Hrishi Raj Thakur

Roll No. 3012

ROSTOW’S ‘THEORY OF STAGES OF ECONOMIC

GROWTH’ IN THE INDIAN CONTEXT

Rostow’s ‘Theory Of Stages Of Economic Growth’ is one of the major historical

models of economic growth. It was first published by W.W. Rostow in 1960.
The model postulates that economic growth occurs in five basic stages of
varying lengths:
1) Traditional Society
2) Pre-conditions to takeoff
3) Take-off
4) Drive to Maturity
5) Age of High Mass Consumption

Here, an attempt has been made to analyze India’s stages of economic growth
through the perspective of Rostow’s model of economic growth.

Stage 1: Traditional Society :

Indian Timeline: Till late 19th century
This stage is characterized by a subsistent, agriculture based economy with
intensive labour and low levels of trading, and a stagnant and static society
with a stratified social structure.
Based on the characteristics of Traditional society as given by Rostow, India
was in the first stage of economic growth till the late 19th century.
Economic Characteristics: During this period in India, subsistence agriculture
was the main driving force of the economy. Agriculture was labour intensive
and only primitive methods of agriculture were used. There was no access to
modern technology. The per capita income of the people was very less. No big
manufacturing industries were present. Only small scale industries like textile,
pottery etc. were present which also suffered during the British rule.
Investments were less than 5%. Trade was almost non-existent. Only export of
raw materials was done by the British .
Social and Political Characteristics: The society was very backwards. Level of
literacy was very low. Stratified structure of society was seen. Society was
divided on the basis of caste, religion etc. Many evil social customs were
prevalent during this period
There was very limited bureaucracy and the centre of political power was
localistic, region bound and based on land ownership.

Stage 2: Pre-conditions to take off

Indian Timeline: Late 19th century- Early 1960s
Based on Rostow’s model, India was in the second stage of economic growth
from the late 19th century till the early 1960s.
Major Economic driving factors:
1) Since the late 19th century the British, albeit for their self-vested
interests, started developing the infrastructure in the form of railways,
ports, roads, schools etc. They set up industries like, Cotton Mills, Jute
mills and plantations in different parts of the country.
2) They also initiated trade by exporting the raw materials from India and
importing the finished goods from Britain.
3) Since the early 20th century, a new entrepreneur class of Indians also
emerged like Jamsetji Tata, who established certain manufacturing
industries in the country as well as set up educational institutions.
4) After attaining Independence, the Five Year Plans helped in improving
the overall infrastructure of the country and financial institutions were
also set up to mobilise savings among the people.
Thus, during this period the country gradually started employing newer and
improved techniques of production, infrastructure development, trade and
commerce was initiated upto some extent, financial institutions were set up
which led to some amount of capital formation.
Social and Political Driving Forces:
1) During this period the literacy level of the people improved as
educational institutions were set up by the British, elite Indian class and
the Indian Government after Independence.
2) This period saw the birth of a new Industrial/Entrepreneur class of
Indians.
3) Many of the evil customs practiced by the people were abolished during
this period. Stratified structure of society gradually started disappearing.
4) The society developed a thirst of knowledge during this period which
was guided by the nations struggle towards Independence.
5) A sense of nationalism and unity among the people was developed in
their quest for freedom.
6) One of the most important political changes took place during this
period as India gained Independence in 1947. Thus the centre of political
power was centralized and in the hands of the Indian Government. A
democratic political system was adopted in the country which allowed
the citizens to vote for their representatives.

Stage 3: Take-off
Indian Timeline: Late 1960s to 2000s
Based on Rostow’s model, India was in the third stage of economic growth
from the late late 1960s till the 2000s.
Major Economic driving factors:
1) The Green Revolution started in 1960s helped in improving the
productivity of agriculture. Newer and advanced technologies were used
and agriculture shifted from subsistence to commercial agriculture.
2) This period also saw the establishment of several large scale industries in
the country which led to a gradual shift in the labour force from
agriculture to manufacturing sector.
3) The New Economic Policy introduced in 1991 focused on Liberalisation,
Privatisation and Globalisation ,was instrumental for the country in the
takeoff stage as these policies allowed large foreign investments into the
country. The service sector saw a sharp growth due to this policy
Thus, this period saw a structural change in the economy, rate of foreign
investment increased, new technologies were introduced, shift in the labour
force from primary to tertiary sector was seen and capital formation increased.
Major Social and Political Driving Forces:
Health and education sector further improved during this period. New political
framework was setup due to the policies of globalization, liberalization and
privatization. There was greater urbanization and urban labour force
increased. An increase in entrepreneur class was seen.

Stage 4: Drive to Maturity

Indian Timeline: 2010s to present
It can be said that India has entered the fourth stage of Rostow’s model of
economic growth.
This stage occurs when the economy becomes mature and is capable of
generating self-sustained growth.
Today India has seen growth in all sectors of the economy. Advanced
technologies are being implemented during production process. Management
and organizational structure of the economy has improved and high degree of
professionalism is introduced. The per capita income and rates of saving and
investment has seen an increase from the previous stage. Importance is given
to sustainable development and environmental concerns are also taken into
account.
In terms of social and political changes, the standard of living of the people has
increased. The government policies are made in such a manner so as to
encourage investments and foreign trade.

Stage 5: Age of Mass Consumption

India is yet to reach the age of mass consumption as it has only just begun its
drive to maturity. Hence, it will take some decades before India is able to reach
this stage