Indian Economy 1950-1990

Indian Economy 1950-1990

• Studying this chapter will expose learners to the goals of India's five-year plans.
• Learners will gain knowledge of development policies in sectors like agriculture and industry between 1950 and 1990.
• Learners will develop critical thinking about the merits and limitations of a regulated economy.

Introduction

• On August 15, 1947, India achieved independence.
• Leaders faced the task of choosing an economic system to promote overall welfare.
• Socialism appealed to Jawaharlal Nehru.
• Nehru wasn't in favor of the Soviet Union's model of socialism, where all means of production were controlled by the state.
• Nehru promoted an alternative to pure capitalism and socialism.
• He aimed for a socialist society with private property and democracy, a balance of public and private sectors.

Types of Economic Systems

• Every society must answer three core questions: What goods should be produced, how, and how to distribute them?
• One way is through market forces of supply and demand, also called capitalism.
• Another model is socialism where the government decides what needs to be produced, how, and how to distribute.
• Modern economies are typically mixed, combining market forces and government intervention.

What is a Plan?

• A five-year plan outlines a nation's resource allocation to achieve specific objectives and goals.
• Five-year plans are crucial for defining short-term and long-term goals.
• Goals of planning in India may conflict, requiring careful balancing by planners.
• India's plan documents go beyond five-year horizons to include a broader perspective, considering potentially 20-year periods.

Growth

• Growth is an increase in a country's production capacity, or output of goods and services.
• This can mean greater capital, support services like transport and banking, or improved efficiency.

Service Sector

• Initially, agriculture held a significant share of India's GDP, more than 50%.
• As the economy developed, the share of the service sector increased to over 40% by 1990.

Land Reforms

• Land to the tiller was a key policy to improve farming efficiency.
• Ownership incentives increased productivity in the agricultural sector.
• Limiting land ownership helped to reduce concentration of landholdings.
• Reforms attempted to distribute land fairly but faced challenges and loopholes.

Green Revolution

• India's initially low agricultural productivity was significantly improved by the introduction of High Yielding Varieties (HYV) seeds during the 1960s.
• This significantly increased yields of crops like rice and wheat.
• Usage of fertilizers and pesticides were also important in the implementation of the revolution.

Economic policies

• Import substitution was a government policy aimed at reducing reliance on imports.
• Promoting domestic production of goods became a priority.
• Policies to protect domestic industries like tariffs and quotas.
• This had both positive and negative outcomes.

Public and Private Sector

• India's economic development has seen both public and private sector participation in different eras.
• Public sector initially played a vital role.
• There was controversy about the right mix of public and private sector involvement.

Conclusion

• The first seven five-year plans boosted India's agricultural and industrial sectors.
• India largely became more self-sufficient.
• Efforts for the equitable distribution of wealth through land reforms and subsidized goods did not fully deliver as expected.
• There were mixed results to economic planning and policy.

EXERCISES (List of questions)

• Exercises include questions about defining a plan, the objectives of planning, HYV seeds, marketable surplus, land reforms, the Green Revolution, etc.