Indian Economy in Pre-independence Period

• The history of India traces back to the prehistoric era, spanning from 3500 BC to 1800 BC, marked by the rise of the Indus Valley Civilization. This ancient civilization thrived during this period and showcased a well-developed economy that relied significantly on trade, supported by progress in transportation technology.
• The inhabitants engaged in agriculture, animal domestication, and the crafting of tools and weapons made from copper, bronze, and tin. They also traded items such as terracotta pottery, beads, gold and silver ornaments, colored gemstones like turquoise and lapis lazuli, as well as metals, flints, seashells, and pearls.
• Trade routes extended as far as Mesopotamia, with goods like gold, copper, and jewelry transported via ships, highlighting their extensive maritime commerce.
• The Mahajanapadas imprinted punch-marked silver coins around 600 BC. Trade activity was brisk, and cities grew rapidly during this time.
• When the Greek Seleucid and Ptolemaic empires ruled the Middle East around 300 B.C., the Maurya Empire (c. 321 -185 BC) united most of the Indian subcontinent.
• The political stability and military security allowed for the development of a single economic system, as well as enhanced trade and commerce and agricultural efficiency.
• In another 1500 years, India developed its classical peoples, who acquired tremendous amounts of wealth. Between the 1st and 17th centuries AD, India was estimated to have been the world’s largest economy, controlling between one-third and one-fourth of global prosperity.
• India witnessed unprecedented prosperity in history during the Mughal Empire (1526–1858 AD). In the 16th century, India’s gross domestic product was projected to be over 25.1 percent of the global economy.
• According to a study of India’s pre-colonial economy, Emperor Akbar’s treasury brought in £17.5 million a year in 1600 AD (compared to £16 million for the entire treasury of Great Britain two centuries later in 1800 AD). In 1600 AD, Mughal India’s gross domestic product (GDP) was estimated to be around 24.3 percent of the world’s second-largest economy. During this time, the Mughal Empire had expanded to encompass about 90% of South Asia and had instituted a standardized customs and taxation system.

Indian Economy – During British Rule

• From 1757, the British East India Company gradually established and increased its political authority in India. They spent the vast sums of money created by the provinces under their control on Indian raw materials, spices, and products.
• As a result, the continual inflow of bullion into India as a result of foreign trade came to an end. The Colonial government spent land revenue on wars in India and Europe, leaving less money for India’s growth.
• India’s economy shifted from being an exporter of processed goods for which it was paid in bullion to being an exporter of raw resources and a buyer of manufactured goods over the course of 80 years under colonial rule (1780-1860 AD).
• More specifically, in the 1750s, India exported fine cotton and silk to markets in Europe, Asia, and Africa; by the 1850s, raw materials, particularly raw cotton, opium, and indigo, accounted for the majority of India’s exports.
• Under British colonial authority, India’s economy was completely destroyed by cruel exploitation. At the time, India’s population had become impoverished, suffering from food scarcity, widespread malnutrition, and a lack of education.

Indian Economy after Independence

• When India became independent from the colonial authority in 1950, the process of economic development began. India adopted a centralized planning system.
• The Five-Year Plans, which were changed in effect. In 1952, the first five-year plan for the development of the Indian economy was put in place.
• As an agricultural economy, India has made investments in irrigation, dam construction, and infrastructure development.
• The building of new enterprises, modern scientific and technological institutes, and the advancement of space and nuclear programs are all priorities for policymakers.
• The rate of economic growth accelerated from 1980 to 1990. The economy grew at a 5.5 percent yearly rate, or 3.3 percent per capita, from 1980 and 1989.
• Agriculture increased at a 3.6 percent annual rate while the industry grew at a 6.6 percent annual rate.
• High investment rates were a major role in the economy’s growth. In the early 1970s, investment was around 19 percent of GDP, but by the early 1980s, it had risen to nearly 25%.
• Over the years, India has experienced a tremendous expansion in the services sector and contributed to spectacular progress in numerous fields of science and technology, and it now has a strong network of S&T institutions, a trained workforce, and an innovative knowledge base.
• India has already established itself as a manufacturing hub for small automobiles and engineering equipment.
• India is one of the world’s most potential markets for food and agricultural products. India is the third-largest food producer in the world. Agriculture makes for around 16.1% of India’s GDP. India has grown to become the world’s largest milk producer, with annual milk production exceeding 100 million tonnes.