Pre-liberalisation Policies
| Part of a series on the |
| History of modern India |
|---|
| Pre-Independence |
| British Raj (1858–1947) |
| Independence movement (1857–1947) |
| Partition of India (1947) |
| Post-independence |
| Political integration (1947–49) |
| States Reorganisation Act (1956) |
| Non-Aligned Movement (1953–present) |
| Green Revolution (1970s) |
| Indo-Pakistani War of 1971 |
| Emergency (1975–77) |
| 1990s in India |
| Economic liberalisation |
| 2000s in India |
| See also |
| History of India |
| History of South Asia |
| India portal |
Indian economic policy after independence was influenced by the colonial experience (which was seen by Indian leaders as exploitative in nature) and by those leaders' exposure to Fabian socialism. Policy tended towards protectionism, with a strong emphasis on import substitution, industrialisation under state monitoring, state intervention at the micro level in all businesses especially in labour and financial markets, a large public sector, business regulation, and central planning. Five-Year Plans of India resembled central planning in the Soviet Union. Steel, mining, machine tools, water, telecommunications, insurance, and electrical plants, among other industries, were effectively nationalised in the mid-1950s. Elaborate licences, regulations and the accompanying red tape, commonly referred to as Licence Raj, were required to set up business in India between 1947 and 1990.
Before the process of reform began in 1991, the government attempted to close the Indian economy to the outside world. The Indian currency, the rupee, was inconvertible and high tariffs and import licencing prevented foreign goods reaching the market. India also operated a system of central planning for the economy, in which firms required licences to invest and develop. The labyrinthine bureaucracy often led to absurd restrictions—up to 80 agencies had to be satisfied before a firm could be granted a licence to produce and the state would decide what was produced, how much, at what price and what sources of capital were used. The government also prevented firms from laying off workers or closing factories. The central pillar of the policy was import substitution, the belief that India needed to rely on internal markets for development, not international trade—a belief generated by a mixture of socialism and the experience of colonial exploitation. Planning and the state, rather than markets, would determine how much investment was needed in which sectors.
— BBC
In the 80s, the government led by Rajiv Gandhi started light reforms. The government slightly reduced Licence Raj and also promoted the growth of the telecommunications and software industries.
The Vishwanath Pratap Singh (1989–1990) and Chandra Shekhar Singh government (1990–1991) did not add any significant reforms.
Read more about this topic: Economic Liberalisation In India
Famous quotes containing the word policies:
“We urgently need a debate about the best ways of supporting families in modern America, without blinders that prevent us from seeing the full extent of dependence and interdependence in American life. As long as we pretend that only poor or abnormal families need outside assistance, we will shortchange poor families, overcompensate rich ones, and fail to come up with effective policies for helping families in the middle.”
—Stephanie Coontz (20th century)