2.5. Analysis

The Nehru-Mahalanobis strategy of development faced considerable criticism from several quarters. Since it put greater emphasis on industrialization compared to agriculture, the latter suffered. The allocation of higher priority to heavy industries compared to labour-intensive industries resulted in heavy concentration of wealth and large-scale unemployment. The IDRA (Industrial Development Regulation Act) of 1951 did not serve its purpose fully. It created a license raj in the country favouring the large industrial houses, which became an impediment to industrial development. Land reforms could not be implemented properly owing to the defects in legislations, lack of political will and bureaucratic apathy. Because of the same reasons, the CDP (Community Development Programme) did not achieve considerable success.

Nevertheless, the first phase of the development effort witnessed several significant achievements. This phase created the basic physical and human infrastructure for comprehensive development in the society. The overall economic performance was far better compared to the colonial period. The rate of growth was quite impressive. Both the savings and investment rates rose substantially. Growth in agricultural production occurred because of land reforms, CDP and large investment in irrigation, power and agricultural research. Industry grew more rapidly than agriculture. The country developed a heavy industry complex with considerable diversification within the industrial structure. Furthermore, progress was made in the sphere of human capital due to the setting up of institutions of higher learning, especially in the scientific field.