Professional Documents
Culture Documents
in
CHAP TER
LEARNING OBJECTIVES
the land and they were responsible to pay the (a) Industrial growth during the 19th
land revenue to the government. The share century
of the government in total rent collected was During the 19th century, British investors
fixed at 10/11th, the balance going to the started to pioneer industrial enterprises in
Zamindars as remuneration. India as they had experiences of running
industries at home. British enterprises also
8.3.2 Mahalwari System or received maximum state support. Although
Communal System of the Britishers initiated industrialisation
Farming process in the 19th century, they were
primarily interested in making profit and
After introduction of this system, it was not in accelerating the economic growth
later extended to Madhya Pradesh and in India. At the end of 19th century,
Punjab. The ownership of the land was there were about 36 jute mills, 194 cotton
maintained by the collective body usually mills and a good number of plantation
the villagers which served as a unit of industries. The production of coal had
management. They distributed land risen to over 6 million tonnes per annum.
among the peasants and collected revenue
from them and pay it to the state. (b) Industrial progress during the 20th
century
8.3.3 Ryotwari System or During the first part of 20th century,
the Owner-Cultivator Swadeshi movement stimulated the
System industrialisation process in India. The
This system was initially introduced existing industries and new industries
in Tamil Nadu and later extended to had maintained a slow but steady growth
Maharashtra,Gujarat, Assam, Coorg, East till the outbreak of the First World War
Punjab and Madhya Pradesh. Under this in 1914.By this time more than 70 cotton
system the ownership rights of use and mills and 30 jute mills were set up. Coal
control of land were held by the tiller production was doubled. The foundation
himself. There was the direct relationship of iron and steel industry was laid. Railway
between owners. This system was the least network was extended.
oppressive system before Independence. During the period 1924-39, various
major industries like iron and steel, cotton
textiles, jute, matches, sugar, paper and
8.4 pulp industry etc. were brought under
Process of Industrial protection scheme. This led to rapid
Transition and Colonial expansion of protected industries in India.
Capitalism These protected industries captured the
entire Indian market and eliminated
This process of industrial transition in foreign competition totally.
India during the British period can be Thus in the early part, British rule
broadly classified into two as given below: tried to transform the Indian economy as
Indian Economy 169
www.tntextbooks.in
ranks number one in the raw jute z The paper industry in India is
and jute goods production and ranked among the 15 top global
number two in export of jute goods paper industries.
in the world.
7. Silk industry
3. Cotton and textile industry z India is the second-largest(first
being China) country in the world
z Oldest industry of India, and
in producing natural silk. At
employs largest number of workers.
present, India produces about 16%
z It is the largest organised and broad- silk of the world.
based industry which accounts for
z India enjoys the distinction of being
4% of GDP, 20% of manufacturing
the only country producing all the
value-added and one third of total
five known commercial varieties of
export earnings.
silk viz Mulberry, Tropical Tussar,
z The first Indian modernised cotton Oak Tussar, Eri and Muga.
cloth mill was established in 1818
8. Petroleum and natural gas
at Fort Gloaster near Calcutta. But
this mill was not successful. The z First successful Oilwell was dug in
second mill named “Mumbai’s India in 1889 at Digboi, Assam.
Spinning and Weaving Co.” was z At present a number of regions with
established in 1854 at Bombay by oil reserves have been identified and
KGN Daber. oil is being extracted in these regions
b. Small Service Industries: The Bank etc. However, the government keeps
investment in equipment is more than reducing the stake in PSU banks as and
₹.10 lakhs but does not exceed ₹.2 when they sell shares. So, to that extent they
crores. can also become minority shareholders in
c. Medium Service Enterprises: The these banks. This is in accordance with the
investment in equipment is more than privatization policy.
₹.2 crores but does not exceed ₹.5
crores. Private Sector Banks
In these banks, most of the equity is
owned by private bodies, corporations,
8.11 institutions or individuals rather
Public Sector and than government. These banks are
Private sector managed and controlled by private
banks promoters.
Of the total banking industry in India,
Public Sector Banks public sector banks constitute 72.9% share
Public sector bank is a bank in which the while the rest is covered by private players.
government holds a major portion of the In terms of the number of banks, there are
shares. Say for example, SBI is public sector 27 public sector banks and 22 private sector
bank, the government holding in this banks.As part of its differentiated banking
bank is 58.60%. Similarly PNB is a public regime, RBI, the apex banking body,
sector bank, the government holds a stake has given license to Payments Bank and
of 58.87%. Usually, in public sector banks, Small Finance Banks (SFBs). This is an
government holdings are more than 50 attempt to boost the government’s Financial
percent. Public sector banks are classified Inclusion drive. (But, there may be other
into two categories: 1. Nationalised Banks problems).
2. State Bank and its Associates. As a result, Airtel Payments Bank
In case of nationalized banks, the and Paytm Payments Bank Limited have
government controls and regulates the come up. How far these banks would help
functioning of the banking entity.Some the poor people is not known.
examples are SBI, PNB, BOB, OBC,Allahabad
Nationalization
4. Nationalisation of banks was required Its main focus was on the agricultural
to reduce the regional imbalances development of the country.
where the banking facilities were not This plan was successful and achieved
available. the GDP growth rate of 3.6% (more
5. Before Independence, the numbers than its target)
of banks were certainly inadequate.
After nationalization, new bank Second Five Year Plan
branches were opened in both rural (1956-1961)
and urban areas. It was based on the P.C. Mahalanobis
6. Banks created credit facilities mainly Model.
to the agriculture sector and its allied Its main focus was on the industrial
activities after nationalization. development of the country.
This plan was successful and achieved
After New Economic Policy 1991, the
the growth rate of 4.1%
Indian banking industry has been
facingthe new horizons of competitions,
Third Five Year Plan
efficiency and productivity. With all these
(1961-1966)
developments people in villages and slums
depend largely on local money lenders for This plan was called ‘GadgilYojana’ also.
their credit need. This is unfortunate. The main target of this plan was to
make the economy independent and
to reach self prpalled position ortake
8.13 off.
Performance of India’s Due to Indo -China war, this plan could
Five Year Plans not achieve its growth target of 5.6%
This plan failed and could achieve For the first time, due to the pressure
growth rate of 3.3% only, against the from private sector the private sector
target of 5.7%. got the priority over public sector.
Its growth target was 5.0% but it
Fifth Five Year Plan achieved 6.0%.
(1974-1979)
Annual Plans
In this plan top priority was given to
agriculture, next cameindustry and Eighth five year Plan could not take place
mines. due to volatile political situation at the
Overall this plan was successful, centre. So two annual programmes are
which achieved the growth rate of formed in 1990-91& 1991-92.
4.8% against the target of 4.4%.
Eighth Five Year Plan
The draft of this plan was prepared
(1992-1997)
and launched by D.P. Dhar. This plan
was terminated in 1978. In this plan the top priority was
given to development of the human
Rolling Plan resources i.e. employment, education
and public health.
This plan was started with an annual plan
During this plan, New Economic
for 1978-79 and as a continuation of the
Policy of India was introduced.
terminated fifth year plan.
This plan was successful and got
annual growth rate of 6.8% against the
Sixth Five Year Plan target of 5.6%.
(1980-1985)
The basic objective of this plan was Ninth Five Year Plan
poverty eradication and technological (1997-2002)
self reliance. Garibi-Hatao was the The main focus of this plan was
motto. “growth with justice and equity”.
It was based on investment yojana. This plan failed to achieve the growth
Its growth target was 5.2% but it target of 7% and Indian economy grew
achieved 5.7%. only at the rate of 5.6%.
Objectives of this plan included the This plan aimed to double the per capita
establishment of the self sufficient income of India in the next 10 years.
economy and opportunities for It aimed to reduce the poverty ratio to
productive employment. 15% by 2012.
MODEL QUESTIONS
d. Noorjakhan a. 1956
b. 1991
3. The power for governance of India
c. 1948
was transferred from the East India
d. 2000
Company (EIC) to the British crown in
7. The objective of the Industrial Policy
a. 1758 1956 was ……..
b. 1858 a. Develop heavy industries
CHAP TER
9 Development
Experiences in India
LEARNING OBJECTIVE
9.1
Introduction
twin problems of rampant poverty and
At the time of Independence in 1947, widespread unemployment, both resulting
India was a typically backward economy. in low standard of living.
Owing to poor technological and The year 1991 is an important landmark in
scientific capabilities, industrialization the economic history of post-independent
was limited and lop-sided. Agricultural India. The country went through a severe
sector exhibited features of feudal and economic crisis in the form of serious Balance
semi-feudal institutions, resulting into of Payments problem. Indian economy
low productivity. Means of transport and responded to the crisis by introducing a set
communications were underdeveloped. of policies known as Structural Reforms.
Educational and health facilities were These policies were aimed at correcting the
grossly inadequate and social security weaknesses and rigidities in the various
measures were virtually non-existent. sectors of the economy such as Industry,
In brief, the country suffered from the Trade, Fiscal and Agriculture.
9.2
Meaning of Liberalization,
Privatization and
Globalization (LPG)
9.3
Arguments in favour of
The triple pillars of New Economic Policy LPG
are Liberalization, Privatization and
Globalization (LPG) a. Liberalization was necessitated
Liberalization: Liberalization refers to because various licensing policies were
removal of relaxation of governmental said to be deterring the growth of the
restrictions in all stages in industry. economy.
Delicensing, decontrol, deregulation, b. Privatization was necessitated because
subsidies (incentives) and greater role for of the belief that the private sector was
financial institutions are the various facets not given enough opportunities to
of liberalization. earn more money.
Privatization: Privatization means
c. Globalization was necessitated
transfer of ownership and management of
because today a developed country
enterprises from public sector to private
can grow without the help of the under
sector. Denationalization, disinvestment
developed countries. Natural and
and opening exclusive public sector
human resources of the developing
enterprises to private sector are the
countries are exploited by the
gateways to privatization.
developed countries and the developing
Globalization: Globalization refers to economies are used as market for
the integration of the domestic (Indian) the finished goods of the developed
economy with the rest of the world. Import countries. The surplus capital of the
developed countries are invested in
Development Experiences in India 190
www.tntextbooks.in
Important Initiatives by
the Government towards
Industrial Policy
The policy has brought changes in the
following aspects of industrial regulation:
1. Industrial delicensing
According to International Monetary 2. Dereservation of the industrial sector
Fund, World Economic Outlook 3. Public sector policy (dereservation
(Ocoter-2016), GDP (nominal) of and reform of PSEs)
India in 2016 at current prices was
4. Abolition of MRTP Act
$2,251 billion. India contributed 2.99%
5. Foreign investment policy and
of total world’s GDP in exchange rate
basis. India shared 17.5 percent of the foreign technology policy.
total world population and 2.4 percent
of the world surface area. India was Before 1991 After 1991
now 7th largest economy of the world Industrial
in 2016. Deregulation
India was at 3rd position after China Industrial
L
all comm icensingfor
Licensing restricted to
odities alcohol, drugs etc.,
and Japan among Asian countries. Private secto
r not allowed Only defense,energy,railway for public
India shared 8.50% of total Asia’s GDP in many indu
stries sector-large scale privatization,
disinvestment
Controls
(nominal) in 2016. and distri
on price fix
bution
ation Market allowed to
determine prices
9.6
Industrial Sector Reforms
productivity and there was a shift towards about 25% to 30% of production. Besides,
cash crop cultivation. Moreover, agricultural quality of a sizable quantity of produce
indebtedness pushed several farming also deteriorates by the time it reaches the
households into poverty and some of them consumer. Most of the problems relating to
resorted to extreme measures like suicides. the marketing of fruits and vegetables can
be traced to their perishability. Perishability
9.7.1 Crop Insurance is responsible for high marketing costs,
market gluts, price fluctuations and other
Agriculture in India is highly prone
similar problems. In order to overcome this
to risks like droughts and floods. It is
constraint, the Government of India and
necessary to protect the farmers from
the Ministry of Agriculture promulgated
natural calamities and ensure their
an order known as “Cold Storage Order,
credit eligibility for the next season. For
1964” under Section 3 of the Essential
this purpose, the Government of India
Commodities Act, 1955. However, the cold
introduced many agricultural schemes
storage facility is still very poor and highly
throughout the country.
inadequate.