Conclusion

The progress of the Indian economy over the first seven plans was genuinely impressive. Industry became far more diversified than it had been at independence, and the Green Revolution made the country self-sufficient in food production, while land reforms did away with the hated zamindari system.

At the same time, serious shortcomings emerged, mainly in industry and trade:

• Many economists grew dissatisfied with the performance of public sector enterprises, several of which ran heavy losses that drained the nation's limited resources.
• Excessive government regulation held back the growth of entrepreneurship.
• In the name of self-reliance, Indian producers were shielded from foreign competition, which removed their incentive to improve the quality of their goods.
• Indian policies were inward-oriented and failed to build a strong export sector.

Against a changing global economic backdrop, the need to reform economic policy came to be widely felt, and the new economic policy of 1991 was launched to make the Indian economy more efficient — the subject of the next chapter.

Key takeaways

• After independence India chose an economic system combining the best features of socialism and capitalism, resulting in the mixed economy model.
• Economic planning was carried out through five year plans, whose common goals were growth, modernisation, self-reliance (self-sufficiency) and equity.
• The major agricultural initiatives were land reforms and the Green Revolution, which together made India self-sufficient in food grains. …