UNIT IIII - NCERT

1 DEVELOPMENT POLICIES AND EXPERIENCE (1947-90)UNITIIIUNITI2022-23 The two chapters in this unit give us an overviewof the state of the Indian economy as it was at theeve of independence till after four decades ofplanned development, which was a path that Indiachose. This meant that the Government of Indiahad to take a series of steps such as theestablishment of the Planning Commission andannouncement of five year plans. An overview ofthe goals of five year plans and a critical appraisalof the merits and limitations of planned developmenthas been covered in this After studying this chapter, the learners will become familiar with the state of the Indian economy in 1947, theyear of india s Independence understand the factors that led to the underdevelopment andstagnation of the Indian ECONOMYON THEEVE OF INDEPENDENCE2022-234 INDIAN ECONOMIC INTRODUCTIONThe primary objective of this book,Indian Economic Development, is tofamiliarise you with the basic featuresof the Indian economy, and itsdevelopment, as it is today, in theaftermath of Independence.

2 However, itis equally important to know somethingabout the country s economic past evenas you learn about its present state andfuture prospects. So, let us first look atthe state of india s economy prior to thecountry s independence and form anidea of the various considerations thatshaped india s post-independencedevelopment structure of india s present-day economy is not just of currentmaking; it has its roots steeped inhistory, particularly in the period whenIndia was under British rule whichlasted for almost two centuries beforeIndia finally won its independence on15 August 1947. The sole purpose ofthe British colonial rule in india wasto reduce the country to being a rawmaterial supplier for Great Britain sown rapidly expanding modernindustrial base. An understanding ofthe exploitative nature of thisrelationship is essential for anyassessment of the kind and level ofdevelopment which the Indianeconomy has been able to attain overthe last six and half decades.

3 LEVEL OF ECONOMICDEVELOPMENT UNDER THECOLONIAL RULEI ndia had an independent economybefore the advent of the British agriculture was the mainsource of livelihood for most people,yet, the country s economy wascharacterised by various kinds ofmanufacturing activities. india wasparticularly well known for itshandicraft industries in the fields ofcotton and silk textiles, metal andprecious stone works etc. Theseproducts enjoyed a worldwide marketbased on the reputation of the finequality of material used and the highstandards of craftsmanship seen in allimports from india (See Box ). india is the pivot of our If the Empire loses any other part of itsDominion we can survive, but if we lose india , the sun of our Empire will haveset. Victor Alexander Vruce, the Viceroy of British india in 1894 Box : Textile Industry in BengalMuslin is a type of cotton textile which had its origin in Bengal, particularly,places in and around Dhaka (spelled during the pre-independence period asDacca), now the capital city of Bangladesh.

4 Daccai Muslin had gained worldwidefame as an exquisite type of cotton textile. The finest variety of muslin wascalled malmal. Sometimes, foreign travellers also used to refer to it as malmalshahi or malmal khas implying that it was worn by, or fit for, the ECONOMY ON THE EVE OF INDEPENDENCEThe economic policies pursued bythe colonial government in india wereconcerned more with the protectionand promotion of the economicinterests of their home country thanwith the development of the Indianeconomy. Such policies brought abouta fundamental change in the structureof the Indian economy transformingthe country into supplier of rawmaterials and consumer of finishedindustrial products from , the colonial govern-ment never made any sincereattempt to estimate india s nationaland per capita income. Someindividual attempts which weremade to measure such incomesyielded conflicting and inconsistentresults.

5 Among the notable estimators Dadabhai Naoroji, William Digby,Findlay Shirras, Rao Desai it was Rao, whoseestimates during the colonial periodwas considered very , most studies did find thatthe country s growth of aggregate realoutput during the first half of thetwentieth century was less than twoper cent coupled with a meagre halfper cent growth in per capita outputper AGRICULTURAL SECTORI ndia s economy under the Britishcolonial rule remained fundamentallyagrarian about 85 per centof the country s population livedmostly in villages and derivedlivelihood directly or indirectly fromagriculture (See Box ). However,despite being the occupation of sucha large population, the agriculturalFig. s agricultural stagnationunder the British colonial ruleBox : Agriculture DuringPre-British IndiaThe French traveller, Bernier, describedseventeenth century Bengal in thefollowing way: The knowledge I haveacquired of Bengal in two visits inclinesme to believe that it is richer than exports, in abundance, cottons andsilks, rice, sugar and butter.

6 It producesamply for its own consumption wheat, vegetables, grains, fowls, ducksand geese. It has immense herds of pigsand flocks of sheep and goats. Fish ofevery kind it has in profusion. Fromrajmahal to the sea is an endlessnumber of canals, cut in bygone agesfrom the Ganges by immense labour fornavigation and irrigation. Take note of the agricultural prosperity in our country in the seventeenth century. Contrast itwith agricultural stagnation around the time when the British left india , around 200 years ECONOMIC DEVELOPMENT sector continued to experiencestagnation and, not infrequently,unusual deterioration. Agriculturalpro-ductivity became low though, inabsolute terms, the sector experiencedsome growth due to the expansion ofthe aggregate area under stagnation in the agriculturalsector was caused mainly because ofthe various systems of landsettlement that were introduced bythe colonial government.

7 Particularly,under the zamindari system whichwas implemented in the then BengalPresidency comprising parts ofIndia s present-day eastern states,the profit accruing out of theagriculture sector went to thezamindars instead of the , a considerable number ofzamindars, and not just the colonialgovernment, did nothing to improvethe condition of agriculture. The maininterest of the zamindars was only tocollect rent regardless of theeconomic condition of the cultivators;this caused immense misery andsocial tension among the latter. To avery great extent, the terms of therevenue settlement were alsoresponsible for the zamindarsadopting such an attitude; dates fordepositing specified sums of revenuewere fixed, failing which thezamindars were to lose their this, low levels of technology,lack of irrigation facilities andnegligible use of fertilisers, all addedup to aggravate the plight of thefarmers and contributed to thedismal level of agriculturalproductivity.

8 There was, of course,some evidence of a relatively higheryield of cash crops in certainareas of the country due tocommercialisation of These Out Compare the map of British india with that of independent india and findout the areas that became parts of Pakistan. Why were those parts soimportant to india from the economic point of view? (Refer, to youradvantage, Dr Rajendra Prasad s book, india Divided). What were the various forms of revenue settlement adopted by the Britishin india ? Where did they implement them and to what effect? How far doyou think those settlements have a bearing on the current agriculturalscenario in india ? (In your attempt to find answers to these questions, youmay refer to Ramesh Chandra Dutt s Economic History of india , which comesin three volumes, and Baden-Powell s The Land Systems of BritishIndia, also in two volumes. For better comprehension of the subject, youcan also try and develop an illustrated agrarian map of British india eitherby hand or with the help of your school computer.)

9 Remember, nothinghelps better than an illustrated map to understand the subject at hand).2022-237 INDIAN ECONOMY ON THE EVE OF INDEPENDENCEBut this could hardly help farmers inimproving their economic conditionas, instead of producing food crops,now they were producing cash cropswhich were to be ultimately used byBritish industries back home. Despitesome progress made in irrigation, india s agriculture was starved ofinvestment in terracing, flood-control,drainage and desalinisation of a small section of farmerschanged their cropping pattern fromfood crops to commercial crops, a largesection of tenants, small farmers andsharecroppers neither had resourcesand technology nor had incentive toinvest in INDUSTRIAL SECTORAs in the case of agriculture, so alsoin manufacturing, india could notdevelop a sound industrial base underthe colonial rule. Even as the country sworld famous handicraft industriesdeclined, no corresponding modernindustrial base was allowed to comeup to take pride of place so longenjoyed by the former.

10 The primarymotive of the colonial governmentbehind this policy of systematically de-industrialising india was two-fold. Theintention was, first, to reduce india tothe status of a mere exporter ofimportant raw materials for theupcoming modern industries inBritain and, second, to turn india intoa sprawling market for the finishedproducts of those industries so thattheir continued expansion could beensured to the maximum advantage oftheir home country Britain. In theunfolding economic scenario, thedecline of the indigenous handicraftindustries created not only massiveunemployment in india but also a newdemand in the Indian consumermarket, which was now deprived of thesupply of locally made goods. Thisdemand was profitably met by theincreasing imports of cheapmanufactured goods from the second half of thenineteenth century, modern industrybegan to take root in india but itsprogress remained very , this development wasconfined to the setting up of cottonand jute textile mills.