The Political Economy of Development in India

How did India make the transition from an economic laggard to one of the fastest growing economies in the world? India’s sluggish economic growth has been pejoratively described as the “Hindu rate of growth”. Industrial modernization and the green revolution could muster a mere 3.4% average annual rate of growth between 1956 and 1974, at a time when many economies of Asia had boomed. Economic growth accelerated to a rate higher than 5% between 1975 and 1990 and furthermore to over 6%, after 1992. Growing at 8.8% between 2003 and 2007, India transformed itself to one of the fastest growing economies in the world, after China. The World Bank – IMF Annual Meeting in Singapore in 2006 was dedicated to the rise of China and India. India continued to grow more rapidly (6.1% in 2008/09) than all the major Asian economies, except China, in the aftermath of the global financial crisis. India gradually deregulated private sector investment after 1975. This phenomenon was consolidated in the 1980s. There was substantial domestic opposition to engaging with trade in the 1980s, even though the lessons from the success stories in East Asia were making an impact on policymakers. It was only after the balance of payments crisis of 1991 that