Indian economy

• M.G. Ranade was born

  18th January, 1842
• M.G. Ranade completed his MA from University of Bombay
• M.G. Ranade studied law and became the judge of Bombay High Court
• Subjects of economic ideas of Ranade

  • Methodology of study (inclusive method or historical methods)
  • Explanation of backwardness/poverty in India
  • Development and industrialisation of India and the role of State
• Economic ideas of Ranade can be found in his essays on 'Essay on Indian Economics' or 'Essays on Indian Political Economy', 1893
• Ideas of Ranade mainly with respect to Protection

  1. Ranade opposed the laissez-faire policy i.e., non-interference by the government in economic matters

  2. Government (State) must play an important role in removing poverty and promoting the wealth of the nation

  3. State must come forward with measures helpful for the development of the economy

  4. State must take care of national needs and take help of individual and cooperative efforts

  5. Government must bring effective and economical efforts

  6. Advocated a planned economy with the objective of a welfare State
• Ranade opposed the policy of free trade


  Advocated and supported the policy of protection of India and mainly of Indian industries
• Problem of population pressure

  • Advocated balanced redistribution of population by sending people from thickly populated areas to thinly populated areas
  • Government must take care of the resettlement of the people
• Advocated changes in land policy

  • Changes are essential for the interest of cultivators of soil
  • Farmers must be allowed to pay their tax in kind if it is convenient for them
  • Advocated a permanent Ryotwari Land Settlement for a minimum period extending from 20 to 30 years
  • Advocated the reorganization of credit system by setting up committees of capitalists to finance agriculture
• Ranade's argument against classical position


  Advocated that India should adopt a policy of protection until her industrial strength had grown
• Ideas of economic growth linked with

  Population, credit and investment, protection, and other possible state actions
• His ideas of economic growth are closely linked with

  • Population
  • Credit and investment
  • Protection
  • Other possible state actions
• The sector was not able to attract funds
• There was an excessive demand for government securities which commended a premium
• There was a surfeit of funds with the exchange banks
• The real deficiency was the lack of suitable financial intermediaries through which funds could be channeled
• In the country-side, there was a predominance of private lending which could not be considered the best
• The need of the economy was to have a developed system of institutional lending
• Expansion of banking


  Would be very helpful in this connection
• Ranade was able to realize the role of institutional finance and banking at an early time
• Ranade was not concerned with economic justice between individual members of society
• Capital accumulation and technology were mainly the responsibility of bigger proprietors
• Ranade believed in the fundamental strength of the case for free trade
• In the initial stages of industrial growth, protection was needed
• Free trade was good between parties of equal strength
• Ranade: '"The Advanced Theory concedes freedom where the parties are equally matched in intelligence and resources; when this is not the case, all talk of equality and freedom adds insult to injury."'
• Ranade believed that in the initial stages of industrial growth, protection was needed
• Ranade advocated a systematic shift in government policy regarding the purchase of stores in favor of Indian products
• Protection, store-purchases, and similar actions

  Would create demand for Indian industrial products