Dear Delegates,

Greetings!

MUNing has been one of the foremost platforms for students and youngsters of
this region from all walks of life to come together and talk about things which
actually do matter. The concept of MUN is new to no one at this point of time.
If you have an internet connection or maintain any form of contact with the
outside world, it is very likely that you must have heard about the concept of it
at least once.
The present document is neither a tool for research nor a hub of getting
information with regard to the agenda. It is just a way for you to familiarise
yourself with the agenda at hand and understand the role you are expected to
play in the committee. Furthermore, this document is more of an informal letter
from the Executive Board to you. At any point of time during the committee
sessions, the Background Guide cannot be put forward as a source of the facts
you intend to present. However, this document should provide you with the
starting push and guide you further along the path of your personal research
pertaining to the agenda.
Keep in mind that your research shouldn’t be limited to the freeze date of this
committee. Since this is a committee with an erratic and ever-changing time
frame, we have to understand the past, and also, look into the consequences of
the decisions that were taken at that point of time. The very essence of this
committee lies in the fact that we will have the opportunity to revolutionise how
this country functions economically on various frontiers.

Wishing you all the luck,

Executive Board.
UNDERDEVELOPMENT
MEANING:
The entire world economy has been broadly classified into two different
groups: (a) underdeveloped or developing economies and (b) developed
economies.
The Planning Commission of India offered a definition of underdeveloped
country as one “which Is characterized by the co-existence, in greater or less
degree, of unutilized or under-utilized manpower on the one hand and of the
unexploited natural resources on the other”.
In other words, an underdeveloped country is one which has good potential
prospects for using more capital or more labor or more available natural
resources for all of these, to support its present population on a higher level of
living or if its per capita income is already high, to support a large population
on a not lower level of living.

CHARACTERISTICS:
 Low level of income
 Shortage of technology and skills
 Mass poverty
 Lack of infrastructural development
 Lack of industrialization
 Lack of capital formation
 Heavy population pressure
 Agricultural backwardness
 Unemployment problem
 Unexploited natural resources
 Lack of proper market
 Mass illiteracy
 Poor socio-economic conditions
 Inefficient administration set-up
 Low level of living
India is considered as an underdeveloped economy. In India, there exists
chronic poverty as well as unutilized natural resources. Moreover, most of the
features of an underdeveloped economy are present in our economy.
ECONOMIC POLICIES DURING BRITISH RULE
1. COMMERCIALISATION OF AGRICULTURE:

The large increase in industrial output in Britain due to the Industrial

Revolution required an increased supply of raw materials such as jute,
cotton, sugar cane, groundnut, etc. To meet this requirement, efforts
were made by the British government to commercialize Indian
agriculture. This was done by inducing farmers to substitute food crops
with commercial crops. The British developed railways, roads, shipping,
etc. in such a way that raw materials could be procured at cheaper rates
from the remote corners of the country and exported to Britain. This
contributed to the process of commercialization of Indian agriculture.
However, there were two disquieting effects of commercialization:

a) Commercialization was one of the key factors contributing to

frequent famines. The area under commercial crops increased at
the cost of food crops, resulting in more production of commercial
crops at the cost of food crops.
b) In many areas, commercialization led to the development of rich
peasantry. However, the rich peasants preferred to use their
savings to buy lands so as to become landlords or moneylenders.

Thus, commercialization of Indian agriculture had very adverse

consequences on the Indian economy. The government made no efforts
to develop agriculture. As a consequence, agricultural productivity
remained very low. Thus, on the eve of independence, the agriculture
sector of the Indian economy was absolutely backward, stagnant and
non-vibrant.

2. INDUSTRIAL AND COMMERCIAL POLICIES:

The objectives of the industrial and commercial policies of the British

rulers was twofold. First, they wanted to develop India as a market for
British manufactured goods. Second, they wanted to convert India into
an agricultural country with the objective of making it a source for raw
materials and foodstuffs.to achieve these objectives, the British
government in India formulated policies that led to the destruction of
Indian handicrafts and export of raw materials. Important examples of
these policies are as follows:
 a) The British textile goods imported by India were kept either duty-
free or had to pay very little import duties.
b) To protect the British textile industry and to crush the Indian
textile industry, a 5% excise duty was imposed on Indian textile
industry.
c) A heavy import duty was imposed on goods imported by Britain
from India. Indian cotton textiles were available at about half the
price of British goods.

The industrial and commercial policies pursued during the British rule in
India had the following adverse effects on the Indian economy:

a) These policies resulted in the destruction of Indian handicrafts,

mainly textile handicrafts, as the industries producing these goods
were made to function under unfavorable conditions. Such
industries could not compete with the cheaper machine-made
British products. Decline of textile handicrafts also created a
situation of back-to-land movement. Since alternate sources of
employment were not available, the unemployed craftsman
shifted back to agriculture.
b) India became a classic example of a colonial country, which not
only provided markets for the manufactured goods on its
imperialist ruler, but also acted as an important source of raw
materials for the rulers. India’s own manufacturing industries
were more or less destroyed and India gradually became the
hinterland of Great Britain.

INDUSTRIAL POLICY

INDUSTRIAL POLICY OF INDIA

Industrial policy is a comprehensive package of policy measures which

covers various issues connected with different industrial enterprises of
the country. The policy is essential for devising various procedures,
principles, rules and regulations for controlling such industrial
enterprises of the country.
The policy incorporates fiscal policy, monetary policy, the tariff policy,
labor policy and the government’s attitude towards the public and
private sectors of the country. Before independence, there was no
proper policy for determining industrial development of the country. It
was only after independence a beginning had been made in this regard.

INDUSTRIAL POLICY,1948

On April 6,1948, the Government of India adopted the industrial policy

resolutions for accelerating the industrial development of the country.
The policy resolution contemplated a mixed economy which included
both the public sector and the private sector in the industrial front. This
policy divided the various industries into four broad categories:

a) In the first case of exclusive state monopoly, the manufacture of

arms and ammunition, the production and control of atomic
energy and ownership and management of railway transport were
included.
b) The second category included coal, iron and steel, air craft
manufacturers, and mineral oil industries. In this category all the
new factories would be owned and managed by the public sector.
However, the existing factories of such industries would continue
to be run by the private industrial establishments. Thus, the state
would have the exclusive right in setting up of new undertakings
included in this category.
c) The third category of industries included 20 important large scale
and basic industries which were kept reserved for the time being
to the private sector although the state reserved the right to plan,
regulate and control as and when necessary. These industries
included industries such as salt, automobiles, tractors, prime
movers, heavy chemical, electric engineering, machine tools,
fertilizers, electro-chemical industries, rubber manufacturers,
non-metals, paper, industries related to defense, etc.
d) The fourth category comprised of the ‘remainder of the industrial
field’ which was kept open to private sector including both
individual as well as co-operative.

In this industrial policy, special emphasis was laid on the development of

cottage and small-scale industries. Besides this, proper steps were taken
to design a suitable tariff policy, taxation policy and also for maintaining
sound industrial relations between management and labor.
 Regarding foreign capital, the industrial policy recognized the need for
security and participation of foreign capital and enterprise especially in
respect to industrial technique and knowledge for enhancing the pace of
industrialization in the country. The policy laid down the foundation of a
mixed economy with the participation of both public and private sector
for accelerating the pace of industrial development in the country.

THE STATE OF AGRICULTURAL ECONOMY

The largest portion of the natural resources of India, consists of land and by far
the larger portion of its inhabitants are engaged in the exploitation of land. In
any scheme of land economic development of the country, therefore,
agricultural reorganisation hold a position of basic importance. Recently on
account of the growing need for Food and raw materials this importance has
been brought home to all sections of the community. While the several parts
of the nation's economy are mutually inter-dependent and ley must all receive
their proper share of attention from the economic planner, the success f the
whole Plan will vitally depend on the results achieved in making the most
advantageous se of the land and labour resources engaged in agriculture. In
this sense the importance of agriculture is both basic and vital.

Land Utilisation And Crop Pattern

2. The total geographical area of the country is 8n million acres, but land use
statistics are available for only about 615 million acres which are as follows :—

Million acres Percentage to total

1 Forests* 93 15
2. Net area sown 266 43
3. Current fallows 58 9
4. Cultivable waste 98 16
5. Not available for 96 16
cultivation
Total 615 100
 PLANNING COMMISSION

FUNCTIONS:

a. To Make an assessment of the material, capital and human resources of

the country, including technical personnel, and investigate the
possibilities of augmenting such of these resources as are found to be
deficient in relation to the nation’s requirement;
b. To Formulate a Plan for the most effective and balanced utilisation of
country's resources;
c. On a determination of priorities, define the stages in which the Plan
should be carried out and propose the allocation of resources for the
due completion of each stage;
d. To indicate the factors which are tending to retard economic
development, and determine the conditions which, in view of the
current social and political situation, should be established for the
successful execution of the Plan;
e. To determine the nature of the machinery which will be necessary for
securing the successful implementation of each stage of the Plan in all its
aspects;
f. To appraise from time to time the progress achieved in the execution of
each stage of the Plan and recommend the adjustments of policy and
measures that such appraisal may show to be necessary; and
g. To Make such interim or ancillary recommendations as appear to it to be
appropriate either for facilitating the discharge of the duties assigned to
it, or on a consideration of prevailing economic conditions, current
policies, measures and development programmes or on an examination
of such specific problems as may be referred to it for advice by Central
or State Governments.
BASIC PROBLEMS INVOLVED IN PLANNING:

1) Influx of refugees: the partition of India created a major refugee

crisis. People who crossed over the newly formed boundaries
between India and Pakistan—by choice or forcibly—didn’t lose
their nationalities, they were still forced to live the lives of a
refugee. Refugee camps across north India served as homes for
those who had borne the brunt of Partition. The national capital
of Delhi in particular saw a huge influx of refugees. The numbers
were such that an entire city—Faridabad—had to be built to
rehabilitate refugees who were living in appalling conditions in
various camps. The scale of the problem was an unprecedented
challenge for the young government.

2) A severe shortage of food:The partition of India in 1947

aggravated the food crisis as after partition the country received
about 82 per cent of the population but had to manage with
nearly 45 per cent of the total cultivated area under cereals and
with 69 per cent of the irrigated area. The country had to forego
the surplus area of West Punjab and Sind.

3) Inflation: After the second world war there had been a strong
inflationary pressure on the economy, because of the high
demand and low supply because of the rapid growing of Indian
population, rising money incomes, expansion in money supply and
liquidity in the country, increase in the volume of black money
and continuous rise in demand for goods and services due to the
rapid economic development.

4) The problem of unemployment: In a country with vast reserves of

unutilised manpower, the problem of employment has two
aspects in relation to development. There is, in the first place, the
need to make the maximum use of idle labour for the purpose of
development. Here it is not so much a question of providing
employment at existing or higher real wages but rather one of
effectively mobilising all the available resources at minimum social
cost. The second aspect of the problem is that of increasing the
productivity of labour so that larger employment can be provided
at rising levels of real income. In the initial stages of development,
newly mobilised labour will not be able to contribute significantly
 to total output and, therefore, larger money incomes will tend to
exert pressure on available supplies and cause sectional rises in
prices. This process is apt to cause a redistribution of available
supplies leading probably to a rise in the real incomes of those
newly employed and a fall in the real incomes of those who were
already employed. it is necessary, therefore, to see that the
newly mobilised labour is able to raise total output.

SUGGESTED MODERATED CAUCUS TOPICS:

 STATE OF INDIAN ECONOMY

 PRIORITIES IN PLANNING
 QUESTIONS TO BE ADRESSED WHILE PLANNING
 RESOURCES REQUIRED TO MEET THE REQUIREMENTS OF DEVELOPMENT
 SOCIO-ECONOMIC POLICIES
 RELATIONS BETWEEN PUBLIC AND PRIVATE SECTOR
 ALLOCATION OF RESOURCES
 SOCIAL WELFARE
 CONSERVATION OF NATURAL RESOURCES
 PROBLMES IN AGRICULTURAL DEVELOPMENT
 TAXATION
 DEVELOPMENT OF BACKWARD CLASSES
 LABOR POLICY
 EMPLOYMENT AND MANPOWER
 BALANCED REGIONAL DEVELOPMENT

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eve-of-independence/7445