From 1947 to 2014: How the Indian economy has changed since independence

The 67-years of independence have seen many changes in the socio-economic landscape of Asia’s third largest economy.

During the decades that followed the colonial rule, India’s economy, in absolute terms, has expanded to Rs 57 lakh crore from mere Rs 2.7 lakh crore and the nation’s foreign exchange reserves have crossed $300 billion, giving the economy firepower to fight external shocks.

Even as the country has progressed in laying out the basic framework to take the economy to high growth path by building roads and ports and ramping up the food grain production, a fast growing population and infrastructure woes demand more work to be done on multiple fronts.

Here is a look at the key macro indicators of the nation’s economy fromindependence till now:

GDP

India’s GDP, in absolute numbers, has grown from a mere Rs2.7 lakh crore to Rs57 lakh crore in 67 years of indpendence.

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Annual growth of GDP (In %)

Economic growth surged to near double-digit levels between 2005-06 to 2007-08 compared with anaemic growth in the early years post indpendence. The growth has slowed to sub-5 percent levels in the last two financial years hit by slowdown in global and domestic economies and in the absence of much needed growth oriented reforms.

Gross domestic savings as % of GDP

Gross domestic savings of Indians, as a percentage of GDP, has grown over the decades to touch a high of 36.8 percent of GDP in fiscal year 2008, but the ratio has steadily declined after that to 30 percent in fiscal year 2013, causing concern to the policymakers.

Foodgrain production

India’s food grain production has more than doubled over the decades that followed colonial rule to a record 264 million tonnes in the fiscal year 2014. But, to feed the fast growing population, with more than a quarter of them still estimated to be below the poverty line, the country needs to produce more.

Roads

Post independence, the country has progressed significantly in building roads to connect its cities with its hinterland, but given that poor infrastructure is a major concern for India, the country needs a wider road network to carry the fruits of growth to far-flung villages.

Forex reserves

The nation’s foreign exchange reserves have grown to over $ 300 billions from a mere $ 2 billion at the time of independence. Strong foreign exchange reserves have given the economy more fire power to withstand external shocks compared. In January 1991, India had to pledge 67 tonnes of gold to International Monetary Fund after the country’s forex reserves plunged to a mere $ 1.2 billion, just enough to finance three weeks of essential imports.

Import/export

India’s imports have shot up at a faster pace than exports over the decades resulting in a widening gap in the trade balance. India’s current account deficit widened to a record 4.8 percent of the GDP in the fisal year 2013, before falling to 1.7 percent in fiscal year 2014 after the government clamped down on gold imports.

India’s external debt

The country’s external debt has surged to $440 billion in the fiscal year ending March 2014. The external debt, which comprises of government and non-government borrowings, has risen mainly because of increase in the non-government debt. At end March, 2014, total government debt stood at $82 billion and that of non-government debt at $359 billion.