The 70th Independence day is upon us! We have moved a lot ahead of what we were since the colonial rule. The economic picture has also changed, and it has become easier to get loans in India today. One aspect of independence is being able to choose what to do with our money. Today we’ll see what makes India an economic powerhouse and how credit is an asset in a huge growing economy like ours.
Loans in India: Before, in 1947, and now
As mentioned in other blogs on this site, easy loans are a big factor that shapes the economy of a country. For any small, medium, or a large business, the owners don’t always have enough funds to start or grow. Loans come in handy, as they potentially benefit both the investors and business owners. Let’s take a look at the usual practices people followed in different walks of the Indian economy
Before independence, there wasn’t much of significant business going on, compared to today. India’s economy was based on agriculture. Agriculture carries risks, especially in monsoon dependent irrigation. Delays or advances of monsoon meant a disaster for the farmers. The government and the financial institutions did have provisions for agricultural loans, but the core rural population of India were never aware of these. The colonial government couldn’t care less, as long as they had the control of the produce and their taxes, a.k.a. Lagaan (which they did have via Zamindar lords).
There were a few known industrialists and they had the influence on the right set of people. They got what they wanted all the time, which meant that the transparent system of bank loans or p2p loans that we see now wasn’t there. For common people, there were a few Sahukaars or freelance money lenders. These sahukaars preyed on the ignorance and poverty of the common people. People became indebted to them for life, and sometimes even beyond. 3% per month (36% p.a.) was a common interest rate, with compounding. Clearly, this was not a good state of loans in India.
The economy immediately after independence was not only slow but also chaotic. Influential people got the lion’s share of all the resources under the British government. Our economic outlook was restricted while we were struggling to unite the various sections of the country and community. Capitalism was nowhere in the picture, and people used to live on the behest of the government. Poor Infrastructures, limited budgets and two back to wars made the situation worse. Then came a day when even PM had to ask the citizens to skip some meals to cope with the scarcity of food grains. Our economy was quite unstable during that period. Drought for 1-2 years could make the farmer’s life miserable. Easy loans and financing can help a lot in such situations. Our country experienced this at the end of 20th century.
Liberal India post-1991
Economic policies of India saw a new light in the year 1991. The government made the Indian economy liberal which marked the beginning of Capitalism in India. Focus shifted from socialism and we gave more emphasis to business activities and entrepreneurship. As a part of policies, norms were liberated for loans too. The Government encouraged banks and investors to provide loans to the industries. In the later years, this process was simplified further. Farmers and laborers could also get loans in India with some conditions.
Indian economy has also reached new heights. We have foreign reserves worth $365750 million. Our GDP is as high as $2.1 trillion. We have reached here from a mere $63.50 billion in 1970. We are a big market for almost everything there is. Business giants from across the world want to invest in India.
Now many government-aided institutions as well as private players have come into the picture and are providing loans to all. P2P lending market is also growing fast. People have surplus funds which they are ready to invest. The market is open to all, and whoever offers the best commodity at the best price wins. Value for money is not just a concept anymore.
Loans in India are one such commodity. Currently, P2P loans get the best savings and earnings from loans. This is why the market for P2P loans is growing manifold, which is soon going to make banks sweat in getting potential borrowers. Banks simply can’t match the margins P2P loans provide to both parties. Exilend encourages this practice by making personal loans affordable for all at no fee or hidden costs. Join for free today. Lend and borrow loans in India with ease.