Before the mid- 1980s, India’s economy was led by the so-called “License Raj”, which basically meant that the economic development of the country was mostly dominated by socialist- influenced and state-owned tendencies.
About 25 years ago, India started to slowly open up its market through economic liberalization, and by 1991, there was an economic reform that significantly help boost development in the region. Basically, what the reform consisted of was that it got rid of “License Raj”. This ended many public monopolies and made way for foreign direct investment in many different sectors.
India’s GDP has been growing at about 7.5% yearly. Some analysts predict that in 2011, the growth rate might reach the government’s target of 10%.
Despite the rather optimistic forecast, however, there are a number of problems undermining economic development, and that need to be fixed in order for the standards of living to really change, and for the country to enter a new stage.
One important thing that should be mentioned is infrastructure of the country. India might have an increasingly growing number of mobile towers, telephone poles and internet lines, but at the same time the country has problems with transporting goods from one area of the country to another because of broken roads, as railway tracks and facilities are often out of date, causing a danger for passengers. The gap between urban and rural areas is still very wide, and one of the reasons for this is that the infrastructure in the less developed urban areas does not allow for easy free economic development.
Some sectors of the economy are growing, while others are either regressing or depreciating; and others staying on the same spot. In order for the economy to grow, and standards of living improved in the country, it is necessary to diversify development. Perhaps this is where the main problem lies, that is, in uneven development.
Poverty is still widespread in the country. This is partly as a result of the uneven development, and on the other hand, the rapid economic development. This had led to the huge gap between the rich and the poor.
Indian vice-president, Hamid Ansari, said that “rapid economic development, being good in itself, is often dislocating,” reported the India Times. He claimed that due to rapid economic development, “conventional social and economic notes of life are disrupted, people are displaced and uprooted by unseen forces beyond their control, social and cultural axes of reference are replaced and people suffer varying degrees of alienation, disconnect with the roots and conflict of their external environment with their internal cultural context,” the India Times reported.