The Indian View of Economic Development : Resilience and the Quest for Growth

The central theme of this paper is that the Indian economy has been remarkably resilient and been able to adapt its quest for growth to changes in circumstances in both the domestic and the global economy and is now poised for sustained progress. At the time of independence after centuries of stagnation, even decline, India's confidence and society stood shaken. The licence quota raj ensured that three decades of unimpressive growth followed even as developing East and Southeast Asia were surging ahead. Yet once the controls were slackened the Indian economy was able to discover its innate vitality. Growth has remained high since the mid 1980s and has even started to accelerate of late, albeit with a few short-run drops. This paper is an account of the resilience of the Indian economy as well as its quest for higher rates of growth. In the process the Indian economy and society are being transformed and there are clear signs of a much stronger player emerging on the global stage in the near future. The plan of this paper is as follows. It provides a historical backdrop for India's growth experience in section II, emphasizing the resilience of the economy to adverse shocks over a period of almost 400 years and the pick-up of economic growth once some of these constraints were lifted. Section III discusses some factors contributing to the acceleration in India's growth rate. Section IV outlines India's performance in external trade and section V presents two faces of the new India - a dynamic sector (automobiles) and a laggard (agriculture). Section VI concludes