India's economy: a story of success, failure, hope

ON THE eve of India's independence from Britain 70 years ago, The Times of India reported "frenzied enthusiasm" and "wild scenes of jubilation" across the land. But despite the triumph of having overthrown colonial rule, the country was in a dire state. It had just been split into two nations - India and Pakistan - a division that was marked by the biggest migration in history and the slaughter of more than a million people, which left behind political wounds that have yet to heal.

Per capita income growth had been close to zero for more than half a century. Life expectancy was 37. Literacy was less than 15 per cent. The country's industrial base which had been among the largest in the world two centuries earlier had been all but wiped out. Poverty was pervasive; there was no middle class to speak of.

Economically, India has made enormous strides. It is today the world's third largest economy in purchasing power parity (PPP) terms. Since independence, its per capita income has grown more than tenfold and now exceeds US$1,500, which makes it a middle-income country. Life expectancy has almost doubled, literacy stands at 74 per cent. It has a 280 million-strong middle class. India is the fastest-growing major economy in the world and one of the most favoured investment destinations.