The pre-1990 Indian economy was characterized by a strong emphasis on protectionism, import substitution, and central planning. India's share of world income declined from 22.3% in 1700 to 3.8% by 1952 due to British colonial rule. After independence, the government prioritized heavy industry and public sector growth through five-year plans but saw limited success. Reforms began in the 1990s with liberalization of trade and investment policies to address fiscal and balance of payments crises, opening India's economy to globalization. Major reforms included trade liberalization, privatization, tax changes, and incentives for foreign investment and exports.

1. Pre-1990 Indian
Economy

2. India : The Beginning
Pre Colonial : Refers to the economic history of
India since Indus Valley Civilization to 1700 AD.
During Indus Valley Civilization Indian economy
was very well developed.
India had very good trade relations with other parts
of world, which is evident from the coins of various
civilizations found at the site of Indus valley.
Before the advent of East India Company, each
village in India was a self sufficient entity. Each
village was economically independent.

3. British Invasion
The arrival of East India Company in India
ruined the Indian economy.
During this phase India's share of world
income declined from 22.3% in 1700 AD to
3.8% in 1952.
Two-way depletion of resources.
British bought raw materials from India at cheaper
rates.
Then, the finished goods were sold at high price in
Indian markets.

4. Indian economy after
independence
Indian economy was influenced by the colonial
experience, which was seen by Indian leaders as
exploitative.
Domestic policy tended towards protectionism, with
a strong emphasis on import
substitution, industrialization, economic
interventionism, a large public sector, business
regulation and central planning, while trade and
foreign investment policies were relatively liberal.

5. 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 existence.
First five year plan for the development of
Indian economy came into implementation in
1952.
The rate of growth of the Indian economy in
the first three decades after independence
was derisively referred to as the Hindu rate of
growth by communists.

6. 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.

7. Economic Policy
Socialist Policy
Concentration and emphasis on heavy industries
and subsidizing manual, low-skill cottage
industries
Tough Controls for private sector
License Raj
Refusal to change policy with changing time
India followed the same policy over the years and
this degraded India’s situation in the world even
more

8. 1990s : India &
Globalization
Socialism to

9. India first felt Globalization in the 1990s when Dr
Manmohan Singh, then finance minister under
the government of P V Narsimha Rao, initiated
the economic liberalization plan.
Before the 1990s, India’s economy focused on
equity over growth.
In 1991, India began liberalizing its economy by
decreasing government control over many
domestic industries and increasing its openness
to the rest of the world. Combined, these actions
sought to increase competitiveness and
encourage innovation.

10. Major Reforms
Trade liberalization
Financial Liberalization
Opening up to Privatization
Tax reforms
Inflation control measures
Opening up to foreign investments
Reinforced focus on Agricultural
Development

11. Need for Reforms
Govt not being able to repay debts
The biggest reason : Unsustainable govt expenditure
Foreign exchange reserves had hit the bottom.
Uncontrolled Inflation
Continual expenditure on development programmes of
the government did not generate additional
revenue, thus government had to overshoot its revenue
to meet problems like unemployment, poverty and
population explosion.
Tax revenues insufficient
Exports not enough to pay for growing imports

12. Reasons for Globalization
To resolve revenue crisis, India took a loan of $7
billion from the World Bank and the International
Monetary Fund.
In leau of the loan, they expected India to
liberalise and open up the economy by
Removing restrictions on the private sector
Reduce the role of the government in many areas
Remove trade restrictions.
India agreed to the conditions and announced
the New Economic Policy (NEP).

13. India’s major steps towards
Globalization
Devaluation:
Announcement of the devaluation of Indian currency
by 18-19 percent against major currencies in the
international foreign exchange market.
Disinvestment :
Under the privatization scheme, most of the public
sector undertakings have been/ are being sold to
private sector

14. THANK YOU!
Any Questions??
Group Members : Seencha Bhutia, Shivani Sharma,
Srimoyee Dasgupta & Yasmin
Hussain