Indian Economy: Performance, Policies, Politics, and Prospects and Challenges

The paper begins with a bird's‐eye view of growth, showing that the Indian economy grew slowly during 1951–1988, faster during 1988–2003, and the fastest during 2003–2023. India's first prime minister, Jawaharlal Nehru, sought to establish a self‐sufficient and socialist economy. Accordingly, he focused upfront on heavy industries, with the public sector leading the way. Employment and production of consumer goods were left to tiny household enterprises. The result was a highly controlled formal sector with nearly all capital and a swath of the informal sector with nearly all labor. Slow growth was the inevitable outcome. Some ad hoc liberalization began in the 1980s and became more systematic in the 1990s. However, socialism remained entrenched, resulting in a stop‐go process of liberalization. With reforms accumulating, the paper predicts a bright future, though the migration of the vast workforce from agriculture to industry and services is likely to remain a challenge.