(9.

4)
(-12) Plans) Systemwaswhich
the
(80) Yéars
of chapter.
growth)
(36) Yearsectors
Economicintroduced
Five next
of
124 three
6 and model of
'Mixed werematter
Chapter3 on
Economy
focuses thereforms
of subject
model (or
(Mixed
discussiongrowth
economic
the the
growthupon of whichis
ECONOMY
INDIAN Green
Industrial
Good
FOCUSThebased strategy
of
and its of 1950-1990. set Policy)
and model
Technology trade, A
our
Indian Economic
1991.
(1956) Strategy
Substitution the and as
(1950-1990) in
SectorsResolution
Strategy
Growth
period
how
industry
year
1990
To
Do
List) HYV
SmallScale
Industry
discusses
the
yearthe(New
Reforms: Import in
Private therevised
agriculture,
during NEP
Policy Or Looking
of
Land
Reforms
" Development Features
and
Effects
Bad to
Revolution
and of chapter Plans'. called
ourself
Agriculture:
Technical Industrial Strategy
Inward
implemented Comprehensively
Industry:
"Public viz., were
Trade: Salient present Yearrestrict
" " economy, together
" Five
Ihe Was and VWe
Indian Economic Development Indian Economy (1950-1990)
1. AGRICULTURE
(2) Ceiling on Land Holdings With aview to promoting equity (equality) Basic Objeetive of
Land Reforms
in the distribution of land, ceiling were imposed on the holding-size. The government
Recap bot backward and stagnant (non-vibrant): at the tin It implies fixation of the maximum size of cultivable land that annd eforms wth the basie
Agricultural sector wass
both
backward as it exhibited the
following feature individual or a family could own. objective of promoting
ofindependence. It was
equity (equality) in the
output and productivity.
Land ceiling aims at reducing the concentration of land ownership in a ural economy. It swas to
() Low level of inducement to invest
fewer hands.
fthe
as well as low
() Low level of investment primitive technel The surplus land (over and above the ceiling limit) was resumed by the sillers of the soil and by
forcing reliance on
(ui) Small and scattered holdings, production. government and redistributed among small holders or landless labourers. eliminating the class of
intermediaries (zamindarn)
and consequently high cost of
(3) Consolidation of Holdings: With a view to reducing fragmentation, 10 as to stop expioitation
(iv) Subsisten ce outlook of the farmers, taking agriculture largely as a me consolidation of holdings was accorded a high priority.
of the actual cultivators of
the sol.
source of earning profit.
of subsistence rather than a Consolidation is a practice to allot land to the farmer at one place for his
following features:
Further, agriculture was stagnant, as it exhibited the zamind
scattered holdings here and there. It saves the cost of cultivation.
system (like
() t was subjected to an exploitative land revenue ownersh
By 2004, more than 1,633 lakh hectares of land was brought under
system of land revenue) which deprived the farmers of their consolidated holdings.
rights and left them with no surplus (of output) beyond subsistence (49) Regulation of Rent: To put an end to excessive and illegal extortions
() Forced commercialisation of agriculture (by way of cultivation of indig from the cultivators, rents were regulated. Generally, these were not to
to meet industrial needs of the British textile industry. exceed 1/3rd of the value of crop.
() Widening gulf between the tillers of the soil and owners of the soil. Th (5) Cooperative Farming: Cooperative farming was promoted to enhance
tillers had no surplus to invest and the owners wasted their surplus bargaining power of the small holders. Collectively, the farmers could
conspicuous consumption. buy inputs at a lower price and sell their produce at a higher price.
In view of these issues of backwardness and stagnation of Indian agriculture
theplannersin Indiz introducedaseries of reforms whích are broadly classifie Partial Implementation of Land Reforms
as (i) Land (or Institutional) Reforms, and (i) Technical Reforms. Followingi Despite the noble objective of land reforms, these reforms were only partially
a brief description of these reforms: implemented in the country. These wvere effectively introduced only in the
states of West Bengal and Kerala. In most other parts of the country, land BRAIN
Land Reforms [Institutional Reforms] reforms were only propagated and not effectively implemented. This was TEASER
Land reforms or institutional reforms aimed at reducing because of two reasons: Read the ews hesdine gves
inequality in India Deiow and anner the uestion
agriculture, and included the following actions by the (i) The zamindars in most cases managed to evict the tenants, to show
() government:
Abolition of Intermediaries: Intermediaries (between the themselves as cultivators and legitimate owners of the soil. wRahase Shastrsfocus
on foot ecunity aove bom
theactual tiller of the soil), popularly known as state a (iü) The landlords challenged the land ceiling legislation in courts which the tact Uhat n the 960s India
zamindars were abolishe
Ownership rights were given to those who actually provided the landlords enough time to evade the Ceiling Act. They
the soil. Asa result, the cultivated (or t
government intended to achieve managed to register their surplus land in the name of their close relatives.
hom the US were beginning
to Nt lnda sforegn polcy

) Stop two objective atono

exploitation of the
(i) Give incentives to the cultivators by the
ncatexpress com
zamindars. Technical Reforms:
its owners. cultivators make improvements on
to
a HYV Technology and Green Revolution
in eave rise to
Revolution during
the 1960s in India

The abolition of
intermediaries
meant that some 200 lakh The problem of low productivity was tackled by way of technical reforms. Ans The Green Re

ownership rightsand tenanb b These reforms evolved around HYV (High Yielding Variety) seeds. Use of molutons to deal ith
for the payment of theyr came into direct contact with the
land govern HYV seeds along with chemical fertilizers, insecticides and pesticides led to food security

revenue.
59
 Deveiooment Indian Econorny (1950-12901
The rise in output u
substantial rise in the level of agricultural output.
significant that it was called 'Green
Revolution. (3) Use of Insecticides and Pesticides for
to 'spurt (signi6. Crop Protection: Along with fertilizers,
The term 'Green' refers to 'crops' and 'Revolution refers
in crop production. It sta the use of HYVs also requires the use of
rise). Together, these terms imply a spurt
1967-68. In the year 1967-68 itself, food o pesticides to protect the crops against pests
happening in India in the year
production increased by nearly 25 per cent. India became self-sufo and diseases.

in the production of food grains and successfully broke the vicious cycle Fourteen Central Plant Protection Centres
agricultural stagnation. were set-up in this respect.
For crop protection, lntegrated Pest
Management Programme was adopted Pesticides for Crop Protection
along with the adoption of HYV technology.
(4) Expansion of Irrigation Facilities: HYV seeds need to be deeply
irrigated.
To cope with the need, several major and minor irrigation
projects were launched across different parts of the country. It is
significant that while in 1951, barely 17 per cent of land was under
permanent means of irrigation, it increased to nearly 45 per cent during
the plan period.

Two Distinct Phases of Green Revolution

Phase 1: Mid-60s-Mid-70s
Green Revolutlon: ARevolutionary Rise in Productivity wheat
During this phase, scope of Green Revolution was restricted largelyoftoPunjab,
Elements of HYV Technology and rice growing regions of the country. These included the states
Andhra Pradesh and Tamil Nadu. This is because the HYV seeds requirein
HYV technology includes four principal elements regular supply of water in addition to the use of fertilizers and pesticides
financial
as under: correct proportion. In the first phase, only the farmers who had
therefore,
(1) Use of resources to purchase the inputs were able to reap the benefits and
HYV Seeds: Since 1965, High the revolution was restricted to affluent areas of the country.
Yielding Variety seeds started replacing the
conventional varieties. Phase 2: Mid-7Os-Mid-80s
widespread,
HYV seeds gained popularity for wheat, bajra During this phase, the impact of Green Revolution became
rice, maize, jowar, and cotton, in covering most areas of the country and larger number of crops.
High Yielding Variety Seeds and High Crop
Productivity is these seeds which led to a particular. to the small farmers
substantial rise in During second phase, the government provided loans making the
& pesticides,
(2) Use of agricultural output. at a very low interest rate and subsidised fertilizers
result, Green Revolution
Chemical Fertilizers: Use of HYV seeds
of fertilizers. modern inputs accessible to the small farmers. As a
As the use of requires the us
fertilizers. The estimates ofHYV
covered the small landholders as well.
increased, so did the use of chemica
Fertiliser by the government that the benefits of the
almost 293.69 lakh Association of India reveal tha
during 2019-20, tonnes of chemical fertilizers were
hus, it was owing to intervention
Green Revolution accrued to the small farmers as well.
consumed in Ind
61
indian Economic Development Indian Econormy (950-199O)

Gains of Green Revolution

benefits of Green Revolution: (4) Change in Farmers Outlook: Commercialisation of agriculture has
Following observations highlight the caused a change in outlook of the farmers. Farming is no longer viewed
There has been a substantial jumn in
(1) Spurt in Crop Productivity: as asource of subsistence; it is considered as acommercial venture as well.
productivity. (6) Selfsufficiency in Food Grain Production and Buffer Stocks Bufer Stock in fndis
estimated at 3,464 ko
To illustrate: Productivity of wheat was hectare in 1951; ofrics Increase in crop production (on account of increase in acreage and The concept of buffer stock
to 660 kg per increase in productivity) led to self-sufficiency in food grain production. in India was introduced
hectare in 2020-21 compared kg per hectare in loc
in Fourth Five Year Plan.
2,713 kg per hectare in 2020-21 compared to 665 compared to 7o4. Spurt in production led to a fall in market price of food grains. fs refers to z
and of maize, it was 3,195 kg per hectare in 2020-21 Accordingly, even poorer sections of the society could comfortably ful61
the time of emergencies
per hectare in 1951. their subsistence needs. Food grain production increased so substantially Government of lndia
in Indian agriculr that it enabled the government to keep buffer stocks. These stocks are maintain buffer stock of
Spurt in productivity has led to a structural shift used to meet demand during lean seasons of farm supplies. food grains to:
agricult
This has marked the end of long period stagnation in Indian release food grains
through Public
(2) Substantial Rise in Acreage (Area under Cultivation): H Gains of Green Revolution: Distribution System
technology has significantly reduced the time lag between sowing an
harvesting of crops.
Significant but not Sufficient #meet energency
situations lake crop
ranarural
Or
Use of chemical fertilizers has eliminated the need for fallowins
Accordingly, double cropping has become possible. This has led trto Limitations of Green Revolution
substantial rise in gross area under cultivation.
Following observations highlight the limitations (failures) of Green
In 1950-51, gross area under cultivation was 13 crore hectare which now Revolution in India:
has shot up to 20 crore hectare. (1) Limited Crops: Revolutionary rise in output (due to Green
Revolution) was confined mainly to the prooucton oof food grains
Fallowing
(wheat and rice). There has been no similar rise in production of
Itis a practice of leaving land as uncultivated for some time. So that, it regains its fertility.
Fallowing was a common practice among the Indian farmers prior to the aunch ofHYV pulses and commercial crops like jute, cotton, tea, etc.
technology,
(2) Un-even Spread: Spread of Green Revolution was not uniform
(3) Shift from across all regions. In states like Punjab, Haryana, Maharashtra and
Subsistence Farming to Commercial
Farming: A Tamil Nadu, it made a remarkable impact. But in Eastern UP, Bihar,
substantial rise in output (owing to increase in
increase acreage) has started generating marketable
in productivity and Madhya Pradesh and Odisha, its impact was relatively insignificant.
surplus.
prompted the farmers to gradually shift from subsistence This has
(3) Limited Farming Population: The bulk of the farming population
commercial farming. This is a sign of growth farming to in India consists of small and marginal farmers. The gains of Green
and development.
Marketable Surplus Revolution eluded these farmers. Because, HYV technology required
It refers to surplus of expensive inputs which were beyond the reach of marginal farmers.
farmersoutput over and
Marketable S
Surplus of Wheat Output of above his 'on-farm consumption'. Thus: However, rich farming population (though small in number) happens
consumptionwheat-On-farm
to own the bulk of farming area in India. Which is why the results of
of wheat by theconsumption wheat (or expected
of
This surplus is Green Revolution were found to be impressive in terms of overall rise
B By seling the availabie the farmer for sale in the market. farmer's family during the year).
to
marketable
further production and alsosurplus
hegets cash. He can use Hence, called marketable surplus. in output.
to buy this
B
Marketable surplus is asign of consumer goods for his currentcash to buy
producer goods tor () Economic Divide: Despite aid by the government in terms of subsidised
commercialisation agriculture. consumption.
of inputs, HYv technology remained beyond the reach of most marginal
holders. Consequently, the gulf between rich and poor tended to swell
Over time.
 Indan eonomic Developrnen foundd to be significant,
of
Revolution were
Green failed to bridge the gap between the rich bu Indian Economy 950-199O)
pains tion
Brieflh while itt
scaled incom
up Briefly, we can say the need of the houris not to lower subsidies, but to
suficient. Green kev
Indeed, HYV technology,smallland marginal that the benefits of subsidies is directed towards the ensure
India. the intended beneficiaries.
theirholders
poor in the rural failed to address issues of
farmer, it a far cry owing to
the rich technology remained expansion pove 2. INDUSTRY
adoption of new agricultural failed to achi
whom revolutionary phase of
Thus, even the
Sustained GDP rowth is possible only when its
industrial sector. lndustries provide employment epieentre thatin theare
lies
Equity
Virtue or Vice? stable in comparison to those in opportunities
Agricultural Subsidies: appreciate t.
agricultural sector. Since the colonial rule
had Jeft behind a decayed handicraft
debated topic. While some industry, besides s bleak existence of
Aericultural subsidy is a widely Following is a brief description oc the large-scale industry (confined mainly to cottnn and jute teatiles), the
vice.
virtue, others denounce it as a planners accorded high priority to industrial development thrugh the Five
keer to the menetary Year Plans. It was also recognised by the planners that
assistace given by the viewS industrial deveopment
needed a strong infrastructural base requiringa massive investment which
OVerment to sustain
and acoelerite prodcon Agricultural Subsidies: A Vice could be realised only through a direct and signifcant participation of the
make the following obser
actiir Those who denounce farming subsidy asa vice, public sector.
Finances: It is argued thar on
() Huge Burden on Government Public and Private Sectors in Indian Industrial
subsidies have served their purpose, implying the technology is prow
useful andis adopted widely, subsidies should be phased out as thev n Development
huge burden on government finances Or
(2) Misappropriated Benefits: The subsidies not only benefit the farme
but also the input industry, like fertilizer industry. Among farmere : Factors Necessitating Direct Participation of the
benefts of subsidies are mostly reaped by those in prosperous region State (Public Sector) in Industrial Development
Since, the target beneficiaries are left behind, there is no rationale Along with the need to develop industry as the epicentre of growth, the
continuing with the subsidies. Puhlic snd Privat
planners and the politicians also realised that the process of industrialisation Sectos
(9) Wasteful Consumption: Subsidies do not allow market price to dictu could not be left to the market forces ofsupply and demand. Also, it could not PAc Sectur Tefers
to thse business
the supply of goods. Availability ofsupplies at lowprice leads to wasteD be left to the wisdom of private entrepreneurs alone. Direct participation of
consumption. the state was considered essential in view of the following factors
the govenenent Thbese
Example: If water issupplied free to the farmers, they would tend to (1) Lack of Capital: ndustrial development in India needed a big push. ate largely driven by
it unmindful of the fact that water is a scarce resource and needs to b Implying a large amount of capital expenditure conideratiank of social
rationally used. Similarly, subsidies on fertilizers and pesticides may led adence. Tata and Birla were the only weitare
At the time of independen estabished Prvate Sectur refers
to their excessive use causing environmental pollution. industrial houses in ndia. The requirement of capital for the country's to those bstness
industrial growth was far beyond the capacity of these industrial houses. enterpresce
Agricultural Subsidies: AVirtue Accordingly, it became essential for the state (or the government) to diduals
These ate larecly deiven
The proponents of subsidies believe that since achieve industrial growth through public sector undertakings
in India, subsidies are needed. It is argued that aagriculture
is a risky busine by considerations af
large (2) Low Inducement to Invest: The private investors lacked inducement proñt-maximisation
poor and do not have sufficient means to number of farmers
the need for purchase the required inputs. He to invest. It was owing to limited size of the market. Limited size of the
subsidies. market was owing to low level of demand Level of demand was low
The proponents of farming subsidies further because of low level of income.
argue that if subsidies
eliminated, the inequality between rich and poor farmers
while the rich can reap the benefits of new will expand. Beca
technology, the poor canne
65
Indian Economic Development
this:
vicious circle operating like indian Economy (1950-1990)
Thus, there was a sot of
secondary role. New enterprises were to be established primarily in
Low inducement Low the public sector. This category includes ferilizer
Limited sz to invest investment incorme industry, mining
Low Low
of the mane industry, etc.
income demand
(i) All industries other than in catezories (i) and () were left to the
Only a big push of public investment
could break this vicious o private sector.
enterprises were obvious choice to initiate &
Accordingly, public the Thus, IPR, 1956 clearly implied that the state was to spearhead
process ofindustrialisation. (sponsor)
the process of industrialisation in the economy.
independence
(3) Growth with Social Justice: The government after (2) Industrial Licensing: Industries in the private sector coald be
amply clear that the Indian economy needed to be given a socialies established only through a licence from the government.
pattern. Accordingly, growth with social justice was stated as one of i
The basic idea of licensing policy was to encourage industry in backward
critical objective of Five Year Plans. The government realised that th
regions of the country. This was to promote regional equality:
objective could be achieved only through direct participation of the st
in the process of industrialisation. Because it requires investment th Licensing Policy to Promote Regional Equality
generates employment rather than investment that maximises profit B Licensing policy of the government was to promote regional equalir
Concentration of wealth was to be discouraged and public investmeg Private entrepreneurs were expected to establish industry in backward regions of the country
(rather than private investment) was considered as the best meane
Accordingly, licences were liberally issued for the bacikward regions ratber than the develaped
achieve it. regions of the country.
Control of Commanding Heights of the Economy A licence was needed not only for establishing a new enterprise, but
Commanding heights of the economy refers to industries of strategic significance. These industries also for expanding production capacity of the existing ones. This was to
(incuding those like transport and communication) were of strategic significance because they regulate the allocation of resources to different uses. The focus was to
provided an infrastructural base for the overall spread of industrialisation in the economy, The promote social welfare rather than private profits.
government decidedto develop these industries as public sector undertakings. (3) Industrial Concessions: The private entrepreneurs were offered
The'conmanding heights also included industries of defence production which, owing to strategic many types of industrial concessions for establishing industry in the
Deed of countrys defence, could not be left in the hands of private entrepreneurs
backward regions of the country. These concessions included
IPR, 1956 (Industrial Policy Resolution, 1956)- tax holiday (freedom from the payment of tax for sometime), and
subsidised power supply.
ADeclaration on Leading Role of the State
BRAIN
TEASER Industrial Policy Resolution, 1956 was a clear Like the policy of industrial licensing, the industrial concessions were
declaration of the 8overnment expected to promote regional equality.
on the leading role of the government in the
This resolution laid a roadmap of the Se process of industrialisation.
Second Five Year Plan. Also, it was i Small-Scale Industry
len milestone of achieving growth with social justice.
Following were the principal elements of IPR, 1956: (To Promote Employment and Equity)
() The process of industrialisation had rwo broad dimensions:
Three-fold Classification of Industries: Industries were classihe
Saute wtea into three categories:; (i) Growth of large-scale industry (like iron and steel, transport and
that e n a t e d
6) Those which would be communication) to generate infrastructural facilities, and
public sector enterprises. established
e estate
and developed () Growth of small-scale industry to generate opportunities of employment,
include atomic energy,exclusively
4lcente ha the
These
railways defence ano and promote equity (social justice).
(ii) Those which could be Asmall-scale industry is presentiy defined asa unit having hxed investment
established both as the private and pubu
sector enterprises, However, of less than 10 crore with a turnover of less than 50 erore. Earlier, it was
66 the private sector was to
play only
indian Economic Development
did not exceed 1 crore. Att the
deined as one whose
investment beginni
did not
defined as one whose investment
of planning (1951), it was
R5 lakh. development
industry for promoting rural
The role of small-scale Village and Smal..
underlined by Karve Committee (also called
Industries Committee) in 1955.
Industries in terms of th
It underlined the significance of small-scale
under:
three principal characteristics as
Three Typical Characteristics of SSI
highlighting its Role and Importance
() SSL is Labour-intensive and therefon
Employment Friendly: Small-scale industa
is generally considered to be labour-intensiy.l
while large-scale industry is capital-intensive
To produce a given output, small-scal
industry is expected to use more of labo
than capital. A large-scale industry, oa
the other hand, uses more of capital tha
labour.
Smail-scale industry:Labour-intensive
We inherited an economy from the British
which was a 'capital-deficient economy' and a labour-surplus economy
Accordingly, our planners rightly thought of achieving full employment
by focusing on small-scale industry.
(2) SSI shows Locational Flexibility and
therefore Equality-Oriented (referring
to inter-regional equality) Large-scak
industry (like Bhilai Steels or Rourkela Steels
is often established close to the source
raw material. This is because raw material
requirement of the large-scale industry is ven)
Lage-scale industry :Capital-intersive huge. Its transportation from a distant plact
leads to high cost of
SSI, on the other hand, shows transportation.
locational flexibility, It is
thereto
equality-oriented,
(3) Ssi needs Small contributing balanced regional growth.
to
Investment and is therefore
(referring to equality Equity-Orien
SSI needs much smaller across different sections of the socie
investment, compared to large-scale indusi
indian Economy (1950-1990)
Accordingly, it does not lead to concentration of economic power, Forms ofProtection
Rather it promotes equality scross different sections of the society. Protection ftom imports
Equity is further promoted because of greater employment per unit of
investment in SSI compared to large-scale industry
Tariffu Aariff isa
commodity, It directly
Development of small-scale industry requires government suppart 2s increases the price of
imported commodities
these industries cannot compete with the big índustrial bouses. As a result,
thereby offering
production of a number of goods was reserved for the snall-scale industries
based on the capability of these small-scale industries to manufacture those Tcers from
foreign conpetition
goods. They were also given benefits of lower excise duty and lower interest
sOuota Ueder it, the
rates on the bank loans. BOVernment fixs the
quota of import of
diferent goods ro
Th
3. TRADE: STRATEGY OF IMPORT SUBSTITUTION in
in wie the needs of the
To complement the efforts of industrial development, India adopted the Country
strategy of import substitution during the period 1950-1990. It is also called restrit
Both antf and quos
the imports and,
"Inward-Looking Trade Strategy.
therebys protect the
Inward looking trade strategy refers to the policy of reliance on import domestic producers from
substitution' and protection to the domestic industry through import restrictions oncg compett
and import duties in the area of international trade. Note these points carefully:
(i) Import substitution implies domestic production of those goods which
the economy has been importing from rest of the world. This is astrategy BRAIN
to save foreign exchange by restricting the volume of imports. TEASER
(ii) Foreign exchange (being extremely scarce) was to be utilised for
developmental imports (referring to import of such plant and machinery
which is essential for growth and development but cannot be produced
domestically, owing to the lack of technology or the lack of investment
funds). etare
(in) By adopting inward looking trade strategy, the government preferred
to economise the use of foreign exchange (through import substitution)
rather than maximise the generation of foreign exchange (through od and seicess callad
export promotion).
from
(iv) Also, the government wanted to protect the domestic industry
international competition.
Import Substitution and Export Promotion Strategies
exchange by encouraging domestic production
Import Substitution isa strategy to save foreign
of such goods which the country has been importing irom rest of the warld. Domestic industry is
from foreiga compeition through impott restrictions and iinpart duties
otfered protection
Contrary to it, Export Promotion is a strategy to earn foreign exchange by promoting domestic
competitive in the international market.
exports and making domestic industry
69
 indian Economy (1950-1990)
Indan Economic Development
GROWTH STRATEGy
4. SALIENT FEATURES OFEFFECTS (i) There was a marked diversification in the industrial sector. The then
sunrise industry (electronics in particular) narked its emergence in the
AND ITS GOOD & BAD domestic economy.
Year Plans as the overall groh Rourkela and Bhilai Steel Plants)
Based on Mixed Economy and Five following salient fe iv) Growthhof large-scale industryin (like
exhibited the projected an infrastructural shift the lndian economy The Indian economy
the growth strategy during the period
central role in the proc showed its ability to absorb the impact oflarge-scale industrialisation
0 Pubi enterprises were to play a the
industrialisation. () Growth of SSI made a substantial contribution in achieving
a secondary role in the proce objectives of growth with social justice. The development of small-scale
(a) Private enterprises were to play onlyPermit-Licence Raj. It was a s industries offered entrepreneurial opportunities for the small
investors,
industrialisation and that too under
under which privzte entrepreneurs were to
obtain a license for the lacking funds for large enterprises. noticeahle
industrial establishments, and in most cases were to produce poo Briefly, the growth-process during U-1990showed a
the econom of agricultural sector (in terms
within the legally prescribed limits of production capacity. ructural shift in
declining in favour of the
of its relative contribution to GDP) started modernisation, equity and
(m) Process of industrialisation focused on 'import substitution. Imple industrial sector. Goals of Five Year Plans (growth,
that the production of such goods was to be accorded a high prior self-reliance) started showing green shoots.
which were imported from rest of the world. The idea was to achien
self-reliance as well as to economise the use of foreign exchange. Bad Efect
(iv) As far as possible, domestic industry was to be protected fromn foreie: These are as under:
Bad effects were as significant as good effects.
competition. Protection was to be offered through: planners realised excessive dominance of
() In due course of time, the
(a) hezvy duty on imports, and certain consumer goods
public sector. Covering the production of realised as the
(b) fxation of import quotas. It was realised that protection woule (which the private sector was well equipped to do) was
surprising that
foster the growth of the domestic industry. key element of excessive dominance. It was indeed enterprises.
were produced by the public sector
(v) Large-scale industry was to be developed with a view to building even bread and shoes
agent of growth.
infrastructural base in the country. This undermined the significance of private sector as an
turned out to be a 'dead social weight.
(i Smal-scale industry was to be developed with a view to achieving the (i) Public sector monopolies gradually
objectives of employment and equity. corruption, leakage and pilferage emerged as their principal
Inefficiency,
characteristics. By incurring huge losses, public sector enterprises led to
Good Effect inefticient use of scarce national resources.
of new firms or expanding the
The strategy of growth during the period 1950-1990 (iii) The need to obtain license for opening houses. The big houses
good effects: yielded the following existing firms was misused by big industrial
emergence of competitors in
) Economic growth got a big push with a blend of Green would get licenses simply to ward-off the system
Revolutios whole
the market. The whole system ultimately started flourishing as a
Despite amassive increase
in agricultural output, Permit-License Raj dominated by the big players in the market.
the proportion of
industrial sector in GDP
increased from 13 per cent in 1950-51 stimulated its growth. But, it failed to
24.6 per cent in 1990-91 which (iv) Protection of domestic industry
isa sign of growth with product-quality. Lack of competition
Industrial output trrecordeda signifcant structural change achieve international standards of
annual increase in output during the rise. There was about 6 per ceat prompted the domestic entrepreneurs to focus upon monopoly-control
period 1950-1990. competition and diversifñcation was
() Iadian industry was no of the market. Growth through
jute; fact, the
in longer confined merely to cotton textiles a conveniently avojded.
due to the publicindustrial sector became well diversified by 1990, through import substitution (rather than
sector. largey (v) Saving foreign exchange promotion) proved to be an inefficient
generating it through export
indan Economic beVelopt
exchange e reserves
policy instrument. Our foreign started shrinkin
by the end of 1990, these stocks sank to the bottom. So
Bank to much
reserves with the World
we bad to pledge our gold
borrowings.
Conclusion
Asaresult ofthe strategy of growth under Five Year Plans, Indian n
able to break the barrier of economic stagnation. India became self-su
in food grain production. Land reforms and HYV technology turned t.
agriculrure from astagnant and backward sector into a vibrant and er
sector of the economy. The industrial sector was diversified. Infrast
development became perceptible reality. A structural shift in terms of
relative contribution of agricultural and industrial sectors to GDP alsok
perceptible. But paradoxically, even as the industrial sector grew and
contribution of agricultural sector to GDP declined, almost 65 per cent of
ndan Eeonomy (1950-1990)
Limitations of Green Revolution: i Limited crops, ii) Us-even spresd, (atl Limited farming
salvage population, (iv) Economic divide.
Agricultural Subsidies Instrumental in encouraging adopsion of new technlog that is deemed
risky by the farmers. Limitations of agricultural sabsidies ate () Hugr barden on govenment fnances,
(H) Misappropriated benefits, (ii) Wasteful consumption.
economy Direct Participation of the State in the Process of industrialisation vas fated in view of the
following facts: (6) There was lack of capital with private entrepreneurs, Gil) Privateentrepreners lacked
inducement to invest, owing to limited size of the market, and (i) There wasa growing ralistion that
the principal objective of planning (growth with social justice) could be achieved only through direct
intervention by the state.
Industrial Policy Resolution, 1956 was an offcial declaration on the leading rale of the government
in the process of industrialisation. Private sector was assigned only a secondary role in the procesu of
industrialisation. Industries in the private sector could be established only through aBoemce from the
government

population continued to be employed in agricultural sector till 1990. Imnle Small-scale Industries (SSI): Small-scale industries were accorded high prionity with iew to
that the growth in industrial and service sector was not sufficient to absorh# promoting the goals of 'employment and 'equity
surplus labour force of the agricultural sector. Spurt in productivity owinrs
Green Revolution led to a huge backlog of surplus labour force in agricult Three Important Characteristics of SS: () These industries are more labour-intensive than the
large-scale industries. Accordingly, the planners relied on $SI Ifor opportunities
for generating employent opp
But, industrial growth was not enough to absorb that surplus,
Consequent in the economy, (i) SSI shows locational fleribilaty enabling them to achieve inter-tegonal eqiiy
the planners were confronted with a situation of massive rural
unemployme (ii) SSI needs stnall investment and therefore, do not cause concentration af weaith; instead, they promote
in the economy, besides growing
unemployment among the educated yout
in the urban areas. This was recognised as one of the major
equity.
to the
the industrial policy pursued under Five Year Plan. In
limitations Inward Looking Trade Strategy: It refers to the policy of import substitution and protectin looking trade
addition, the excessi restrictions and import duties. Contrary to it, ourward
domestic industry through import
regulation and protection from foreign competition led to to the policy of'export promotion through competitive production environmeat in the
incompetitivene strategy refers
and ineficiency of the domestic
seldom realised the need for producers. The
protected private sedta domestic economy.

modernisation and diversification. M Salient Features of Growth Strategy during 1950-1990: () Public
sector was to plava ceatral role in
With the passage of time, bad effects of the strategy of ofindustrialisation, (ii) Private sector was to play a secondary role, and that too under Permit
industrialisatia the process with the key policy instrument of
started overshadowing the good effects. So much so, License Raj. (iü) Process of industrialisation was to proceed in tandem
compelled revisit the entire strategy of economic that the government euition, (v) Large-scale
from foreign competitbon,
to import substitution, (iv) Domestic industry was to be protected
infrastructural base in the economy, (vi) SSI was
emergence of NEP (New Economic growth, This led ttoo th industry was to be developed with aview to generating
Policy), the subject matter of chapter to be developed to promote the objectives of employment and
equity
Power Points Revision Window Good Effect of our 'Growih Srategy is highlighted in terms of the following achievements
Agriculture. output, (u) Industrial sector was diversihed. ( l Large-scalea
land holding, Agricuiture
(ii) Consoliincluded
a series of land
reforms: () Abolition of (0 There was a marked rise in industrial successfally launched, (iv) SSl recorded
were
dation of boldings, (iv) Regulation intermediaries,
of rent, (v) (i) Ce industries (particulatly in the area of iron and steel)
Technial Reform: Gteen Cooperative substantial spread across different regions of the country.
introduced as part of Revolution: Revolution: refers to aspurt in farm
lt farming is highlighted in terms of the
following observations
insecticides and pesticidGreen
es for crop
(i) Use ofHYV seeds, () output during mid 60's, Measurn
Use of chemical
Bad Effect of our Growth Strategy
causing 'dead social weight, () Protection shielded the domestic
0 Pablic sector monopolies started cope with international competition, (i) Relying upon import
Gains of Green protection, iv) Expansion of irrigation fertilizers, ( industry, but rendered it inefticient to
Revol utio n: () Spurt
(v)cultivation), Shift from subsistence crop productivity, (ii)
(in) in facilities. substitution, the forex (foreign exchange) reserves
started dwindiling
Sell-suffhciency in food grain farming to Substantial rise in acreage u unde
productio and bufercommerci al
stocks. farming. Change in farmers
(iv) 'outlok