Development Policies and Experience

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UNIT UNIT

I I I

DEVELOPMENT POLICIES AND EXPERIENCE (1947-90)

The two chapters in this unit give us an overview of the state of the Indian economy as it was at the eve of independence till after four decades of planned development, which was a path that India chose. This meant that the Government of India had to take a series of steps such as the establishment of the Planning Commission and announcement of five year plans. An overview of the goals of five year plans and a critical appraisal of the merits and limitations of planned development has been covered in this unit.

1
INDIAN ECONOMY
ON THE

EVE

OF

INDEPENDENCE

After studying this chapter, the learners will

• •

become familiar with the state of the Indian economy in 1947, the year of India’s Independence understand the factors that led to the underdevelopment and stagnation of the Indian economy.

“India is the pivot of our Empire... If the Empire loses any other part of its Dominion we can survive, but if we lose India, the sun of our Empire will have set.” Victor Alexander Vruce, the Viceroy of British India in 1894

1.1 INTRODUCTION
The primary objective of this book, Indian Economic Development, is to familiarise you with the basic features of the Indian economy, and its development, as it is today, in the aftermath of Independence. However, it is equally important to know something about the country’s economic past even as you learn about its present state and future prospects. So, let us first look at the state of India’s economy prior to the country’s independence and form an idea of the various considerations that shaped India’s post-independence development strategy. The structure of India’s presentday economy is not just of current making; it has its roots steeped in history, particularly in the period when India was under British rule which lasted for almost two centuries before India finally won its independence on 15 August 1947. The sole purpose of the British colonial rule in India was to reduce the country to being a feeder economy for Great Britain’s own

rapidly expanding modern industrial base. An understanding of the exploitative nature of this relationship is essential for any assessment of the kind and level of development which the Indian economy has been able to attain over the last six decades. 1.2

1.2

LOW LEVEL OF ECONOMIC DEVELOPMENT UNDER THE COLONIAL RULE

India had an independent economy before the advent of the British rule. Though agriculture was the main source of livelihood for most people, yet, the country’s economy was characterised by various kinds of manufacturing activities. India was particularly well known for its handicraft industries in the fields of cotton and silk textiles, metal and precious stone works etc. These products enjoyed a worldwide market based on the reputation of the fine quality of material used and the high standards of craftsmanship seen in all imports from India.

Box 1.1: Textile Industry in Bengal Muslin is a type of cotton textile which had its origin in Bengal, particularly, places in and around Dhaka (spelled during the pre-independence period as Dacca), now the capital city of Bangladesh. ‘Daccai Muslin’ had gained worldwide fame as an exquisite type of cotton textile. The finest variety of muslin was called malmal. Sometimes, foreign travellers also used to refer to it as malmal shahi or malmal khas implying that it was worn by, or fit for, the royalty.

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INDIAN

ECONOMIC

DEVELOPMENT

The economic policies pursued by the colonial government in India were concerned more with the protection and promotion of the economic interests of their home country than with the development of the Indian economy. Such policies brought about a fundamental change in the structure of the Indian economy — transforming the country into a net supplier of raw materials and consumer of finished industrial products from Britain. Obviously, the colonial...
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