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Q.Examine any two areas of disagreement with respect to the model of economic development adopted in India after independence.

CBSECBSE Class XII Board 2020Subjective· 2mImportance★★★★★
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After independence, India’s economic development model sparked sharp disagreements over the role of the state versus private enterprise, and over whether to prioritise heavy industry or agriculture and small-scale production.

The decades following independence were not a time of quiet consensus. While Jawaharlal Nehru’s vision of a mixed economy with a dominant public sector and centralised planning became official policy, it was contested from several directions. Two of the most significant areas of disagreement concerned the balance between state and private enterprise and the relative priority given to heavy industry versus agriculture and rural development.

State versus private enterprise. The core of the Nehruvian model was that the state would occupy the “commanding heights” of the economy — sectors like steel, energy, mining, and heavy machinery were reserved for the public sector. Private enterprise was allowed, but tightly regulated through a system of licences, quotas, and tariffs. Critics on the right, such as C. Rajagopalachari and the Swatantra Party, argued that this stifled initiative, created a licence-permit raj, and slowed growth. They believed that a market-driven economy, with minimal state interference, would generate wealth more efficiently and reduce poverty faster. On the other hand, critics on the left, including the Communist Party of India, argued that the state had not gone far enough — that the public sector should have been even larger, and that private capital, especially from large industrial houses, should have been nationalised outright. For them, the mixed economy was a compromise that allowed capitalist exploitation to continue under a socialist banner.

Note

The licence-permit raj, as it came to be called, meant that even a small business needed government permission to expand, change product lines, or import machinery. This created bottlenecks and corruption, and became a major target of reformers in the 1980s and 1990s. …

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