Occupational Structure and the State of the Economy at Independence

By the time British rule ended, the combined effect of agricultural stagnation, commercialisation of agriculture, de-industrialisation, and lopsided modern industry could be seen very clearly in India's occupational structure — that is, how the working population was distributed across agriculture, industry and services. At Independence, an overwhelming majority of India's workforce depended on agriculture and allied activities for a livelihood, while only a very small share worked in modern industry or organised services. This heavy dependence on a low-productivity agricultural sector, with very little industrial or service-sector employment to absorb surplus labour, was itself a symptom of how limited India's economic development had been under colonial rule.

When India became independent in 1947, the economy it inherited showed the accumulated effects of this history: widespread poverty, very low levels of literacy and education among the general population, a narrow and underdeveloped industrial base, and an agricultural sector that was both the main source of livelihood and chronically low in productivity. On top of these long-standing colonial-era weaknesses, Independence also brought the immediate economic shock of Partition — the division of British India into India and Pakistan. Partition disrupted the economy in concrete ways: some resource-rich and industrially significant regions (such as areas with jute cultivation and mills, or canal-irrigated agricultural tracts) ended up on the other side of the new border from complementary parts of the same economic system, breaking established supply chains. At the same time, India had to manage the large-scale resettlement of refugees who crossed the new border in both directions, which placed further strain on …