Indian Economy

India got its independence on 15th August 1947. From there started the journey for a new India. India had a substantial change in the economic policies. From 1947 there was a gradual but slow change from a laissez faire policy, with low taxation rates and taxation based heavily on lump sum taxes on land rent, to an interventionist policy which relied more on taxes that could at some deadweight cost be evaded. But India always remained a country with light taxes. Table below shows the average state revenue as a percentage of income by province in Pre-Independent India in 1938-9 and in Independent India in 1949-50 (before the formation of the modern Indian states) and 1998. Before independence, the tax revenue was mainly from tax on land. Gradually the revenue gained from tax land has steadily declined in terms of percentage of overall in overall revenue and it accounts for only 1% of the national tax revenue.

India is highly diverse in terms of religion, language and culture. During the British rule, this was broken down a bit but still the forces of the British rule could not change India entirely. India still has 11 different languages spoken as the principle language amongst its population of more than 20 million people.

The economy of India is the twelfth largest in the world, with a GDP of US $1.25 trillion (2008) when measured in terms of UDS-exchange rate [source: economics times India]. It is also the third largest in the world when measured in terms of Purchasing Power Parity (PPP). The GDP growth rate for the fiscal year 2006-2007 was 9.4% making it the second fastest growing economy in the world, second only to China. However, India is classified as low-income economy due to its high population, resulting in a per capita income of $4,542 at PPP and $1,089 at nominal (revised 2007 estimate) [source: CIA - The World Factbook - India. CIA (2007-09-20)]

Agriculture is still the source of livelihood