Panchayati Raj and economic empowermentThe principal motivations for decentralising of political, administrative and fiscal systems are propelled by the purpose of harnessing the developmental potential and improve the living conditions of the people.
This system of Panchayati Raj was adopted by state governments during the 1950s and 60s. The Amendment Act of 1992 contains provision for devolution of powers and responsibilities to the panchayats both for the preparation of economic development plans, rural empowerment and social justice.
One can say that the system of Panchayati Raj gave a tool for economic empowerment for people living in rural India wherein the person at the lowest level of society can feel associated with the policy formulation as well as get a share in the economic decisions.
The common departments in the Panchayat Samiti has ensured that rural India gets empowered through the formulation of policy in Finance, Public work, Agriculture, Health, Education and Social welfare.
Compiled by Ajeet Kumar and Reema Sharma
Licence RajJawaharlal Nehru was the architect of the system of Licence Raj or the Permit Raj. It refers to the elaborate licenses, regulations and accompanying red tape that were required to set up and run businesses in India between 1947 and 1990.
India`s decision to have a planned economy or the state controlled economy gave birth to the Licence Raj. Licences were given to a select few and up to 80 government agencies had to be satisfied before private companies, the production of which was to come under government regulation.
The License Raj-system was in place for four decades. The reform policies introduced in after 1991 removed many of these restrictions but Indian labour laws still prevent manufacturers from reducing their workforce without prohibitive burdens.
MGNREGAWith an aim of improving the purchasing power of the rural people, primarily semi or un-skilled work to people living in rural India, the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) was launched by the Government of India. It was enacted by legislation on August 25, 2005.
The law was initially called the National Rural Employment Guarantee Act (NREGA) but was renamed on 2 October 2009. The Indian job guarantee scheme provides a legal guarantee for one hundred days of employment in every financial year to adult members of any rural household willing to do public work-related unskilled manual work at the statutory minimum wage of INR120 (2009 prices).
Abolish Poverty/Garibi HataoAbolish Poverty or the Garibi Hatao slogan carried out by Indira Gandhi`s 1971 election bid was designed to give Gandhi an independent national support—based on rural and urban poor. The Congress Party in New Delhi funded and developed the programs through garibi hatao agenda and was carried out locally across the country.
The Garibi hatao program however reached very little to the three main anti-poverty programs that combined only about 4% of all funds allocated for economic development. The agenda however helped secure Gandhi`s election.
Bank NationalisationIn the 1960s a debate had ensued about the nationalization of the banking industry. Indira Gandhi, then Prime Minister of India, expressed the intention of the Government of India in the annual conference of the All India Congress Meeting in a paper entitled "Stray thoughts on Bank Nationalisation."
Following this, the Government of India issued an ordinance [`Banking Companies (Acquisition and Transfer of Undertakings) Ordinance, 1969`)] which led to the nationalization of India’s 14 largest commercial banks (that contained 85 percent of bank deposits in the country) with effect from the midnight of July 19, 1969. Within two weeks of the issue of the ordinance, the Parliament passed the Banking Companies (Acquisition and Transfer of Undertaking) Bill, and it received the presidential approval on 9 August 1969.
A second dose of nationalization of 6 more commercial banks followed in 1980, thereby allowing the Government of India a control of around 91% of the banking business of India.
Indian stock marketThe Economic Liberalization introduced by Man Mohan Singh in 1991, then Finance Minister in the government of P V Narsimha Rao, proved to be the stepping-stone for Indian capital markets.
The equity market capitalization of the companies listed on the BSE was USD 1 trillion as of December 2011, making it the 6th largest stock exchange in Asia and the 14th largest in the world. The BSE has the largest number of listed companies in the world.
As of March 2012, there are over 5,133 listed Indian companies and over 8,196 scrips on the stock exchange, the Bombay Stock Exchange has a significant trading volume.
The Bull run which started since 2003 peaked during starting of 2008 and had a huge fall due to US Subprime crisis (which was the main reason).
On January 10, 2008, the market had hit an all time high of 21206.70. The markets after testing new lows in 2009 gave awesome returns in 2010.
Foreign Direct Investment in IndiaAs the third-largest economy in the world in PPP terms, India is a preferred destination for FDI. During the year 2011, FDI inflow into India stood at USD 36.5 billion, 51.1 percent higher than 2010 figure of USD 24.15 billion.
India has strengths in telecommunication, information technology and other significant areas such as auto components, chemicals, apparels, pharmaceuticals, and jewellery. Despite a surge in foreign investments, rigid FDI policies were a significant hindrance.
However, due to positive economic reforms aimed at deregulating the economy and stimulating foreign investment, India has positioned itself as one of the front-runners of the rapidly growing Asia-Pacific region.
During 2000–10, the country attracted USD 178 billion as FDI.
India- A trillion economy (India`s growth story)The past 20 years, India`s best, are the inflection point on the graph of India`s progress. It is the time-period (1991-till now) of the fastest rate of economic growth and the biggest jump in per capita income. These were the best 20 plus years for tax revenues, government spending, savings and investments, all of which lifted the economy`s size to above USD1 trillion.
The economy of India is now the tenth largest in the world by nominal GDP and the third largest by purchasing power parity (PPP).The country is one of the G-20 major economies and a member of BRICS.
India recorded the highest growth rates in the mid-2000s, and is one of the fastest-growing economies in the world. India has recorded a growth of over 200 times in per capita income in a period from 1947 (Rs 249.6) to 2011. The growth was led primarily due to a huge increase in the size of the middle class consumer, a large labor force,growth in the manufacturing sector due to rising education levels and engineering skills and considerable foreign investments.
Reforms in India (Post 91 reforms)Though economic liberalization in India can be traced back to the late 1970s, economic reforms began in earnest only in July 1991.
The collapse of the Soviet Union, which was India`s major trading partner, and the Gulf War, which caused a spike in oil prices, resulted in a major balance-of-payments crisis for India, which found itself facing the prospect of defaulting on its loans.India asked for a USD1.8 billion bailout loan from the International Monetary Fund (IMF), which in return demanded reforms.
In response, Prime Minister Narasimha Rao, along with his finance minister Manmohan Singh, initiated the economic liberalisation of 1991. The reforms did away with the Licence Raj, reduced tariffs and interest rates and ended many public monopolies, allowing automatic approval of foreign direct investment in many sectors.
Since then, the overall thrust of liberalisation has remained the same, although no government has tried to take on powerful lobbies such as trade unions and farmers, on contentious issues such as reforming labour laws and reducing agricultural subsidies.
By the turn of the 20th century, India had progressed towards a free-market economy, with a substantial reduction in state control of the economy and increased financial liberalisation.
This has been accompanied by increases in life expectancy, literacy rates and food security, although urban residents have benefited more than agricultural residents.
But, perhaps, the greatest change in the last 20 years has been in the attitude toward reforms. Whereas the vocal supporters of reforms within India were rare during the 1980s, virtually every political party today recognizes the need for continued reforms.
Differences on which reforms to undertake first and at what pace still exist, but few disagree that reforms must continue. Initial fears that changes in governments will bring the reform process to a halt or even reverse it have proven to be without foundation.
Planning in IndiaPlanning without an objective is like driving without any destination. There are generally two sets of objectives for planning, namely the short-term objectives and the long-term objectives. While the short-term objectives vary from plan to plan, depending on the immediate problems faced by the economy, the process of planning is inspired by certain long term objectives.
The economy of India is based in part on planning through its five-year plans, which are developed, executed and monitored by the Planning Commission. The tenth plan completed its term in March 2007 and the eleventh plan is currently underway.
Prior to the fourth plan, the allocation of state resources was based on schematic patterns rather than a transparent and objective mechanism, which led to the adoption of the Gadgil formula in 1969. Revised versions of the formula have been used since then to determine the allocation of central assistance for state plans.
In case of our Five Year plans, the long-term objectives are:
(i) A high rate of growth with a view to improvement in standard of living
(ii) Economic self-reliance
(iii) Social justice
(iv) Modernization of the economy
(v) Economic stability