India Closed Economy

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CHAPTER 1 INDIA’S TRANSITION FROM A CLOSED TO AN OPEN ECONOMY

A moment comes, which comes but rarely in history, when we step out from the old to the new, when an age ends, and when the soul of a nation, long suppressed, finds utterance. 1.1 These are the words of Pandit Jawaharlal Nehru, the first Prime Minister of India, in his speech marking the Independence of India on 14 August 1947. These words still hold true today as India moves onto the global scene and is making its presence felt as an emerging economic power.

History Since Independence
1.2 When India achieved its independence in 1947, it was 'the beginning - not the end - of a period of nation-building '.1 India was determined to definitively break away from the imperialist influences of its former coloniser, the United Kingdom. 1.3 Prime Minister Nehru, 'armed with socialist faith in an interventionist state and an aristocratic disdain for consumerism, tried to transform India into a giant of heavy industry '.2 India embarked on a program, combining a non-aligned movement and a socialist, centrally planned economy. This program was seen as a compromise between the extremes of capitalism and communism, combining the better elements of the West 's democratic framework with the economic planning of China and the USSR. The resulting doctrine was broadly regarded as 'economic socialism '.3 Non-Aligned Movement (NAM) 1.4 During the Cold War, the globe was separated into two main trading blocs or superpowers. The non-aligned movement (NAM) was supported by nations not willing to commit wholly to one power or the other. India sought to identify a 'third way ' in which to pursue relations with the rest of the world.4 An Asian-African Conference (representatives from 29 Asian and African countries) at Bandung, Indonesia, in April 1955 eventually led to the First NAM Summit in Belgrade in 1961. The majority of countries involved in the NAM shared a desire to escape colonial domination. 1.5 India was a

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