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thefirstpost-independencegovernmentledbyJawaharlalNehruandwiththeaimofspeedingup

economicdevelopmentandgrowthtomeettheneedsofIndiasrapidlygrowingpopulation.Thefirst

ofIndiasfive-yeareconomicplanswaslaunchedin1951.Duringthedecadesthatfollowedthestate
tookovercertainkeysectorsandinvestedheavilyinothers,whiletheprivatesectorwassubjectto
wide-rangingcontrols.Tariff,andother,barrierswereerectedtoprotectdomesticindustries,and
variousagrarianreformprogrammeswereinitiated.

Theresultsweregenerallypositive,especiallywhencomparedwithmanyotherdevelopingcountries.
Economicgrowth,exceptduringtimesofseveredroughtsuchas1979and1987,wassteady;it
averaged3.6percentayearinrealterms(thatis,aftertakingintoaccountpopulationgrowth)

between1965and1980,andmorethan5percentayearduringthe1980s.Inflationandthenational
debtweregenerallykeptlow.Agriculturaloutputrosesignificantlyandthespectreofmassfamine

waseliminated.Thebasisofamodernindustrialstatewaslaid.However,growthlevelswerestilltoo
lowtohavemorethanamarginalimpactontheincomeofthemajorityofIndians.In2004Indias
grossnationalproduct(GNP)wasaboutUS$673,205million,givinganincomeperheadofjust

US$820.Inaddition,morethan60percentofunder-fivesweremalnourished,whileaccesstoclean
waterandsanitationwasstillavailableonlytoaminorityofthepopulation.

In1991P.V.NarasimhaRaobecameprimeministerandinstitutedasignificantchangeineconomic
policy.Manyofthecontrolsovertheprivatesectorhavebeenabolishedandthestatemonopolyin
certainareas,suchasairtransport,wasloosened.Theeconomygenerallywasopenedupbythe

reductionoftariffcontrolsandbytheencouragementofforeigninvestment.Thesechangeswere
partlybroughtaboutbytheneedtosustainhighergrowthrates.However,thegovernmentalso

neededtocutpublicspendingandtoreduceinflation,debtrepayments,andthebalanceofpayments

deficitwhichhadallrisensharplyasaresultofproblemscreatedbytheGulfWarandbygovernment
borrowinginthelate1980s.In1991and1992realeconomicgrowthdroppedto1.1percent;by
1996itwasabove6.5percent.

Changesatnationallevelhavealsobeenreflectedatstatelevel.Thestateshavesignificantcontrol

overinternalpolicyandinterpretnationalpolicyindifferentways.Some,likeWestBengal,havefar

greatergovernmentcontroloftheeconomythanaverage;others,likeMaharashtra,havetraditionally
beenmoremarket-oriented.Since1991,however,almostallthestateshaveopenedtheirdoorsto

foreigninvestment,reducedcontrolsovertheprivatesector,andallowedsomeprivatizationofstate

companies.Somestateshavebeenmoresuccessfulinthisregard.Fivemajorstates,whichtogether
constituteonethirdofIndiaspopulationAndhraPradesh,Gujarat,Karnataka,Maharashtra,and

TamilNaduhavesecuredtwothirdsofprivateinvestmentproposalssince1991and60percentof
commercialbankcredit.Incontrast,sevenstates,whichtogetherconstitute55percentofthe

population,havesecuredonly30percentofprivateinvestmentproposalsduringthesameperiod.

ThesearethestatesofAssam,Bihar,MadhyaPradesh,Orissa,Rajasthan,UttarPradesh,andWest

Bengal.Thisdisparitymayleadtoinstabilityinthefuture.In2006some4.45milliontouristsvisited
India,andspentanestimatedUS$7,352million.

Agriculture,Forestry,andFishing

Intermsoflanduses,54percentofIndiaslandisusedforarableagriculture,3percentforcrops,

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