India

Consumption in India: Past and Present

Until the end of the 20th century, consumption in India was at a low level and based on meeting basic needs. During the precolonial period, which lasted up to the 18th century, almost all of the population resided in rural villages. Subsistence agriculture was the mainstay of the economy, alongside networks of commerce and manufacturing. Hand-based industries were common, such as crafts, food processing, textiles, or toolmaking. There was also trade between cities and exports of agricultural products [Page 416]and textiles to overseas markets in Europe, the Middle East, and southeast Asia.

Consumption patterns changed when India was colonized by the United Kingdom in the early- to mid-19th century. The traditional, agrarian way of life was gradually replaced by national systems of economic, legal, and social organization. Consumption was transformed by development and urbanization, including the establishment of industries, markets, and towns. These changes brought new ways of living. The colonial period coincided with major changes in the world economy, particularly industrialization, production, and trade. However, the impact of British rule on India's economy and consumption is a controversial topic. Some argue that policies implemented by the British Raj were exploitative and led to the demise of domestic industries, causing agricultural production to be insufficient for feeding the population. When India gained independence from British rule in 1947 and became a republic with a new constitution in 1950, it was a deeply impoverished country—one of the poorest in the world. Much of the population was still surviving on subsistence levels of consumption.

From the 1950s to the 1980s, India was a socialist state, generally isolated from the world economy. It focused on self-sufficiency and encouraged consumption of Indian-made products, rather than imported goods. Economic and social development was limited by the government's adherence to socialist policies, state ownership of many sectors, and extensive regulation.

Manufacturing accounts for about half of India's gross domestic product. The country is well known for textile manufacturing, and areas such as Ludhiana and Tirupur have gained recognition as leading sources of hosiery, knitted garments, and sportswear

The tide began to turn in the 1990s, when economic reform and liberalization opened new markets, as India moved toward a market-oriented economy. Changes included privatization of certain public-sector industries, new policies on international trade and investment, and tax reforms. Consequently, in the intervening years, India has transformed into one of the fastest-growing economies in the world, with an average annual gross domestic product (GDP) growth rate of 5.8 percent since the 1990s.

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