How India Became the World’s 4th Largest Economy: Milestones & Future Goals

From Colonial Legacy to Economic Liberation
Post-1947, India inherited an economy crippled by British extractive policies (e.g., deindustrialization, resource drain). The early Soviet-inspired Five-Year Plans (1951–1991) focused on self-reliance, building heavy industries (steel, dams), but stifled private enterprise. Growth stagnated at 3–4% annually—pejoratively termed the “Hindu rate of growth”—leaving GDP at just $266 billion by 1991, alongside a balance of payments crisis.

Key Exam Notes:
License Raj: Overregulation stifled innovation; industries needed government permits for basic operations.
1991 Crisis: Foreign reserves plummeted to 3 weeks of imports, forcing India to pledge gold for loans.


1991 Reforms: The Game-Changer
The Narasimha Rao-Manmohan Singh duo dismantled the License Raj, embracing LPG (Liberalization, Privatization, Globalization):
Industrial delicensing: 80% of industries no longer needed permits.
FDI inflows: Sectors like telecom and automobiles opened to global players (e.g., Maruti-Suzuki).
IT Revolution: Infosys, TCS, and Wipro leveraged Y2K opportunities, making India a global services hub.
Result: Services sector surged to 60% of GDP; economy crossed $2 trillion by 2014.

Why Aspirants Should Care:
Questions on 1991 reforms’ impact on poverty, inequality, or globalization.
Case Study: How IT exports ($250 billion in 2023) cushioned trade deficits.


The Modi Decade: Acceleration & Aspiration
Post-2014, India shifted from reforms to execution, with flagship schemes:
Make in India: Aims to boost manufacturing’s share from 16% to 25% of GDP (e.g., smartphone exports hit $11 billion in 2023).
Startup India: 100K+ startups (113 unicorns by 2024) in sectors like fintech (Paytm, PhonePe).
Infrastructure Push: PM Gati Shakti (integrated logistics) and 7.5% GDP growth in 2023–24.
Data Snapshot:
Tourism: 29M foreign tourists (2024) contributed $30 billion to forex reserves.
Consumption: MPCE rose from ₹1,430 (2011–12) to ₹3,000 (2022–23), reflecting demand for healthcare, education, and leisure.
Poverty: Extreme poverty (<$1.9/day) fell from 22% (2011) to 10% (2024).


Debunking the Per Capita Myth
Critics highlight India’s low per capita income ($2,600), but context matters:
USA (GDP: $28T): 7th in per capita ($80,000).
China (GDP: $18T): 69th ($12,500).
India’s Scale: Even at $30T GDP, per capita would mirror today’s Romania (~$55th rank).
Exam Insight: Focus on multidimensional poverty indices (NITI Aayog reports) over GDP alone.


The Road to $10 Trillion: Tech or Bust
India missed the first three industrial revolutions (steam, electricity, computing) due to colonial rule or slow reforms. To lead the Fourth (AI, quantum, biotech), it must:
Innovate, Not Imitate:
ISRO’s cost-efficient space tech (Chandrayaan-3 at $75M vs. NASA’s $1B missions).
AI Talent: India has 16% of global AI workforce (need for chip design labs).
Funding Deep Tech:
Semiconductor Mission: $10B incentive for fabs (e.g., Tata’s Assam plant).
Future Skills:
NEP 2020: Coding from Class 6; vocational courses in AI, robotics.

Why It’s Relevant:
UPSC Essay Topic: “Can India leverage AI to bridge the digital divide?”
SSC GK: Recent schemes like IndiaAI Mission (2024).


Conclusion: No More Missed Revolutions
India’s $10T-by-2035 goal demands tech leadership, not dependency. For aspirants, this narrative isn’t just about GDP—it’s a masterclass in turning demographic potential into geopolitical leverage, a recurring theme in interview panels and essay papers.