Changes in Indian Economy After Independence

Topics: Five-Year Plans of China, Five-year plan, Economic history of the People's Republic of China Pages: 60 (23364 words) Published: June 22, 2013
CHANGES IN INDIAN ECONOMY AFTER INDEPENDENCE
INDIA'S ECONOMY HAS MADE great strides in the years since independence. In 1947 the country was poor and shattered by the violence and economic and physical disruption involved in the partition from Pakistan. The economy had stagnated since the late nineteenth century, and industrial development had been restrained to preserve the area as a market for British manufacturers. In fiscal year (FY--see Glossary) 1950, agriculture, forestry, and fishing accounted for 58.9 percent of the gross domestic product (GDP--see Glossary) and for a much larger proportion of employment. Manufacturing, which was dominated by the jute and cotton textile industries, accounted for only 10.3 percent of GDP at that time. India's new leaders sought to use the power of the state to direct economic growth and reduce widespread poverty. The public sector came to dominate heavy industry, transportation, and telecommunications. The private sector produced most consumer goods but was controlled directly by a variety of government regulations and financial institutions that provided major financing for large private-sector projects. Government emphasized self-sufficiency rather than foreign trade and imposed strict controls on imports and exports. In the 1950s, there was steady economic growth, but results in the 1960s and 1970s were less encouraging. Beginning in the late 1970s, successive Indian governments sought to reduce state control of the economy. Progress toward that goal was slow but steady, and many analysts attributed the stronger growth of the 1980s to those efforts. In the late 1980s, however, India relied on foreign borrowing to finance development plans to a greater extent than before. As a result, when the price of oil rose sharply in August 1990, the nation faced a balance of payments crisis. The need for emergency loans led the government to make a greater commitment to economic liberalization than it had up to this time. In the early 1990s, India's postindependence development pattern of strong centralized planning, regulation and control of private enterprise, state ownership of many large units of production, trade protectionism, and strict limits on foreign capital was increasingly questioned not only by policy makers but also by most of the intelligentsia. As India moved into the mid-1990s, the economic outlook was mixed. Most analysts believed that economic liberalization would continue, although there was disagreement about the speed and scale of the measures that would be implemented. It seemed likely that India would come close to or equal the relatively impressive rate of economic growth attained in the 1980s, but that the poorest sections of the population might not benefit. India - Structure of the Economy

Independence to 1979
At independence the economy was predominantly agrarian. Most of the population was employed in agriculture, and most of those people were very poor, existing by cropping their own small plots or supplying labor to other farms. Landownership, land rental, and sharecropping rights were complex, involving layers of intermediaries (see Land Use, ch. 7). Moreover, the structural economic problems inherited at independence were exacerbated by the costs associated with the partition of British India, which had resulted in about 12 million to 14 million refugees fleeing past each other across the new borders between India and Pakistan (see National Integration, ch. 1). The settlement of refugees was a considerable financial strain. Partition also divided complementary economic zones. Under the British, jute and cotton were grown in the eastern part of Bengal, the area that became East Pakistan (after 1971, Bangladesh), but processing took place mostly in the western part of Bengal, which became the Indian state of West Bengal in 1947. As a result, after independence India had to employ land previously used for food production to cultivate cotton and jute for...
Continue Reading

Please join StudyMode to read the full document

You May Also Find These Documents Helpful

  • Advertising in Indian Economy Essay
  • Globalization and Indian Economy Essay
  • Indian Cinema After Independence Essay
  • indian economy Essay
  • Indian Independence Essay
  • The Indian Economy Essay
  • Indian Economy Essay
  • Indian Economy Essay

Become a StudyMode Member

Sign Up - It's Free