Developmental

processes and social movements in contemporary India

Assignment : Critically evaluate State planning in Indian since

Independence with special reference to New economic policy and it's
impact on the economy.

INTRODUCTION

India was a prosperous and thriving economy till the late seventeenth century before the advent
of British rule and was famously called the “golden sparrow”. The western world envied it as the
world’s bullion found its way all throughout the globe into Indian coffers . Though agriculture
was the backbone of economy as it is even today, yet, it was also characterised by presence of
various kinds of manufacturing activities and was particularly well known for its handicraft
industries in the fields of cotton and silk textiles, like chintz and muslin , metal and precious
stone works etc. which enjoyed a worldwide market based on the reputation of the fine quality
of material used and the high standards of craftsmanship. But the clock turned reverse with the
onset of colonialism . From the “Plassey plunder” to the well defined development of
underdevelopment which was forcibly enforced in the country and justified via “ the white
man’s burden” , the economic policies pursued by the colonial government in India were
concerned more with the protection and promotion of the economic interests of their home
country than with the development of the Indian economy and thus brought about a devastating
fundamental change in the structure of the Indian economy — transforming it into a supplier of
raw materials and consumer of finished industrial products from Britain . In his book , “Poverty
and un-British rule in India” , Dadabhai Naoroji wrote , “The British rule caused only
impoverishment in India with their knife of sugar. That is to say, there is no oppression, it is all
smooth and sweet, but it is a knife notwithstanding.”

On 15 August 1947, India woke to a new dawn of freedom. One of the pressing challenges that a
new born country faced was to ensure inclusive and equitable development of the country
which had been ravaged by the vagaries of colonial ruin. At the time of independence, the
incidence of poverty in India was about 80% or about 250 million . There was widespread
illiteracy and only a few number of people were educated, the literacy level was just 12% .
.Even the per capita income was very stunted accounting for only 249.6 rupees annually(5).
All this led to a low Indian Economy which accounted for only 3% of world GDP

Indian leaders were tasked to prove to the world that India can survive without a
foreign authority ruling it Thus the leaders of independent India had to decide, among other
things, the type of economic system most suitable for our nation, a system which would
promote the welfare of all rather than a few . Nehru, and many other leaders and thinkers of the
newly independent India, sought an alternative to the extreme versions of capitalism and
socialism. Basically sympathising with the socialist outlook, they found the answer in an
economic system which, in their view, combined the best features of socialism without its
drawbacks. This was the Indian brand of democratic socialism popularly captured in the
jargon , the “mixed economic model”. In this view, India would be a socialist society with a
strong public sector but also with private property and democracy; the government would plan
for the economy with the private sector being encouraged to be part of the plan effort as
reflected in ‘Industrial Policy Resolution’ of 1948 .
 TRACING THE ROOTS OF PLANNING

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 decision of a determinate authority,
on the basis of a comprehensive survey of the economic system as a whole.”

By the decade of the 1930s,the idea of planning had already entered the domain of intellectual
and political discussion in India and later served their purpose when India embarked on the
journey of planned economic development. Visionary engineer Sir Vishveshvaraya pointed to
the success of Japan and insisted that ‘industries and trade do not grow by themselves, but have
to be planned and systematically developed‘ in his book titled “Planned Economy for India’
(1934). National Planning Committee set up by INC in 1938 advocated setting up of heavy
industries in public ownership to build other industries. In 1944, leading businessmen and
industrialists put forward “A plan of Economic Development for India” – popularly known as the
‘Bombay Plan’ which saw India’s future progress based on further expansion of the textile and
consumer industries and an important role for the state to provide infrastructure and protect
Indian industry from foreign competition. Similar socialist leanings were also visible in the
Gandhian plan of Shriman Narayan Agarwal in 1944 and later the People’s Plan formulated by
the radical humanist leader M.N.Roy, based on Marxist socialism and advocated the need of
providing the people with the ‘basic necessities of life’. A lone blueprint for the planned
development of India was formulated by the famous socialist leader Jayaprakash Narayan in
January 1950 in his Sarvodaya plan and drew its major inspirations from the Gandhian
techniques of constructive works by the community and trusteeship as well as the Sarvodaya
among the prominent ideas to be highlighted.

GOALS OF INDIAN PLANNING

With the onset of planning, the envisioned idea was to form the broad contours of plans around
major goals envisaged by policymakers. The goals of the five year plans as identified in the early
era of planning were: growth, modernisation, self-reliance and equity. This ,however does not
mean that all the plans have given equal importance to all these goals , as limited resources
constrained our choices to emphasise on a particular goal in one plan. Nevertheless, the
planners have to ensure that, as far as possible, the policies of the plans do not contradict these
four goals . Growth is expected to spread to all sections and regions; raise resources for the
Government to spend on socio economic priorities etc. As it takes a long time for growth to
trickle down to all people and regions , state plans were required for an expeditious process of
inclusive growth. Modernization is an improvement in technology driven by innovation and
investment in Research & Development. However it also refers to changes in social outlook such
as the recognition that women should have the same rights as men. Self-reliance means
avoiding imports of those goods which could be produced in India itself. This policy was
considered a necessity in order to reduce our dependence on foreign countries, especially for
food. Further, it was feared that dependence on imported food supplies, foreign technology and
foreign capital may make India’s sovereignty vulnerable to foreign interference in our policies.
The term self-reliance should not be confused with self-sufficiency as the latter means that the
country has all the resources it needs which is not possible. Social justice ( equity) means
inclusive and equitable growth where inequalities are less and benefits of growth reach all rural
– urban, man – woman; caste divide and interregional divides are reduced. While the above four
were the long term goals of the planning process, each five year plan had specific objectives and
priorities.


THE SAGA OF INDIAN PLANNING

Once the National Planning Committee published its Report (1949), there was a firm need for
the inclusion of 'Economic and Social Planning' in the Constitution, the stage was set for the
formal launching of planning in the country. The Planning Commission of India was set up by a
Resolution of the Government of India in March 1950. As in USSR, the Planning Commission of
India opted for 5 year plans, based on a simple idea of a government document with all
expenditures and incomes for next five years. The planning commission was an autonomous
body headed by the prime minister and worked closely with union and state cabinets .
Objectives of the government while starting PC were to promote a rapid rise in the standard of
living of the people by efficient exploitation of the resources of the country , increasing
production and offering opportunities to all for employment. The National Development
Council (NDC) was set up on August 6, 1952 by a Resolution 59 issued from the Cabinet
Secretariat. The first Plan recommended its formation with a very concise and suitable
observation: "In a country of the size of India where the states have under the constitution full
autonomy within their own sphere of duties, it is necessary to have a forum such as a National
Development Council at which, from time to time, the Prime Minister of India and the Chief
Ministers of the states can review the working of the plan and of its various aspects.'

The first five year plan’s draft and then the original plan generated much excitement in the
academicians , professionals, politicians , common people and others from all walks of life. The
First Five Year Plan (1951-1956) sought to get the country's economy out of the cycle of
poverty. K.N. Raj, a young economist involved in drafting the plan, argued that India should
‘hasten slowly' for the first two decades as a fast rate of development might endanger
democracy. The First Five Year Plan addressed, mainly, the agrarian sector including investment
in dams and irrigation. The Second FYP (1956-61) stressed on heavy industries. It was drafted
by a team of economists and planners under the leadership of P. C. Mahalanobis. If the first plan
had preached patience, the second wanted to bring about quick structural transformation by
making changes simultaneously in all possible directions. Third Plan (1961 - 66) tried to
balance industry and agriculture. For the first lime, India resorted to borrowing from the IMF.
Rupee was also devalued for the first time in 1966. India’s conflict with China and Pakistan and
repeated droughts contributed to the failure of this plan. Then was a period of the three
consecutive Annual plans was 1966–69. Though, the Fourth Plan was ready for
implementation in 1966, the weak financial situation as well as the low morale after the defeat
by China, the government decided to go for an Annual Plan for 1966–67. Due to the same
reasons, the government went for another two annual plans in the following two years. Some
economists calling this period as a discontinuity in the planning process named it as “Plan
Holiday” . The Fourth Plan (1969-74) was based on the Gadgil strategy with special focus on
the ideas of growth with stability and progress towards self- reliance. Droughts and the Indo
Pak War of 1971 led capital diversions to defence, thereby creating financial crunch for the Plan.
The politicisation of planning started from this plan, which took serious ‘populist’ design in the
coming plans. Frequent double digit inflations, unreigned increase in the fiscal deficits, subsidy
induced higher nonplan expenditures and the first move in the direction of ‘nationalisation’ and
greater control and regulation of the economy were some of the salient features of this plan.
Fifth Plan (1974 - 79) had its focus on poverty alleviation and self-reliance and the former goal
was sensationalised by the government to the extent of launching a Twenty-point
Programme(TPP) (1975) with a marginal importance being given to the objective of ‘growth
with stability’ . The havocs of hyperinflation led the government to hand over a new function to
the Reserve Bank of India to stabilise the inflation. This Plan saw an increase in the
socioeconomic and regional disparities despite the many institutional, financial and other
measures initiated . The nationalisation policy continued. There was an overall decay in the
quality of ‘governance’ as a nexus of the ‘criminal-politician-bureaucrat’ seemed to emerge for
the first time to hijack the political system . The plan period was badly disturbed by the
draconian emergency and a change of the government at the Centre. The Janata Party came to
power with a thumping victory in 1977 and cut short the ongoing plan by a year ahead and
launched a fresh Sixth Plan for 1978–83 and termed it as a ‘Rolling Plan’. In 1980, there was
again a change of government at the Centre with the return of the Congress which abandoned
the Sixth Plan of the Janata Government in the year 1980 itself. The Sixth Plan (1978–83) ( the
Congress Government adjusted the two planned years under the Janata Government) could not
become an official plan for India but had emphasis on some of the highly new economic ideas
and ideals with almost a complete no to foreign investment; new thrust on price control;
rejuvenation of the Public Distribution System (PDS); emphasis on small scale and cottage
industries; new lease of life to Panchayati Raj Institutions (PRIs) ,agriculture and rural
development . Sixth Plan ( 1980-85) was launched with the slogan of “ Garibi Hatao” and some
of the major issues addressed by the Plan were—emphasis on socio economic infrastructure in
rural areas; eliminating rural poverty and reducing regional disparities through the
IRDP(Integrated Rural Development Program)(1979); ‘target group’ approach initiated wherein
a number of national level programmes and schemes were launched that tried to attend to the
specific areas and the specific concerns of socioeconomic development . Seventh Plan (1985 -
90) emphasised on rapid food grain production, increase in employment creation and
productivity in general. Though the economy had better growth rates throughout the 1980s, the
Plan was not laid with a strong financial strategy, which put the economy into a crisis of
unsustainable balance of payments and fiscal deficits. The economy failed to service heavy
foreign loans on which the governmental expenditures depended heavily. The Eighth Plan
could not take off due to the ‘fast-changing political situation at the Centre’ , the sweeping
economic reforms ensuing around the world, as well as the fiscal imbalances of the late 1980s .
Hence two consecutive Annual Plans (1990–92) were formulated within the framework of the
approach to the Eighth Plan (1990–95) with the basic thrust on maximisation of employment
and social transformation. The Eighth Plan (1992 - 97) was launched in a typically new
economic environment and was based on Rao – Manmohan Singh model of liberalization. The
major concerns of this plan were to immediately redefine the state’s role in the economy ,
advising areas of ‘Market-based’ development , more investment in the infrastructure sector,
especially in the laggard states , restructuring and refocusing subsidies and decentralisation
with an emphasis on cooperative federalism. The Ninth Plan (1997–2002) was launched when
there was an all-round ‘slowdown’ in the economy led by the South East Asian Financial Crisis
(1996– 97). Though the liberalisation process was still criticised, the economy was very much
out of the fiscal imbroglio of the early 1990s. With a general nature of ‘indicative planning’, the
Plan not only did target an ambitious high growth rate (7 per cent), but also tried to direct itself
towards timebound ‘social’ objectives especially the seven identified Basic Minimum Services
(BMS) like a safe drinking water, health , education , housing etc. The Tenth Plan(2002-2007)
aimed at doubling per capita income in 10 years, increasing States’ role in planning with the
greater involvement of the PRIs and policy and institutional reforms in each sector .Agriculture
sector declared as the prime moving force of the economy. For the first time monitorable targets
were set for centre and states in eleven select sectors. The Eleventh Plan(2007-2012)
emphasised upon increasing the investment rate & and savings rate and a thrust on the social
sector, including agriculture and rural development. The plan targeted a growth rate of 10%
and thus stressed on “ inclusive development”. The Twelfth plan ( 2012-2017) targeted a
growth rate of 9 %, emphasized the need to intensify efforts to have 4 per cent average growth
in the agriculture sector as higher growth in agriculture would not only provide broad based
income benefits to the rural population but also help restrain inflationary pressure. It drew
attention to evolve a holistic water management policy, a new legislation for land acquisition,
the need for focusing more on efficient use of available resources in view of the resource
constraints and emphasised the importance of the process of fiscal correction. In 2014,
government decided to dissolve the Planning Commission. It was replaced by the newly formed
NITI Aayog ,a premier think tank that provided policy and directional support to the economy.
The FYPs were discontinued after the 12th FYP (2012-2017).

APPRAISAL OF PLANNING

An assessment of the outcomes of this phase of planned development must begin by

acknowledging the fact that in this period the foundations of India's future economic growth
were laid. Some of the largest developmental projects in India's history were undertaken during
this period including mega-dams like Bhakhra-Nangal and Hirakud for irrigation and power
generation, heavy industries in the public sector, steel plants, oil refineries, manufacturing units,
defence production etc. Infrastructure for transport and communication was improved
substantially. Of late, some of these mega projects have come in for a lot of criticism. Yet much of
the later economic growth, including that by the private sector, may not have been possible in
the absence of these foundations.

However, the consensus for a state-led economic development did not last forever. Planning did
continue, but its salience was significantly reduced. Between 1950 and 1980 the Indian
economy grew at a sluggish per annum rate of 3 to 3.5% , popularly called the “ Hindu rate of
growth. In view of the prevailing inefficiency and corruption in some public sector enterprises
and the not-so-positive role of the bureaucracy in economic development, the public opinion in
the country lost the faith it had initially placed in many of these institutions. This brings us to
deeply and critically analyse the phase of planned development in India.
Indian planning is blamed for failing the objective of a regionally balanced growth and
development. Though the Second Plan itself had noticed this fact, the measures taken were not
sufficient or were short sighted. Economic planning at the national level has elsewhere proved
to be a highly effective tool of promoting balanced growth but the Indian story witnessed an
opposite trend. At the theoretical level, the governments knew the remedies, but at the practical
levels, politics and democratic immaturity dominated the planning process.

Decentralising the process of planning had been a major goal of the governments since the
1950s , but after Nehru, with every Plan a greater tendency of centralisation was evident.
Finally, by early 1990s two constitutional amendments (i.e., the 73rd and the 74th) promoted
the cause of decentralised planning by delegating constitutional powers to the local bodies but
as Mani Shanker Committee noticed that these bodies lacked blood and flesh to be able to
function effectively.

Planning in India tilted heavily in favour of ‘capital intensive’ industries, especially from the
Second Plan onwards. Such industries in the public sector could not generate enough
employment and were unable to capitalise the enormous human resources of the country and the
latter lagged behind in skilling themselves .

Critics argue that Indian planning emphasised on public sector undertakings (PSUs) for the
right reasons, but in the wrong way and for a considerably longer period of time. The state’s
monopolies in certain areas continued over such a long period, that too , in losses that there
came a demand-supply gap in the major goods and services produced by the PSUs. It is also
now widely held that state enterprises continued to produce certain goods and services (often
monopolising them) although this was no longer required such as in telecom { BSNL is still
under losses}, hospitality sectors and were a drain of wealth of the nation’s resources or what
Bimal Jalan , former RBI Governor , famously remarked as “ old family silver “ .

The excessive regulation of what came to be called the permit license raj prevented certain firms
from becoming more efficient.

Protection from foreign competition was also being criticised on the ground that it continued
even after it proved to do more harm than good. Due to restrictions on imports, the Indian
consumers had to purchase whatever the Indian producers produced who had no incentive to
improve the quality of their goods as they had a captive market.

Promoting the cause of faster industrialisation over time became so dear to the planning
process that the agriculture sector got badly overshadowed and resources were scarce for the
agriculture sector. Such a policy always created a situation of food insecurity for the country
and the masses who depended upon agriculture for their livelihood and income (still it is 58.2
per cent) could never increase their purchasing power to a level that the economy could reverse
the situation of ‘market failure’.

In India, even today, industrial growth is badly dependent on agricultural growth. There are
time tested theories of ‘industrial location’ considering the nearness of raw materials, market,
cheaper labour, better transportation and communication, etc. But the Plans always prioritised
setting up of new industrial units (i.e., the PSUs) in the backward regions of the country
falsifying these theories. The government needs to develop all industrial infrastructures besides
setting up certain PSUs. As the PSUs require skilled labour force (which was not available in the
vicinity), the regions failed to gain any employment from the PSUs too.

Mobilising resources to support the highly capital intensive plans were complemented by
various measures like going for a highly complex and liberal tax structure, nationalising the
banks, etc. Ultimately, tax evasion, the menace of parallel economy and lesser and lesser capital
for the private sector were the bane of India. Expansion of subsidies, salaries and the interest
burden every year gave an upward push to the non- plan expenditure leading to scarcity of funds
for plan expenditure. In a democratic political system, almost every issue of socio political
importance is influenced by politics and more so in lesser mature democracies which stands
true for India also. Greater and greater politicisation of the planning process culminated in such
a design that at times economic planning served the opposite purpose.

Yet it must be said that the public policy of the nehru era had set in motion a more or less
stagnant colonial economy. The economy had been got moving and in any case the policies were
open to course correction.

ONSET OF REFORMS

The progress of the Indian economy during the first seven plans was impressive indeed. Our
industries became far more diversified compared to the situation at independence. India
became self- sufficient in food production thanks to the green revolution. Land reforms resulted
in abolition of the hated zamindari system. However in industrial sector, many economists
became dissatisfied with the performance of many public sector enterprises. Excessive
government regulation prevented growth of entrepreneurship. Indian policies were ‘inward
oriented’ that failed to develop a strong export sector. Such lack of public faith led the policy
makers to reduce the importance of the state in India's economy from the 1980s onwards. The
need for reform of economic policy was also felt in the context of changing global economic
scenario .

In 1991, India met with an economic crisis relating to its external debt and the government was
not able to make repayments on its borrowings from abroad and foreign exchange reserves
dropped to levels that were not sufficient for even a fortnight. The crisis was further
compounded by rising prices of essential goods and later accentuated by the hostile
international economic environment ,viz , the Gulf war between Iraq and Kuwait pushed oil
prices and subsequently the oil import bill went up substantially and the rapid withdrawal of
foreign exchange in the form of NRI deposits because of the political instability and uncertainty
at home. The origin of the financial crisis can be traced from the inefficient management of the
Indian economy in the 1980s. Even though the revenues were very low, the government had to
overshoot its revenue to meet challenges like unemployment, poverty and population explosion.
However the continued spending on development programmes of the government did not
generate additional revenue. At times, our foreign exchange, borrowed from other countries and
international financial institutions, was spent on meeting consumption needs. Neither was an
attempt made to reduce profligate spending nor sufficient attention was given to boost exports
to pay for the growing imports. In the late 1980s, government expenditure began to exceed its
revenue by such large margins that meeting the expenditure through borrowings became
unsustainable.

In response to the internal economic crisis of 1990-91 and the changing international situation,
the Narasimha Rao government decided to introduce economic reforms or the New Economic
Policy (NEP) and announced it on 23rd July 1991. The NEP clearly reflected certain global trends,
namely, the collapse of the socialist economy and growing acceptance of economic globalization
across the world.

Although the reforms as a part of the process of liberalization and globalization were
revolutionary in nature, these were launched within the democratic framework of the country.
While the national goals set out at Independence remained unaltered, the change came only in
the strategy to achieve these goals – from Nehru-Mahalanobis development strategy to the new
development strategy of liberalization and economic reforms. Similar reform process started by
some other economies since the 1980s were voluntary decisions of the concerned countries but
in the case of India it was not so. Under the Extended Fund Facility (EFF) programme of the IMF,
countries get external currency support from the fund to mitigate their BoP crisis, but with
obligatory conditionalities put on the economy to be fulfilled. The conditionalities put upon
India were of the nature which required all the economic measures to be formulated by them
such that reforms India carried were neither formulated by India nor mandated by the public.
The IMF conditions put forth for India were; Devaluation of the rupee by 22 per cent , drastic
reduction in the peak import tariff from the prevailing level of 130 per cent to 30 percent ,
excise duties (i.e., CENVAT now) to be hiked by 20 per cent to neutralise the revenue short falls
due to the custom cut , and all government expenditure to be cut down annually by 10 per cent.
Though India was able to pay back its IMF dues in time, the structural reform of the economy
was launched to fulfil the above-given conditions of the IMF. The ultimate goal of the IMF was to
help India bring about equilibrium in its BoP situation in the short-term and go for
macroeconomic and structural adjustments so that in future the economy faces no such crisis.

THE REFORM AGENDA

The reforms introduced comprised two basic policy heads; firstly , macroeconomic
stabilization was a short-term programme adopted to overcome the macroeconomic crisis by
regulating the total demand in the economy and comprised of fiscal stabilisation measures and
internal- external sector liberalization and secondly, structural stabilisation measures which
dealt with sectoral adjustments and resolving the problems on the supply side of the economy
by bringing in dynamism and competitiveness through liberalized trade and investment policies
with emphasis on exports, industrial deregulation, disinvestment and public sector reforms, and
reform of the capital markets and the financial sector.

The specific character of the reform agenda was visible under 3 distinguished policy heads ,
Liberalisation , Privatisation and Globalisation ( LPG). Economic liberalisation is the policy of
deregulation of different segments of economy. It is the policy of doing away or reducing the
government’s controls over industry and other activities, which existed before 1991. The main
features were delicensing of industries (entrepreneurs are now free to enter any industry, trade
or business), relaxation in controlling monopolies , liberalisation in industrial policy location ,
removal of restrictions on mergers, takeovers, separation of industrial units , private sector
entry in infrastructure development and liberalisation of capital and foreign exchange market.
Privatisation basically implies the process which leads to transfer of ownership of public sector
enterprises from the government to the private sector. The supporters of this strategy consider
it desirable as it leads to improvement in managerial efficiency, creation of a competitive
environment, enables flexibility in decision making , reduces burden on public exchequer, pays
attention to consumer satisfaction, enables greater investment and employment opportunities ,
increases accountability and maintains strict financial discipline. In India this was attempted via
, reducing the number of reserved industries to eight through Industrial Policy of 1991, granting
enhanced powers to the Board of Directors of various profit-making CPSEs known as
Maharatna, Navaratna, and Miniratna ,government entering into MOUs with the public sector
enterprises and the policy of disinvestment (selling of government's equity in PSU’s ).
Globalisation is a process of integrating the economy of the country with other economies of
the world through trade, capital flow, and technology. As part of implementation of the agenda
of globalisation, the government introduced exchange rate reforms ( flexible determination ),
import liberalisation by entering the WTO, and opening up to foreign investment and
technology by removing equity restrictions.

NEP : AN ANALYSIS

The reform process has completed three decades since its introduction. The balance sheet of the
Indian economy in the post-reform period is mixed. The new economic policy has played an
important role in stepping up the growth rate of the Indian economy from 5 per cent in 1990-
1991 to about 9.3 % in 2007-08 , popularly called the Sardar rate of growth. The performance
of the industrial sector during the post- reform period is much higher, experiencing a growth
rate of 9.2 % during the Tenth Plan, and a growth rate of around 7.7 per cent during the
Eleventh Plan. The post-reform period has also been characterised by significant changes in the
composition of national income. The share of the agriculture and allied sector in national
income has decreased from 29 % in 1991-92 to 17 percent in 2016-17, industrial sector, on the
other hand, showed a steady increase from 24 % in 1991-92 to about 29 % in 2016-17and
tertiary or service sector has increased significantly from 44 % in 1991-92 to about 54 % in
2016-17 driving the trajectory up. Gross domestic savings increased from about 23% in 1990-
91 to 31 % in 2015-16, rate of investment (rate of gross domestic capital formation as per cent
of GDP) has increased from 26 % in 1990-91 to about 31 % in 2015-16 . Over time, the export
sector has grown to be a significant earner of foreign exchange . India's foreign exchange
reserves have increased rapidly and stood at US $405 billion in July 2018 as against only $1.1
billion in June, 1991 .FDI increased from US $1.3 billion in 1990-91 to US $60.08 billion in 2016-
17 as overtime, FDI rules have been radically overhauled across sectors such as broadcasting,
retail, trading and air transport. India is emerging as a stable growth engine and as a Big
Emerging Market (BEM) in the world due to robust economic performance supported by a
vibrant democracy, increasing young population, expanding middle class and domestic market
and well-developed private sector.

However, this growth is not inclusive. First, its skewed as there is a great divide separating
industry and agriculture, and the infrastructure, especially the rural infrastructure, is in an
appalling state. Second, the reforms are just confined to the economy and they are not spreading
to the social sector including healthcare, education, social security, gender equity and
environmental protection which have suffered a setback owing to the decline of the public
investment in this crucial area. Indian society is marked by four great divides: rural-urban, rich-
poor, and along gender and caste lines. As a result of liberalization, the state is increasingly
transferring its constitutional responsibility of providing public goods to market forces and is
failing to build human capability and to ensure dignity of life for every citizen of the country.
This has led to huge interpersonal and inter-regional inequalities causing social instability
manifested by increasing protests and farmers’ suicides etc. Globalization, as shaped by the new
development paradigm has given rise to large-scale human displacement and the consequent
disappearance of many communities and cultures evident in the continuing paradox of India
and Bharat – a fast-growing economy supported by a well-developed private sector and yet with
persistent mass deprivation and no effective freedom – within the democratic framework in the
country giving rise to the question of whether democracy and market are incompatible. There is
also a Heavy dependence on foreign debts and the new economic policy ignores the
development of the internal resources. MNCs have been successful in leaving the scourge of neo
colonialism on Indian market and society. Keeping these concerns in view, the government
decided to introduce the second-generation reforms while continuing the beneficial measures of
the first-generation reforms.


CONCLUSION

India has completed 75 years of its economic developmental journey. From our lengthy
democratic experience, scholars have come to agreement that the aim of economic development
should be to help turn India into not only a fast-growing economy, but also a knowledge
economy by strengthening the knowledge sector; a strong democracy by building social capital;
and finally a humane society with the highest levels of sustainable human development. Indian
policy makers since the times of independence have pretty much tried to achieve the lofty goals
enshrined in our preamble and the sort of economic justice envisaged in the DPSPs . However
given the colonial legacies and the bad state of economy inherited at independence , this was the
most toughest of all the challenges. The Indian growth story is a saga of state controlled
economy followed by a quasi-private structure. Both the phases were attributed by their own
ups and downs . If the former established robust foundations then the latter helped in
accelerating the growth process to achieve some idealistic figures that matched global trends .
Nevertheless, it has been time and again depicted that growth in absolute figures as in the GDP
indicators might at times turn out be deceptive if it is unable to bring considerable change in
ground realities and enables only some sections of the society to mushroom while ignoring the
chunk of majority of masses. So the success of the entire growth process can be evaluated by the
standard of life that the citizens today enjoy. This has been unfortunately been a harsh reality.
The ills of poverty and inequality mar the social outlook of masses ; unemployment , lack of
skilling, informalisation and contractualisation of labour force have hindered the apt utilisation
of the demographic dividend of a youthful population ; haphazard urbanisation and
industrialisation have stalled the quality life that people enjoy and also taken a toll on
environment. The global social indicators portray that all is not rosy as many in India go to sleep
empty stomach { India has the highest rate of malnourishment in children }. The Oxfam report
has laid bare how an unequal society India is where the bottom 50 % population enjoys just 6%
share in national wealth. Our health and education budgets are far too minimal and
infrastructure everywhere inadequate. Most worryingly , corruption is fast eating up our finite
resources .

Yet there are reasons to cheer. India has had travelled much ahead than what colonialism had
rendered us to be. Life expectancy, literacy rates, mortality rates have all grown considerably
well whose credit goes to the intellect and will of our policymakers. The government has been
introducing various reforms, schemes and programmes which aim to eradicate poverty , hunger
and unemployment. With Right to Education enshrined as a fundamental right and the NFSA
ensuring food access to all as a legal obligation on the state, commensurate improvements have
been recorded. More recently the emphasis on digitalisation , direct benefit transfers ,
infrastructure improvement and strengthening domestic supply chains while integrating with
global market via free trade agreements to leverage India’s export potential , have earned us the
reputation of being the fifth largest economy. Ujjawla scheme, Ayushman Bharat, Sanjeevani,
Beti bachao, Beti padhao , Jan Dhan, Kisan credit cards , More crop per drop , National
Infrastructure Pipeline etc. have been gamechangers in enabling people to enjoy the benefits of
development and providing resilience to the economy. The period between 2014 and 2020
witnessed the highest growth in real per capita income as compared to any other five year
period in India’s growth trajectory. But still there is much more that has to be committed and
delivered to fulfil that long-awaited promise that Jawaharlal Nehru so eloquently described as
our ‘tryst with destiny’ at Independence. Only if the entire country joins hands together and
those who enjoy a larger chunk of the pie shoulder a greater burden to assist the state
while the mandarins in public offices shed off the baggage of corruption , can India really
become the “India of our dreams” by 2047 and be able to fulfil what Gandhiji had wanted, “
wiping off every tear from every eye”.

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