As India is all set to celebrate the 70th independence year, the country finds itself standing at number four in the list of world’s largest economies. We have population of around 1.2 billion and soon, we are going to be the nation with the most number of young and technically sound work forces. Our country emerged as the global agricultural powerhouse, after being dependent on the other countries for grain import for so many years. Life expectancy and literacy rates in the country have also doubled and quadrupled in the last few years. Let us have a look at the major events that took place in India that shaped Indian economy:
1) GST Bill: In a unanimous decision on August 4, 2016, the Rajya Sabha finally approved the vital 122nd Constitutional amendment to turn the Goods and Services Tax Bill into a law. The Bill secured 203 votes in favour and none against after years of debate and deliberation.
This marked the biggest tax reform in Indian history since Independence as it brought all indirect taxes under one uniform tax system.
Following its passage, the Centre set up a GST Council that focused on other aspects of the tax such as exemptions, threshold, compounding and control. On November 4, the GST Council finally agreed on a multi-layered rate structure as 0 per cent, 5 per cent , 12 per cent, 18 per cent and 28 per cent, a departure from popular international practice of having one rate of tax for all goods and services.
2) Demonetisation of Rs 500 and Rs 1,000 notes: In the most surprising and unspeculated move of 2016, Prime Minister Narendra Modi on November 8 announced the decision to withdraw Rs 500 and Rs 1,000 bank notes in a bid to crack down on black money.
The government issued new Rs 500 and introduced Rs 2,000 note as replacement.
In the following weeks RBI introduced several rules in relation to withdrawal limit, deposits and exchange. Countless black money was retrieved, raids were conducted and even national banks were scrutinised.
It has been the boldest reform and the government claims that it definitely will bring long-term benefits at the cost of short-term setbacks.
3) 1991 Economic liberalisation: The economic liberalisation process that started during 1991, had the goal of making the economy more market-oriented and expanding the role of private and foreign investment. Important changes were introduced which included - reduction in import tariffs, deregulation of markets, reduction of taxes, and greater foreign investment. Liberalisation has been credited by its proponents for the high economic growth recorded by the country in the 1990s and 2000s.
Ever since the liberalisation process, the Indian markets opened to both private and public sector companies. India started carrying out businesses with foreign establishments as well.
4) End of Licence Raj: Bringing an end to “Licence Raj” was one of the chief goals of the 1991 economic liberalisation process. The Licence Raj was a system of licences, regulations and accompanying red tape that were needed in order to set up and run businesses in India between 1947 and 1990.
The Licence Raj was a result of India's decision to control the economy and give out licences to only a select few. During that period, nearly 80 government agencies had to be satisfied before private companies could produce something and, if a licence is granted, the government would regulate the production.
However, reforms since 1991 significantly reduced these regulations and the business houses could work without having to worry about unnecessary “red tapism.”
5) Abolition of Privy Purse in India: Privy Purse can be defined a form of payment that was made to the royal families of all erstwhile princely states as it was made a part of their agreement in order to merge with India in 1947, and later to integrate their states in 1949, whereby they had lost all ruling rights. Privy Purse was discontinued under Prime Minister Indira Gandhi’s regime, after the 26th Amendment in 1971, by means of which all their privileges and allowances from the Centre were rendered invalid.
If Privy Purse continued, our tax money would have gone to the royal families without any reason.