Chapt

erV I
ndi
anEconomi
cThought
Ear
lyeconomi
cideas

Kaut
il
ya

Hewaspr
imemi ni
sterofChandr
aGupthaMaurya,knownasChanaky
aorIndianMachi
aval
li
.
Hi
sbookArt
hashastragiv
esdetai
lsofpol
i
tical
,soci
al,
economi
candmil
i
tary.Hisi
deasare

1.Weal
th

Acqui
sit
ionofweal
thwasdescr
ibedasoneoft
hef
ourmaj
orgoal
sofl
i
fe.Di
scussed
Dharma, Ar
tha,
Kama,andMoksha.

2.Vart
ha–meanssci
enceofnat
ional
economy
.Hei
ncl
udedagr
icul
tur
e,ani
mal
husbandr
y
andtrade.

3.Agr
icul
tur
e--
--
--mor
eimpor
tancet
oagr
icul
tur
e

4.Labourandcaste-i
nanci
entI
ndi
acast
esy
stem pr
evai
l
ed.Hegi
vei
mpor
tancet
oeach
l
abourdisci
pli
ne.

5.Val
ueandtr
ade-
--v
alueofeachcommodi
tyaccordi
ngtot
imeandpl
ace.Noval
uef
or
i
temsi
ncapabl
eofexchange.Hegav
emoreattenti
ont
othepr
obl
emsoftrade.

6.Publicfi
nance-
--l
andrev
enuewasani mportantsourceoft
axati
on.Arthashast
ra
elaborat
eschemeofpubli
cfi
nance.Taxcol
lectedasperquali
tyofland.He
recommendedbalancedbudget
.Heclassi
fi
edt axrecei
ptsi
nto3

 Taxongoodspr
oducedwi
thi
nthecount
ry

 Goodspr
oducedi
nthecapi
tal

 I
ncomeear
nedt
hroughexpor
t,i
mpor
tandt
ax

Mainit
emsofpubl
i
cexpendit
urear
enati
onaldef
ence,
admi
nist
rat
ion,
slav
ery
,ar
my
et
c.theygav
emuchimport
ancetowel
fare.

Thi
ruv
all
uvar

-
-Bel
ongstosangam age—famousbook–Thi rukkur
al.I
thasvari
ouspar
ts.Hi
seconomi
cideas
f
oundinsecondpartofThi
rukkur
al.Porat
pal
isthepartdeal
ingwit
hwealt
h.Hegave
i
mportancet
oagricul
tur
e,whichdependsonrai
n.Hisideasare

 Pov
ert
yandbeggi
ng—hecondemnedpov
ert
yandbeggi
ngasgr
eat
estcur
sesofsoci
ety

 Wealth—expl
ainedt
hei
mportanceofaccumulat
ionofweal
thandregar
dedwealt
has
onlyameansnotanend.Accordi
ngtohimindustr
yisr
ealweal
thandlabouri
sgreat
resource
  Agr
icul
tur
e—mostf
undament
aleconomi
cact
ivi
ty.I
tissuper
iort
oal
lot
heroccupat
ions

 Publi
cfi
nance-
--mainsourceofrevenuear
ea)weal
thcomesbyit
sel
f,b)cust
oms, c)
tr
ibut
epaidbydefeatedenemies.Paymentofl
andr
evenuebecameapar tofnor
mal
dutyofever
yci
tizen

 Publ
icexpendi
tur
e—def
ence,
socialser
vice,
publi
cwork—i
mport
ancetowel
far
e
st
ate—educati
onasani
mportantfact
orthatpr
omotedeconomi
cprogr
ess.

 Externalassi
stance—hewasagainstdependenceonext
ernal
assistance.
—recommendedselfsuffi
cienteconomy
.

Moder
neconomi
cideas

Dadabhai
Naor
oji
(1825-
1917)

- BorninBombay-knownasgrandoldmanofIndi
a-f
atherofIndi
annat i
onal
i
sm-
famousbook-povert
yandunBr i
ti
shrul
einI
ndi
a.Heconcentrat
edonpov er
ty.He
conduct
edasurveyofper
capit
aincomeinBombayforyear1867-70.

- Drai
nt heory—DadaBhaiNaoroji
isfamousasaneconomi stfordraintheory
.He
stat
est hatconsequencesofforei
gndomi nationwasthedr ai
nofweal t
hofIndi
ao
England,andhighcostofBrit
ishadmi ni
strat
ionhaddisastrouseffectonIndian
economy .Thisdrai
jwasoneofmai ncausesofpovert
yofI ndia.Thedr ai
nofwealt
h
tookplaceinnumberofway s.

1.Lar
ger
emi
tt
anceswer
emadebyEur
opeanof
fi
cial
soft
hei
rsav
ingsi
nIndi
a

2.Lar
ger
emt
tenceswer
emadei
nthef
orm ofsal
ari
esandpensi
ons

3.I
ndi
aof
tenhadt
opayf
orgov
texpendi
tur
einEngl
andandI
ndi
a

4.Nonof
fi
cial
Eur
opeansmader
emi
tt
ancesf
rom t
hei
rbusi
nesspr
ofi
tinI
ndi
a.

Naoroj
istudiedthi
stheorybycoll
ect
ingl
otofstat
isti
caldataregardi
ngexpor t
,import,
salaryof
Bri
ti
shstaff,rai
l
wayconstruct
ionandexpenseofIndi
ans.Benefit
sofr ail
wayconstruct
ionwer e
enj
oyedbyf orei
gnersbutit
sburdenbornbyIndi
ans.EuropeansexploitedIndi
ansbydifferent
ways.

Naor
oji
suggest
edsomemeasur
est
oremov
eIndi
a’
spov
ert
yandt
oreducedr
ain.

 I
ndi
aandEngl
andshoul
dpayal
lsal
ari
est
othei
rpeopl
ewi
thi
nthei
rboundar
ies

 AsEngl
ishmenwerepai
dreasonabl
esal
ari
eswhi
l
etheyser
vedi
nIndi
a,t
her
ewasno
needt
opaypensi
ontothem.
  All
advantagesf
rom I
ndi
annavywenttoEngl
and.I
ndi
ashoul
dnotchar
gedanypor
ti
on
ofexpendi
turef
ormaint
enanceofnav
y.

MahadevGov
indRanade(
1842—1901)

Bor
ninNasik.HewasajudgeofBombayhighcour
t.Hi
scommoni
deasar
efoundi
nhi
sessay
s
onI
ndianpoli
ti
cal
economy,r
iseofMar
athapower.

Met
hodandscopeofpol
i
tical
economy

Heattacheddeducti
vemet hodofclassi
cal
economist.Hebel
ievedindoctr
ineofrelat
ivi
ty.He
emphasizedi
mpor t
anceofeconomi ceducati
oninpromoti
ngtheweal t
hofnat i
on.Hesaidt hat
nat
ionseconomiceducationisoffarmoreimport
ancethanpresentgainofit
sindiv
idual
member sasr
epresentedbyquanti
tyofwealthmeasuredbyit
sv al
ueinexchange.

I
ndi
aspov
ert
y

Hebel
i
evedpov
ert
yofI
ndi
awasr
esul
tofBr
it
ishr
ule.Heexpr
essedr
easonsofpov
ert
yar
e

1.Toomuchdependenceonagr
icul
tur
e.

2.I
ndust
ri
esinIndi
awer
einbackwar
dst
ateowi
ngt
othei
rinabi
l
ityt
ocompl
etewi
th
f
orei
gnindust
ri
es.

3.Cr
edi
tsy
stem washi
ghl
ydi
sor
gani
sed andbanki
ngf
aci
l
iti
eswer
einadequat
e.

4.Def
ect
ivel
andpol
i
cyofgov
t.

Suggest
edr
emedi
es

Heopposedl aissez-fair
epol icyandst atemustpl ayani mport
antroleinr emov ingpov ert
y
andpr omot ingweal t
hofnat ion.Apl annedeconomyi smustf orestablishingwel farestate.
Heopposedf r
eet radebecausei twillhurtIndi
anindustri
es.Soher ecommendedapol icyof
protecti
ont oI ndiani ndustri
es.Hebel ievedt hatabalancedandpl anneddev elopmentof
agri
cul t
ure,agr icultureandcommer cewasessent i
alforpromoti
ngeconomi cdev elopment
ofIndia.Hef avour edbal ancedpopul ation.Headv ocatedchangesinlandpol i
cyt osav e
i
ntrestofcul tivators.Heagr eedf armersmi ghtbeal l
owedt opaytheirtaxi nkindand
pl
eadedf orper manent, ryotwari l
andset tl
ementf orami ni
mum per i
odext entlyfrom 20t o
30y ears.Hesuggest edcr editsystem shoul dreor
ganiset oprov
ideagr icult
uref i
nance.
Karvehasdescr ibedhi mt hepr ophetofl i
ber alI
ndi
a.

R.C.Dut
t(1848-1909)

HewasaBengali,
joi
nedinIndi
ancivi
lserv
icein1869.
hisi
mport
antbooksin
economi
csareEconomicHi st
oryofI
ndia,Faminesi
nIndi
a.Hewaspresi
dentof
Indi
anNat
ional
Congressin1899.
 Economi
cIdeas

Povert
y–chi efreasonforpov er
tyandfaminewereBrit
ishrule—r esourcel essconditi
onsof
I
ndianpeasants.Duet ohight ax,r
easonedt
odeclineoff al
l ofcottagei ndustries.Absence
ofir
ri
gati
on, l
owpr oduct
ivi
t ywereaffect
edagri
cul
ture.I
ndianhandi craftswer eunableto
facecompleti
onofmachi nemadegoods.Sel fi
shandunsoundf i
nanci al administrat
ive
poli
cywasf ol
lowedbyBr i
t ain.nearl
yonehalfofrevenuer eceivedinI ndiawer eremit
ted
outofcountry

Remedi
es

1.I
ndi
ancot
tagei
ndust
ri
esshoul
dber
evi
vedf
orsol
vi
ngpr
obl
em ofunempl
oyment

2.Reducel
andt
ax

3.I
ndi
anr
evenueshoul
dbel
argel
yspenti
nIndi
ait
sel
f

4.I
rr
igat
ionf
aci
l
iti
esshoul
dbeext
ended

5.I
ndi
ani
sat
ionofgov
tser
vice

6.Pr
omot
ionofi
ndust
ri
ali
sat
ion.

Gopal
Kri
shnaGokal
e(1866-1918)

Bor
ninPoona.Founderofser
vant
sofI
ndi
ansoci
ety
.in1905hewasel
ect
edpr
esi
dent
ofI
NC.

Economi
cideas

Hewasanexper ti
nfiscal economics.Hewasmai nl
yi nterestedinprobl
emsf i
nanceandf iscal
administ
rat
ioninIndi
a.Hesuggest ednumberofr eformsi ntaxati
onandbudget ar
ypolici
es.He
awsnotinf av
ourofsur plusbudget.Gokaleobjectedtot hepr act
iceofusingbudgetsurplusfor
repayi
ngthedebtincurredf ortheconstr
ucti
onofr ai
lway .Ast herai
lwayswereacommer cial
undert
aking,hethoughtitshoul dmeetitsdebtcommi tment sfr
om itsownincomeandnot
from t
heproceedsoft axation.

Hesuggestedanequi
tabledistr
ibut
ionoftaxproceedsbetweencentr
eandpr ovinci
algov
tand
l
ocalbodi
es.Hesuggestedlandr ev
enue,exci
se,for
estmightputinprov
inci
alli
st;opi
um,sal
t,
cust
oms,post,tel
egr
aphmi ghtbegiventoot
hersecti
on.Headv ocat
eddecentrali
sati
onof
powersfr
om centr
edownt ov i
ll
ages.

Heopposedtheincreasei
nsalttax.Hesuggest edcert
ainr
eformsinlandrevenuesystem.In
ryot
wariar
eas,
revenueshouldnotbemor ethan20%ofgr ossproducewher ethecult
ivat
ors
paidrev
enuedi
rectl
ytogovt.Heest i
matedvariouskindsofexpendi
tureunderpubli
c
expendi
tur
e.Hesuggestedfol
lowingmeasuresas

1.Publ
i
cexpendi
tur
eshoul
dnotexceedpubl
i
creenue
2.Mi
l
itar
yexpendi
tur
eshoul
dbecutdownt
omi
nimum

3.I
ndi
ani
sat
ionofci
vi
lser
vice

4.Audi
tshoul
dbemadei
ndependent
.

Gokalemadearemarkabl
econtr
ibut
iont
othestudyoff
iscal
admini
st r
ati
oni
nIndi
a.He
real
isedi
mport
anceofwelli
nfor
medpubli
copini
onofgovtandpoli
cies.Hewasapoli
ti
cal
guruofGandhi
j
i.

J.
K.Meht
a

Bor
ninMady
apr
adeshi
n1911.Hi
seconomi
cideasar
e

 Scopeanddefi
nit
ionofeconomics-
--
--
---
-economicsasasciencewhichstudies
humanbehavi
ourasameanst otheendofwant l
esness.Humanbehaviouri
st he
subj
ectmatt
erofscienceofeconomics.Iti
stheresul
tofastateofdi
sequil
ibri
um of
humanmind

 St
ateofwantl
esness-
--
--
--
-want
lesnessconsi
stnei
theri
nnoteat
inganddr
inki
ngnor
i
nnotearni
ngincome.

 Economicgener
ali
sati
on-
--
--
--economictheor
yteachest
oar
rangef
act
sinpr
oper
orderoft
hei
rmagnitudei
nor deroft
heirpl
aceandtime.

 Stat
icanddy namiceconomics--
--st
ati
ceconomicsref
erstotheeconomicsy
stem
whichisinequil
ibr
ium.Dynamiceconomicsistodet
erminethetemporar
ypoi
ntof
equil
i
brium wit
hinashortperi
odatsuccessi
v emomentsoftime.

 Consumersur
plus-
--
--
-iti
sthedi
ferencebet
weenut
il
it
ythatheexpectf
rom
consumpt
ionofcommodityandcostofbuyi
ngit
.

 I
nterest-
--hedefi
nedi nt
erestastheear
ningofcapi
tal
whichisdet
erminedbyit
s
marginalproduct
ivi
ty.Interesti
sdeter
minedbya)mar gi
nalpr
oducti
vit
yofcapi
tal
,
b)absenceofef f
ort,c)priceofwai
ti
ng,andd)ti
meprefer
ence

 Wel
far
eeconomi
cs-
--
--
--
--
-gi
vei
mpor
tancet
osoci
alwel
far
e

 Economi csofgrowth-
--
--
--accor
dingt
ohim gr
owt hmeansgrowthofpopul
ati
on,
wealth,percapi
tai
ncome.Wheni ncomegrows,economyisgrowi
ngbutitmightbe
decl
ining.

Heconcludedt
hatt
her
eisani
nver
ser
elat
ionshi
pbet
weengr
owt
handnumer
al
pr
ogress.
 Mahendr
aNat
hRoy
(1887—1954)

BorninwestBengal
,hewaspr ominentI
ndianphiosopherof20thcent
l ury.Hewas
f
atherofI
ndi
ancommuni sm.Hewasapol it
ical
philosopherandspeaker
.Het r
iedi
n
manywaystospreadthephi
losophyofcommuni sm inIndi
a.Hegivesmuchi mpor
tance
t
ohumanism.

Maj
orwor
ks

I
ndiai
ntr
ansi
ti
on,
Indi
a’
spr
obl
emsandi
tssol
uti
on.Labourpar
ty,
nat
ional
i
sm,
peopl
e’
s
pl
an.

Accor
dingt
ohi
sconceptpeopl
espl
anwer
eint
roducedi
nIndi
a.

Gandhi
j
i(1869-1948)

MohanDasKaramChandGandhi
,fat
herofnat
ion,hestar
tednonv
iol
ence,
nonco-
oper
ati
vemovementtoat
tai
nthegoalofi
ndependence.

Hewasacentpercentswadeshi.Star
tedKadhi movement,
hindswaraj
.Hi
seconomi
c
i
deasi
sbasedonet hical
foundati
on.Hiseconomi ct
hought
sarebasedon4
f
undament
alpr
inciples--
--
--t
rut
h,nonv i
olence,
digni
tyofl
abourandsimpl
i
cit
y.

Hi
simpor
tantt
hought
sar
e

 Vil
l
ager epubli
c–- -
tohim,vi
ll
agewasIndia.Hewasi nter
est
edindev
elopmentof
vi
ll
agesandsel fsuff
ici
entuni
ts.Heopposedextensiveuseofmachi
nery,
urbani
sat
ion
andindustri
ali
sat
ion.Hewantedtoprotectther
uralcivi
li
zat
ion

 Onmachi nery--
-heconsi
deredmachineryasgreatsi
nbecausei
fweusemachineryi
n
al
lfi
elditleadstounemploy
mentoflabour.Hewasnotagai
nstmachi
ner
yingeneral
.If
machinesar el
aboursuppor
tiv
e,i
tisverygood.

 I
ndustrial
isat
ion–heconsider
edindustr
ial
isat
ionasacurseonmanki nd.Iti
sonlya
manifestati
onofcapit
ali
sm.Hebeli
evedindustri
ali
sat
ionwouldnotremov epovert
yof
I
ndia.Heal soopposedlar
gescal
eindustri
ali
sm alsoongroundofsocial
justi
ce.He
thoughtitwouldresul
tint
heconnecti
onofeconomi cpowerinafewhands.Hehat ed
pri
vil
egeandmonopol y.

Gandhi
j
iimposedf
oll
owi
ngcondi
ti
onsf
orusi
ngmachi
ner
y

a)Theymustnotdepr
ivepeopl
eofempl
oyment
.

b)Theymustnotexpl
oitv
il
lager
s

c) Theymusthel
pthev
il
lagear
ti
sant
oimpr
ovehi
sef
fi
ciency

d)Notl
eadt
omonopol
y
 e) Notl
eadt
oexpl
oit
ati
on

f
) Admi
nist
eredbygov
t

 Decentr
ali
sati
on---headvocateddecentral
isedeconomy .hewant
edtorev
ive
cott
ageindustr
iesbecausehet houghtonlyproducti
onwassimult
aneouswit
h
consumptionanddistr
ibut
ionandv ici
ouscircleofmoneyeconomywasabsent.
Product
ionwasf orimmediateuseandnotf ordi
stantmarket
s.

 Vil
l
agesurvodaya–accordingt
oGandhijirealI
ndi
awastobef oundinv il
lages
andnotintownsandciti
es.Sohesuggesteddevel
opmentofselfsuffi
cient,sel
f
dependentvi
l
lages.Vi
l
lageswaraj
washisi deal
.Ev
eryvi
l
lageswillbe
panchayat
hhavingpowers.Hehasgiv
ent oppri
ori
tyf
orkhadiprogramme.

 breadlabourormanuallabour--
-her
eal
i
zedthedi
gni
tyofhumanl
abour
.He
consi
deredeachlabourhasitsowndi
gni
ty.

 Doctri
neoftrust
eeshi
p--hedev
elopeddoct
ri
neoft
rusteeshi
ptoprovi
dean
alt
ernat
ivetoMarxi
ansoci
ali
sm.Iti
sbasedonnonvi
olence.Sal
i
entfeat
uresof
thi
sformulaare

a)Trust
eeshipprov
idesameansoftr
ansf
ormi
ngt
hepr
esentcapi
tal
i
stor
der
ofsociet
yintoanequal
i
tar
ianone.

b)I
tdoesnotr
ecogni
zeanyr
ightofpr
ivat
eowner
shi
pofpr
oper
ty.

c) Ani
ndi
vi
dual
can’
thol
dhi
sweal
thf
orsel
fi
shsat
isf
act
ion.

d)Thechar
act
erofwi
l
ldet
ermi
nedbysoci
ety
.

e) Hewasagai
nstf
oodcont
rol

f
) Onpopul
ati
on—heopposedmet
hodofpopul
ati
oncont
rol
.

 Cooper
ati
onmov
ement

 Cot
tagei
ndust
ri
es.

C.
NVaki
l
(1895—1979)

Hi
sideasar
e

1.Planni
ng—putf orwardanalternati
veapproachtoIndianpl
anning,whi
chwasopposi tet
o
Mahalanobismodel duri
ng2f iveyearpl
an.Hismodel isr
elat
edtoMar xianconceptof
vari
ablecapit
al.Assumpt i
onsofhi smodelofplanarea)wagesar epaidinadvanceof
producti
on,b)variabl
ecapital
const i
tut
eexclusiv
elyfood,
c)labourcoul
dpr oduce
capit
algoodswi thouttheassi
stanceofot herfactor
sofproducti
on,d)themodel i
s
 developedwi t
hamul tipl
ierfor
mulawhichisbasedinthest ockofwagefoodsinthe
handsofpl anningauthorit
ies,
e)exi
stenceofindust
ri
alreservearmyordi
sguised
unempl oy
ment ,f)t
ransferofreser
vearmyf r
om rur
alsectordoesnotl
eadtodecreasei
n
outputinfarm sect
or.

2.Wagegoodmode–accor di
ngtohimt her ateofgrowthofeconomyi sinfluencedby
sever aleconomi candnoneconomi cf actor s.Amongeconomi cf act
ors, accumulati
on
ofcapi tali
smosti mportant
,whichintur ndependsupont echnicalprogress.Asnon
economi cfactorsareconcerned,i
nstituti
onal changesareimpor t
ant.Demandf or
i
nv estmentdependsuponconsumpt ionofgoods.Demandf orconsumpt iondependsup
onsi zeofmar ket.Butduetolowlevel ofincome, si
zeofmar ketisli
mited.Thel abour
product iv
ityoflabourleadstolowerlev elofincomeandhencesi zeofmar ketandlevel
ofinv estmenti sl
ow

3.Rol
eoftechnol
ogical
progr
ess—technol
ogi
calpr
ogressi
spower
ful
engi
neofgrowthin
out
putasitdidnotcauseunemploymenti
ndevel
opedeconomi
esandal
sothati
tlead
toi
ncr
easeinstandar
dofliv
ingofpeopl
e.

4.Consumpt
ionmul
ti
pli
er-
--
--
--i
tsassumpt
ionsar
e

a)MPCofwagegoodspr
oduceri
szer
o

b)Moneyandr
eal
wager
ater
emai
nconst
ant

c) Pr
icel
evel
remai
nconst
ant

d)Lar
gescal
edi
sgui
sedunempl
oymentexi
sti
nwagegoodsf
arm sect
or

e) Rat
eofi
nter
estr
emai
nconst
antbecausesuppl
yofcr
edi
tisper
fect
lyel
ast
ic

f
) Si
zeofpopul
ati
onr
emai
nsconst
ant
.

5.Pov er
ty-- pover
tyinacountrymaybeduet odefect
seitheri
ntheproducti
onof
weal t
horinitsdi
str
ibuti
on.Twor easonsofpover
tyareint
ernal
andexternal
.–int
ernal
reasonsar e–seasonalwork,f
ewact i
veworker
sinfamily,
beggars,
cli
mat eand
education.

Ext
ernal
fact
orsar
eint
ernat
ional
trade,
indust
ri
albackwar
dness.

6.Def
ici
tfi
nancingandpubl
i
cexpendi
tur
e--
-st
rongl
yobj
ect
eddef
ici
tfi
nanci
ng.Appoi
nted
apubl
icexpendit
urecommissi
oni
n1921.

7.I
nfl
ati
on–hewasf
ir
stI
ndi
aneconomi
stgav
emuchat
tent
iont
opr
icer
ise.

D.
RGadgi
l

Hi
simpor
tantwor
ksar
eindust
ri
alev
olut
ionofI
ndi
ainr
ecentt
imes,
regul
ati
onofwagesand
ot
herpr
obl
emsofi
ndust
ri
all
abouri
nIndi
a

 Industr
ialev
olut
ionofIndi
a–hef oundt
hatther
ewasacloseconnect
ionbetween
agricul
tur
eandindustr
ialpr
osper
ity
.Hediv
idedint
odi
ff
erentphasesofindust
ri
al
evoluti
on.

1880-
1895–f
ir
stf
act
oryl
awi
n1881.
,commer
cial
cropscul
ti
vat
ionst
art
ed(cot
tonand
j
ute.
.)

1895-
1914–sev
eref
ami
nedur
ing1896-
97.

1914-
1928–cooper
ati
vecr
edi
tforr
ural
area,
incr
easei
nint
ernat
ional
trade.

1929-1939–wor
ldwi
det
radedepr
essi
onsopr
ovi
nci
alaut
onomyst
art
ed

Af
ter1935–pr
osper
it
yst
art
ed.

 Industri
allabour–hest udi
edpr oblemsoflabouri
nIndiaandlowlev
el ofpaymentmade
toindustrialworker
sanddi spari
tybetweenwagepaidforsimil
arwork.Hesuggested
soluti
onf orthi
sandwel far
epr ogrammessuchasi ndustr
ial
housi
ng,empl oy
ment
i
nsur anceandheal t
hinsuranceet c.

 Warandeconomicpol
i
cy–hedescr
ibedaboutpr
ice,
moneysuppl
y,i
nfl
ati
onand
economi
cpoli
cy.

V.
K.R.
V.Rao

Hewasagr eatscholartodesigneconomicpoli
ciesandplan.Hi
smajorworksare
Nati
onal
IncomeofBr i
ti
shIndia,I
nvestmentI
ncomeMul tipl
ieri
nanunderdevel
oped
economy,EssaysonEconomi cdevel
opment,
EducationandHumanr esour
ce
Devel
opment,Inf
lat
ionandI ndia’
sEconomicCri
sis.

Hewasdeepl
yint
erestedi
n3largetheor
iessuchas1)nationalincome,2)food,
nut
ri
ti
onanddi
str
ibuti
onoffood,3)empl
oy mentandoccupationaldi
str
ibut
ion.

Nat
ional
income(
NI)met
hodol
ogy

Asanappli
edeconomi st
,hisworkisremember
edforstudyofnati
onalincome.He
est
imatednati
onali
ncomeonsci enti
fi
cappr
oach.Befor
ethateconomistswere
gavei
mportancet
opov ert
yestimati
on.Hest
udi
edexchangev al
uederiv
edoutputin
devel
opedcountr
iesgetsunrecor
dedandunderesti
matedindevel
opingcountri
es,
est
imatedNIoncostoff i
nalgoods.

Hefocusedonli
nksbetweenincomenadconsumpt
ion,behav
iourofcapi
tal
outputrat
io,
nat
ionalandr
egi
onalpovert
ychanges,
rur
alur
bandi
ffer
ence,incomeanddiffer
ences
i
nrelat
iveout
put
.
 Hispaperon‘full
employmentandeconomicdev
elopment’
wasoneoftheear
li
est
cont
ribut
ioni
nt hefi
eldofdevel
opmentor
ient
edtowardsempl
oyment
.

I
nter
nat
ional
Dev
elopmentAut
hor
it
y-hewast
hepr
oposerofI
DA.

I
nter
nat
ional
foodAi
d–expl
ainedt
hisconceptf
orsol
vi
ngwor
ldpov
ert
y.

Suppor
terofsoci
ali
sm

I
ndust
ri
ali
sat
ion-heexpl
ainedr
easonsf
orl
owper
capi
tai
ncomei
nIndi
aas

 Uneconomi
chol
dingwi
thsubdi
vi
sion

 Lowl
evel
ofwat
erav
ail
abi
l
ityf
orcr
ops

 Popul
ati
onpr
essur
eonagr
icul
tur
e

 Absenceofcapi
tal

 Absenceofaut
onomyi
ncur
rencypol
i
cy,
gener
almonet
arymat
ter
s.

Hear guedforsupplementar
yv ol
unt
arysav
ing.I
ndust
ri
ali
sat
ioncancont
rol
excess
dependenceonagricult
ureoflabour
.

Suggest
edv
il
lage—cl
ust
erf
orr
ural
dev
elopment

I
nvest
ment,IncomeandMul
ti
pli
er—st
udi
edi
nter
act
ionbet
weenI
,YandKi
nan
under
devel
opedeconomy.

Dr
.B.
R.Ambedkar(1891-1956)

Hewasar chi
tectofIndi
anconst
it
uti
on.
,cust
odianofsocial
just
iceandchampi onofsoci
ali
sm
andsatat
eplanning.Hismaj
orworksar
eAnci entIndi
anCommer ce,andNational
divi
dendof
Indi
a.Themaineconomi ci
deasofAmbedkarar estudi
edunder4sections.

1.Financi
aleconomics--hi
smai nconceptwasf inanci
al economics.Accordi
ng
tohimtheinadequacyofimperi
alfinancewasmai nl
yduet oanunsound
fi
scalpoli
cy.
Thegovernmentdependedheav il
yonaf ewt axessuchasl and
tax,
customsandsalttaxwhichaffectedagr
icul
t ur
e, t
rade, i
ndustr
y, and
poorrespecti
vel
y.Hedivi
dedevolutionofpr
ov i
ncialfi
nancei nt
othreestages
as

 Budgetbyassi
gnment
s

 Budgetbyassi
gnedr
evenues

 Budgetbyshar
edr
evenues
Budgetbyassi
gnment
s(1871-
72t
o1876-
77)

Underthesystem ofbudgetbyassi
gnment s,assi
gnmentsoffundsfr
om imperi
altr
easur
ywas
adoptedasamet hodofsupplytobalancetheprovi
nci
albudget.Heconsi
der
edpr ovi
nci
al
budgetaseconomi calandbenef
ici
al.Undert
hissyst
em ,r
evenueincr
eased,r
eceipt
sfrom
serv
icesexpandedandev asi
ondecreased.

Budgetbyassi
gnedr
evenues(
1877-
78t
o1881-
82)

Undert
hesyst
em inpl
aceoffi
xedassi
gnmentt
heprovi
nceswer
egi
vencer
tai
nsour
cesby
rev
enue.They
iel
ddependedupongoodmanagement.

Budgetbyshar
edr
evenues(
1882-
83t
o1920-
21)

Inear
li
ert
imesbudgetwasgroupedunder2cat
egor
iesasi
mper
ial
andpr
ovi
nci
albutnew
schemechangedi
ntojoi
ntsy
stem.

Rupeev
alue-
--Heexpr
essedt
hedecl
i
nei
next
ernal
val
ueofr
upeef
rom 21.
63i
n1875t
o16.
73
i
n1892.

2.Agr
icul
tur
eeconomi
cs

Hiscont
ri
buti
ontoagr
icul
tur
eeconomicsli
esi
nhissuggest
ionthati
nputoutputr
elat
ionshi
p
shoul
dbetrue.Hebel
i
evedindust
ri
ali
sat
ionwoul
dhavebenefi
cialef
fectuponagri
cultur
al
devel
opment.

3.Economi
csofcast
e

Hebelievedcastesy
stem basedonbirt
hwouldnoti
mprovesociet
y.SCorHar
ij
answereworst
suf
ferersofcastesyst
em.Soi nourconst
it
uti
onhest
rongl
yrecommendedforequal
i
tytoal
l
ci
ti
zensofI ndi
a.

4.Economi
csofsoci
ali
sm

Hewasasocial
ist
.Hecombinedphi
l
osophyofMarxandBuddha.Headvocat
edest
abl
i
shment
ofst
atesoci
ali
sm wi
thpar
li
amentar
ydemocracywi
thoutdi
ctat
orshi
p.