CHAPTER: 3 ECONOMIC DEVELOPMENT

Economic Development and Planning

A. Mixed Economy Model (Socialism)

After independence, apart from extreme poverty, illiteracy, a ruined agriculture and industry, the structural distortions created by colonialism in Indian economy and society made the future transition to self-sustained growth much more difficult.

Ensuring wellbeing and economic development were the important challenges for the Indian leadership and to pursue these goals, they had two models of economic development, the liberal – capitalist model followed in U.S.A. and Europe, another was the socialist model followed in U.S.S.R. During the debate of model of economic development, there was abroad consensus that development of India should involve economic growth and social as well as economic justice. Hence very few people supported the American style of capitalist development. There were many who got impressed by the Soviet model of development.

India abandoned the colonial economic model that was focused on commercial gains only. In the democratic polity post-independence, poverty alleviation and social-economic redistribution became the primary responsibility of the government. Therefore India adopted the mixed model of economic development, which has features of both the capitalist and socialist models.

Factors that generated hopes for the revival of Indian economy after centuries of colonial subjugation included:

1. There was a mature indigenous entrepreneurial class (Birlas, Tatas, Singhanias, Dalmia- Jains) that developed an independent economic base which was an asset for post independence planned development.

2. Wider societal consensus on the nature and path of development. Everyone from the staunch Gandhian to the Socialists, the capitalists as well as the communists were more or less agreed on following agenda:

a. Multi pronged strategy of economic development based on self reliance.

b. Rapid industrialization based on import-substitution including capital goods industries.

c. Prevention of imperialist or foreign capital b.

d. Land reforms involving tenancy reforms.

e. Abolition of Zamindari system.B. Planning and its Impact The First Five Year Plan (1951-1956):Second Five Year Plan (1956-1961)Third Five Year Plan (1961-1966):Achievements of Plans From 1947–65 1. Agriculture vs. Industry 2. Public vs. Private Sector:C. Green Revolution Prevailing Conditions before the introduction of Green Revolution:Initiatives prior to Green Revolution to boost Agriculture:Introduction of Green Revolution in India:Significant government initiatives during Green Revolution Period:Positive impact of Green Revolution:♤ Increase in income of farmers led to the demand for factory produced consumer durables Negative impacts of the Green Revolution:D. Land Reforms and the Cooperatives At the time of independence Objectives of Land Reforms Implementation of the Reforms:Land ceilings Consolidation of Holdings The Cooperatives:Success of Cooperatives: The Milk Cooperatives and Operation Flood Beginning of Operation Flood:Impact of operation Flood Limitations of Cooperativization Furthermore, in the case of credit cooperatives, there was a virtual exclusion of the landless in securing credits, as found by the National Commission on Agriculture in 1971.