Indian Economy: Adopting New Approach Essay

After independence, India chartered a path of economic development based on mixed economy, building a new industrial structure around the public sector and a closely monitored, regulated and controlled system where government played the role of licenser in the process of building industry. There were few hiccups in between. In the late 70s Mrs. Indira Gandhi brought in small doses of liberalization. In the mid 80? s Rajiv Gandhi did likewise but the real change came in 1991 when economic crises were looming large on the horizon. India’s economy could be termed as a developing economy which is characterized by the coexistence, in greater or lesser degree, of utilized or unutilized manpower on the one hand and of unexploited and exploited natural resources on the other. A developing economy bears the common features of technological backwardness at low per capita income coupled by widespread poverty, heavy population pressure, low grade productivity, high unemployment, low level utilization of country’s natural resources, rigid social structure, predominance of old beliefs, lack of opportunity for capital formation, pre-dominance of agriculture and scanty participation in international trade etc. But all this is amidst a possibility of economic development, small pockets of high rates of economic growth and affluence. It is gain saying truth what the world economy has experienced that colonization directly lead to the exploitation of the colonized country by the colonial rulers. Colonization is also a factor for the underdevelopment of a country’s economy. India was a victim of the colonial feature of economic exploitation for more than hundred years. The British colonial exploitation in India can be broadly divided in three periods. They are (i) the period of merchandised capital, (ii) the period of industrial capital which leads to the drain of Indian wealth for the interest of British industry and (iii) the period of financial capital. During British period foreign capital flowed into India. However in real terms those capitals were not according to the proper needs of Indians and directly helped the capital growth of Britishers. The overall impact of British rule in Indian economy can be summed up as stagnation of per capita income ever a long period of time, high priority to the traditional method of agricultural activities, repeated famines and acute poverty of handicrafts and traditional village industries defective land holding and erroneous implemen tation of zamindari practices etc. The basic aim of British administration in India was to transform Indian subcontinent as a consumer market for British furnished goods, Technological up gradation and development of infrastructure as well as social infrastructure were negligible. During the independence Indian economy had almost all the features of an underdeveloped economy. In the last fifty years of self-rule, a lot of policy initiative has been taken up by the government of India to upgrade the economic base of the country. Still Indian economy is gripped by poverty, population explosion, backwardness both in agriculture and industry, low grade technological development, high unemployment and wide difference between the high and low income levels. Now in India incidence of poverty is coexisting with sophisticated nuclear technology. The policy measures taken within the last five decades metamorphosed Indian economy to break the stagnant per capita income to achieve self sufficiency in food grain production. Indian economy is a unique blend of public and private sector otherwise known as a mixed economy. It is also a dualistic economy both modern industry and traditional agricultural activities exist side by side. The mandatory economic rights which the Constitution promises are (i) equality of opportunity unemployment or appointment to any office irrespective of race, caste and sex, (ii) all the citizens of India shall have property or carry on any occupation, trade or business, (iii) right to acquire private property by the state with compensation paid under the procedure established by law, iv) ban on begging, child labour and trafficking of human beings. The federal economic structure of India includes the central government and the state government within a unitary system. Demarcations of responsibilities are divided between the central and state governments. However, the residuary power is vested with the central government. Besides finance commission, other economic commissions are set up by the central government time to time to look after the parity of resources distribution among the states. Annual budgets (both general and railway) and five year plans aye the backbone of India’s economic policy initiatives. Indian Economy since Independence-After India’s independence long spell of stagnation was broken with the introduction of economic planning. Since 1950s net national product at factor cost had arisen from Rs. 40,454 crore to 11,224 crores in 1999-2000. The growth of national income was 3. 8 percent. India’s per capita income has been running since 1950-51. India’s per capita income at current price was Rs. 160, 47. Apart from the growth in quantitative terms, there have been significant changes in India’s economic structure since independence. During the second plan priority was acceded to capital intensive manufacturing units. These industries now account for more than fifty percent of the industrialproduction. The transport system in India over the past four decades has grown both in terms of capacity and modernization. Then road network is one of the largest in the world as a result of spectacular development of roads under various lanes. The total road length comprising national high ways state high ways and other road accounted for 24. 66 lakhs km in 1996-97 progress of shipping, railways and civil aviation has equally been impressive. Though the country is presently facing an energy crisis but this sector has also gained much in termsof production. Similarly irrigation facilities in the country have increased raising irrigated area. Since independence significant reformation has taken place in the banking and financial sector ofIndia. The process of nationalization was initiated after independence. First the Reserve Bank was nationalized in 1949, thereafter in 1995 the Imperial Bank of India, a leading commercial bank of that time, was nationalized and renamed the State Bank of India. In 1969 fourteen big commercial banks were nationalized. This act of government undermined thecontrol of big capitalists on the finance capital. From the above argument we can conclude that the Indian economy is no longer caught in low levelequilibrium trap.