Indian Economy in Global Context

Subhalaxmi Mohapatra
United World School of Business
Dated: 17.01.2011
Indian Economy at Independence
• The Colonial Regime
• The India of 1947
• The beginning of Planning
 The Colonial Regime
• Period of near stagnation
• Vicious circle of poverty
–low per capita consumption and income levels
–low level of saving
–low capital formation
–low productivity
–low income
• Changes in the economic policies:
–agricultural and the taxation sectors.
•deviate in the production of cash crops rather than the food crops,
–so as to gain competitive advantage and profitability
–This heavy shift to cash crops in such a short span of time led to numerous of famines
across the nation.
–farmers were also charged heavy taxes which were very close to impossible for the small
farmers to pay.  
–Also, the local handicraft and small scale industries were discouraged by the British to create
dominance in the market and most of the domestic industries and production houses were
shut down, as a result.
Characteristics of the Indian Economy in the
Colonial Regime
– inadequate infrastructure
– illiterate and unskilled work force
– low agricultural production
– stalled industrial development
– poorest economies in the world
 India of 1947
• According to the Cambridge University, during
this phase the India’s share of the world’s total
income fell to as low as 3.8% in 1952 from the
22.6% in the seventeenth century.
• Under developed economy
• Indian economy – rural and agricultural
• Insufficient in food and raw materials for
industry
 Distribution of National Income and
Workforce sector wise (in per cent)
Sector National Income (1948-49) Workforce (1950-51)
Agriculture, Animal 49.1 72.3
Husbandry, Forestry,
Fisheries
Mines, Manufacturing 17.1 10.7
Industries and Small
Enterprises
Trade, Transport and 18.5 7.7
Communications
Other Services, 15.7 9.3
Professions,
Administration, Domestic
Services
Total 100.0 100.0
Characteristics of the Indian Economy
at Independence
• Little industrialization
• Low agricultural output
• A low national income
• Sluggish economic progress
• Considerable unemployment and under
employment
 Planning Era

• Planned economic development – with the

formulation of First Five Year Plan in 1951
• Developed, executed and monitored by the
Planning Commission
• Why Five Year ?
• Shifting Focus
 5 Year Plans in India
Plan Period Focus
1st 1951–1956 the agrarian sector, including investments in dams and irrigation.
2nd 1956–1961 focused on industry, especially heavy industry
3rd 1961–1966 agriculture and improving production of rice
4th 1969–1974 Agriculture and nationalization
5th 1974–1979 Self reliance
6th 1980–1985 liberalization
7th 1985–1990 productivity level of industries by upgrading of technology

8th 1992–1997 Modernisation of industries

9th 1997–2002 speedy industrialization, human development, full-scale
employment, poverty reduction, and self-reliance on domestic
resources.
10th 2002–2007 Growth and human development
11th 2007–2012 Human development
Thank You