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Major Features of the Indian Economy
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Indian Economy
- Main Features of the Indian Economy
- Natural and Human resources
- Overview of indian agriculture – broad features- cropping pattern, land reforms, green revolution, agricultural finance & marketing, agriculture price policy, shifting cultivation.
- Industry & tertiary sectors in India – Achievements and failures of the industrial sector, industrial policy, causes of the slow pace of industrial growth, problems & prospects of Small Scale Industries-and Cottage Industries- Development in the tourism sector.
- Economic planning & Economic Reforms – features of economic planning in India, major objectives, the strategy of Indian planning, Economic Reforms since 1991- Liberalisation, Privatisation, and Globalisation.
Major Features of Indian Economy
Features of Indian Economy-
(i) Low per capita income
(ii) Heavy dependence on agriculture
(iii) Rapid growth of population
(iv) Unemployment problem
(v) Unequal Distribution of income
(vi) Lack of Capital
(vii) Lack of Industrialization
(viii) Poverty
(ix) Poor level of human resource
(x) Lack of infrastructure
(xi) Demographic Features
Natural Resources-
(i) Bauxite
(ii) Barytes
(iii) Coal and lignites
(iv) Gold
(v) Diamond
(vi) Copper
(vii) Fire clay
(viii) Mica
(ix) Tungsten
(x) Magnesites
(xi) Nickel
(xii) Iron ore
(xiii) Limestone
(xiv) Graphite
(xv) Uranium
(xvi) Crude oil.
Human Resources- India is the seventh largest country in the word Our country is blessed with many natural resources and human resources. But all these resources cannot help a country unless they are tapped handled and used in a planned way. This can be done only by the people. Human can develop the resources only when he/she is wise, healthy, educated and properly trained Thus, the real resources of our country are its people. They are our human resources.
Three out of every four Indians live in villages. They earn their living from farming, forestry, fishing and cattle rising. People are now leaving villages and coming to cities in search of work. This is putting a great pressure on the civil amenities and other facilities in cities.
(i) Size of population- India is the second largest populous country in the word next to China. 2011 census stand 121.02 crore population in India. The annual growth rate is 1.76 percent per year Every seventh man in the word is an Indian. Our country’s population is increasing at a rapid rate. It has doubled over the last 45 years. This is the creating many problems.
(ii) Birth and Death rate- Population size of a country hugely depends upon birth and death rate of the population. The change in birth and death rate stimulates the high growth of population in india. The decadal growth rate of population during 1951-60 was 40 people per thousand population and it is decreased to 22.8 persons per thousand population. Likewise, during 1951-60 death rate was 18.0 persons per thousand population and fall to 9.8 people per thousand in 2008.
(iii) Sex Ration- There is gap between male and female people though it is not high in India. It is recorded in 2011 census that 940 females per thousand male population in India.
(iv) Density of population- There are 340 people in India per square k.m. according to 2011 census report
(v) Population living in the Rural and Urban Areas- 2011 census stands 68.8 percent rural population and 31.2 percent urban population.
(vi) Literacy Rate- According to 2011 census India stands 74.04 percent literacy rate.
(vii) Dependence of Agriculture- In about 65-70 percent people depends upon agriculture and we say way of life.
Overview of Indian Agriculture-
Agriculture is important sector of Indian economy. Agriculture forms the backbone of the Indian economy despite the concerted industrialization during the period; agriculture still occupies a pride of pace. In the word of Jawahar Lal Nehru, “Agriculture needed top most priority because the Govt. and the nation would both fail to succeed if agriculture could not be successful”.
Agriculture is important not only from an economic point of view but deep-rooted influence on our social political and cultural life. Though, agriculture has been playing as the mainstay of the Indian economy.
Features of Indian Agriculture:
(i) Source of livelihood
(ii) Dependence of monsoon
(iii) Labour intensive cultivation
(iv) Under employment
(v) Small size of holdings
(vi) Traditional methods of production
(vii) Low agricultural production
(viii) Dominance of food crops
Indian agriculture in post-independence period
(i) Feudal/Semi feudal system
(ii) Dual wage rate of income
(iii) Primitive agricultural practice
(iv) Uncertainty in production
(v) Diversified agriculture
(vi) Importance of organic farming
Role of Agriculture in Indian Economy
(i) Contribution to national income
(ii) Source of livelihoods
(iii) Ensuring food security
(iv) Earning foreign exchange
(v) Agriculture and economic planning
(vi) Capital formation
(vii) Sources of revenue
(viii) Sources of foreign trade
(ix) Transportation
(x) Source of saving
(xi) Capital formation
(Xii) Way of life
Role of agriculture for industrial development-
Agriculture in India has been the major source of supply of raw materials to Various important industries of our country. Cotton and jute, textiles, sugar, vanaspati, edible oil plantation industries viz. tea, coffee, rubber and agro-based cottage industries are also regularly collecting their raw materials directly from agriculture. About 50% of our income generated in the manufacturing sector comes from all these agro-based industries in India. Moreover, agriculture can provide a market for industrial products. An increase in the level of agricultural income may lead to expansion of market for industrial product.
Thus, during different plan periods, the Government has accorded vital importance to the agricultural sector and has tried to increase the agricultural productión and productivity through different policy measures.
(i) Special rice production programme, initiated by the Government in Assam, Bihar, Orissa, West Bengal and eastern Uttar Pradesh.
(ii) National water-shed development programme which gives emphasis on dry land horticulture, optimal cropping system, firm forestry and fodder production. Here, the aim is to develop areas under dry land agriculture which are characterised by low productivity and high risk.
Determinates of cropping pattern-
(i) Natural factors
(ii) Technological factors
(iii) Economic factors
(iv) Price of input and production
(v) Size of plots
(Vi) Land reform measures
(vii) Political factors
Land Reforms – The land reforms are of great significance for the agrarian countries for faster growth of the economy and imparting social justice to the poor farmers. The term and reforms mean institutional changes to make proper relations in respect of land favorable to actual tillers of the soil to raise the agricultural production. Institutional factors include land tenure system, land holdings, farming structure, land distribution, intermediaries etc. the objectives of land reforms are-
(i) The abolition of the prevalent intermediaries.
(ii) The conferment of ownership right on the cultivating tenants.
(iii) Imposition of selling on agricultural land holdings.
(iv) Rationalization of the record of right on land so as to reflect the right of the tenants, sharecroppers and other categories of insecure land holders.
(v) Consolidation of holdings with a view to ease the application of modern techniques of agriculture.
Green Revolution – Green revolution is the spectacular advancement in the field of agriculture as a result of intensive and continued efforts of many agricultural scientists. Agricultural revolution occurred primarily due to the miracle of new wonder seeds [high yielding variety (HY) seeds] which raised agricultural yield per acre to incredible heights.
Agricultural finance – Finance in agriculture is as important as development of technologies. Technical inputs can be purchased and used by a farmer only if he has money. But His own money is always inadequate and he needs outside finance or credit.
Sources of agricultural credit in India-
1 Non-institutional sources
(i) Rural Credits
(ii) Traders and businessman
(iii) Reaction and friends
(iv) Landlord
2. Institutional sources
(i) Cooperative credit society
(ii) Commercial bank
(iii) Land development bank
(iv) Regional rural bank
(v) Kishan credit card
Problems of agricultural credit in India
(i) Lack of credit
(ii) Inequality
(iii) Low rate of repayment
(iv) Lack of documents
(v) Corruption
(vi) Presence of non institutional credits
Agricultural Marketing – Agricultural marketing plays a vital role in increasing the welfare of the farmers and helps to accelerate the pace of economic development by stimulating production an and consumption.
Agriculture marketing comprises all activities involved in supply of farm inputs to the cultivators and movement of agricultural produce from the farms to the ultimate consumers. Further agricultural marketing includes assessment of demand and supply of farm-inputs, post harvest handling of farm products performance of various activities required in transferring farm products from farm to processing industries and or ultimate consumers. According to the National Commission on Agriculture “Agricultural marketing starts with a decision to produce a saleable farm commodity and it involves all aspects of market structure of system, both functional and institutional, based on technical and economic considerations and includes pre and post harvest operations, assembling, grading, storage.
In short Agricultural marketing is a process that involves assembling, storage, processing, transportation, packaging. grading and distribution of different agricultural commodities across the country.
Existing System of Agricultural marketing in india – There are five existing system of agricultural marketing in India is a under-
(i) Primary or Local Markets- These markets are known as and are organised by Village Panchayats. They are held once or twice in a week at a commonplace. Village Panchayat charges some rent from the shopkeepers for the space occupied.
(ii) Secondary Markets – These markets are also known as wholesale or assembling markets and they are called Mandis.
(iii) Terminal Markets – Such markets perform the function of carrying goods to consumers or final buyers or to processing.
(iv) Fairs – Fairs are held on religious occasions at pilgrimage centers and they are significant places of marketing agricultural commodities as well as the household product.
(v) Regulated Markets – Such markets have been set up by the government with the sole purpose of checking fraudulent practices which are common with the traders in the primary and secondary markets.
Problems of Agricultural Marketing – Agricultural marketing in India undergoes many problems like –
(i) Malpractices in the markets – Malpractices are common in markets. These related to weight and measures, low fixation of price by traders.
(ii) Lack of proper storage facilities – Another important problem is lack of proper storage facilities in rural areas. Crops are stored in open areas. Sometime farmers are forced to sell at low price.
(iii) Lack of finance – Marketing of crops requires finance. Financial assistance from the credit societies greatly benefits the big farmers. Small farmers depend on the traders and money lenders.
(iv) Force sales- Indian farmers are force to sell agricultural produce immediately after harvest due to ack of storage facility, repayment of loans, domestic needs etc.
(v) Lack of market intelligence – Farmers generally lack knowledge of prevailing market conditions. They depend on commission agents for the price of their produce. Therefore they sell their produce at low price.
(vi) Large number of intermediaries- There is a long
chain of intermediaries between the farmers and the final consumer e.g. wholesaler, retailers and commission agent. Those persons take away bulk of profits.
(vii) Sale at village level – Due to inconvenient transport facility and lack of organised market the farmers compeled to sae at village level.
(viii) Lack of grading – Farmers are not interested to grading of their produce. They hesitate to separate the qualitatIvely good crops from bad crops. Therefore, they fail to fetch a good price of their quality product.
(ix) Lack of regulated market – Another serious problem of agricultural marketing is ac of regulated market. The existing regulated markets of the country are not sufficient for the farmers to sell their produce at the nearest and short time.
(x) Lack of organisation – Indian farmers lack collective organisation. Small Quantity of marketable surplus is separately brought to the markets by large number of small farmers. This cause high transportation cost and low bargaining power.
(xi) Lack of transport – There is general lack of economical and fast means of transportation between rural and urban areas. Due to absence of proper road transport facilities farmers unable to sell their produce at mandis at a fair price.
Measures to improve Agricultural marketing – T government of India adopted the following measures to improve the system of agricultural marketing-
(i) Regulated Markets- Regulated markets have been organised with a view to protect the farmers from the malpractices of sellers and brokers. There are 7062 number of regulated market in India in 1999.
(ii) Cooperative Markets – In view of the predominance of small farmers in the country and the existing defects in ths e marketing of agricultural produce, cooperative marketing appears to be the only and right solution to the problem of marketing.
(iii) Infrastructure Facilities – it is immense essential to develop infrastructure facilities like roads way, railways, warehouse, godowns, cold storage and processing units.
(iv) Standardization and Grading- Standardization and grading helps the farmers to fetch a good price for quality product produced by the farmers.
(v) Minimum Support price – To safeguard the interest of farmers government fixes the minimum support prices of agricultural products.
Agricultural Price Policy – Indian agriculture has been a gamble in the monsoon. During period of good monsoon boost the harvest and huge marketable surplus and bad monsoon reduce the marketable surplus. In India many agricultural products are in the category of necessary goods and so have low price elasticity of demand. During Good harvests, there is no appreciable increase in the demand for agricultural goods and so the farmer is force to make distress sale of their produce at very low price. During the bad monsoon agriculture production resulted low marketable surplus: Thus price of agricultural produce raise but the income from sales is insufficient to meet the cost incurred by the agriculturists. Hence Indian farmer is on the losing end both at the time of good na bad harvest. Therefore, the central government formulates national agricultural policies of price support procurement subsidies, investment, credits and trade. The government fixed minimum support prices for major commodities and updates the prices each year. The government procures mainly food grains at support prices and maintains public stocks for redistribution among low income consumers at subsidised prices through a national network, the Public Distribution System (PDS).
Shifting cultivation- Shifting cultivation is considered to be the most ancient system of agriculture dating back to the lower Neolithic period It is also known as field forest rotation or sash and burn agriculture and in north east india known as Jhum cultivation.
Making a Clearing – To create a clearing on the forest the tribe selectively sashes the natural vegetation by simple tops and burns the logs, so the nutrients are released as ash which dissolves and is washed by rain into the soil as natural fertilisers.
Growing Crops – Variety of food crops are grown on the land such as rice, puse étc. After 2 or 3 years, due to decline in soil fertility, the yield of successive crops declines and weeds grows extensively.
Abandoning the Clearing – The site is abandoned and cultivation moves to another site, where another patch of the forest will be cleared for a new swidden. They will try not to return to the former clearings for at least 3-5 years or more.
Industry
Industry sector has a share of 28% in the overall GDP and its share in total employment increased from 16.2% in 1999-2000 to 21.9% in 20009-10.
Role of Industry in Economic development
(i) Utilisation of natural resources
(ii) Capital formation
(iii) Employment opportunity
(iv) Contribution to national income
(v) Contribution to agricultural sector
(vi) Balance sectoral development
(vii) Spread of infrastructure
Roll of Small scale and Cottage industries in economic development
(i) Contribution to industrial output
(ii) Employment opportunity
(iii) Equal distribution of income
(iv) Increase export
(v) Capital formation
Industrial policy of India
(i) Industrial development and Regulation Act, 1951 – The Industries (Development and Regulation) Act, 1951 (IDRA) which was enacted in pursuance of the Industrial Policy Resolution, 1948. The Act was formulated for the purpose of development and regulation of industries in India by the Central Government. The main objectives of the Act is to empower the Government-
(i) to take necessary steps for the development of industries.
(ii) to regulate the pattern and direction of industrial development.
(iii) to control the activities, performance and results of industrial undertakings in the public interest, The Act applies to the ‘Scheduled Industries listed in the First Schedule of the Act. However small scale industrial undertakings and ancillary. units are exempted from the provisions of this Act.
(ii) Industrial policy, 1956 – A second industrial policy resolution was adopted in April, 1956 replacing the resolution of 1948. Important provision of the 1956 resolution were-
(a) New càssification of industries
(b) Fair and non discrimination treatment for the private sector
(c) Encouragement to village and small scale enterprise
(d) Removing regional disparities
(e) Attitude towards foreign capital.
(iii) Industrial policy, 1977 – In March 1977, the Congress Party was thrown out and the Janata Party assumed power at the Centre. In December 1977 the Janata Government announced its new Industrial Policy by way of a Statement in the Parliament. The main elements of this new policy were
(a) Development of small-scale Sector. The list of items reserved for small scale industries was expanded from 180 to 504 and then to 807 in May 1978.
(b) District industrial centres were to be set up in each district to beep in the development of small scale and cottage industries.
(c) Handloom sector was given preference over the power-loom and mill sectors, the latter two were not to add to their weaving capacity.
(d) For reduction in regional imbalances, shift-ing of industries to backward areas was to be assisted and establishment of new industries in urban areas was to be avoided.
(e) Special fiscal concessions were proposed for export oriented units.
(f) Takeover of sick units would be on a selective basis.
(g) Special attention was to be given to the promotion of “tiny sector”, namely units with investment of Rs. 1 lakh and situated in towns/villages with a population not exceeding 50,000.
(h) Large houses would have to rely on their own internally generated resources for financing new projects or expansion of the existing ones.
(i) The Public sector would be charged with the responsibility of encouraging the development of a wide range of ancillary industries, and contributing to the growth of decentralised production by making available its expertise in technology and management to small-scale and cottage industry sectors.
(j) Inorder to promote technological self – reliance, the policy recognised the necessity for continued inflow of technology in sophisticated and high priority areas where Indian skills and technology were not adequately developed.
(iv) Industrial policy, 1980- With the return of Congress
(I) government in power the new industrial policy was announced in July 1980. Here the task of raising the pillars of economic infrastructure in the country was entrusted to the public sector for reasons of its greater reliability, requirement of large investments and longer gestation periods of the projects. The policy laid down following socio-economic objectives-
(a) Optimum utilisation of the installed capacity.
(b) Maximising production and achieving higher productivity and higher employment generation.
(c) Correction of regional imbalance through a preferential development of industrially backward areas.
(d) Strengthening of the agricultural base by according preferential treatment to agro-based industries, and promoting the optimum inter-sectoral relationships.
(e) Faster promotion of export-oriented and import substitution industries.
(f) Promoting economic federalism with an equitable spread of investment Over small but growing units in the rural and.
(g) Revival of the economy which is inhibited by infrastructural gaps and inadequacies in perform- ance.
(v) Industrial policy, 1991- A major shift in the industrial policy was made by the Congress (I) Government led by Mr. P.B. Narasimha Rao on July 24, 1991. The main aim of this policy was to unshackle the country s industrial economy from the cobwebs of unnecessary bureaucratic control and introduce liberalization with a view to integrating the indian economy with the world economy, to remove restrictions on direct foreign investment and also to free the domestic entrepreneur from the restrictions of MRTP Act. Besides, the policy aims to shed the load of the public enterprises which have shown a very low rate of return or are incurring losses over the years. The salient features of this policy are as follows-
(a) Except some specified industries (security and strategic concerns, social reasons, environmental issues, hazardous projects and articles of elitist consumption industrial licensing would be abolished.
(b) Foreign investment would be encouraged in high-priority areas up to a limit of 51 percent equity.
(c) Government will encourage foreign trading companies to assist Indian exportérs in export activities.
(d) With a view to injecting the desired level of technological dynamism in Indian industry, the government will provide automatic approval for technology agreements related to high priority industries.
(e) Relaxation of MRTP Act (Monopolies and Restrictive Practices Act) which has almost been rendered non-functional.
(f) Dilution of foreign exchange regulation act (FERA) making rupee fully convertible on trade account.
(g) Disinvestment of Public Sector Units shares.
(h) Closing of such public sector units which are incurring heavy losses.
(i) Abolition of C.C.I, and wealth tax on shares.
(j) General reduction in customs duties.
(k) Provide strength to those public sector enterprises which fall in reserved areas of operation or in high priority areas.
(l) Constitution of special boards to negotiate with foreign firms for large investments in the development of industries and import of technology.
Causes of slow pace of industrial growth-
(i) Poor capital formation
(ii) Inadequate economic infrastructure
(iii) Poor performance of the agricultural sector
(iv) Poor performance of the public sector
(v) Regional imbalances
(vi) Industrial sickness
(vii) Dearth of technology and efficient personnel
(viii) Gaps between target and achievement.
Problems of small-scale and cottage industries
(i) Shortage of raw materials
(ii) Old machinery use
(iii) Difficulties of marketing
(iv) Inadequacy of finance
(v) Competition with large scale industries
Suggestive measures-
(i) Cooperation among the industries
(ii) Continuous supply of raw material
(iii) Credit facility
(iv) Market organisation
(v) Subsidies price electric power supply
(vi) Improve efficiency in competition
Development of tourism industry- Tourism is now regarded largest industry in the world and the tourism industry is one of the most flourishing industries in India. This industry is rapidly growing these days making India a global destination. Itis contributes great amount of foreign exchange which has made it the most profitable industry. Several factors are playing roles in the growth and richness of this industry. Here are some reasons that will let you know the factors behind the prosperity of tourism industry in India. IT and other industries are doing very well in India which gives rise to the foreigners’ trips to India whose visit prolongs in the form of longer holidays. Foreign visitors spend more in India as compared to any country în the word It can be understood by the fact that tourists arrival increases by 22% per year in India.
Economic Planning-
Economic planning refers deliberate control and direction of the economy by a central authority for the purpose of achieving definite targets and objectives within a specified period of time. First Five Year Plan defines economic panning is essentially a way of organising and utilizing resources to the maximum advantage in terms of defined social ends.
To Dickenson, “Economic planning is the making of major economic decisions what and how much is to be produced and to whom it is to be allocated by the conscious decisions of determining authority on the basis of a comprehensive survey of economic system as a whole.
Economic planning could be classified as imperative or indicative. Imperative planning is applicable to a centralised macroeconomic plan in an economy which has been dominated by the public sector. Indicative panning refers to the indication of a series of goals by the government.
India had started the five year plan in 1951.
Necessity of Planning-
(i) To Break the Vicious Circe of Poverty
(ii) Priority to the Social Interest
(iii) Fair Balance between Present and Future
(iv) Optimum Utilisation of Resources
(v) To Built Social and Economic Infrastructure
(vi) To Increase Capital Formation
(vii) The Success of Economic Planning in the USSR
(viii) Other Reasons Removing economic inequality, controlling economic fluctuation etc.
Features of Economic Planning in India
(i) Indicative economic panning
(ii) Physical planning
(iii) Social panning
(iv) Unreliable data
Major Objectives
Planning without an objective is like driving without any destination. There are generally two sets of objectives for planning, namely the short term objectives and the long-term objectives. While the short-term objectives vary from plan to plan, depending on the immediate problems faced by the economy, the process of planning is inspired by certain long term objectives. In case of Five Year pans, the long-term objectives are-
(i) High Rate of Growth- Indian Five-Year Plans have given primary importance to higher growth of real national income. During the British rue, Indian economy was stagnant and the people were living in a state of abject poverty. The Britishers exploited the economy both through foreign trade and colonial administration. Why the European industries flourished, the Indian economy was caught in a vicious circe of poverty. The pervasive poverty and misery were the most important problem that has to be tackled through Five Year Plan.
(ii) Economic Self Reliance- Self reliance means to stand on one’s own legs. In the Indian context, it implies that dependence on foreign aid should be as minimum as possible. At the beginning of panning, we had to import food grains from USA to meet our domestic demand Similarly, for accelerating the process of industrialization, we had to import, capital goods in the form of heavy machinery and technical know-how. For improving infrastructure facilities like roads, railways, power, we had to depend on foreign aid to raise the rate of our investment.
(iii) Social Justice- Social justice means to equitably distribute the wealth and income of the country among different sections of the society. In India, we find that a large number of people are poor; while few lead a luxurious life. Therefore, another objective of development is to ènsure social justice and to take care of the poor and weaker sections of the society. The Five- Year Plans have highlighted four aspects of social justice. They are-
(i) Application of democratic prinCip les in the political structure of the country;
(ii) Establishment of social and economic equity and removal of regional disparity;
(iii) Putting an end to the process of centralization of economic power; and
(iv) Efforts to raise the condition of backward and depressed classes.
Thus the Five Year Plans have targeted to uplift the economic condition of socio-economically weaker sections like scheduled caste and tribes through a number of target oriented programmes. In order to reduce the inequality in the distribution of landed assets, land reforms have been adopted Further, to reduce regional inequality specific programs have been adopted for the backward areas of the country.
(iv) Modernization of the Economy- Before independence, our economy was backward and feudal in character. After attainment of independence, the panners and policymakers tried to modernise the economy by changing the structural and institutional set up of the country. Modernization aims at improving the standard of living of the people by adopting a better scientific technique of production, by replacing the traditional backward ideas by logical reasoning’s and bringing about changes in the rural structure and institutions.
(v) Economic Stability- Economic stability means controlling inflation and unemployment. After the Seçond Plan, the price level started increasing for a long period of time. Therefore the planners have tried to stabilise the economýy by properly controlling the rising trend of the price level However, the progress in this direction has been far from satisfactory.
Strategy of Indian Planning-
In order to achieve the basic goals of the Five years Plans there is need to formulate an appropriate development strategy. The term strategy refers to the underlying long term policy framework for the realisation of chosen goas. Strategy incorporates the entire plan frame-the objectives, the priorities, the investment pattern, the resource mobilisation, the fiscal and monetary policy etc. The development strategy adopted in the Five years plan has the following main phases-
(i) The earlier or Pre-Mahalanobis strategy (1951-56)- In the earlier phase of panned economic development in India, the main emphasis was on economic growth. There were three main aspects of the strategy of development in the earlier period
(a) Developing a Sound base for initiating the process of long term growth.
(b) A high priority to industrialization when actual development began
(c) Emphasis on development-of capital goods industries against consumer goods industries.
(ii) The Mahalanobis strategy (1956-69)- 1t was only with the second plan that there was a clear enunciation of a strategy of development by Indian planners. Prof. P.C. Mahalanobis, who was the real architect of the second plan, was responsible for introducing a clear strategy of development. This strategy emphasised investment in heavy industry to achieve industrialization which was assumed to be the basic condition for rapid economic development. The core of the strategy for the second pan was rapid industrialization through large scale investment in basic key and heavy industries. In addition to the basic strategy other elements of the development strategy were role of public sector, roe of small scale industries and employment generation.
(iii) Deviations from the Mahalanobis strategy (1969-85)- In the fourth plan some deviation were made Irom the Mahalanobis strategy are outlined below-
(a) Whie emphasis on basic industries was continued special attention was given to agriculture and related primary production activities.
(b) This strategy comprises a package programme involving high yielding varieties seeds (HYVs), pant protection measure, adequate use of fertilisers and improved water management in areas having potential of increasing production.
(c) Development of light consumer goods industries.
(d) A high priority was given to quick yielding projects in each sector of the economy.
(e) In the fields of infrastructure, roads were given priority over railways.
(iv) Agricultural development led growth strategy (1985-91) – This strategy had the following main features-
(a) Creation of productive employment opportunities for growing labour force was given a high priority.
(b), Agricultural growth by applying new technology occupied a central place in the strategy of seventh plan.
(c) Programmes relating to family planning, improvement to education and health were given a high priority.
(d) It aimed at improving efficiency in the manufacturing sector through liberalisation of import.
(v) The new development strategy (1991 onwards)- The new development strategy is characterised as Export led growth (ELG) strategy which implies that overall growth performance of the county is determined by the performance of the export front. The ELG strategy adopted in 8th, 9th and 10th plan was oriented to enable India’s private sector to operate under free market and foreign competition, thereby encouraging efficient use of scare resources and ensure rapid growth at least cost.
Economic Reforms since 1991
The process of economic reforms was initiated in India by the government of P.V. Narasimha Rao in July 1991 with the announcement of a number of measurès for liberalising the economy. Economic reforms consisted of two distinct strands- macroeconomic stabilisation and structural reforms. While stabilisation deals with demand management, structural reforms deal with sectoral adjustment designed to tackle the problems on the supply side of the economy.
Macroeconomic stabilisation often called as stabilisation which involves returning to low and stable inflation and a sustainable fiscal and balance of payment position.
Since July 1991 comprehensive liberalisation measures have been undertaken to improve the supply side of the economy. Among these the more important are; trade and capital flows reforms, industrial deregulation, disinvestment and public enterprise reforms and financial sector reforms.
Components of New Economic Policy Measures – The new economic policy measures initiated by the government are of three types or have three components liberalisation, Privatisation and Globalisation.
Liberalisation – An economic policy which gives relaxation to enable entrepreneurs to make their decisions themselves and open freedom to economic activities at all levels is termed as policy of economic liberalisation.
Objectives of Liberalisation
(i) To unshackle the India industry from needless and irksome controls.
(ii) To provide rightful control for market mechanism.
(iii) To upgrade technology
(iv) To develop international competitiveness
Liberalisation Measures-
(i) Industrial Policy Reforms
(ii) Financial Sector Reforms
(iii) Trade and Investment Policy Reforms
(iv) Foreign Exchange Reforms
Privatisation- Privatisation implies transfer of ownership and control from the public sector to the public sector.
Privatisation Measures
(i) Transfer of ownership and management of public enterprises to the private sector.
(ii) Sale of all or some of the assets of public enterprise.
Disinvestment – The sale of some of the shares of public sector under taking (PSUs) to the private sector and public at large is known disinvestment.
Objectives of Disinvestment
(i) To release the public resources for the use of high priority areas.
(ii) To reduce interference and to give greater autonomy to the PSUs for their management.
(iii) To reduce the losses of PSUs and public debt.
(iv) Modernization and upgradation to increase efficiency and competitiveness of PSUs.
Globalization – Globalization is the outcome of the policies of liberalisation and privatisation. GlobaliZation means the unification or integration of domestic economy with the rest of the world through trade, capital and technological flows.
Caus of Globalization
(i) The rapid improvement in Communication media and information technology.
(ii) Rapid growth of research and development.
(iii) Deregulation of money markets.
(iv) Free movement of investment over the greater part of the world, making national economies interdependent.
(v) Spread out of the manufacturing processes by the large companies.
(vi) Removal of artificial barriers to the movement of goods, services and capital.
Globalisation and indian economy- Globalization resulted in greater access to global markets, advance technology and increase the possibility for large industries of developing country like India to become important payers in the international arena.
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