After nearly 200 years of foreign rule, India’s share in world income shrank from 22.6% in 1700 to 3.8% in 1952, making it a historical event in itself. CorpIndiaNews lists out major lesser-known historical events that changed the face of the Indian economy, and what the future looks like amidst a history in making; the pandemic.
Cambridge historian and author, Angus Maddison in his research on the British colonial occupation of India between the 17th century and mid 19th century, observed that India’s net worth in the global income index was approximately 23%, which was equal to entire Europe’s share of 23%.
We resonate with former Prime Minister, Man Mohan Singh’s quote on the subject “The brightest jewel in the British Crown is studded in the erasure of Indian economy, as when the noble Kohinoor diamond was allegedly taken by the Imperialists to clear their balance-sheets, India was left with 0.6% literacy and empty banks.
India’s GDP in 1947 hit a staggering low at just 2.7 trillion rupees, accounting for 3% of total global GDP compared to 23% which was maintained before the British Occupation of India. On the brighter side of things, the latest data published by National Statistical Office show that India is struggling, yet not giving up the fight with price hike and inflation.
The GDP growth rate is -3.8% contrary to the rate at which the economy should grow. With all the new notifications in GST law and inflation caused by pandemic, it will be interesting to watch the economy attain a level of Rs. 198.86 trillion, as against Rs 203. 51 trillion which was estimated in 2019-20
The question that still remains is did India manage to become the golden nation its freedom fighters had dreamt of? The answer to these remains locked in historic events. Read on to know what they are!
1969 – the year of revolution
The year is significant for many reasons, among which the one that stands out for is the emergence of green revolution. The green revolution was the former prime minister’s brain-child after observing the devastating impact and aftermath of nation-wide draughts and famines during late 60’s. The bill for self-sufficient production for food grains was proposed by Indira Gandhi, along with remarkable reforms in the banking sector by nationalizing 14 of the biggest banks in the country with over 50cr deposits to attend the needs of development and technology of the sector.
1991- The worst year before the pandemic
At a time when India’s external debt rose from $35 billion in 1984-85 to $69billion by the end of 1990-91, Economic reforms such as privatization, globalization, and liberalization sure appeared as a boon to the downward spiraling Indian economy.
The year 1991 was devastating as the economic situation became so grim that one point the country could not have afforded finance for even 3 weeks worth of import. Indian government had no other choice than putting 20 tonnes of gold from RBI on mortgage to claim a$200 million loan to clear import debts.
Amidst all the chaos, the Chandrashekar government and finance ministry led by Man Mohan Singh took reformative actions on the matter within weeks of assuming power. These reforms have been the pioneers of modern Indian economy for breaking the barriers of tough bureaucracy of business to open the window for foreign financial inflows and foreign manufacturing opportunities between india and rest of the world. According to verified data from Bombay Stock Exchange, the stock market was all on a all-time boom, with Sexsex ending at 1, 048 cr after the first few days of the implications of the new reforms.
A lesser known fact about this year is that it was shared by yet another economic event, which was later to be recorded as one india’s biggest scam, led by Harshad Mehta who broke the liquidity market with a 13% decline in one day. The scam was worth Rs. 4,000 cr.
2007-2008 The Great Recession
The Great Recession had the entire wall-street on its knees, marking the largest bankruptcy in U.S history with the collapse of “Lehmen Brothers”. An economic downfall at this scale was sure to affect the global economy, however, India maintained its GDP growth of 15% and economic growth rate of 6% for the FY 2008-09.
However, a twist in the plot took place when NDA led government announced a well-intended stimulus package that infused Rs 3 Trillion into public spending by lowering tax margins key rates by the Reserve Bank of India. This violation of fiscal consolidation of the norms flared inflation by 14%, leaving the rupee with no value. Moreover, as a result, Sensex dropped 20,000 points in December 2007 before bouncing back with 17,000 points in the same year.
2016; A year of shockers
Arguably one of the questionable moves led by the NDA government was to introduce demonetization to withdraw notes of higher denomination. On November 8th of the same year, Prime Minister of India, Narendra Modi took to public broadcast to declare the shocking removal of 500’s and 1000s’ Rupee notes out of legal tender of currency. This affected business owners across strata and scale of companies, while the move led to a Sensex crash of 1, 689 points, and the Nifty plunged by over 541 points.
Just months after demonetization, the Rajya Sabha (Upper House) passed a crucial bill on Goods and Services Tax (GST). However, at that time, the markets didn’t react much and remained mostly flat on the upper side.
2020: the virus apocalypse
No later than 3 years after the aftermath of demonitaztion and GST law implication, the economy witnessed a lightening jolt with an uninvited guest; the Covid 19 pandemic. It may be too soon to declare the scale of destruction, both in economy and human life, but to bring perspectives together, a report published by Azim Premji University stated that the first wave of the virus brought 23 crore of Indian citizens below poverty line, which is going even lower than national minimum wage threshold of Rs 375 (reported by Anoop Satpathy Committee). Poverty margins have risen by 15% in rural India, while the urban India has been making most of a 20% rise in the pandemic this year.
As we enter yet another year with financial risks and worries, the overall impact of the second wave on the country’s economy still remains unclear. For now, we are grateful for the abundance in Sensex market, reaching an all-time high of 55K points and Nifty securing 16, 529 points leaving us with hopes for better and improved finances ahead, personally and nationally.
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