India’s Economic Development: Plans, Policies, and History
India’s Five-Year Plans: Goals and Impact
The five-year plans had four primary goals, which were given varied importance in different projects based on the availability of resources. These goals were:
- Growth: Increase the country’s capacity to generate more economic output by producing more goods and services. A good indicator of economic growth is the steady increase in the Gross Domestic Product (GDP).
- Modernization: The adoption of new technology to increase the production of goods and services is called modernization. For instance, a rancher can expand the result on the homestead by utilizing new seed varieties instead of using the old ones.
- Self-reliance: The initial seven five-year plans emphasized becoming more self-reliant. This strategy was viewed as necessary to reduce our reliance on foreign nations, particularly for food. Modernization isn’t simply restricted to the utilization of technology. It also tends to change viewpoints, such as acknowledging the similar right to work for both men and women. The team means to avoid imports of those goods that could be manufactured in India itself.
- Equity: This is to ensure that the benefits of economic prosperity reach the poor simultaneously along with the rich. Every Indian should have the ability to meet their basic needs like food, a decent house, education, and health care, and inequality in the distribution of wealth should be reduced.
Further, there was a fear that reliance on imported food supplies, foreign technology, and foreign capital might make India susceptible to foreign interference in our policies.
Conclusion
After independence, the government of India decided that India would be a socialist society with a strong public sector and democracy, with the private area being urged to be a piece of the arrangement effort. India adopted the five-year planning model, wherein the plan specifies how the resources of a nation should be put to use to achieve the goals and defined objectives within a specified period.
In 1950, the Planning Commission was founded, and they had four primary goals, which were to provide varied importance in different projects based on the availability of resources. The major targets which the Commission aims to achieve are growth, modernization, equity, and self-reliance.
Nehru vs. Gandhi: Economic Philosophies
Gandhi’s Economic Vision
Post-independence, although Gandhi was not around to guide the economic policy of new India, Gandhians like S.N. Agarwal and Sriman Narayan proposed the Gandhian Plan, which reflected Gandhi’s ideas. The plan proposed:
- Reform of Agriculture: This will address the issues of hunger and unemployment. The government should focus on land reforms, cooperatives, and rural credit.
- Revival of Cottage Industries: It will not only provide supplementary income; Khadi was also a way to address the requirement of clothing.
Thus, the focus of the Gandhian plan was to fulfill the basic necessities as a priority. There is also a misunderstanding that Gandhi was against machines and industrialization. However, Gandhi was not against machines per se; he was only against imitating the Western model in the Indian situation. His main concern was:
- Machines should not be pitted against humans.
- Machinization results in the accumulation of wealth and increases exploitation.
Thus, the Gandhian approach was to make Indian villages self-sufficient entities. He was for the revival of the village republic as he believed that ‘India lives in villages’. Without the revival of villages, the goal of Swaraj would be incomplete.
The Gandhian approach was not adopted, and we can see the consequences of its neglect. The economic model which we have adopted to catch up with Western countries is unsustainable and full of conflicts. The developmental model has resulted in imbalanced growth and a widening of the gap between India and Bharat.
Schumacher, in his book Small is Beautiful, has suggested the concept of sustainable development based on Gandhian principles, indirectly derived from the Buddhist model.
Nehru’s Economic Vision
Nehru was also not an economist. Nehru was a modernist. He was impressed by the achievements of the USSR. He wanted to make India a modern and scientific society. He described his philosophy as progressive socialism and wanted India to be a society based on a socialist pattern. Thus, Nehru advocated for a centralized planning system, believing that the state should play a key role in directing economic development. This approach led to the establishment of the Planning Commission and the introduction of Five-Year Plans, aiming to transform India into a modern, industrialized nation. Nehru emphasized heavy industries, large-scale infrastructure projects, and technological advancements, seeing them as essential for economic self-sufficiency and growth. We can understand Nehru’s real approach towards the development strategy from the 2nd Five-Year Plan, which was based on the Nehru-Mahalanobis model.
- Investment in Heavy Industries: It will promote capital formation. It will make India independent of foreign imports and essential goods. Consequently, India will be able to exercise more autonomy in other areas and protect itself from the bargaining of Western countries.
Indian Economy on the Eve of Independence
Introduction
Ancient India flourished in every sphere of life. The Indian economy on the eve of independence started to drop as quickly as the British stepped foot on Indian soil. The rural, manufacturing, and other sectors of India’s economy and planning were all exploited. The nation could not supply sufficient food for its population due to diminishing soil fertility. Even India’s few sectors weren’t enough to keep the country’s economy afloat.
The infrastructure was decaying, and the British government’s primary goal was to increase revenue. The resources that remained were devastated by the Second World War. To achieve freedom, the Indians had to forsake all other areas of existence. The actions of the colonial authorities seemed to be the nail in the coffin for the Indian economy.
The British dispersed well before Asia’s long-running cloth manufacturing industry. Industrialization arose as a result of this. Indians were obliged to import British products, which sparked the revolution. During the British occupation of India, the industries began to disintegrate.
Features
- Poverty was widespread in the country, with many individuals unable to meet their food, shelter, and clothing needs. Poverty and illiteracy were two other difficulties that the government had to deal with.
- Communication, transportation, power, and energy infrastructure were all undeveloped.
- Significant reliance on imports due to the country’s industrial backwardness; various consumer items, including medications, were imported overseas.
- Limited urbanization because the bulk of the public resided in villages; they had fewer options outside of agriculture.
- Because India was a British empire, the British exploited the Indian economy and planning.
- The country’s economy grew slowly or not at all. There was poverty, death, and misery due to stagnation’s lack of food.
- Even though agriculture employs 70% of the population, it only contributes 50% of GDP. Productivity and production were also at an all-time low.
- The country’s manufacturing industry was underdeveloped, with a scarcity of primary and key sectors.
Economic Development in Various Sectors
Agriculture was the first considered source of income and occupation in the Indian economy on the eve of Independence, with over 72.7 percent of the working population employed in this industry. Only 10.2 percent of the working population, on the other hand, worked in the industrial sector. Aside from that, 17.2% of the workforce was employed in the service or tertiary area of the business. On the eve of Independence and later, this resulted in modest growth of the Indian economy’s tertiary or service sector. On the eve of Independence, the Indian economy had an imbalanced boom.
The Demographic
On the eve of Independence, India’s economy was characterized by high birth and death rates. This meant that the citizen’s life expectancy was poor, hovering about 8% per year. The rate of average lifespan was likewise relatively low. On the eve, the Indian economy was described and demonstrated a lack of health care facilities, awareness, and all means for health care for 32 years. Only 16 percent of the population was literate. This demonstrated our country’s social and economic backwardness.
The Level of Agriculture
It is a well-known fact that agricultural practices account for more than 70% of India’s national income. Before 1947, agricultural activity provided almost 95 percent of the country’s income. Over 85% of the country’s people lived in communities where agriculture was their sole source of income. In terms of agriculture, the Indian economy on the brink of Independence was depressing. One of the most significant Indian sectors stagnated and deteriorated for a long time.
The Industrial Sector Under British Rule
When the British arrived in India, they intended to stifle its flourishing industrial phase. They began to gain control of the apparel industry and attempted to stifle the work of artisans. The British devised a strategy to decentralize these thriving businesses. With decentralization, the British attempted to accomplish two goals:
- India’s export volume was elevated to the forefront. India’s raw ingredients were shipped directly to the United Kingdom. Whereas India used to be a significant exporter of manufactured handicrafts, it is now mostly a supplier of raw materials.
- The British misrule in India contributed to the decline of the handicraft sector. The Indian handicraft sector suffered as a result. The British used a discriminatory tariff to undermine the Indian handicraft sector, allowing unrestricted export of raw materials through India to Britain and uncontrolled importing of finished items from Britain to India. The export of handicraft products from India, on the other hand, was subject to a hefty tariff.
Conclusion
Foreign trade is critical to a country’s economic development and earnings. Although being self-sufficient and independent is desirable, overseas trade and globalization are essential for a country’s success. On the eve of Independence, India’s economy and planning was in dire straits in foreign commerce. Due to the British-imposed laws, none of India’s products or skills were recognized. As a result, the structure, composition, and amount of the country’s foreign commerce and income are negatively impacted.
Characteristics of the Indian Economy
Meaning of Indian Economy
India is a developing nation and economy, including a blended economy on the planet. The significant attributes of a developing economy are overpopulation, the most extreme populace underneath the destitute or poverty line, a poor infrastructure, an agro-based economy, a slower pace of capital development, and low per capita income. Since the freedom of the country, India has been creating numerous viewpoints according to the monetary perspective. Albeit the Indian economy is in the developing stage, it will gradually move to become a developed nation. The significant changes in the Indian economy were made in the year 1991.
Characteristics of the Indian Economy
The Indian economy is a developing one, and this is owed to the way that there are exceptionally significant measures of illiteracy, unemployment, poverty, and so on in India. With an instantaneously lessening Gross Domestic Product (GDP) to add to the different issues confronted by the Indian economy, there are a ton of elements that add to the characteristics and nature of the Indian economy being a developing one.
Low Per Capita Real Income
The actual revenue or income of a nation alludes to the buying force or the purchasing power of the nation overall in a given monetary year, while the per capita actual or real income alludes to the normal buying force or purchasing power of the nation or the buying force or purchasing power of a person in a country in that year. Emerging nations share the quality of a low for each capita real income.
High Rate of Population Growth
Where there is a high populace, there additionally must be a framework set up to help that populace. This implies there should be sufficient instructive, educational, and clinical offices, enough business openings or employment opportunities with great compensations, and so forth. With a high populace, particularly an undeniably high populace, giving these facilities to every resident turns into an immense undertaking, and frequently, state-run administrations or the government can’t carry on with it; in this manner, it leaves the economy in the developing stage.
Agro-Based Economy
The Indian economy is absolutely an agro-based economy. Close around 14.2 % of Indian GDP is contributed by farming and unified areas, while 53% of the total populace of the nation relies on the horticulture sector.
Overpopulation
Overpopulation is one of the main pressing issues of the Indian economy. The number of inhabitants in India gets expanded by around 20% in every decade consistently. Around 17.5% of the total populace is owned by India.