India’s transition from state-led industrialization to economic liberalization marks a significant shift in its economic policies, deeply rooted in constitutional principles and evolving governance frameworks.
State-Led Industrialization (1950s-1980s)
After independence, India adopted a mixed economy model, emphasizing state control over key industries while allowing private enterprise in select sectors. This approach was guided by:
Directive Principles of State Policy (DPSP): Articles 38 and 39 emphasized economic justice, equitable resource distribution, and protection of weaker sections.
Industrial Policy Resolutions (1956 & 1970s): Established public sector dominance in strategic industries like steel, coal, and banking.
License Raj: A regulatory framework requiring businesses to obtain government licenses, restricting private sector expansion.
Despite fostering industrial growth, this model led to inefficiencies, bureaucratic delays, and limited global competitiveness.
Economic Liberalization (1991 Onward)
The 1991 economic crisis forced India to shift towards liberalization, privatization, and globalization (LPG). The transition was constitutionally supported by:
Article 301: Ensuring free trade across states, facilitating market-driven reforms.
Amendments to Banking & Trade Laws: Enabled foreign investment and deregulated industries.
New Industrial Policy (1991): Reduced state control, abolished licensing in most sectors, and encouraged private enterprise.
Constitutional Underpinnings of Economic Shifts
Fundamental Rights (Article 19(1)(g)): Guaranteed freedom of trade and profession, aligning with liberalization principles.
Judicial Interpretations: Landmark cases reinforced economic freedoms, balancing state intervention with market autonomy.
Fiscal & Monetary Reforms: Strengthened financial institutions, ensuring economic stability.
India’s economic evolution reflects a constitutional balance between state-led development and market-driven growth.
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