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Economic Development Of India Post Independence (Part-2)

Economic Development Of India Post Independence (Part-2)


  • At the time of independence India was bequeathed with a shattered economy, widespread illiteracy and shocking poverty. The entire politico economics structure has to be reconstructed for genuine development of the country.

Economic Development and Planning

Mixed Economy Model (Socialism)

  • Post Independence, apart from extreme poverty, illiteracy, a ruined agriculture and industry, the structural distortions created by colonialism in Indian economy and society made the future transition to self sustained growth much more difficult.
  • Ensuring well being and economic development were the important challenges for the Indian leadership and to pursue these goals, they had two model of economic development, the liberal – capitalist model followed in U.S.A. and Europe, another was the socialist model followed in U.S.S.R. During the debate of model of economic development, Almost everyone agreed that the development of India means economic growth and social and economic justice. Hence very few people supported the American style of capitalist development. There were many who got impressed by the Soviet model of development.
  • India had to abandon the colonial style of functioning for commercial gains only; and strive for poverty alleviation and social-economic redistribution was primary responsibility of the then government. Therefore India adopted the mixed model of economic development, which has features of both the capitalist and socialist models.

Left-Wing Politics

  • Left-wing politics is more liberal in its approach and outlook
  • Left-wing economics policies involve reducing income equality, increasing tax rates for the wealthy, and government spending on social programs and infrastructure
  • Those belonging to the left-spectrum of politics believe that society will benefit from an expanded role for the government
  • Left-wing politics is characterized by an emphasis on equality, fraternity, progress, and reform
  • Left-wing nationalism is based on social equality, popular sovereignty, and national-determination. It associates itself closely with national liberation movements
  • Left-wing politics is traditionally against religious institutions and believe that state and religion must be separate from each other (Secularism)
  • Populist ideas in the left-wing do not include horizontal exclusion and will rely more on egalitarian ideals.
  • The term ‘Left-wing’ has a similar origin during the French revolution where anti-monarchy revolutionaries were seated on the left side of the hall.

Right-Wing politics

  • Right-wing politics are more conservative.
  • Its economic policies involve low taxes, less regulation on businesses by the government
  • Right-wing ideologies believe that the best outcome for society is delivered when individual rights and civil liberties are paramount with limited involvement of the government
  • Right-wing politics is characterized by ideas of authority, hierarchy, tradition, and nationalism
  • Right-wing nationalism is influenced by Romantic Nationalism where the state derives its legitimacy from the culture it governs, including, language, race, and custom “born” within this culture
  • Right-wing politics have always found supporters who believe that religion should play an expanded role in society.
  • Populism is a recurring theme in right-wing political circles. Populism is a political approach that appeals to ordinary people who feel that their rights are ignored.
  • The term ‘Right-wing’ has its origins during the days of the French Revolution (1789-1799) where the supporters of the Monarchy were seated on the right hall of the National Assembly

Why India rejected capitalist style of Modernization? 

During that era, development meant becoming more and more modern like industrialized countries of West.

  • India rejected such model because majority of the people were illiterate & to become modern, breakdown of traditional social structures was required, which was highly impossible.
  • Modernization was also associated with the ideas of growth, material progress and scientific rationality, but due to lack of resources and education, it was not possible in India which was fully dyed in the wool of caste based mentality.
  • To sum up → Lack of education, poverty, food insecurity, lack of capital, resources & technology, caste based society were major reasons behind rejection of capitalist model of economy.

Economic Planning In India

  • The term economic planning is used to describe the long term plans of the government of India to develop and coordinate the economy with efficient utilization of resources. Economic planning in India started after independence in the year 1950 when it was deemed necessary for economic growth and development of the nation.
  • After the Independence, the Planning Commission was set up in March 1950 by a simple resolution of the Government of India. It has an advisory role and its recommendation become effective only when the Union cabinet approves these. The scope of the resolution by which Planning Commission was formed:
  • Every individual should have the right to an adequate means of livelihood.
  • Material resources of community their ownership and control should served the common good.
  • Economic system should operate in such a way that use of ‘means of production’ and ‘wealth’ should not result in well being of particular community and to the detriment of the society.
  • Noted civil engineer and administrator M. Visvesvaraya is regarded as a pioneer of economic planning in India. His book “Planned Economy for India” published in 1934 suggested a ten year plan, with an outlay of Rs. 1000 crore and a planned increase of 600% in industrial output per annum based on economic conditions of the time.   (Economic Development Of India Post Independence (Part-2))
  • The Industrial Policy Statement published just after independence in 1948 recommended setting up of a Planning Commission and following a mixed economic model. Here are the major milestones related to economic planning in India:
    • Setting up of the Planning Commission: 15 March 1950
    • First Five Year Plan: 9 July 1951
    • Dissolution of the Planning Commission: 17 August 2014
    • Setting up of NITI (National Institution for Transforming India) Aayog: 1 January 2015

The First Five Year Plan: [Economic Development Of India Post Independence (Part-2)]

  • The draft of the first five year plan and the actual plan document was released in December 1951. People from all walks of life-academics, journalists, government and private sector employees, industrialists, farmers, politicians etc. discussed and debated the documents extremely.
  • The first five year plan (1951-56) sought to get economy out of the vicious cycle of poverty. The prominent young economist K.N. Raj argued for “hasten slowly” for the development for the first two decades as a fast rate of development might endanger democracy. The First Five Year Plan addressed mainly the agrarian sector including investment in dams and irrigation. Due to the bitter Partition, Agricultural sector was hit hardest and needed urgent attention. Huge allocations were made for “Modern Temples of India” like the Bhakhra Nangal Dam. The First Five Year Plan also focused on land reform for the country’s development. One of the basic aims of the planners was to raise the level of national income. Basic level of spending was very low in the 1950’s.   (Economic Development Of India Post Independence (Part-2))
  • Hence planners sought to push savings up. Due to the efforts of the planners, savings did rise up and that rise continued till the Third Five Year Plan, but later it declined sharply.

Second Five Year Plan  [Economic Development Of India Post Independence (Part-2)]

  • The second plan stressed on heavy industries and it was drafted by a team of economists and planners under the strong leadership of P.C. Mahalanobis. Contrary to the patience preached in first plan, second plan aspired to bring about quick structural transformation by making changes as all possible directions. The congress party passed a resolution in Avadi near Madras before finalization of the draft of the second plan and declared its goal of “Socialist pattern of society”. This was visible in Second Plan document. The government imposed substantial tariffs on imports to protect domestic industries, which helped them to grow. Savings and investments were growing, bulk of these industries like electricity, railways, steel, machineries and communication could be developed in the public sectors. The push for industrialization marked a turning point in India development.   (Economic Development Of India Post Independence (Part-2))

Key controversies regarding 5 year plans

The strategy of development followed in the early years raised several important questions.

  • Agriculture vs. Industry
  • Many thought that the second Plan lacked an agrarian strategy for development and the stress on industry caused agriculture and rural India to suffer badly. Veteran Gandhian economists like J.C. Kumarappa proposed an alternative blueprint that put greater emphasis on rural industrialisation. The stress on rapid industrialisation required import of technology for which India has to spend precious foreign exchange to buy from global market. It was the industry that attracted more investment than agriculture, the possibility of food shortage loomed large.  (Economic Development Of India Post Independence (Part-2))
  • Public vs. Private Sector:
  • The state controlled key heavy industries, provided industrial infrastructure, regulated trade and made some crucial interventions in agriculture. Critics argued that the planners refused to provide the private sector with enough space and the stimulus to grow. The enlarged public sector produced powerful vested interests that created enough hurdles for private capital by installing systems of licenses and permits for investment. With the restriction on imports, of goods, Production of such goods in domestic market with little or no competition in addition to no incentive to improve the quality of products. The state controlled more things than required which led to inefficiency and corruption.

Green Revolution in India  [Economic Development Of India Post Independence (Part-2)]

  • The world’s worst recorded food disaster occurred in 1943 in British-ruled India. Known as the Bengal Famine, an estimated 4 million people died of hunger that year in eastern India (which included today’s Bangladesh). Initially, this catastrophe was attributed to an acute shortfall in food production in the area. However, Indian economist Amartya Sen (recipient of the Nobel Prize for Economics, 1998) has established that while food shortage was a contributor to the problem, a more potent factor was the result of hysteria related to World War II, which made food supply a low priority for the British rulers.
  • The term green revolution was first used by William Gaud and Norman Borlaug is the Father of the Green Revolution.    (Economic Development Of India Post Independence (Part-2))
  • In the year 1965, the government of India launched the Green Revolution with the help of a geneticist, now known as the father of the Green revolution (India) M.S. Swaminathan. The movement of the green revolution was a great success and changed the country’s status from a food-deficient economy to one of the world’s leading agricultural nations. It started in 1967 and lasted till 1978.
  • There were three basic elements in the method of the Green Revolution
  • Continuing expansion of farming areas
  • Double-cropping in the existing farmland
  • Using seeds with improved genetics.

Phases Of Green Revolution In India

  • Introduction of Green Revolution in India Green Revolution took place in three different phases in India in various regions of the country at different point of time.
  • First phase of the Green Revolution: This happened from 1962–65 to 1970-73 with the sharp increases in yield in wheat in the north-western region of Punjab, Haryana and Western Uttar Pradesh.
  • Second phase of the Green Revolution: This happened from 1970-73 to 1980-83 with the extension of HYV [High Yielding Variety] seed technology from wheat to rice, this time the technology spread was in Uttar Pradesh, Andhra Pradesh particularly the coastal areas, parts of Karnataka and Tamil Nadu and soon regions like Maharashtra, Gujarat, improved their production too.
  • Third Phase: Third phase was from 1980-83, to 1992-95 showed very significant and encouraging results. This time Green Revolution spread to the low growth areas like Orissa, West Bengal, Madhya Pradesh, and Rajasthan. During the last phase, Southern region registered higher rate of growth than Northern region. By the end of this phase, the ‘coefficient of variation’ of the output growth levels and yield [per hectare] level between the various states dropped down substantially compared to earlier decades. By the end of the last phase, there was considerable reduction in regional inequality by increase in the prosperity in rural India.

Impact of Green Revolution in India

  • Not just limited to agricultural output the revolution also increased per Acre yield. Green Revolution increased the per hectare yield in the case of wheat from 850 kg per hectare to an incredible 2281 kg/hectare in its early stage.     (Economic Development Of India Post Independence (Part-2))
  • Green Revolution has remarkably increased Agricultural Production. Foodgrains in India saw a great rise in output. The biggest beneficiary of the revolution was the Wheat Grain. The production increased to 55 million tonnes in the early stage of the plan itself.
  • With the introduction of the Green revolution, India reached its way to self-sufficiency and was less dependent on imports. The production in the country was sufficient to meet the demand of the rising population and to stock it for emergencies. Rather than depending on the import of food grains from other countries India started exporting its agricultural produce.
  • The Green Revolution in India majorly benefited the farmers of the country. Farmers not only survived but also prospered during the revolution their income saw a significant rise which enabled them to shift from sustenance farming to commercial farming.
  • The introduction of the revolution inhibited a fear among the masses that commercial farming would lead to unemployment and leave a lot of the labour force jobless. But the result seen was totally different there was a rise in rural employment. The tertiary industries such as transportation, irrigation, food processing, marketing, etc created employment opportunities for the workforce.


  • In spite of this, India’s agricultural output sometimes falls short of demand even today. India has failed to extend the concept of high yield value seeds to all crops or all regions. In terms of crops, it remains largely confined to foodgrains only, not to all kinds of agricultural produce.
  • In regional terms, only the states of Punjab and Haryana showed the best results of the Green Revolution. The eastern plains of the River Ganges in West Bengal also showed reasonably good results. But results were less impressive in other parts of India.
  • The Green Revolution has created some problems mainly to adverse impacts on the environment. The increasing use of agrochemical-based pest and weed control in some crops has affected the surrounding environment as well as human health. Increase in the area under irrigation has led to rise in the salinity of the land. Although high yielding varieties had their plus points, it has led to significant genetic erosion.

Operation Flood Or White Revolution In India  [Economic Development Of India Post Independence (Part-2)]

  • The Government of India initiated Operation Flood known as the White Revolution after witnessing the huge success of the Green Revolution that resulted in an immense increase in the production of wheat and rice. White revolution in India started with a motive of increasing milk production to make the country one of the largest producers of milk in the world.
  • Operation Flood, launched in 1970, was a project of India’s National Dairy Development Board (NDDB), which was the world’s biggest dairy development program.
  • It transformed India from a milk-deficient nation into the world’s largest milk producer, surpassing the USA in 1998, with about 17 percent of global output in 2010–11.
  • In 30 years it doubled milk available per person, and made dairy farming India’s largest self-sustainable rural employment generator.

Beginning of Operation Flood:

  • Drawing heavily from the Kaira Union for personnel, expertise and much more, the NDDB launched “Operation Flood”, a programme to replicate the “Anand Pattern” in other milkshed of country.
  • Operation Flood had organised cooperatives of milk producers into a nation-wide milk grid with the purpose of increasing milk production, bringing the producers and consumers closer by eliminating middlemen and assuring the producers a regular income throughout the year. It was not just a dairy programme, but a path to development, generating employment & income of rural households and alleviating poverty. By 1995 there were 69,875 village dairy cooperatives spread over 170 milkshed all over the country with a total membership of 8.9 million farmers.

Different Phases of the White Revolution

  • Phase I started from 1970 and lasted for 10 years i.e. till 1980. This phase was financed by the sale of butter oil and skimmed milk powder donated by the European Union through the World Food Program.
  • For the successful implementation of the programme, certain aims were defined in the initial stage of Phase I. One such aim was the improvement in the marketing strategy of milk in the metropolitan cities to accomplish the goals.
  • Phase II lasted for five years from 1981 to 1985. During this phase, the number of milk sheds increased from 18 to 136, milk outlets were expanded to about 290 urban markets, a self-sustaining system was set up that included 4,250,000 milk producers spread across 43,000 village cooperatives. The production of domestic milk powder increased from 22,000 tons in the year 1980 to 140,000 tons by 1989, and the sale of milk also increased by several million litres a day due to direct marketing of milk by the cooperatives. All of the enhancements in production were simply because of the dairies set up under Operation Flood.
  • Phase III also lasted for almost 10 years i.e. 1985-1996. This phase enabled the dairy cooperatives to expand and gave a finishing touch to the programme. It also strengthens the infrastructure required to procure and market increasing volumes of milk.
  • Towards the end of White Revolution or Operation Flood, 73,930 dairy cooperatives had set up that links more than 3.5 crore dairy farmer members. At present, due to the White Revolution, there are several hundred Cooperations in India that are working very efficiently. Hence, the revolution is the cause of the prosperity of many Indian villages.

The Concept Of Co-Operativization  [Economic Development Of India Post Independence (Part-2)]

  • All the leader of Indian freedom struggle, from Mahatama Gandhi to Nehru, the socialists, communists, past independence agreed that co-operativization would lead to major improvement in Indian agriculture and benefit the poor.
  • The congress Agrarian Reforms Committee also known as Kumarappa Committee made the recommendation for compulsory promoting cooperatives. The congress party in their 1959’s Nagpur Session passed Nagpur Resolution which visulaize an agrarian pattern based on Joint cooperative farming in the future, it specified that such a pattern was to be achieved within three years, However, there were some leaders like C. Rajagopalachari, N.G. Ranga and Charan Singh who opposed such move hence Nehru in Feb 1959 assures the Parliament of not using any coercion to introduce cooperatives.
    • The chief beneficiaries of this scheme were the landless people from SC &ST communities and deprived sections of other communities.
  • Operation Flood and the accompanying dairy expansion has been instrumental in the establishment of an indigenous dairy equipment manufacturing industry ; an impressive body of indigenous expertise that includes animal nutrition, animal health, artificial insemination management information systems (MIS), dairy engineering, food technology.
    • Operation flood was instrumental in empowerment of women. Operation flood with the help of NGOs like SEWA helped in establishing about 6,000 Women dairy cooperative societies.
    • Operation Flood had spillover effect on other cooperatives too. Cooperatives for fruits and vegetable producers, oilseeds cultivators, small scale salt makers and tree grower were doing excellently well which were initiated by NDDB.

Advantages Of A Cooperative Society  [Economic Development Of India Post Independence (Part-2)]

  • Easy to Form
  • Open Membership
  • Democratic Management
  • Limited Liability
  • Stability
  • Economical Operations
  • Government Patronage
  • Low Management Cost
  • Mutual Co-Operation
  • No Speculation
  • Economic Advantages
  • Service Motive
  • Internal Financing
  • Income Tax Exemption
  • Durability
  • Cheaper Goods
  • State Patronage
  • Elimination of Middleman
  • Equality
  • Perpetual Existence
  • Scope for Self-Government.

Disadvantages Of A Cooperative Society  [Economic Development Of India Post Independence (Part-2)]

  • Limited Capital
  • Inefficient Management
  • Absence of Motivation
  • Differences and Factionalism among Members
  • Rigid Rules and Regulations
  • Lack of Competition
  • Cash Trading
  • Lack of Secrecy
  • Weightage to Personal Gains
  • Lack of Incentive and Initiative
  • Corruption
  • Limited Consideration
  • High Interest Rate
  • Undue Government Intervention
  • Differences of Opinion
  • Lack of Expertise
  • State Control
  • Lack of Loyalty
  • Lack of Understanding of Principle of Cooperative Societies
  • Lack of Universal Applicability.


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