The Economic System and Political System in India

The Economic System and Political System in India
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The Economic System and Political System in India
After independence, India’s economic development was fostered by socialist-inspired policies. This economic development entailed regulations, state ownership of different sectors, protection from world markets, and red tape, commonly referred to as Licence Raj (Khare, 2018). Since the liberation of India’s economy in the 1990s, the country’s economy has rapidly transformed and shifted towards a market-based system. India’s economy is the second-highest in growth rate after China (Siddiqui, 2019). The country ranks among the twelve largest economies worldwide by purchasing power parity (PPP) exchange rates. The World Bank highlights the most essential priorities in India to be agriculture, public sector reforms, rural development, infrastructure, and abolishment of labor regulations (Siddiqui, 2019). The reforms now in economic environments have resulted in improved international investment and trade, deregulation, privatization, tax-reforms, and inflation-controlling measures. Steady development has been recorded since the economic reforms after independence. The reason is liberation has remained the same even after changes have taken place in government and parties heading the nation. Nonetheless, in the pre-liberation period, economic policies encompassed industrialization, protectionism, import-substitution, government intervention in financial markets and labor, and business regulations. In the 1950s, industries like telecommunications, insurance, steel, electrical plants, and machine tools were nationalized causing a stagnation of the economy at 3.5% between the 1950s and 1980s (Siddiqui, 2019). The license Raj system was characterized by corruption, and this has made businesses to incur huge losses.
The first elections in India were conducted in 1951. The Indian National Congress succeeded in that election. The political party continued to prevail in subsequent elections until 1977 (Siddiqui, 2019). At this point, for the first time, a non-congress party was formed. A rise of coalit...