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Exercises · Q11

Q.Describe the state of the Indian economy at the time of Independence and the objectives India's leaders set for economic planning in response.

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When India became independent in 1947, the economy it inherited from over a century of British colonial rule was in a difficult state. Poverty was widespread, literacy levels were very low, the industrial base was narrow and underdeveloped (a legacy of both de-industrialisation of handicrafts and the limited, lopsided character of colonial modern industry), and the occupational structure remained overwhelmingly agrarian, with the vast majority of the workforce dependent on low-productivity agriculture. On top of these structural weaknesses, Independence coincided with Partition, which disrupted established economic linkages between regions and required India to manage large-scale refugee resettlement in its earliest years as a nation.

It was in direct response to this starting point that India's leaders adopted economic planning, through a Planning Commission and a sequence of Five Year Plans, built around four broad objectives. Growth aimed to steadily raise national output after decades of colonial-era stagnation. Modernisation aimed to shift the economy toward more modern production methods and a more diversified occupational structure, reducing the excessive dependence on traditional agriculture. Self-reliance aimed to reduce dependence on foreign aid, goods and capital, building domestic capacity instead — a natural priority after the colonial experience of dependence on an outside power. Equity, or social justice, aimed to ensure that the benefits of growth reached different sections of society fairly, given the widespread poverty and inequality India …

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