Why is India called socialist country?
India is a socialist country because its Constitution declares it as a socialist country in the Preamble. This and the word secularism were introduced into the preamble during the National Emergency from 1975 to 1977. This was done by the government without the consent of the opposition.
Resources in India were all owned by the government until 1991. Then liberalization reforms were brought in and private citizens were allowed to conduct business alongside PSUs. However the major PSUs have not been privatized like Coal Indiaa and the railways. So all though we have aspects of a market economy we also have socialistic characteristics.
1.License Raj:The license raj was a series of red tape that made it literally impossible to run businesses in India from 1947-1990. All of the industries were nationalized [like in communist nations] and only the government could control the means of production. People could not start their own companies because you needed 80 or so licenses to start one, and even then, the government would determine the method of production/how much to produce. This is socialism.
2.Low Economic Freedom:India ranks very low on the world economic freedom index, and the Ease of Doing Business list 123th and 130th respectively. Countries that are capitalist are ranked higher on these indices. Population, Facts, GDP, Corruption, Business, Trade, FDI [World Economic Freedom] andEase of doing business: India improves ranking, Singapore tops the list, says World Bank – The Economic Times
3.Bureaucracy:India has a lot of red tape and unnecessary bureaucracy. India ranks 2nd last in the housing contracts rankings. A lot of government intervention takes place in business.
So, India was not “bound” to be a socialist but was working as a socialist up till the emergency when the constitution was amended and this was added to the constitution the two words that most of today’s politicians fear the most Socialism and Secularism.
I disagree with one of the answers which said it was done against the will of the opposition and it was done in a manner which was against the essence or ethos of Constitution (though true but not entirely). After the end of emergency when fresh elections were called, and the Janta Party sweapt the polls , they nullified every single legislation or constitutional amendment brought in during emergency. So, if they wanted to remove those two , they would have , they didn’t means they were OK with the scenario.
In current Context rather after early 90’s Liberalization by PVR’s govt ,it is hardly a socialist but undeniably running a socialist agenda (providing subsidies against will of WTO, Loan waivers etc etc). Is it relevant to have the word Socialism in our constitution considering the current framework, I am not sure but yes I do believe it isn’t hampering our state of policy making. No country can survive (according to me) on a purely Capitalist or a purely Socialist framework so adding socialism or not isn’t gonna make a difference.