Indian Economy 1950-1990

Indian Economy 1950-1990

• Learners will gain knowledge of India's five-year plans
• Development policies in agriculture and industry (1950-1990) will be explored
• The merits and limitations of a regulated economy will be assessed

Introduction

• India gained independence on August 15, 1947
• The country's leaders sought an economic system promoting national welfare
• Nehru favored a socialist system, but not the Soviet model of complete government control
• Indian leaders favored an alternative to extreme capitalism and socialism, promoting a mixed-economy approach

Types of Economic Systems

• A market economy (capitalism) relies on supply and demand to determine production and distribution
• A socialist system prioritizes societal needs, with government control over resources and distribution.
• Mixed economies combine market mechanisms and government intervention.

What is a Plan?

• A plan outlines how a nation utilizes its resources to meet specific goals over a defined period.
• India's five-year plans focused on growth, self-reliance, and modernization.
• The goals of the plans sometimes conflicted, requiring balance and prioritization by planners.

Goals of Five-Year Plans

• Growth: expanding the country's productive capacity
• Modernisation: improving technology and infrastructure
• Self-reliance: reducing dependency on foreign imports
• Equity: ensuring that the benefits of development reach all sections of society

The Service Sector

• The service sector's share in India's GDP increased after 1990 as the nation developed, surpassing the shares of both agriculture and industry.

Mahalanobis: Architect of Indian Planning

• Prasanta Chandra Mahalanobis was a key figure in shaping Indian economic planning, particularly during the Second Five-Year Plan
• His work focused on development planning principles
• He played a prominent role in consulting on Indian economic growth

Land Reforms

• Land reform policies aimed to redistribute land ownership to promote equity
• The objectives of land reforms faced challenges from landlords

Green Revolution

• The Green Revolution introduced high-yielding varieties of seeds, significantly increasing food production.
• The revolution, however, was unevenly distributed with benefits accruing more to larger farmers and high-income households

Debate Over Subsidies

• Subsidies were important in encouraging adoption of new technologies
• Subsidies are crucial for guaranteeing the benefits to less affluent farmers.
• However, subsidies also had drawbacks, as larger farmers might disproportionately benefit.

Trade Policy of Import Substitution

• India's trade policies largely focused on replacing imports with domestic production, particularly during its initial development.

Industrial Development

• India made significant progress in its industrial sector during its first seven plans.
• The proportion of GDP contributed by the industrial sector increased substantially.