NCERT Class XI - Indian Economic Development

200 Pages·2013·5.51 MB·English

C
ONTENTS
FOREWORD iii
UNIT I : DEVELOPMENT POLICIES AND EXPERIENCE (1947-1990) 1-35
CHAPTER 1: INDIAN ECONOMY ON THE EVE OF INDEPENDENCE 3
– LOW LEVEL OF ECONOMIC DEVELOPMENT UNDER THE COLONIAL RULE 4
– AGRICULTURAL SECTOR 5
– INDUSTRIAL SECTOR 7
– FOREIGN TRADE 8
– DEMOGRAPHIC CONDITION 9
– OCCUPATIONAL STRUCTURE 10
– INFRASTRUCTURE 11
CHAPTER 2 : INDIAN ECONOMY 1950-1990 16
– THE GOALS OF FIVE YEAR PLANS 19
– AGRICULTURE 22
– INDUSTRY AND TRADE 27
– TRADE POLICY: IMPORT SUBSTITUTION 30
UNIT II : ECONOMIC REFORMS SINCE 1991 36-56
CHAPTER 3 : LIBERALISATION, PRIVATISATION AND GLOBALISATION : AN APPRAISAL 38
– BACKGROUND 39
– LIBERALISATION 41
– PRIVATISATION 44
– GLOBALISATION 45
– INDIAN ECONOMY DURING REFORMS: AN ASSESSMENT 48
UNIT III: CURRENT CHALLENGES FACING THE INDIAN ECONOMY 57-178
CHAPTER 4 : POVERTY 59
– WHO ARE THE POOR? 60
– HOW ARE POOR PEOPLE IDENTIFIED? 63
– THE NUMBER OF POOR IN INDIA 66
– WHAT CAUSES POVERTY? 68
– POLICIES AND PROGRAMMES TOWARDS POVERTY ALLEVIATION 72
– POVERTY ALLEVIATION PROGRAMMES—A CRITICAL ASSESSMENT 75
CHAPTER 5 : HUMAN CAPITAL FORMATION IN INDIA 82
– WHAT IS HUMAN CAPITAL? 84
– SOURCES OF HUMAN CAPITAL 84
– HUMAN CAPITAL AND HUMAN DEVELOPMENT 90
– HUMAN CAPITAL FORMATION IN INDIA: GREAT PROSPECTS 91
– EDUCATION SECTOR IN INDIA 92
– FUTURE PROSPECTS 94
CHAPTER 6 : RURAL DEVELOPMENT 99
– WHAT IS RURAL DEVELOPMENT? 100
– CREDIT AND MARKETING IN RURAL AREAS 101
– AGRICULTURAL MARKET SYSTEM 104
– DIVERSIFICATION INTO PRODUCTIVE ACTIVITIES 106
– SUSTAINABLE DEVELOPMENT AND ORGANIC FARMING 110
CHAPTER 7 : EMPLOYMENT: GROWTH, INFORMALISATION AND OTHER ISSUES 116
– WORKERS AND EMPLOYMENT 118
– PARTICIPATION OF PEOPLE IN EMPLOYMENT 119
– SELF-EMPLOYED AND HIRED WORKERS 120
– EMPLOYMENT IN FIRMS, FACTORIES AND OFFICES 123
– GROWTH AND CHANGING STRUCTURE OF EMPLOYMENT 124
– INFORMALISATION OF INDIAN WORKFORCE 127
– UNEMPLOYMENT 130
– GOVERNMENT AND EMPLOYMENT GENERATION 132
CHAPTER 8 : INFRASTRUCTURE 139
– WHAT IS INFRASTRUCTURE? 140
– RELEVANCE OF INFRASTRUCTURE 141
– THE STATE OF INFRASTRUCTURE IN INDIA 141
– ENERGY 144
– HEALTH 149
xii
CHAPTER 9 : ENVIRONMENT AND SUSTAINABLE DEVELOPMENT 162
– ENVIRONMENT — DEFINITION AND FUNCTIONS 163
– STATE OF INDIA’S ENVIRONMENT 167
– SUSTAINABLE DEVELOPMENT 171
– STRATEGIES FOR SUSTAINABLE DEVELOPMENT 172
UNIT IV : DEVELOPMENT EXPERIENCES OF INDIA : A COMPARISON 179-197
WITH NEIGHBOURS
CHAPTER 10 : COMPARATIVE DEVELOPMENT EXPERIENCES OF 181
INDIA AND ITS NEIGHBOURS
– DEVELOPMENTAL PATH — A SNAPSHOT VIEW 182
– DEMOGRAPHIC INDICATORS 185
– GROSS DOMESTIC PRODUCT AND SECTORS 186
– INDICATORS OF HUMAN DEVELOPMENT 189
– DEVELOPMENT STRATEGIES — AN APPRAISAL 190
GLOSSARY 198-206
xiii
UNIT
UNIT
I
III
D P E
EVELOPMENT OLICIES AND XPERIENCE
(1947-90)
The two chapters in this unit give us an overview
of the state of the Indian economy as it was at the
eve of independence till after four decades of
planned development, which was a path that India
chose. This meant that the Government of India
had to take a series of steps such as the
establishment of the Planning Commission and
announcement of five year plans. An overview of
the goals of five year plans and a critical appraisal
of the merits and limitations of planned development
has been covered in this unit.
1
I E
NDIAN CONOMY

ON THE
E I
VE OF NDEPENDENCE
After studying this chapter, the learners will
• become familiar with the state of the Indian economy in 1947, the
year of India’s Independence
• understand the factors that led to the underdevelopment and
stagnation of the Indian economy.
“India is the pivot of our Empire... If the Empire loses any other part of its
Dominion we can survive, but if we lose India, the sun of our Empire will have
set.”
Victor Alexander Vruce, the Viceroy of British India in 1894
1.1 INTRODUCTION rapidly expanding modern industrial
base. An understanding of the
The primary objective of this book,
exploitative nature of this relationship
Indian Economic Development, is to
is essential for any assessment of the
familiarise you with the basic features
kind and level of development which
of the Indian economy, and its
the Indian economy has been able to
development, as it is today, in the
attain over the last six decades. 1.2
aftermath of Independence. However, it
is equally important to know something
about the country’s economic past even 1.2 LOW LEVEL OF ECONOMIC
as you learn about its present state and DEVELOPMENT UNDER THE
COLONIAL RULE
future prospects. So, let us first look at
the state of India’s economy prior to the India had an independent economy
country’s independence and form an before the advent of the British rule.
idea of the various considerations that Though agriculture was the main
shaped India’s post-independence source of livelihood for most people,
development strategy. yet, the country’s economy was
The structure of India’s present- characterised by various kinds of
day economy is not just of current manufacturing activities. India was
making; it has its roots steeped in particularly well known for its
history, particularly in the period when handicraft industries in the fields of
India was under British rule which cotton and silk textiles, metal and
lasted for almost two centuries before precious stone works etc. These
India finally won its independence on products enjoyed a worldwide market
15 August 1947. The sole purpose of based on the reputation of the fine
the British colonial rule in India was quality of material used and the high
to reduce the country to being a feeder standards of craftsmanship seen in all
economy for Great Britain’s own imports from India.
Box 1.1: Textile Industry in Bengal
Muslin is a type of cotton textile which had its origin in Bengal, particularly,
places in and around Dhaka (spelled during the pre-independence period as
Dacca), now the capital city of Bangladesh. ‘Daccai Muslin’ had gained worldwide
fame as an exquisite type of cotton textile. The finest variety of muslin was
called malmal. Sometimes, foreign travellers also used to refer to it as malmal
shahi or malmal khas implying that it was worn by, or fit for, the royalty.
4 INDIAN ECONOMIC DEVELOPMENT
The economic policies pursued by Rao whose estimates of the national
the colonial government in India were and per capita incomes during the
concerned more with the protection colonial period were considered very
and promotion of the economic significant. However, most studies did
interests of their home country than find that the country’s growth of
with the development of the Indian aggregate real output during the first
economy. Such policies brought about half of the twentieth century was less
a fundamental change in the structure
than two per cent coupled with a
of the Indian economy — transforming
meagre half per cent growth in per
the country into a net supplier of raw
capita output per year.
materials and consumer of finished
industrial products from Britain. 1.3 AGRICULTURAL SECTOR
Obviously, the colonial government
never made any sincere attempt to India’s economy under the British
estimate India’s national and per colonial rule remained fundamentally
capita income. Some individual agrarian — about 85 per cent of the
attempts which were made to measure country’s population lived mostly in
such incomes yielded conflicting and villages and derived livelihood directly
inconsistent results. Among the or indirectly from agriculture. However,
notable estimators — Dadabhai despite being the occupation of such
Naoroji, William Digby, Findlay Shirras, a large population, the agricultural
V.K.R.V. Rao and R.C. Desai — it was sector continued to experience
Box 1.2: Agriculture During
Pre-British India
The French traveller, Bernier, described
seventeenth century Bengal in the
following way: “The knowledge I have
acquired of Bengal in two visits inclines
me to believe that it is richer than Egypt.
It exports, in abundance, cottons and
silks, rice, sugar and butter. It produces
amply — for its own consumption —
wheat, vegetables, grains, fowls, ducks
and geese. It has immense herds of pigs
and flocks of sheep and goats. Fish of
every kind it has in profusion. From
rajmahal to the sea is an endless
number of canals, cut in bygone ages Fig. 1.1 India’s agricultural stagnation
from the Ganges by immense labour for under the British colonial rule
navigation and irrigation.”
(cid:190)
Take note of the agricultural prosperity in our country in the seventeenth century. Contrast it
with agricultural stagnation around the time when the British left India, around 200 years later.
INDIAN ECONOMY ON THE EVE OF INDEPENDENCE 5
stagnation and, not infrequently, regardless of the economic condition
unusual deterioration. Agricultural of the cultivators; this caused
productivity became incrementally immense misery and social tension
low though, in absolute terms, the among the latter. To a very great
sector experienced some growth due extent, the terms of the revenue
to the expansion of the aggregate area settlement were also responsible for
under cultivation. This stagnation in the zamindars adopting such an
the agricultural sector was caused attitude; dates for depositing specified
mainly because of the various sums of revenue were fixed, failing
systems of land settlement that which the zamindars were to lose their
were introduced by the colonial rights. Besides this, low levels of
government. Particularly, under the technology, lack of irrigation facilities
zamindari system which was and negligible use of fertilisers, all
implemented in the then Bengal added up to aggravate the plight of
Presidency comprising parts of India’s the farmers and contributed to
present-day eastern states, the profit the dismal level of agricultural
accruing out of the agriculture sector productivity. There was, of course,
went to the zamindars instead of the some evidence of a relatively higher
cultivators. However, a considerable yield of cash crops in certain areas of
number of zamindars, and not just the country due to commercialisation
the colonial government, did nothing of agriculture. But this could hardly
to improve the condition of help farmers in improving their
agriculture. The main interest of the economic condition as, instead of
zamindars was only to collect rent producing food crops, now they were
Work These Out
(cid:190) Compare the map of British India with that of independent India and find
out the areas that became parts of Pakistan. Why were those parts so
important to India from the economic point of view? (Refer, to your
advantage, Dr Rajendra Prasad’s book, India Divided).
(cid:190) What were the various forms of revenue settlement adopted by the British
in India? Where did they implement them and to what effect? How far do
you think those settlements have a bearing on the current agricultural
scenario in India? (In your attempt to find answers to these questions, you
may refer to Ramesh Chandra Dutt’s Economic History of India, which comes
in three volumes, and B.H. Baden-Powell’s The Land Systems of British
India, also in two volumes. For better comprehension of the subject, you
can also try and develop an illustrated agrarian map of British India either
by hand or with the help of your school computer. Remember, nothing
helps better than an illustrated map to understand the subject at hand).
6 INDIAN ECONOMIC DEVELOPMENT
producing cash crops which were to ensured to the maximum advantage of
be ultimately used by British their home country — Britain. In the
industries back home. India’s unfolding economic scenario, the
agricultural production received a decline of the indigenous handicraft
further set back due to the country’s industries created not only massive
partition at the time of independence. unemployment in India but also a new
A sizeable portion of the undivided demand in the Indian consumer
country’s highly irrigated and fertile market, which was now deprived of the
land went to Pakistan; this had an supply of locally made goods. This
adverse impact upon India’s output demand was profitably met by the
from the agriculture sector. increasing imports of cheap
Particularly affected was India’s jute manufactured goods from Britain.
industry since almost the whole of the During the second half of the
jute producing area became part of nineteenth century, modern industry
East Pakistan (now Bangladesh). began to take root in India but its
India’s jute goods industry (in which
progress remained very slow. Initially,
the country had enjoyed a world
this development was confined to the
monopoly so far), thus, suffered
setting up of cotton and jute textile
heavily for lack of raw material.
mills. The cotton textile mills, mainly
dominated by Indians, were located in
1.4 INDUSTRIAL SECTOR the western parts of the country,
As in the case of agriculture, so also namely, Maharashtra and Gujarat,
in manufacturing, India could not while the jute mills dominated by the
develop a sound industrial base under foreigners were mainly concentrated in
the colonial rule. Even as the country’s Bengal. Subsequently, the iron and
world famous handicraft industries steel industries began coming up in
declined, no corresponding modern the beginning of the twentieth century.
industrial base was allowed to come The Tata Iron and Steel Company
up to take pride of place so long (TISCO) was incorporated in 1907. A
enjoyed by the former. The primary few other industries in the fields of
motive of the colonial government sugar, cement, paper etc. came up after
behind this policy of systematically de- the Second World War.
industrialising India was two-fold. The However, there was hardly any
intention was, first, to reduce India to capital goods industry to help
the status of a mere exporter of promote further industrialisation in
important raw materials for the India. Capital goods industry means
upcoming modern industries in industries which can produce machine
Britain and, second, to turn India into tools which are, in turn, used for
a sprawling market for the finished producing articles for current
products of those industries so that consumption. The establishment of a
their continued expansion could be few manufacturing units here and
INDIAN ECONOMY ON THE EVE OF INDEPENDENCE 7