The Indian Budget 1996-97 The Indian Economy Overview

INDIAN ECONOMY BASICS: A Brief History

[Indian Economy Basics] [Related Pages: 1 2 3 4 5 6 7 ]

INDIAN ECONOMY BASICS: A Brief History

For decades after the departure of the British, India kept the doors closed to foreign investors. With an impending debt trap, the government opened up the floodgates and has not looked back since.


The story begins on 15 August 1947. Two hundred years of subservience to the British Empire came to an end with the Partition; the violent carving away of British India into Muslim and Hindu-dominated states.

On 26 January 1950, the Constitution was adopted, defining India as a sovereign, socialist, secular republic. While shedding British domination, India chose to retain the British two-tiered parliamentary system, made up of a lower house (Lok Sabha) of elected representatives from the states and an upper house (Rajya Sabha) of appointed representatives.

India also preserved the British system of common law, in which the Supreme Court is the apex body.

Recent elections yielded a hung parliament with the long-ruling Congress party reduced to half its strength in parliament. Political analysts say India could be entering a new era of coalition governments, but does this bode well for the future stability of the country and the economy?

Prime Minister H D Deve Gowda, who was appointed to head the United Front government, leads an unwieldy 13-party coalition of socialists, communists and free-market reformers.

Many of the coalition partners now in power, were severe critics of the economic reforms initiated by the previous Congress administration.

However, with the Harvard-educated Mr. Chidambaram, a former Congress Commerce Minister, as Finance Minister, the United Front government has temporarily put to rest investor's fears that the center-left government would roll back reforms made over the past five years.


[Indian Economy Basics] [Related Pages: 1 2 3 4 5 6 7 ]

Shalini Gupta is a merchant banker with one of the foremost financial institutions in India, and an expert commentrator on the fundamentals of the Indian economy.


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