India faced significant financial problems in 1948, just a year after gaining independence. Some key challenges:

1. Partition-related costs: The division of British India into India and Pakistan led to massive refugee resettlement, infrastructure damage, and loss of assets.
2. Economic instability: The British colonial legacy left India with an underdeveloped economy, dependent on foreign aid.
3. Food shortages: India faced severe food shortages, leading to famine-like conditions in some areas.
4. Inflation: High inflation rates, averaging 11.5% in 1948, eroded purchasing power.
5. Currency fluctuations: The Indian rupee’s value dropped significantly against the US dollar.
6. Balance of payments crisis: India struggled to manage foreign exchange reserves.
7. Rehabilitation of refugees: India had to bear the financial burden of rehabilitating millions of refugees.
8. Security concerns: India faced internal and external security threats, requiring significant defense spending.

To address these challenges, the Indian government implemented various measures:

1. Five-Year Plans (starting in 1951)
2. Import substitution policies
3. Export promotion schemes
4. Food grain imports
5. Monetary policy adjustments
6. Fiscal discipline

Key economic indicators in 1948:

• GDP: ₹109 crore (approximately $14.5 billion)
• Inflation rate: 11.5%
• Unemployment rate: Around 14%
• Foreign exchange reserves: ₹295 crore (approximately $39 million)
• Budget deficit: ₹140 crore

India’s financial situation improved gradually through the 1950s and 1960s, driven by economic planning, industrial growth, and agricultural reforms.