Introduction

India's independence marked a significant turning point in its economic history. As a result of British-led deindustrialization, the nation had suffered acute deprivation. According to historical statistics compiled by historian Angus Maddison, India's share of global income fell from 22.6 per cent in 1700 (almost equal to Europe's 23.3 per cent) to 3.8 per cent in 1952. Following independence, India had the difficult task of methodically organizing its economy. It was a tremendous task to overcome centuries-old disparities in resources and development. Economic planning was effective in command economies such as the Soviet Union and East European nations, and it was viewed as a way to address market failures (such as those experienced during the Great Depression in the 1930s). Economic planning was a logical choice for many newly independent developing countries because it allowed states to deploy resources and achieve prioritized goals within set time constraints (Sebak, 2023).

Sectoral composition of GDP of India (per cent)

The sectoral composition of India's GDP has undergone significant transformation over the decades (Figure 8.1), reflecting the changing dynamics of the Indian economy. In the 1950s, agriculture played a dominant role, contributing to over half of the GDP at 55.4 per cent. However, as the country embarked on economic reforms and modernization efforts in the 1960s and subsequent decades, the agriculture sector's share steadily declined. By the 1990s, it had dropped to 30.9 per cent. This shift was accompanied by a remarkable rise in the industrial sector's contribution, from 14.8 per cent in the 1950s to 23.3 per cent in the 1990s. The services sector, encompassing a wide range of industries such as finance, information technology, and healthcare, saw substantial growth evolving from 29.8 per cent in the 1950s to a dominant 61.5 per cent of the GDP in 2021.