Tharisapalli plates granted to Saint Thomas Christians by South Indian Chera ruler Sthanu Ravi Varma testify that merchant guilds and trade corporations played a very significant role in the economy and social life during the Kulasekhara period of Kerala, India. The inscription shown, is a Sanskrit invocation of Lord Shiva. The combination of protectionistimport-substitutionFabian socialismand social democratic -inspired policies governed India for sometime after the end of British rule.
To appreciate the magnitude of the Indian change afterlet me illustrate: But a trade economist will counter this by showing that the world economy was also stagnant in the first half of the 20th century especially after World War I when world per capita GDP grew annually at just under one percent.
Disgraceful protectionism by most governments between the Wars slowed both the world and the Indian economy. In those twenty years it not only outperformed the world economy significantly but it was amongst the fastest in the world. There is also the value of time and accumulated learning through time.
Economists also find it puzzling why the liberal institutions of the British Raj did not engender faster growth during the colonial years. The rule of law, the relative peace of Pax Brittanica, a non-dirigiste administration, the railways and canals—all these were market friendly moves, after all.
I believe that national confidence also plays an important role. The more damaging impact of colonialism may well have been to Indian minds—it created an inferiority complex from which they have only recently recovered.
Douglass North has rightly emphasized the importance of beliefs. Once these socialist institutions began to be replaced by capitalist ones in the Reform period, confidence returned and young Indian minds finally became decolonized.
From this story I shall draw lessons about the role of institutions and culture in development. En passant, I shall touch upon the great questions of Indian history: What is the consequence of democracy preceding capitalism? Consequently, the economy produced a large financial surplus, which was used to support the growing Mughal Empire and finance spectacular monuments like the Taj Mahal.
But the two-year voyage was not a commercial success and the Indians were not interested in European clothes and goods for they made far ones in India. But Da Gama told King Manuel of Portugal of large cities, large buildings and rivers, and great populations. Initially, they came to plunder but soon discovered the rewards of trade.
Hence, there was a constant flow of gold to India, which absorbed a good deal of the bullion mined by the Spaniards in the New World.
Having learned about cotton textiles from India, the English turned the tables, and brought an industrial revolution to Britain, but destroyed the lives of millions of Indian weavers.
India was a leading manufacturer in the 18th century India was a leading manufacturing country in the world in the early 18th century. Instead, why did India become impoverished?
Despite a dynamic and a growing commercial sector which responded to market forces and extensive foreign trade, the truth is that 18th century India was significantly behind Western Europe in technology, institutions and ideas.
One explanation is that even in the 18th century India had a large population and plenty of cheap labor. Prosperity comes with rising productivity and a rise in productivity depends on technology. When the supply of labor is elastic, it is more economical to hire people than to invest in machines.
One explanation is that even in the 18 century India had a large population and plenty of cheap labor. The indigenous banking system, which financed these exports, was also destroyed.
Since the colonial government did not erect tariff barriers, Indian consumers shifted to cheaper English mill-made cloth and millions of handloom workers where left in misery. This led to famines. The worst one in affected 96 million lives and killed an estimated 5 million people.
Moreover, the British government transferred its surplus revenues back to England.The economy of India is a developing mixed economy. The reforms did away with the Licence Raj, As the Indian economy has diversified and grown, agriculture's contribution to GDP has steadily declined from to Aug 26, · Bhagwati, centralised Planning, India, Licence Raj, Sen Whenever the Indian economy is in trouble, discussion somehow leads to a mention (bashing) of the infamous Licence Raj of Socialist India.
It is almost like Godwin’s Law for discussion on Indian economy. The Licence Raj or Permit Raj (rāj, meaning "rule" in Hindi) was the elaborate system of licences, regulations and accompanying red tape that were required to set up and run businesses in India between and The Licence Raj was a result of India's decision to have a planned economy where all aspects of the economy are controlled .
May 23, · What is meant by the Licence Raj is the complex bureaucracy that used to cover just about any economic activity in India. This was partly as .
Impact of the License Raj: The following table shows the difference in growth rate of the Indian economy as compared to that of other countries in Asia: Comparative Growth Rates of Developing Economies Average Annual Rates Country.
The key characteristic of the Licence Raj is a Planning Commission, that centrally administers the economy of the country. Like a command economy, India has five-year plans on the lines of the Five Year Plans in the former Soviet Union.