The Trajectory of the Indian Economy over the Past Four Decades: A Story of Mixed Experiences

The lecture will discuss India’s developmental experience over the past four decades. Since this is a vast subject, the discussion will be limited to only some of the principal features. India’s experience is one of mixed messages, both positive and negative. India historically recorded a low growth rate, around 3.5%. This was accompanied by a high tariff regime along with bureaucratic controls that have been described as a ‘license permit raj’. India experienced a serious balance of payments crisis in 1991 with foreign reserves barely enough to pay for 2 weeks’ food imports. This set in motion a series of trade liberalisation reforms initiated by the then Finance Minister, Dr Manmohan Singh, consisting of removal of trade barriers and reduction of high tariffs on several items. This propelled India to one of the fastest growing economies accompanied by increase in per capita income and reduction in poverty. India ranks third on aggregate GDP (on PPP) though on per capita GDP she falls well down the list. India’s sizeable middle-class swamps that of the EU and many of the smaller economies thus providing a large market. There has been widespread digitalisation of transactions leading to reduction in corruption. But there has also been a large increase in inequality and according to the World Inequality report, 2026, India is one of the most unequal countries in the world. There is lack of skilled jobs to employ the educated youth making India unable to exploit the advantage of ‘demographic dividend’ she enjoys over China. The talk will compare living standards between India and China.

Professor Ranjan Ray did his undergraduate studies in Economics from Presidency College in Calcutta, postgraduate studies from Delhi School of Economics, and PhD from the London School of Economics. He retired as Professor of Economics in Monash University. Prior to moving to Australia, he served as Professor of Public Economics at the Delhi School of Economics. He has published in reputable international journals and has written oped pieces for several media outlets. His research has been funded by the Australian Research Council, The World Bank and the ILO.  He has held visiting positions at Cornell University, USA, University of British Columbia (UBC), Canada, and the University of Rome, Tor Vergata, in Italy.