of payments crisis. i n 
response, india embarked on a path of economic 
liberalisation and reforms.
I
the government implemented policies to 
dismantle the license raj, encourage foreign 
direct investment, and promote privatisation. 
the exchange rate was made flexible, allowing 
for depreciation as necessary to maintain 
competitiveness. the rupee became fully 
convertible on the current account and partially 
convertible on the capital account. this shift 
towards a market-oriented economy opened up 
avenues for growth, fostered entrepreneurship, and 
attracted global investments. t he real growth rates 
increased from an average of 5.5 per cent in the 
1980s to 6.3 per cent between FY1993 and FY2000. 
external trade experienced a significant boost, with 
the total goods and services trade-to-gDP ratio 
rising from 17.2 per cent in 1990 to 30.6 per cent 
in 2000.
the new millennium saw the continuation of 
these reforms, albeit with intermittent progress. 
Foreign direct investment was further liberalised 
in the early 2000s. t he new telecom Policy of 1999 
catalysed the it sector boom in i ndia, generating 
widespread benefits for other sectors as well. 
v anantHa nagEswaran The author is the Chief Economic Adviser, Government of India. Email: cea@nic.in
As nations progress and evolve, their economies play a crucial role 
in shaping their trajectory. The journey of the Indian economy, as 
it commemorates 75 years of independence, reflects the resilience, 
challenges, and opportunities that define India’s youthful, dynamic, and 
progressive nature. Over time, the Indian economy has experienced 
various highs and lows, navigating through obstacles and capitalising on 
opportunities to establish itself as the world’s fifth-largest economy.
IndIan eConomy
hIstorICaL perspe CtIve  
and the way forward
FocuS
24 August 2023
the policy on disinvestment and privatisation 
gained momentum during this period, with the 
establishment of a dedicated Ministry to drive these 
initiatives. structural policies were formulated to 
address macroeconomic imbalances. the Fiscal 
r esponsibility and Budget Management (FrBM) Act 
was passed to address the government’s historically 
high combined gross fiscal deficit. the banking 
system, burdened by bad debts accumulated 
during economic resurgence following the 1991 
reforms, was supported through the deregulation 
of interest rates and the enactment of the sArFAesi 
Act 2002, and these years of structural reforms 
strengthened the macro-economic foundation of 
the indian economy to enable a high growth period 
in the coming years. While global growth averaged 
4.8 per cent in 2003-2008, the indian economy 
achieved an average growth rate of over 8 per 
cent. sustained momentum in domestic economic 
activity, improved corporate performance, a healthy 
investment climate, and favourable global liquidity 
conditions and interest rates resulted in substantial 
capital inflows to i ndia from 2004 to 2008. Domestic 
credit growth, especially bank credit, doubled 
as a share of gDP. chapter 2 of the government’s 
economic survey for 2022-23 has more details on 
this.
this unsustainable credit boom in the 
millennium’s first decade increased banks’ non-
performing assets. As companies’ investments 
turned sour, their ability to repay bank loans 
declined. this triggered a prolonged period 
of repairing financial and non-financial sector 
balance sheets for which the government and the 
rBi implemented several policy initiatives to assist 
the financial sector in recovering from balance 
sheet stress. Amendments to the sArFAesi Act 
2002, the implementation of the insolvency and 
Bankruptcy code (iBc), the introduction of the 
‘Asset Quality r eview’ , the adoption of the prompt 
corrective action framework, recapitalisation 
of Public sector Banks (PsBs), and the merger 
of PsBs were among the measures that helped 
resolve the issues in banks’ and corporations’ 
balance sheets. 
New-age reforms
the balance sheet repair in the millennium’s 
second decade dampened india’s growth potential 
and dynamism. consequently, the government’s 
economic policy focus since 2014 has been to 
restore india’s growth potential by easing business 
conditions and significantly enhancing physical and 
digital infrastructure. t hese efforts aim to improve 
the overall business climate and strengthen the 
competitiveness of india’s manufacturing sector. 
Diverse economic reforms have been implemented 
to facilitate ease of doing business and improve the 
quality of life while enhancing governance systems 
and processes.
simplification of regulatory frameworks through 
reforms such as the insolvency and Bankruptcy 
code (iBc) and the real estate  (regulation and 
Development) Act (rer A) has enhanced the ease 
of doing business and thereby improved investor 
sentiment. t he iBc has helped clean up companies’ 
The country faced macroeconomic 
imbalances during the late 1980s 
and early 1990s, prompting the 
government to introduce structural 
reforms in 1991. High combined 
deficits of the central and state 
governments, elevated inflationary 
pressures, and an unsustainable 
current account deficit triggered 
a balance of payments crisis. In 
response, India embarked on a path of 
economic liberalisation and reforms.
25 August 2023
finances. o ut-of-court settlements in cases of loan 
default are increasing to avoid the procedures of 
iBc. rer A has transformed the real estate sector by 
making it more organised, resulting in increased 
new launches and sales of houses.
Additionally, significant changes have been 
made to the taxation ecosystem in india since 
2014. tax policy reforms, including the adoption of 
a unified g oods and services tax (gst ), reduction 
in corporate and income tax rates, exemption 
of sovereign wealth funds and pension funds 
from taxes, removal of the Dividend Distribution 
tax, and the abolishment of the retrospective 
tax, have reduced the tax burden on individuals 
and businesses. the implementation of gst has 
broadened the tax base, reduced compliance 
requirements, facilitated the free flow of goods 
across state borders, and contributed to the 
formalisation of the economy. t he gst system has 
exhibited improved buoyancy compared to the pre-
gst regime, with average monthly gross collections 
consistently rising from inr 0.9 lakh crore in FY18 
to inr 1.5 lakh crore in FY23 and inr 1.7 lakh crore 
in the first quarter of FY24. the number of gst 
taxpayers has also significantly increased, with a 
larger number of smaller businesses entering the 
gst regime.
Large-scale public spending has also been 
undertaken since 2014 to address the long-standing 
infrastructure gaps and logistics bottlenecks. 
the effective c apital expenditure by the union 
government has risen from 2.8 per cent of gDP in 
2013-14 to 3.8 per cent in 2022-23. t his investment 
has aimed to improve connectivity and modernise 
infrastructure in areas such as road connectivity 
(Bharatmala), port infrastructure (sagarmala), 
electrification, railways, and airports/air routes 
(uDAn). t he national Logistics Policy 2022 supports 
these initiatives by establishing an overarching 
logistics ecosystem.
r ecognising the need for consistent and long-
term efforts to improve infrastructure in a country 
as vast as india, the government has established the 
national infrastructure Pipeline (niP). t his forward-
looking approach to infrastructure investments 
projects around inr 111 lakh crore of investments 
spread over five years until 2024-25. c urrently, more 
than 9,000 niP projects, with a total investment of 
over inr 108 lakh crore, are at various stages of 
implementation across different sectors.
in addition, there have been many reforms 
and governance initiatives over the past nine years 
to improve the investment climate. Programmes 
such as ‘Atmanirbhar Bharat’ and ‘Make in india’ 
The government's economic 
policy focus since 2014 has been 
to restore India's growth potential 
by easing business conditions and 
significantly enhancing physical 
and digital infrastructure. These 
efforts aim to improve the overall 
business climate and strengthen 
the competitiveness of India's 
manufacturing sector. Diverse 
economic reforms have been 
implemented to facilitate ease of 
doing business and improve the 
quality of life while enhancing 
governance systems and 
processes.
26 August 2023
have aimed to enhance india’s manufacturing 
capabilities and promote exports across various 
industries. Production Linked incentives (PLis) 
have been introduced to attract domestic and 
foreign investments, fostering the development 
of global champions in the manufacturing sector. 
strategic sectors, including defence, mining, 
and space, have been opened up to enhance 
business opportunities for the private sector. the 
government has further liberalised the Foreign 
Direct investment (FDi) policy, with most sectors 
now open for 100% FDi under the automatic route. 
Moreover, the new Public s ector enterprise Policy 
has been implemented to limit the government’s 
presence in public sector enterprises to only a few 
strategic sectors.
significant reforms have also been undertaken 
to reduce policy uncertainties. Decriminalising 
minor economic offences under the c ompanies 
Act of 2013 has greatly improved the ease of doing 
business. As a result of this reform, over 1,400 
default cases have been resolved without resorting 
to court proceedings, and more than 400,000 
companies have voluntarily rectified past defaults 
to avoid penalties. Additionally, around 25,000 
unnecessary compliances have been eliminated, 
and over 1,400 archaic laws have been repealed in 
the past nine years.
the emphasis of the reforms for the private 
sector has been on more than just the large 
businesses. sustained reforms have also supported 
smaller businesses in recovering from the impact 
of the pandemic and have facilitated their growth. 
initiatives such as the emergency credit Line 
guarantee s cheme (ecL gs), revision in the definition 
of MsMes under the ambit of Atmanirbhar Bharat, 
the introduction of tr eDs to address the delayed 
payments for MsMes, the inclusion of r etail and 
Wholesale trades as MsMes, and the extension of 
non-tax benefits for three years in case of an upward 
change in the status of MsMe, have all contributed 
to the sector’s resilience.
integrating technology and digital platforms has 
been a common theme throughout these reforms. 
studies have shown that india’s core digital economy 
has grown 2.4 times higher than the overall economic 
growth between 2014 and 2019. this digitalisation 
has had significant positive effects on the economy, 
strengthening its potential for growth through 
various channels such as higher financial inclusion, 
greater formalisation and increased efficiencies.
Digital infrastructure has facilitated the creation 
of digital identities, improved access to finance and 
markets, reduced transaction costs, and enhanced 
tax collection. r ecent digital initiatives, such as the 
open network for Digital c ommerce (onDc ) and the 
Account Aggregator framework, hold the potential 
to enhance economic growth further. the onDc 
will provide greater market access for e-commerce 
businesses, opening up new opportunities for 
growth and expansion. the Account Aggregator 
framework will also enable more accessible credit 
for smaller businesses, promoting development 
and overall economic growth.
Way Forward
t he new age reforms undertaken in the indian 
economy form the foundation of its resilient growth 
during Kartavya Kaal. the sound and healthy 
financial sector developed over the previous few 
years will ensure efficient credit provisioning, 
contributing to robust economic growth in the 
coming years through higher investments and 
consumption. A restored credit cycle and enhanced 
public sector capex will rejuvenate the indian 
private sector capex cycle. the digitalisation 
reforms and the resulting efficiency gains in terms 
of greater formalisation, higher financial inclusion, 
and more economic opportunities will be essential 
drivers of india’s economic growth in the medium 
term. A sustained pace in the expansion of digital 
infrastructure, significant upscaling of r&D in 
both the public and the private sector, and higher 
availability of skilled workforce will be required 
to ensure an overarching ecosystem for the rapid 
growth of high-end manufacturing and high value-
added services in the medium term. 
contextually relevant and appropriate 
economic reforms, considering india’s demographic 
profile and understanding of strategic challenges 
– political and economic – that technological 
developments such as advances in Artificial 
intelligence and energy transition motivated 
by climate change considerations pose for the 
country, will pave the way for bright and steady 
growth prospects for the country, leading up to 
2047. through this approach, india can chart its 
path towards sustainable and inclusive economic 
development in the future.                                             ?
Page 5


23 August 2023
ndia’s economic journey traces back 
to the early years, post-independence, 
when it adopted a mixed economy 
model, combining socialist policies with 
elements of a market economy. the focus was on 
nation-building, industrialisation, and achieving 
self-sufficiency through the establishment of public 
sector enterprises and import substitution. While 
these policies laid the foundation for industrial 
growth, they also led to unintended consequences 
such as bureaucratic inefficiencies, limited 
competition, and stifled innovation.
the 1990s (some think it started early in the 
eighties) marked a significant turning point for 
india’s economy. t he country faced macroeconomic 
imbalances during the late 1980s and early 1990s, 
prompting the government to introduce structural 
reforms in 1991. High combined deficits of the 
central and state governments, elevated inflationary 
pressures, and an unsustainable current account 
deficit triggered a balance of payments crisis. i n 
response, india embarked on a path of economic 
liberalisation and reforms.
I
the government implemented policies to 
dismantle the license raj, encourage foreign 
direct investment, and promote privatisation. 
the exchange rate was made flexible, allowing 
for depreciation as necessary to maintain 
competitiveness. the rupee became fully 
convertible on the current account and partially 
convertible on the capital account. this shift 
towards a market-oriented economy opened up 
avenues for growth, fostered entrepreneurship, and 
attracted global investments. t he real growth rates 
increased from an average of 5.5 per cent in the 
1980s to 6.3 per cent between FY1993 and FY2000. 
external trade experienced a significant boost, with 
the total goods and services trade-to-gDP ratio 
rising from 17.2 per cent in 1990 to 30.6 per cent 
in 2000.
the new millennium saw the continuation of 
these reforms, albeit with intermittent progress. 
Foreign direct investment was further liberalised 
in the early 2000s. t he new telecom Policy of 1999 
catalysed the it sector boom in i ndia, generating 
widespread benefits for other sectors as well. 
v anantHa nagEswaran The author is the Chief Economic Adviser, Government of India. Email: cea@nic.in
As nations progress and evolve, their economies play a crucial role 
in shaping their trajectory. The journey of the Indian economy, as 
it commemorates 75 years of independence, reflects the resilience, 
challenges, and opportunities that define India’s youthful, dynamic, and 
progressive nature. Over time, the Indian economy has experienced 
various highs and lows, navigating through obstacles and capitalising on 
opportunities to establish itself as the world’s fifth-largest economy.
IndIan eConomy
hIstorICaL perspe CtIve  
and the way forward
FocuS
24 August 2023
the policy on disinvestment and privatisation 
gained momentum during this period, with the 
establishment of a dedicated Ministry to drive these 
initiatives. structural policies were formulated to 
address macroeconomic imbalances. the Fiscal 
r esponsibility and Budget Management (FrBM) Act 
was passed to address the government’s historically 
high combined gross fiscal deficit. the banking 
system, burdened by bad debts accumulated 
during economic resurgence following the 1991 
reforms, was supported through the deregulation 
of interest rates and the enactment of the sArFAesi 
Act 2002, and these years of structural reforms 
strengthened the macro-economic foundation of 
the indian economy to enable a high growth period 
in the coming years. While global growth averaged 
4.8 per cent in 2003-2008, the indian economy 
achieved an average growth rate of over 8 per 
cent. sustained momentum in domestic economic 
activity, improved corporate performance, a healthy 
investment climate, and favourable global liquidity 
conditions and interest rates resulted in substantial 
capital inflows to i ndia from 2004 to 2008. Domestic 
credit growth, especially bank credit, doubled 
as a share of gDP. chapter 2 of the government’s 
economic survey for 2022-23 has more details on 
this.
this unsustainable credit boom in the 
millennium’s first decade increased banks’ non-
performing assets. As companies’ investments 
turned sour, their ability to repay bank loans 
declined. this triggered a prolonged period 
of repairing financial and non-financial sector 
balance sheets for which the government and the 
rBi implemented several policy initiatives to assist 
the financial sector in recovering from balance 
sheet stress. Amendments to the sArFAesi Act 
2002, the implementation of the insolvency and 
Bankruptcy code (iBc), the introduction of the 
‘Asset Quality r eview’ , the adoption of the prompt 
corrective action framework, recapitalisation 
of Public sector Banks (PsBs), and the merger 
of PsBs were among the measures that helped 
resolve the issues in banks’ and corporations’ 
balance sheets. 
New-age reforms
the balance sheet repair in the millennium’s 
second decade dampened india’s growth potential 
and dynamism. consequently, the government’s 
economic policy focus since 2014 has been to 
restore india’s growth potential by easing business 
conditions and significantly enhancing physical and 
digital infrastructure. t hese efforts aim to improve 
the overall business climate and strengthen the 
competitiveness of india’s manufacturing sector. 
Diverse economic reforms have been implemented 
to facilitate ease of doing business and improve the 
quality of life while enhancing governance systems 
and processes.
simplification of regulatory frameworks through 
reforms such as the insolvency and Bankruptcy 
code (iBc) and the real estate  (regulation and 
Development) Act (rer A) has enhanced the ease 
of doing business and thereby improved investor 
sentiment. t he iBc has helped clean up companies’ 
The country faced macroeconomic 
imbalances during the late 1980s 
and early 1990s, prompting the 
government to introduce structural 
reforms in 1991. High combined 
deficits of the central and state 
governments, elevated inflationary 
pressures, and an unsustainable 
current account deficit triggered 
a balance of payments crisis. In 
response, India embarked on a path of 
economic liberalisation and reforms.
25 August 2023
finances. o ut-of-court settlements in cases of loan 
default are increasing to avoid the procedures of 
iBc. rer A has transformed the real estate sector by 
making it more organised, resulting in increased 
new launches and sales of houses.
Additionally, significant changes have been 
made to the taxation ecosystem in india since 
2014. tax policy reforms, including the adoption of 
a unified g oods and services tax (gst ), reduction 
in corporate and income tax rates, exemption 
of sovereign wealth funds and pension funds 
from taxes, removal of the Dividend Distribution 
tax, and the abolishment of the retrospective 
tax, have reduced the tax burden on individuals 
and businesses. the implementation of gst has 
broadened the tax base, reduced compliance 
requirements, facilitated the free flow of goods 
across state borders, and contributed to the 
formalisation of the economy. t he gst system has 
exhibited improved buoyancy compared to the pre-
gst regime, with average monthly gross collections 
consistently rising from inr 0.9 lakh crore in FY18 
to inr 1.5 lakh crore in FY23 and inr 1.7 lakh crore 
in the first quarter of FY24. the number of gst 
taxpayers has also significantly increased, with a 
larger number of smaller businesses entering the 
gst regime.
Large-scale public spending has also been 
undertaken since 2014 to address the long-standing 
infrastructure gaps and logistics bottlenecks. 
the effective c apital expenditure by the union 
government has risen from 2.8 per cent of gDP in 
2013-14 to 3.8 per cent in 2022-23. t his investment 
has aimed to improve connectivity and modernise 
infrastructure in areas such as road connectivity 
(Bharatmala), port infrastructure (sagarmala), 
electrification, railways, and airports/air routes 
(uDAn). t he national Logistics Policy 2022 supports 
these initiatives by establishing an overarching 
logistics ecosystem.
r ecognising the need for consistent and long-
term efforts to improve infrastructure in a country 
as vast as india, the government has established the 
national infrastructure Pipeline (niP). t his forward-
looking approach to infrastructure investments 
projects around inr 111 lakh crore of investments 
spread over five years until 2024-25. c urrently, more 
than 9,000 niP projects, with a total investment of 
over inr 108 lakh crore, are at various stages of 
implementation across different sectors.
in addition, there have been many reforms 
and governance initiatives over the past nine years 
to improve the investment climate. Programmes 
such as ‘Atmanirbhar Bharat’ and ‘Make in india’ 
The government's economic 
policy focus since 2014 has been 
to restore India's growth potential 
by easing business conditions and 
significantly enhancing physical 
and digital infrastructure. These 
efforts aim to improve the overall 
business climate and strengthen 
the competitiveness of India's 
manufacturing sector. Diverse 
economic reforms have been 
implemented to facilitate ease of 
doing business and improve the 
quality of life while enhancing 
governance systems and 
processes.
26 August 2023
have aimed to enhance india’s manufacturing 
capabilities and promote exports across various 
industries. Production Linked incentives (PLis) 
have been introduced to attract domestic and 
foreign investments, fostering the development 
of global champions in the manufacturing sector. 
strategic sectors, including defence, mining, 
and space, have been opened up to enhance 
business opportunities for the private sector. the 
government has further liberalised the Foreign 
Direct investment (FDi) policy, with most sectors 
now open for 100% FDi under the automatic route. 
Moreover, the new Public s ector enterprise Policy 
has been implemented to limit the government’s 
presence in public sector enterprises to only a few 
strategic sectors.
significant reforms have also been undertaken 
to reduce policy uncertainties. Decriminalising 
minor economic offences under the c ompanies 
Act of 2013 has greatly improved the ease of doing 
business. As a result of this reform, over 1,400 
default cases have been resolved without resorting 
to court proceedings, and more than 400,000 
companies have voluntarily rectified past defaults 
to avoid penalties. Additionally, around 25,000 
unnecessary compliances have been eliminated, 
and over 1,400 archaic laws have been repealed in 
the past nine years.
the emphasis of the reforms for the private 
sector has been on more than just the large 
businesses. sustained reforms have also supported 
smaller businesses in recovering from the impact 
of the pandemic and have facilitated their growth. 
initiatives such as the emergency credit Line 
guarantee s cheme (ecL gs), revision in the definition 
of MsMes under the ambit of Atmanirbhar Bharat, 
the introduction of tr eDs to address the delayed 
payments for MsMes, the inclusion of r etail and 
Wholesale trades as MsMes, and the extension of 
non-tax benefits for three years in case of an upward 
change in the status of MsMe, have all contributed 
to the sector’s resilience.
integrating technology and digital platforms has 
been a common theme throughout these reforms. 
studies have shown that india’s core digital economy 
has grown 2.4 times higher than the overall economic 
growth between 2014 and 2019. this digitalisation 
has had significant positive effects on the economy, 
strengthening its potential for growth through 
various channels such as higher financial inclusion, 
greater formalisation and increased efficiencies.
Digital infrastructure has facilitated the creation 
of digital identities, improved access to finance and 
markets, reduced transaction costs, and enhanced 
tax collection. r ecent digital initiatives, such as the 
open network for Digital c ommerce (onDc ) and the 
Account Aggregator framework, hold the potential 
to enhance economic growth further. the onDc 
will provide greater market access for e-commerce 
businesses, opening up new opportunities for 
growth and expansion. the Account Aggregator 
framework will also enable more accessible credit 
for smaller businesses, promoting development 
and overall economic growth.
Way Forward
t he new age reforms undertaken in the indian 
economy form the foundation of its resilient growth 
during Kartavya Kaal. the sound and healthy 
financial sector developed over the previous few 
years will ensure efficient credit provisioning, 
contributing to robust economic growth in the 
coming years through higher investments and 
consumption. A restored credit cycle and enhanced 
public sector capex will rejuvenate the indian 
private sector capex cycle. the digitalisation 
reforms and the resulting efficiency gains in terms 
of greater formalisation, higher financial inclusion, 
and more economic opportunities will be essential 
drivers of india’s economic growth in the medium 
term. A sustained pace in the expansion of digital 
infrastructure, significant upscaling of r&D in 
both the public and the private sector, and higher 
availability of skilled workforce will be required 
to ensure an overarching ecosystem for the rapid 
growth of high-end manufacturing and high value-
added services in the medium term. 
contextually relevant and appropriate 
economic reforms, considering india’s demographic 
profile and understanding of strategic challenges 
– political and economic – that technological 
developments such as advances in Artificial 
intelligence and energy transition motivated 
by climate change considerations pose for the 
country, will pave the way for bright and steady 
growth prospects for the country, leading up to 
2047. through this approach, india can chart its 
path towards sustainable and inclusive economic 
development in the future.                                             ?
29 August 2023
he road to 75 years has not been easy, 
yet india has come a long way — from a 
country that saw its wealth drained by its 
colonial masters to a major player in the 
global economy. As india enters the Kartavya Kaal, 
it is time for the country to realise its potential and 
emerge as a world leader in this post-covid new-
World order. More importantly, it is imperative to 
T
foster sustainable and inclusive economic growth 
while protecting people and the planet.  
According to a Ficci-McKinsey report, by 
2047, a growing india is expected to become 
a high-income nation with six times its current 
per capita income and to create 60 crore jobs to 
gainfully employ its growing workforce. Achieving 
ansHuman KHanna The author is the Assistant Secretary General at FICCI. Email: anshuman.khanna@ficci.com
Over the last decade, India has made significant progress in strengthening 
the competitiveness of its domestic manufacturing, especially under the 
Atmanirbhar Bharat and Make in India initiatives. Manufacturing has the 
highest potential of all sectors to propel job growth, with the potential 
to create 60-70 million jobs by 2030. The future of manufacturing is 
sustainability. Through a number of initiatives, the Indian Government 
is enticing businesses to adopt sustainable manufacturing, including 
‘Zero Defect-Zero Effect’, ‘Digital India’, and many others. Over the past 
seven years, India has made substantial improvements in its policy 
and regulatory environment, making it much easier for enterprises to 
establish themselves and flourish.
vIsIon for Industry 29 august 2023