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Indian Economy: An Introduction
Indian Economy: An Introduction
Dr. K. Narayanan
Professor of Economics
Department of Humanities & Social Sciences, IIT Bombay
knn@iitb.ac.in
Overview
• State of the Economy @ Independence
• Strategies adopted for economic growth and development
• Changing paradigms in the approach to development
• Major Issues confronting the economy
• Policy instruments used – a critical view
• Trends and pattern, sectoral shares and composition,
constraints and contradictions
• India and the world economy
State of the economy @
independence
• Slow and sluggish rate of growth in savings,
investment and national output
• Highly unequal distribution of the fruits of
Development
• Measurement of national income
• Railways
• De-industrialization
• Historical origins of Indian poverty
Basic concepts
• Concept of Growth and Development
– Growth referring to rate of progress of an
economy [mostly in terms of GDP, GNP,
national income, Per capita income, etc]
– Development is a broad based concept referring
to, among others, the improvement in the
capability of an economy to accelerate the
growth process.
Select related concepts
• Capital
• Capital formation
• Financial and Physical capital
• Human capital
• Full employment
• efficiency
• Optimal utilisation of resources
• Equity & social justice
Planning
• Ascertain and evaluate the type of reasoning
that has gone into the formulation of a Plan
• Understanding a development Plan must
take into account:
– The socio-economic landscape
– Informal constraints the the planners had to
respect
Understanding Indian Plans
• “Often being judged only by the adequacy,
or otherwise, of the models which
constituted their analytical underpinning,
although these by no means exhaust their
full set of implications.”
– Chakravarty, S. (2007)
Understanding – cont.
• Theoretical understanding at a given point
in time [based on perception of objectives
and constraints]
• Actions and policies [adequacy and changes
in them with learning]
Three reasons for discussion
• Nature of the ‘structural break’ that
planning represents in India’s development
experience
• ‘analytical’ ideas underlying Indian plans as
contributory factors to the growth of
‘development economics’
• Market vs. Plan
Alternatives
• Choice between a market based approach
and planning for development
– Consensus was for a large role for the State
– Setting the goals [short vs. long term]
• Closed Vs Open economy models
• Identification and removal of structural
constraints
Structural Constraints &
Development Strategy
• The underlying causes of structural
backwardness were perceived as follows: