Indian economy 1950-1990

• Agriculture: Policy and Performance, in Bimal Jalan, (Ed.) The Indian Economy: Problems and Prospects Penguin, Delhi
• The goals of India's five year plans are to initiate a process of development which will raise the living standards and open out to the people new opportunities for a richer and more varied life.
• From 1950-1990, India's development policies focused on agriculture and industry.
• India's economy from 1950-1990 can be categorized as a regulated economy.
• The leaders of independent India had to decide, among other things, the type of economic system most suitable for our nation, a system which would promote the welfare of all rather than a few.
• Socialism appealed to Jawaharlal Nehru the most among different types of economic systems.
• Nehru was not in favour of the kind of socialism established in the former Soviet Union where all the means of production, i.e., all the factories and farms in the country, were owned by the government.
• Nehru, and many other leaders and thinkers of the newly independent India, sought an alternative to the extreme versions of capitalism and socialism.
• India would be a socialist society with a strong public sector but also with private property and democracy, according to the leaders and thinkers of the newly independent India.
• The central objective of Planning in India is to initiate a process of development which will raise the living standards and open out to the people new opportunities for a richer and more varied life.
• The first seven five year plans, covering the period 1950-1990, aimed to attain these four goals and the extent to which they succeeded in doing so, with reference to agriculture, industry and trade.
• During the colonial rule, there was neither growth nor equity in the agricultural sector.
• The policy of self-reliance was considered a necessity in order to reduce India’s dependence on foreign countries, especially for food.
• Equity in economic development is important to ensure that the benefits of prosperity reach the poor sections instead of being enjoyed only by the rich.
• The policy makers of independent India addressed these issues through land reforms and promoting the use of ‘High Yielding Variety’ (HYV) seeds which ushered in a revolution in Indian agriculture.
• By 1990 the share of the service sector was 40.59 per cent, more than that of agriculture or industry, like what we find in developed nations.
• In 2015-16, 22 per cent of the GDP was produced in India itself.
• Land ceiling was a policy to promote equity in the agricultural sector, fixing the maximum size of land which could be owned by an individual.
• The abolition of intermediaries meant that some 200 lakh tenants came into direct contact with the government, thus being freed from being exploited by the zamindars.
• The first Five Year Plan aimed to increase agricultural production, improve agricultural productivity, and expand the production of cottage and small-scale industries.
• In India, the share of agriculture in the GDP was more than 50 per cent— as we would expect for a poor country.
• This phenomenon of growing share of the service sector was accelerated in the post 1991 period (this marked the onset of globalisation in the country which will be discussed in a subsequent chapter).
• Usually, with development, the share of agriculture declines and the share of industry becomes dominant.
• At higher levels of development, the service sector contributes more to the GDP than the other two sectors.
• Land reforms aimed to change the ownership of landholdings.
• The first Five Year Plan also aimed to improve the living conditions of rural India, including the provision of drinking water, electricity, and healthcare.
• The industrial sector and the service sector did not absorb the people working in the agricultural sector, leading to an important failure of policies followed during 1950-1990.
• In India, between 1950 and 1990, the proportion of GDP contributed by agriculture declined significantly but not the population depending on it (67.5 per cent in 1950 to 64.9 per cent by 1990).
• Economists have found that poor nations can progress only if they have a good industrial sector.
• Prices of goods are determined in the market and prices are signals about the availability of goods.
• If a good becomes scarce, its price will rise and those who use this good will have the incentive to make efficient decisions about its use based on the price.
• By the late 1960s, Indian agricultural productivity had increased sufficiently to enable the country to be self-sufficient in food grains.
• Despite the increase in agricultural productivity, 65 per cent of the country’s population continued to be employed in agriculture as late as 1990.
• Economists have found that as a nation becomes more prosperous, the proportion of GDP contributed by agriculture as well as the proportion of population working in the sector declines significantly.
• The five year plans place a lot of emphasis on industrial development.
• Subsidies do not allow prices to indicate the supply of a good and provide an incentive for wasteful use of resources.
• The policy makers were faced with the question of what should be the role of the government and the private sector in industrial development.
• At the time of independence, the variety of industries was very narrow.
• Experts argue that if subsidies are largely benefiting the fertiliser industry and big farmers, the correct policy is not to abolish subsidies but to take steps to ensure that only the poor farmers enjoy the benefits.
• There were two well- managed iron and steel firms in India at the time of independence, but the industrial base needed to expand with a variety of industries if the economy was to grow.