India’s economic saga is a rich tapestry, woven with threads of history, resilience, and transformation. To truly appreciate the essence of India’s economic narrative, one must embark on a captivating voyage through time, tracing its origins from the cradle of the Indus Valley civilization, where the foundations of trade and commerce were ingeniously laid.
Ancient Marvels: The Indus Valley Civilization
The pages of India’s economic history reveal a rich tapestry of events within the ancient Indus Valley civilization, spanning from 3500 BC to 1800 BC. During this era, a complex network of trade flourished, propelled by advancements in transportation. The inhabitants of this civilization engaged in the cultivation of crops, domestication of animals, and the artistry of crafting tools and weapons from materials such as copper, bronze, and tin. Their innovative spirit extended to the production of terracotta artifacts, which served as a form of currency for their trade. The Indus Valley civilization, more commonly known as the Harappan civilization, possessed a highly coveted gemstone of that era: lapis lazuli. Remarkably, this azure stone held greater value than gold, and the Harappans even exported it to the Egyptian civilization, contributing to India’s prosperity and wealth.
Venturing far beyond their borders, these intrepid traders embarked on sea voyages to Mesopotamia, where they exchanged gold, copper, jewelry, precious stones and other treasures. This thriving commerce laid the bedrock of India’s economic prowess.
The Maurya Empire: A Flourishing Era
Around 600 BC, the Indian subcontinent witnessed the emergence of the Mahajanapadas, issuing punch-marked silver coins, signaling an era marked by robust trade and urbanization. By 300 BC, the Maurya Empire, under the visionary rule of Chandragupta Maurya and Ashoka, unified the subcontinent, fostering economic synergy and prosperity.
The Maurya Empire, renowned for its political unity and military might, played a pivotal role in developing India’s infrastructure. The construction of an extensive network of roads, along with enhanced security and standardized measurements, catalyzed trade and commerce. The use of coins as currency facilitated economic transactions, further bolstering India’s economic standing.
Mughal Grandeur: India’s Economic Zenith
The Mughal dynasty, spanning from 1526 to 1858 AD, marked an unprecedented era of economic prosperity. In the 16th century, India’s GDP accounted for a staggering 25.1% of the global economy. Emperor Akbar’s treasury in 1600 AD rivaled the entire treasury of Great Britain two centuries later, standing at £17.5 million.
By 1600 AD, India’s GDP constituted 24.3% of the world economy, making it the second-largest economic powerhouse globally. The Mughal Empire, encompassing nearly 90% of South Asia, established a uniform customs and tax administration system, fostering trade and economic stability. In 1700 AD, the exchequer of Emperor Aurangzeb reported annual revenues exceeding £100 million.
Colonial Era: The Dark Age
However, the wheels of fortune took a somber turn with the advent of British colonial rule. The British East India Company, from 1757 onward, exploited India’s resources, diverting wealth to their coffers. The inflow of bullion ceased, and India transitioned from an exporter of processed goods to a supplier of raw materials. A once-thriving economy faced frequent famines, pervasive malnutrition, and a steep decline in income.
Angus Maddison, the eminent British economist, noted that India’s share of the world income plummeted from 27% in 1700 AD to a mere 3% in 1950.
Independence and Beyond: Rebuilding the Nation
India’s journey towards economic revival commenced with independence in 1947. This era witnessed the inception of the Five Year Plans, mirroring the Soviet Union’s successful model. Investments in irrigation, dams, infrastructure, and the establishment of modern industries took precedence. However, growth was impeded by challenges such as limited capital formation, defense expenditure, population growth, and inadequate infrastructure.
From 1951 to 1979, India’s economy grew at an average rate of 3.1% annually, with industry outpacing agriculture, growing at 4.5% per year.
The Turning Tide: Economic Rejuvenation
The 1980s marked a turning point, with economic growth surging to 5.5% annually. Increased investment, reaching 25% of GDP by the early 1980s, and a reliance on foreign borrowing fueled this growth. A balance of payments crisis in 1990 forced India into further economic liberalization. The step was later called the LPG reforms where L stands for Liberalization, P for Privatization and G for Globalization. This step made India to let go the conservative approach and opened for the wider participation of the private players in key economic sectors.
India’s Ascendancy: A Glimpse into the Future
Today, India stands as one of the world’s fastest-growing economies, poised for decades of growth. With its burgeoning middle class, investment opportunities, and a thriving domestic market, India is destined to reshape the global economic landscape. By 2040, India’s share in world output is projected to soar from 5% to a commanding 20.8%.
As India continues its economic odyssey, it is not merely a nation in the making; it is a testament to human resilience, innovation, and the unwavering spirit of progress.
In the grand tapestry of global economics, India is poised to shine as a brilliant and enduring thread, weaving its way into the fabric of the future. The journey from antiquity to the present signifies not just a nation’s economic growth but the indomitable spirit of a people who have overcome adversity and are ready to take their place on the world stage.