Analysis of National Income Trend Since 1950 and Inflexion Points

In: Business and Management

Submitted By adarshpb
Words 829
Pages 4
Macroeconomics – Case 1.3
1 Analysis of National Income Trend since 1951
Rate of Change of National Income
12% 10% 8% 6% 4%

2%
0% -2% -4% -6% Rate of Change of National Income

1951-1965: Post independence the country was wrought with economic stagnation and extreme poverty, as a result this phase witnessed rapid industrialization. While the agricultural sector contributed more than 50% to the GDP, the consumer goods industry were completely neglected. As a result the growth rate kept fluctuating during this period.

1966-80: During this period, India’s economic growth can be characterized by one word – “volatile”. The 1971 war with Pakistan, successive changes In Government in the late 1970’s and the huge drought in 1979 which affected nearly 200 million people in the agricultural sector, had a major impact on the national income.

1981-1991: In the 1980s, the businesses were able to drive efficiency and react to supply and demand incentives, the economy took off. The plan laid stress on improving the productivity level of industries by upgrading of technology. So, the national income always increased as depicted by the graph shown. Progress toward that goal was slow but steady. In the late 1980s, however, India relied on foreign borrowing to finance development plans to a greater extent than before.

Trend since 1991: Economic liberalization of India began in 1991. The economic abolished license raj, reduced tariffs, removed entry-exit barriers and ended various trade barriers. The period from 1991 saw the Indian economy get integrated with global economy and the steady flow of foreign investment chipped in. The structural reforms and the stabilization measures undertaken since have had far reaching effects on the Indian economy. De-regulation, Liberalization and Globalization was able to attract international capital and modern technology.

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