Why did young independent India adopt the socialist economic model? How much did socialism help the Indian economy? What led to the opening up of the Indian economy to liberalization, privatization, and globalization?
To know how Indian economy shaped took shape after Independence
India’s journey from socialism to capitalism
To know the role of global bodies in shaping Indian economy
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In the first five decades after Independence, Indian economy was a socialist one. This was because right after Independence, Indian leaders faced the decision of wanting to make India a capitalist economy (like USA) or a communist one (like USSR). They decided on a middle path of socialism. The private sector remained small as compared to the public sector because of restrictive regulations. From 1951, the Fiver Year Plans focused mostly on education, healthcare, and infrastructure. It was during this period that the hallowed IITs and AIIMS were set up. Slowly, the Indian market was opened to the global economy for machinery and technology not available here. However, there were many challenges. The tough regulations for obtaining licenses to set up sector companies earned the moniker of License Raj in India. Many state-owned enterprises were incompetent and shutting down. Under pressure from entrepreneurs and global bodies like IMF and World Bank, India opened its market to become a capitalist country.
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