The Indian economic growth after independence is unprecedented in all history. Though the economy suffered after the partition, but the government strove hard to make the economy grow faster than before and it did. People from all walks of life have been helped by the Indian government's policy towards the economy. Though there were various external factors that affected the economy including unrest in abroad, natural disasters as well as the Indian elections, but the policies put forth by the Indian government proved to be highly beneficial to the economy.
Today Indian economy is experiencing unprecedented economic growth. There are various reasons behind this. But the most important reason for the economic growth is the policy adopted by the government, which focused on infusing more cash into the economy. This was done by introducing more fiscal and monetary policy which enabled more money to be injected in the economy. Moreover, the introduction of floating rate for the currency also induced a sharp inflow of cash.
Initially the introduction of fiscal policy was accompanied with heavy fiscal policy rates which resulted in inflation. However with the passage of time, inflation reduced to a large extent and the inflow of money started to become significant. Inflation is a measure of living standards and it is directly related to the price level. With more currency being introduced, people started to pay more money for the same goods which was the cause of inflation. On the other hand, the policy makers kept away from inflating the currency rate as they knew that inflation can bring down any fiscal policy and hence it is also avoidable.
Another major factor responsible for the Indian economic growth is the foreign direct investment (FDI) policies. This policy is directed at promoting the economic development in the country. The FDI policy was opened up for foreign investors who want to invest in the domestic market and hence India became a major destination for investors. Furthermore, the policy makers also allowed the multinational companies to set base in India. Earlier when the big multinational companies were not interested in investing in India, they used to invest their capital in countries like England or the U.S., but later they started to invest their funds in India.
Indian economy has seen the highest rate of per capita GDP growth in decades after independence. It is mainly due to the liberalization policy adopted by the government and the growth in the manufacturing sector, which led to rise in the industrial production and employment opportunities. There was also a significant inflow of funds from abroad, which resulted in an increase in demand for Indian products.
The above mentioned are some of the major aspects which contributed to the Indian economic growth after independence. However, the major factor is the fiscal policy which has eased the burden on the domestic economy. Moreover, . . . . . . the government has adopted a coordinated economic policy that is inclusive of all policy makers. Moreover, the central bank of the country has done a lot to stabilize the economy by implementing effective monetary policy. Apart from all these, the Indian people have also showed a profound interest in exploring possibilities of growth in business. They are encouraged by the government in this regard.