India adopted the mixed model of economic development, which has features of both the capitalist & socialist models as there was a mature indigenous entrepreneurial class (Birlas, Tatas, Singhanias) that developed an independent economic base which was an asset for post-independence planned development.
Everyone was more or less agreed on following agenda
During that era, development meant becoming more and more modern like industrialized countries of West.
To sum up: Lack of education, poverty, food insecurity, lack of capital, resources & technology, caste based society were major reasons behind rejection of capitalist model of economy.
In the late 1980’s government expenditure began to exceed its revenue by such large margins that it became unsustainable.Inflation was soaring, imports grew in excess to the export to such a level that foreign exchange reserves declined to a level that it was not adequate to finance imports for more than two weeks.
The first two are policy strategies & the last one is the outcome of these strategies.
Financial sector reforms: Major aim was to reduce the role of RBI from regulator to facilitator of financial sector. These reforms led to the establishment of private sector banks & entry of foreign banks with certain conditions on FII.
Tax Reforms: Since 1991, there has been a continuous reduction in the taxes on individual incomes. The rate of corporation tax was reduced; simplification of procedures to pay the income tax was also initiated.
Foreign Exchange Reforms: Initially the rupee was devalued against foreign currencies. This led to the increase in the inflow of foreign exchange. Now usually, markets determine exchange rates based on the demand and supply of foreign exchange.
In India, the path towards technology induced development especially associated with ICT, was given a vent in 1984 by Rajiv Gandhi government. He adopted an effective route to development with massive programme of computerization, launched in commercial and the public sectors undertakings and in administrative departments.
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1. What are the factors contributing to the economic development of India? |
2. How has foreign direct investment (FDI) contributed to India's economic development? |
3. What initiatives has the Indian government taken to promote economic development? |
4. How has technological advancement impacted India's economic development? |
5. How does infrastructure development contribute to India's economic development? |
24 videos|44 docs|21 tests
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