Critically examine the politics of Economic growth in India. (UPSC CSE Mains 2016 - Political Science and International Relations, Paper 1)
- Indian independence from British rule in 1947 raised hopes of a new India. Two and a half centuries of colonial experience (from c.1700 to 1947) left our economy in ruins. Both agriculture and industry were characterised by extremely low levels of productivity. This implied mass poverty, widespread disease and ignorance. Any hope of improving the general standard of living on a sustained basis rested on the creation of a firm economic foundation. This was the major challenge before India after independence. There was a second challenge as well. This related to nation-building in the vast sub-continent. A diverse society deeply divided by language, geography, caste, religion and feudal power structures was to be transformed into a modern democracy based on universal suffrage and commitment to a national constitution.
- Political economy framework perceives individuals as first and foremost member of social classes in term of specific ways viz. owners of capital, workers, land lords, peasants, bureaucracy etc. The activities and behaviour of social individuals are conditioned by the social classes to which they belong. The historical, social and political forces determine the nature and functioning of markets. The State is an integral part of the economy. Its economic policies mediate the interests of social classes. Development is wider concept. It includes economic growth and changes in economic institution. It relates to the quality of life of the people.
- The economic impact of colonial rule in India was devasting. Leaders of the nationalist movement were aware that freedom from foreign rule was not the ultimate goal. Nationalist writings and regional social reform movements also bear testimony to an understanding of what we today call ‘human development’. The Gandhian approach to economic development emphasised voluntary limitation of wants, sustainable use of natural resources and self-sufficient village communities. Although this approach did generate some debate before and after independence, the modernising approach of Nehru, stressing growth in commodity production and capital stock found favour with both congress workers and the left wing politicians. In terms of development thinking, there was a general consensus among all classes on two issues: (i) that industrialisation was the key to economic growth, and (ii) that the state must take the lead to initiating the process of economic growth.
- At the eve of independence, there was a consensus on two major issues: (i) industrialisation was the key to economic growth (ii) state must take lead to initiate the process of economic growth. Based on Nehru-Mahalanobis strategy, importsubstitution industrialisation policy was followed in carrying out the programmes in a framework of five year/ annual plans.The state played the commanding role in a mixed economy. With the dominant role for the public sector , the system of controls, licensing and permits operated for three and half decades (from 1950- 1990).
- The year 1991 marked an important landmark replacing Nehru-Mahalanobis strategy by comprehensive macro-economic reforms envisaging reduction of the role of state, dismantling controls, and opening up of the economy to foreign trade, insurance and finance. The long term objective of economic development namely elimination of structural poverty became subservient to the process of economic liberalisation. Unemployment and inequality have remained unsolved after both the major shifts in economic policy in independent India.
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