Economic Growth in India During 1950–2015: Nehruvian Socialism to Market Capitalism

Abstract

Comparisons of pre and postreform economic growth in India are widely researched in the literature. This paper adds to this literature, but with a sectoral growth accounting perspective. We compare the proximate sources of economic growth in India during the 1950–1980 periods, the so‐called Nehruvian socialist regime, with that of the post‐1980 period, which includes the pro‐business reforms in the 1980s and more aggressive pro‐market reforms in the 1990s. We document two important features of India's growth dynamics. First, the overriding importance of the services sector in India's growth is not new, but it has always been the case in independent India. However, there has been a major shift in the composition of service sector growth. While the socialist regime fostered more nonmarket services, including the government sector, the market services sector flourished in the market regime, in terms of labour productivity, TFP and economic growth. Second, the economic growth in the socialist period was substantially driven by capital accumulation, except in the nonmarket services, whereas the market regime sees a combination of both productivity and capital accumulation.

Globalisation and regional income growth disparity in India and the People’s Republic of China (PRC)

“…which are not exclusively captured in our paper. In the recent years, the development of various intuitions (Ahrens, 1997;Amendola et al, 2011;Das et al, 2019;Iyer et al, 2012;Subramanian, 2007) is possibly due to the spill-over effects of economic growth in the Indian states.…”

“…Hence, the decomposition of per capita income growth into the growth of factor inputs and efficiency growth would determine the sources of the variation in economic growth. The paper conducts a growth accounting exercise to decompose the per capita income growth (Bosworth et al, 2007;Bosworth and Collins, 2008;Mallick, 2015;Das et al, 2019). It uses labour persons, capital stock and labour income share to decompose the per capita income growth.…”

Modern services led growth and development in a structuralist dual economy: Long‐run implications of skilled labor constraint

“…For example, about 10% of the total labor force with advanced education in South Asia was unemployed in 2000, this number decreased to about 7% and 8% for 2007 and 2012 respectively only to increase to an average of about 15% in the years 2018–20 (World Development Indicators). Second, it is believed that the Nehruvian vision of developing higher education system during the planning era (Das et al., 2021) and/or a political and sociocultural bias towards secondary and higher education since the colonial era (Broadberry & Gupta, 2010) enabled the post‐1980 service‐led expansion in the Indian economy. Availability of a critical mass of English‐speaking engineers since the late‐1980s, in particular, is considered an important factor during the initial growth phase of the Indian software sector.…”

Reconceptualizing marketing: an assessment of the marketing system in an emerging economy

“…health care, education and government services), especially under the aegis of the government, grew at a faster rate (by more than half a percentage point) than the market services sector (hotels and restaurant transport and storage, communication and business services). The economic growth was driven by capital accumulation, which was the source of expansion in manufacturing (Das et al , 2021). However, the severity of the economic crisis from 1985 to the 1990s allowed the government to shed its old image of an autarchic, closed economy and undertake policy reforms that expanded economic engagements internationally.…”