page_title: Economy of India
section_title: Pre-liberalisation period (1947–1991)
hierarchical_section_title: Economy of India / History / Pre-liberalisation period (1947–1991)
caption_attribution_description: English: This map shows the change in per capita GDP of India from 1820 AD to 2015 AD. All GDP numbers are inflation adjusted to 1990 International Geary-Khamis dollars. Data Source: Tables of Prof. Angus Maddison (2010). The per capita GDP over various years and population data can be downloaded in a spreadsheet from here. The per capita data in this chart is also available in hardcopy version here: Maddison A (2007), Contours of the World Economy I-2030AD, Oxford University Press, ISBN 978-0199227204 The 2015 estimate is retrieved from the International Monetary Fund.
context_page_description: The economy of India is characterised as a developing market economy. It is the world's fifth-largest economy by nominal GDP and the third-largest by purchasing power parity. According to the IMF, on a per capita income basis, India ranked 139th by GDP and 118th by GDP in 2018. From independence in 1947 until 1991, successive governments promoted protectionist economic policies with extensive state intervention and regulation; the end of the Cold War and an acute balance of payments crisis in 1991 led to the adoption of a broad program of economic liberalisation. Since the start of the 21st century, annual average GDP growth has been 6% to 7%, and from 2014 to 2018, India was the world's fastest growing major economy, surpassing China. Historically, India was the largest economy in the world for most of the two millennia from the 1st until 19th century.
  The long-term growth perspective of the Indian economy remains positive due to its young population and corresponding low dependency ratio, healthy savings and investment rates, and is increasing integration into the global economy.
context_section_description: Indian economic policy after independence was influenced by the colonial experience, which was seen as exploitative by Indian leaders exposed to British social democracy and the planned economy of the Soviet Union. Domestic policy tended towards protectionism, with a strong emphasis on import substitution industrialisation, economic interventionism, a large government-run public sector, business regulation, and central planning, while trade and foreign investment policies were relatively liberal. Five-Year Plans of India resembled central planning in the Soviet Union. Steel, mining, machine tools, telecommunications, insurance, and power plants, among other industries, were effectively nationalised in the mid-1950s.
  Never talk to me about profit, Jeh, it is a dirty word.
  — Nehru, India's Fabian Socialism-inspired first prime minister to industrialist J.R.D. Tata, when Tata suggested state-owned companies should be profitable
  Jawaharlal Nehru, the first prime minister of India, along with the statistician Prasanta Chandra Mahalanobis, formulated and oversaw economic policy during the initial years of the country's independence. They expected favourable outcomes from their strategy, involving the rapid development of heavy industry by both public and private sectors, and based on direct and indirect state intervention, rather than the more extreme Soviet-style central command system. The policy of concentrating simultaneously on capital- and technology-intensive heavy industry and subsidising manual, low-skill cottage industries was criticised by economist Milton Friedman, who thought it would waste capital and labour, and retard the development of small manufacturers.
   I cannot decide how much to borrow, what shares to issue, at what price, what wages and bonus to pay, and what dividend to give. I even need the government's permission for the salary I pay to a senior executive.
  — J. R. D. Tata, on the Indian regulatory system, 1969
  Since 1965, the use of high-yielding varieties of seeds, increased fertilisers and improved irrigation facilities collectively contributed to the Green Revolution in India, which improved the condition of agriculture by increasing crop productivity, improving crop patterns and strengthening forward and backward linkages between agriculture and industry. However, it has also been criticised as an unsustainable effort, resulting in the growth of capitalistic farming, ignoring institutional reforms and widening income disparities.
  In 1984, Rajiv Gandhi promised economic liberalization, he made V. P. Singh the finance minister, who tried to reduce tax-evasion and tax-receipts rose due to this crackdown although taxes were lowered. This process lost its momentum during later tenure of Mr. Gandhi as his government was marred by scandals.
caption: Change in per capita GDP of India, 1820–2015. Figures are inflation-adjusted to 1990 International Geary-Khamis dollars.[157][158]
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