Chapter 2: Indian Economy (1950 – 1990)

A plan is a list of actionable goals and specific objectives that a nation wants to achieve over a specific period of time.

After achieving independence in 1947, India was faced with the task of reviving the poor, backward state in which the colonial government had left India. Efforts were made to solve people’s problems through interventions by a democratic government. A country is said to be on the path of development when there is economic prosperity. To attain that prosperity, the Planning Commission was set up in 1950 to establish a development framework for the nation where both public and private sectors would contribute towards economic development.

A plan without a goal is like a ship without a radar. The plan specifies ways in which resources need to be allocated in order to achieve the target defined by goals. Goals are achievements that help us visualize the successful execution of plans. Thus goals are a must-have in planning.

These are the seed varieties which give a higher yield compared to others. The seeds produce more yield than the normal varieties. Seeds need proper irrigation facilities along with more fertilizers and pesticides in order to get the best yield. HYV seeds grow at a faster rate than the normal varieties and are able to generate 10-20 times more crop per hectare than normal varieties.

The portion of the harvest that a farmer can sell in the market in order to earn a profit is known as Marketable Surplus. The profit thus earned can be reinvested into farming operations.

The needs for land reforms in India are discussed below:

1. In India, there existed three types of land tenure systems, namely Zamindari, Ryotwari and Mahalwari systems. In these systems, revenue needed to be paid for cultivating the land. This resulted in the exploitation of the farmers.

2. The land holdings were very small and fragmented, which hindered the use of modern techniques.

3. The farmers had a lack of initiative as the land was owned by landlords.

4. The basic purpose of farming was to earn for survival and not to make a profit. Hence it needed to change.

Type of land reforms undertaken by the Government are as follows:

1. Abolishing of Intermediaries: The land reforms put an emphasis on abolishing intermediaries like Jagirdar and Zamindars and making the tillers or farmers, the owners of the land.

2. Rent regulation: The farmers were charged exceptionally high rents. After independence, in the first five-year plan, it was decided that the rent for cultivating the land would be reduced to one-fourth or one-fifth.

3. Land Holding Consolidation: The land pieces being very fragmented, modern technology could not be used. Hence land consolidation was done to provide them with land pieces which was the total of the land plot they owned. It allowed for the implementation of modern technology and better production.

4. Land Ceilings: This is aimed at providing a fixed amount of land to an individual in order to promote equality of land holdings and promote development.

5. Co-operative Farming: Small-scale farming by a farmer was not at all profitable, encouraging farmers to work together on farmlands. This enhanced productivity, and profit sharing also increased.

India, after Independence, was recovering from the implications of being under foreign rule. The initial years saw low productivity, coupled with wars with neighbours China and Pakistan and natural disasters such as famines for two consecutive years. India was over-reliant on the US for the import of food grains under the PL 480 law. On being denied the assistance, India devised a plan to attain self-sufficiency in crop production by importing more than 18000 tonnes of High Yield Variety or HYV from Mexico. This resulted in significant crop production the following year, which ended India’s reliance on grain imports. It is known as Green Revolution.

Benefits to Farmers:

1. Increase in income followed the green revolution as most of the areas that cultivated wheat and rice were witnessing great production, which helped in removing poverty from these areas.

2. With the increase in the production of crops, age-old customs were abolished, and the farmers began to adopt new agricultural methods, which were instrumental in bringing change in productivity.

3. It helped reduce unemployment as the lands were used for growing two varieties of the crop as per season, and therefore, it helped removed seasonal unemployment.

4. With nationalising of banks, farmers were given subsidies on loans for cultivation, which improved production as more farmers were able to take a loan.

Economic growth can be defined as an increase in the total output of goods and services in the country for a given time period. Growth with equity is said to be growth with equal distribution. Growth refers to an increase in GDP, and equity means social justice. Only growth will not be able to guarantee the welfare of the people of the country. The GDP is not a good measure of the development of the people of a nation. Therefore growth along with equity which means development for all, is a good parameter for economic planning and paves the way for development with social justice.

Modernisation as a planning objective does not create contradictions in employment generation as modernisation is a medium to generate more employment. It may use new and modern technology, and as a result, there will be some job losses upfront. But, as people adopt modern technology and get skilled in the process, it will create demand for such skilled professionals which will create more job opportunities.

Self-reliance as a planning objective was necessary for India because, without self-reliance, a country will have a dependency on foreign products, which will never improve the domestic sector, and the country will be at the mercy of other nations. From an economic perspective, dependence on foreign goods causes a reduction in foreign reserves. These reserves can be used for the development of the country. Therefore self-reliance is an essential characteristic that needs to be adopted by any country for overall development.