Independence Day 2025: Evolution of India’s ₹331.03 Lakh Crore Economy Since Independence

India’s economic journey since gaining independence in 1947 is inspiring. From a poor, struggling nation, India has grown into the world’s fourth-largest economy by 2025. This journey reflects decades of hard work, changing policies, and bold reforms.

What Did India’s First Budget Have?

India’s first budget laid the foundation to rebuild itself and grow despite enormous challenges. It was introduced from August 15, 1947, to March 31, 1948. The government estimated total expenditure at ₹197.29 crore, with targeted revenues of ₹171.15 crore. Nearly half of this budget (about 46%) was allocated to defence, reflecting urgent security concerns in the early days of independence.

The Early Years: Building a Foundation (1947–1950s)

After independence, India faced huge challenges like poverty, food shortages, and the trauma of partition. The first Prime Minister, Jawaharlal Nehru, chose a mixed economy inspired by socialist ideas. The government took charge of big industries and focused on self-reliance through planned growth.

The Planning Commission created Five-Year Plans to guide development. The First Plan focused on agriculture and power, helping solve food shortages and build dams like Bhakra-Nangal. The Second Plan shifted to heavy industries, setting up steel plants and Public Sector Undertakings (PSUs) like SAIL and BHEL.

However, the Licence Raj system, requiring government permission for businesses, slowed growth and caused corruption.

Learning from Early Challenges: The Mundhra Scandal

India’s first major financial scandal happened in 1957. Businessman Haridas Mundhra had forced the government-owned Life Insurance Corporation (LIC) to invest ₹1.24 crore in failing companies he owned, bypassing normal procedures. Feroze Gandhi exposed the scam in Parliament, leading to an investigation.

The scandal revealed fraud and misuse of public funds. It caused the resignation of Finance Minister T.T. Krishnamachari and led to Mundhra’s imprisonment.

The Green Revolution and Food Security (1960s–70s)

In the 1960s, India faced severe food shortages. The Green Revolution introduced high-yield seeds, better irrigation, and fertilisers, led by scientist MS Swaminathan. This transformed India into a food-surplus country. Yet, benefits were uneven across regions, and intensive farming caused environmental problems.

Technology and Reforms Begin (1980s)

The 1980s saw the start of change under Prime Minister Rajiv Gandhi. Technology became a focus, with advances in telecom and computers improving services and opening rural India to better communication. Licensing rules were eased, setting the stage for bigger reforms.

The 1991 Economic Liberalisation: A Turning Point

By 1991, India was facing a severe financial crisis. The government, led by PM PV Narasimha Rao and Finance Minister Manmohan Singh, introduced major reforms to open up the economy. They ended many licensing restrictions, allowed private companies to grow, and encouraged foreign investment.

To get an IMF loan, India even pledged its gold reserves, showing how serious the situation was. These reforms sparked fast growth, ending the slow rate of economic growth.

India’s Global Rise and the Services Boom

Post-1991, India’s economy grew rapidly, especially in services like IT. Companies like Infosys and TCS became global leaders. India became known worldwide for software and outsourcing.

Today, India is a US$4.19 trillion economy, surpassing Japan to be the fourth-largest in the world. Its strong domestic market, young population, and ongoing reforms suggest it could overtake Germany soon.

Recent Initiatives Shaping Modern India

In the last decade, India has launched many programs to boost growth:

• Pradhan Mantri Jan Dhan Yojana (2014): Mass financial inclusion, opening millions of bank accounts.
• Make in India (2014): Encouraging manufacturing growth.
• Digital India (2015): Building digital services and infrastructure.
• Unified Payments Interface (UPI) (2016): Revolutionising digital payments.
• Demonetisation (2016): Pushing digital transactions to curb black money.
• Goods and Services Tax (GST) (2017): Simplifying taxes across the country.
• Production Linked Incentive (PLI) Scheme (2020): Supporting domestic industries.

Many Indians now use demat accountsto easily invest in stocks and build wealth, reflecting how accessible financial markets have become.

Conclusion

From the first budget with its focus on defense to a vibrant US$4.19 trillion economy, India’s progress is remarkable. The country’s rise from a ‘third world economy’ to a global powerhouse is a story of vision, reform, and determination. As India celebrates its 78th Independence Day in 2025, the future holds even greater promise for growth, innovation, and inclusive development.

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