INDIAN ECONOMY (1950–1990)

INTRODUCTION

1. India became independent in 1947.
2. At the time of independence, the Indian economy was:
   • Poor
   • Backward
   • Underdeveloped
3. The country faced serious problems like:
   • Poverty
   • Unemployment
   • Low industrial growth
   • Poor agricultural productivity
4. To overcome these problems, India adopted a system of planned economic development.
5. Economic planning started in 1951 with the First Five Year Plan.
6. The period from 1950 to 1990 is known as the era of planned development.
7. The government played a major role in:
   • Resource allocation
   • Industrial development
   • Social welfare
8. The economy followed a mixed economic system.
9. Both public sector and private sector were given importance.
10. The aim was to achieve:
    • Economic growth
    • Social justice
    • Self-reliance

THE GOALS OF FIVE YEAR PLANS

The Five Year Plans were designed to achieve four major goals.

1. GROWTH

1. Growth refers to the increase in national income and output.
2. Economic growth was necessary to:
   • Raise living standards
   • Reduce poverty
3. Growth was measured in terms of:
   • GDP
   • Per capita income
4. Investment in:
   • Infrastructure
   • Industry
   • Agriculture was increased to promote growth.
5. Growth was seen as the foundation for development.
6. However, growth alone was not enough.
7. Benefits of growth needed to reach all sections of society.

2. MODERNISATION

1. Modernisation means adopting modern technology and methods.
2. It involved:
   • Use of machines
   • Scientific techniques
   • Improved management
3. Modernisation aimed at:
   • Increasing productivity
   • Reducing dependence on traditional methods
4. It was applied to:
   • Agriculture
   • Industry
   • Education
5. Emphasis was laid on:
   • Scientific research
   • Technical education
6. Modern values like:
   • Equality
   • Rational thinking were promoted.
7. Traditional beliefs that hindered progress were discouraged.

3. SELF-RELIANCE

1. Self-reliance means reducing dependence on foreign countries.
2. India wanted to:
   • Produce goods domestically
   • Save foreign exchange
3. Excessive imports were discouraged.
4. Domestic industries were protected.
5. Emphasis was given to:
   • Import substitution
6. Self-reliance was important for:
   • Economic independence
   • National security
7. This goal was especially important after colonial exploitation.

4. EQUITY (SOCIAL JUSTICE)

1. Equity means fair distribution of income and wealth.
2. The objective was to reduce:
   • Poverty
   • Inequality
3. Steps were taken to:
   • Improve rural development
   • Support weaker sections
4. Land reforms were introduced.
5. Employment generation programs were started.
6. Public distribution system was expanded.
7. Social justice was a key concern of planning.

AGRICULTURE

Importance of Agriculture

1. Agriculture was the backbone of the Indian economy.
2. It employed the largest share of population.
3. Agricultural development was essential for:
   • Food security
   • Raw material supply
   • Employment

Problems in Agriculture

1. Low productivity
2. Dependence on monsoon
3. Small and fragmented landholdings
4. Poor irrigation facilities
5. Lack of modern inputs

Agricultural Reforms

1. Land Reforms

1. Abolition of zamindari system
2. Ceiling on landholdings
3. Redistribution of land
4. Protection of tenant rights
5. Aimed at social justice

2. Institutional Reforms

1. Expansion of cooperative societies
2. Availability of agricultural credit
3. Establishment of rural banks
4. Support through government agencies

Green Revolution

1. Introduced in the mid-1960s.
2. Aimed at increasing food grain production.
3. Used:
   • High Yielding Variety (HYV) seeds
   • Fertilizers
   • Irrigation
4. Initially limited to:
   • Wheat
   • Rice
5. Major beneficiaries:
   • Punjab
   • Haryana
   • Western Uttar Pradesh

Achievements

1. Increase in food grain production
2. Reduction in dependence on food imports
3. Improvement in food security

Limitations

1. Regional imbalance
2. Benefit to large farmers
3. Environmental degradation
4. Limited crop coverage

INDUSTRY AND TRADE

Industrial Policy

1. Industrial development was given high priority.
2. Public sector played a leading role.
3. Heavy industries were promoted.
4. Industrial Policy Resolutions:
   • 1948
   • 1956

Role of Public Sector

1. Public sector developed:
   • Steel plants
   • Power projects
   • Heavy machinery
2. Aim was to:
   • Build infrastructure
   • Support private sector
3. Large investments were made by the government.

Private Sector

1. Private sector was allowed to operate.
2. It was regulated through:
   • Licensing
   • Controls
3. Prevented monopolies and concentration of wealth.

Small-Scale Industries

1. Given special support.
2. Created employment.
3. Used local resources.
4. Promoted balanced regional development.

Trade (Internal)

1. Expansion of domestic trade.
2. Improved transport and communication.
3. Growth of markets.

TRADE POLICY: IMPORT SUBSTITUTION

Meaning

1. Import substitution means:
   • Producing goods domestically
   • Replacing imports with domestic production

Objectives

1. Reduce dependence on foreign goods
2. Save foreign exchange
3. Promote domestic industries
4. Achieve self-reliance

Measures Adopted

1. High import tariffs
2. Quotas and restrictions
3. Licensing system
4. Protection to Indian industries

Advantages

1. Growth of domestic industries
2. Employment generation
3. Industrial diversification
4. Strengthening of public sector

Limitations

1. Lack of competition
2. Inefficiency in industries
3. Poor quality products
4. Higher cost of production
5. Limited exposure to global markets

CONCLUSION

1. The period 1950–1990 was crucial in India’s economic history.
2. Planning helped in:
   • Building industrial base
   • Achieving food security
3. Agriculture improved after Green Revolution.
4. Public sector created infrastructure.
5. Import substitution promoted self-reliance.
6. However, problems remained:
   • Poverty
   • Inequality
   • Inefficiency
7. Growth was slower than expected.
8. Regional imbalances existed.
9. These challenges led to economic reforms in 1991.
10. The planning era laid the foundation for India’s future development.