India today has the fifth-largest economy in the world—and with an annual growth rate of roughly 7 percent, one of the fastest-growing. But for decades, the country was an economic laggard. The policies pursued by India’s founders, most notably its first prime minister, Jawaharlal Nehru, produced neither growth nor equity. They granted a disproportionate role to the state, dramatically regulated industry, and limited India’s integration into the global economy.
After fitful attempts to bring about reform in the 1980s, Indian policymakers were forced to grasp the nettle in the wake of an unprecedented fiscal crisis in 1991. Faced with few options, they sporadically embraced market-friendly reforms that ultimately set the country on a path of steady economic growth. That growth, in turn, played a critical role in reducing endemic poverty even as it contributed to deepening inequality.
India today has the fifth-largest economy in the world—and with an annual growth rate of roughly 7 percent, one of the fastest-growing. But for decades, the country was an economic laggard. The policies pursued by India’s founders, most notably its first prime minister, Jawaharlal Nehru, produced neither growth nor equity. They granted a disproportionate role to the state, dramatically regulated industry, and limited India’s integration into the global economy.
