Historical development in india

Economic development

Evolution of Policy India

The British colonial government of India did not pursue an active policy of agricultural development despite modest efforts to formulate a policy (see The British Raj, 1858-1947, ch. 1). One such effort was the appointment in 1926 of the Royal Commission on Agriculture, which made some recommendations for improving agriculture and promoting the welfare of the rural population. Most of the commission's recom-mendations were deferred because of the Great Depression of the 1930s. One outcome, however, was the establishment of the Imperial (later Indian) Council of Agricultural Research in 1929. During World War II, disruptions in international trade also led the government to initiate the Grow More Food Campaign. The government adopted its first agricultural policy statement in the wake of famine in Bengal in 1943. The policy objectives included increased production of food grains, use of better methods of production, improved marketing, better prices for the producers, fair wages for agricultural labor, fair distribution of food, increased production of raw materials, and improvements in research and education. This statement was the basis of many of the policies adopted soon after independence, especially in the First Five-Year Plan, when the central government was committed to giving priority to agricultural production to increase the food supply in the country.

Industry development
INDUSTRIAL DEVELOPMENT & PROGRESS AFTER INDEPENDENCE

ndia has made considerable economic progress since its Independence. Most noticeable

are the expansion and diversification of production both in industry and agriculture. New technologies were introduced in many industries. Industrial investment took place in a large variety of new industries. Modern management techniques were introduced. An entirely new class of entrepreneurs have come up with the support system from the Government, and a large number of new industrial centres have developed in almost all parts of the country.

Over the years, the Government has built the infrastructure required by the industry and made massive investments to provide the much-needed facilities of power, communications, roads etc. A good number of institutions were promoted to help entrepreneurship development, provide finance for industry and to facilitate development of a variety of skills required by the industry as well as agriculture. The Government also followed a policy of encouraging indigenous industries and provide them all facilities and encouragement. As a result, we have now a widely diversified base of industry and an increased domestic production of a wide range of goods and services. The index of industrial production has gone up from 7.9 in 1950-51 to 154.7 in 1999-2000. Electricity generation went up from 5.1 billion Kwh to 480.7 billion Kwh in the same period. 3.1 Particularly significant achievement has taken place in the field of agriculture. Between 1950-2000, the index of agricultural production increased more than four-fold. Between 1960 and 2000, wheat production went up from 11 to 75 million tonnes, and the production of rice increased from 35 to 89.5 million tonnes. We are now having a problem of plenty, with Government godowns overflowing with wheat stocks. This is not a mean achievement for a country that relied on imported food aid until the early 1960s. The credit for this green revolution goes to Indian scientists as well as to millions of Indian farmers, who wholeheartedly REPORT OF THE NATIONAL COMMISSION ON LABOUR industries, they gave encouragement to small-scale industries by providing a number of support measures for growth. Policy measures undertaken by the Central and State Governments addressed the basic requirements of the SSI like credit, marketing, technology, entrepreneurship development, and fiscal, financial and infrastructural support. These promotional measures covered: a) Industrial extension services through small industries service institutes and other organisations. b) Factory space in industrial estates through cooperative and other industrial estates, ready built shades and developed industrial plots made available through State Government agencies. c) Credit facilities at concessional rates of interest and credit guarantees through commercial banks and State Finance Corporations. d) Special financial assistance schemes at concessional rates of interest and low margins for technician entrepreneurs. e) Availability of indigenous scarce raw materials through special quotas and imported materials through import licenses. f) Provision of training facilities. g) Subsidised power tariffs and exemption of electricity duties. h) Supply of local and imported machinery on hire purchase basis. i) Assistance for domestic as well as export marketing. j) Special incentives for setting up units in backward areas. k) Differential central excise levies for the small-scale sector. l) Preference for products produced in small-scale industries and 15% price preference to them in State Government purchases. m) Reservation of products for exclusive manufacture in the small-scale sector. n) Creation of a large number of institutions both by the State Governments and the Central Government to help small enterprises.

o) Special effort to promote new entrepreneurs by providing them training in entrepreneurship development.

3.17 INVESTMENT IN INFRASTRUCTURE:

Energy-TransportCommunications facilities are extremely essential for smooth and accelerated industrial growth. The Government made huge investments in providing such infrastructure facilities to industries. The Central Government, as well as the State Governments invested huge funds in power generation and distribution, and many new power Table 3.1 Production of Commercial Energy Form of energy Unit 1950-51 1990-91 Coal Million tonnes 33.00 211.73 Lignite Million tonnes - 14.07 Crude oil Million tonnes 0.26 33.02 Natural gas Million cubic mets - 17,998.00 Thermal power Billion Kwh 3.00 186.45 Hydro power Billion Kwh 2.52 71.54 Nuclear power Billion Kwh - 6.24 projects were undertaken and completed. Similarly, investments were made in road building, communications, creation of port facilities etc. Apart from this, various State Governments made developed plots of land or industrial estates with power, water, roads, and communications available to entrepreneurs who wanted to set up industries. This helped considerably in the growth of industries. Changes in the production of primary commercial energy since 1950-51 are summarised in the following table: 144 REPORT OF THE NATIONAL COMMISSION ON LABOUR Oil and natural gas emerged as significant sources of energy since the eighties. The pattern of sectoral consumption has also undergone noticeable changes over the years as can be seen from the following table: Power shortages caused by substantial shortfalls in achieving power targets have been a recurring theme from plan to plan.

OIL AND NATURAL GAS: The Oil and Petroleum industry must be
considered a gift of the planning era. The indigenous oil exploration programme gained credibility in the seventies. New sources of oil were discovered, and considerable refining capacity was created. The Oil and Natural Gas Commission was set up for oil exploration. Additional refining capacity was created through the expansion of some of the existing plants, and the commissioning of new refineries.

TRAINING AND SKILLS DEVELOPMENT: Trained manpower is necessary for industrial growth. To
cater to the growing needs of industries during the last fifty years, the Government set up a large number of industrial training institutes, all over the country to train skilled workers. It also set up Indian Institutes of Technology, Management Institutes and Engineering Colleges to train persons with higher management and technical skills. Table 3.2 Shares Percentage in Final Energy Consumption Sector 1953-54 1990-91 Industry 39.8 50.4 Transport 46.2 24.5 Domestic 9.9 13.8 Agriculture 1.7 9.0 Others 2.4 2.3 Total 100.0 100.0 REPORT OF THE NATIONAL COMMISSION ON LABOUR 145 3.24 Our youth have been quick at learning skills. We have therefore had no shortage of skilled manpower to cater to the growing requirements of industry.

SCIENTIFIC RESEARCH :
Research in science and applied technology is very much needed in order to sustain technological development in industries. The Government of India set up 48 national laboratories to undertake applied research in chemistry, physics, electronics, botany, etc., and these research institutes developed a number of new processes which are commercially exploited by industries. Indian scientists and technologists also ushered in the Green Revolution, and the White Revolution, and developed space technologies on their own.

BACKWARD AREA DEVELOPMENT:

Before Independence, industries were mostly located in and around port cities like Mumbai, Kolkata or Chennai. After Independence, new centres of industries were developed as a result of the infrastructural facilities that were made available by the State Governments. Baroda, Coimbatore, Bangalore, Pune, Hyderabad, Faridabad, Rajkot, and many others, grew up as new industrial cities. Both the Central Government and the State Governments followed a deliberate policy of encouraging industries in backward areas. The Central Government selected a few backward districts and offered 25% capital subsidy for industries set up in these areas. Various State Governments also offered similar capital incentives, exemption from sales

tax levy, subsidies on power rates, cheap developed land, sales tax, loans and other facilities for the growth of industries in these areas. This considerably helped the growth of under developed or backward areas in the different states.

EMPHASIS ON PUBLIC SECTOR

3.28 Right from the beginning, the planners attached great importance to the public sector. It was expected that the sector would control the Commanding heights of the Indian economy. 3.29 In the Industrial Policy Resolutions of 1948 and 1950, a very important role was assigned to the public sector. Power, telephones, communications, atomic energy, defence industries and some areas were reserved for the public sector. Certain industries like life insurance, civil aviation, banks were nationalised and were included in public sector. Thereafter, whenever there was a 146 REPORT OF THE NATIONAL COMMISSION ON LABOUR shortage, the Government stepped in to bail out, as it did with the cement and paper industries. The Government took over sick industries to provide employment. That is how a large number of textile industries came into the public sector. 3.30 Upto the year 1999, there were 235 public sector undertakings and the Government had invested an amount of Rs. 273700 crores in such undertakings. In 1998-99, they made a gross profit of Rs. 397.7 crores.

EVOLUTION OF INDUSTRIAL POLICY IN INDIA Before Independence, the policy of the British Government was against
encouraging industrial development in India. No incentives were offered to Indian industries for their growth. There were many desired and undesired hurdles placed in the way of the growth of Indian industry. Whatever industrial development took place in India was in spite of the negative and hostile attitude of the British Government. Credit must be given to pioneers like Jamshedji Tata, Walchand Hirachand, Lala Sriram, G.D. Birla and others, who laid the foundations of modern industry in India.

AFTER INDEPENDENCE :
Immediately after Independence, the Government of India announced its industrial policy in 1948 and laid down the plan for future industrial growth in the country. It also declared its policy on foreign capital in 1949, and invited foreign capital for investment in the country. The Government was keen to dispel the apprehension that foreign enterprises may be taken over. INDUSTRIAL POLICY RESOLUTION, 1948: The first Industrial Policy Resolution, announced in 1948, broadly laid down the objectives of the Governments policy in the industrial field and clarified industries and enterprises into four categories, namely:

a) Those exclusively owned by the Government, e.g. arms and ammunition, atomic energy, railways, etc.; and in emergencies, any industry vital for national defence. b) Key or basic industries, e.g. coal, iron and steel, aircraft manufacture, ship building, telephone, telegraphs and communications equipment except radio receivers, mineral oils, etc. The undertakings already existing in this group were promised facilities for efficient working and reasonable expansion for a period of ten REPORT OF THE NATIONAL COMMISSION ON LABOUR 147 years, at the end of which, the State could exercise the option to nationalise them. c) The third category of 18 specified industries were to be subject to the Governments control and regulation in consultation with the then provincial (now State) Governments. d) The rest of the industrial field was, more or less, left open to the private sector.

INDUSTRIAL (DEVELOPMENT & REGULATION) ACT, 1951: The Industrial Policy Resolution of 1948 was followed by a Government of India
(GOI) Resolution on 2 September 1948, constituting a Central Advisory Council of Industries under the chairmanship of the Minister for Industry. In 1951, the Industrial (Development and Regulation) Act was passed by the Parliament. The main provisions of the Act were:
nd

a) All existing undertakings at the commencement of the Act, except those owned by the Central Government were compulsorily required to register with the designated authority. b) No one except the central Government would be permitted to set up any new industrial undertaking except under and in accordance with a licence issued in that behalf by the Central Government. c) Such a licence or permission prescribed a variety of conditions, such as, location, minimum standards in respect of size and techniques to be used, which the Central Government may approve. d) Such licenses and clearances were also required in cases of substantial expansion of an existing industrial undertaking.

e) The industries to be brought under regulation were divided into two parts, Part I and II in the Schedule to the Act. 3.36 In regard to the industries listed in Part I of the Schedule, the Central Government could issue necessary directions in respect of quality of its products, falling production, rise in prices etc. a) Government could transfer industries specified in one part to another.

INDUSTRIAL POLICY RESOLUTION, 1956 : After 1948, India adopted a democratic constitution,
guaranteed fundamental rights and also enunciated certain directives of state policy. The Parliament accepted the socialistic pattern of society as the objective of social and economic policy. 3.39 A new Industrial policy was therefore announced in 1956. 3.40 This Industrial Policy divided industries into three categories. All basic and strategic industries were to be set up in the public sector, and were called category A type of industries. In category B industries were private enterprises who could participate along with public enterprises. This sector was called the joint sector. All remaining industries falling in category C, were left to be developed by the private sector. 3.41 The Industrial Policy of 1956, for the first time, emphasised the role of small-scale industries in the development of the national economy. The statement pointed out the importance of the SSI Sector in providing employment. It also laid emphasis on the equitable distribution of national income and the effective mobilisation of resources. The industrial policy, therefore, recommended the development of ancillary industries in areas where large industries were to be set up. 3.42 MONOPOLIES COMMISSION: In April 1964, the Government of India appointed a Monopolies Inquiry Commission to inquire into the existence and effect of concentration of economic power in private hands. The Commission was requested to look at the prevalence of monopolistic and restrictive practices in important sectors of economic activity, the factors responsible for these and the legal solutions for them. The Commission looked at concentration of economic power in the area of industry, and examined industrywise and productwise concentration. The Commission also examined the concentration ratio. This Commission drafted a law to control monopolies and recommended the setting up of a permanent Monopolies and Restrictive Trade Practices Commission. On this basis, an Act was REPORT OF THE NATIONAL COMMISSION ON LABOUR 149 passed and a Monopolies Commission was appointed by the Government in 1969.

Scientific and Technological Developments after Independence : Prior to independence India produced scientists like J.C.Bose,
C.V.Raman and S.Ramanujan. A new chapter began in the history of Science and Technology in India after independence. Jawaharlal Nehru was a great believer in science and technology. He considered them as effective tools to bring rapid socio-economic changes in India. Therefore his Government promoted research in science and technology. The Parliament adopted Nehrus Science Policy Resolution in 1958. Three organizations played very important role in the promotion of science and technology in India. They are 1. The Department of Atomic Energy (DAE) which functioned under

H.J.Bhabha, 2. The Council of Scientific and Industrial Research

112 (CSIR) that worked under S.S.Bhatnagar, and 3. The Defence Science Organisation (DSO) headed by D.S.Kothari. Nehru laid the foundation for the National Physical Laboratory at Delhi in 1947. It is at this Laboratory an inscription bears the words of Louis Atomic Research: The Atomic Energy Commission was set up in August 1948. It became full-fledged Department of Atomic Energy (DAE) in 1954 under Homi Jehangir Bhabha

Council of Scientific and Industrial

Research : The Council of Scientific and Industrial Research (CSIR), which was set up in 1942, was re-organised after independence. Nehru became its president.

It was placed under S.S. Bhatnagar, a

great scientist. Due to his efforts thirty national laboratories in different parts of India came up before 1964. Many more centres have come up all over India.

Space Research : Space research has Nehrus Government appointed a Scientific Manpower Committee in 1947 to assess the technical personnel needed for the country. It led to the establishment of the Indian Institutes of Technology (IITs) at Chennai, Delhi, Kanpur, Karagpur and Mumbai. Later two more have come at Roorkee and Assam. They have produced many trained technologists. India stands third in having trained technologists next to the United States and Russia. Computer engineering is popular in India. There are many computer scientists and professionals in the country.

Agricultural
Republic of India (1947 CE onwards)
Special programs were undertaken to improve food and cash crops supply.[37] The Grow More Food Campaign (1940s) and the Integrated Production Programme (1950s) focused on food and cash crops supply respectively.[37] Five-year plans of Indiaoriented towards agricultural developmentsoon followed.[37] Land reclamation, land development, mechanization, electrification, use of chemicalsfertilizers in particular, and development of agriculture oriented 'package approach' of taking a set of actions instead of promoting single aspect soon followed under government supervision.[38] The many 'production revolutions' initiated from 1960s onwards included Green Revolution in India, Yellow Revolution (oilseed: 1986-1990), Operation Flood (dairy: 1970-1996), and Blue Revolution (fishing: 1973-2002) etc.[39] Following the economic reforms of 1991, significant growth was registered in the agricultural sector, which was by now benefiting from the earlier reforms and the newer innovations of Agro-processing and Biotechnology.[40] Due to the growth and prosperity that followed India's economic reforms a strong middle class has emerged as the main consumer of fruits, dairy, fish, meat and vegetablesa marked shift from the earlier staple based consumption.[41] Since 1991, changing consumption patterns have led to a 'revolution' in 'high value' agriculture while the need for cereals is experiencing a decline.[41] In fact, the per capita consumption of cereals declined from 192 to 152 kilograms from 1977 to 1999 while the consumption of fruits increased by 553%, vegetables by 167%, dairy products by 105%, and non-vegetarian products by 85% in India's rural areas alone.[42] Urban areas experienced a similar increase.[42] Agricultural exports continued to grow at well over 10.1% annually through the 1990s.[43] Contract farmingwhich requires the farmers to produce crops for a company under contract and high value agricultural product increased.[44] Contract farming led to a decrease in transaction costs while the contract farmers made more profit compared to the non-contract workforce.[45] However, small landholding continued to create problems for India's farmers as the limited land resulted in limited produce and limited profits.[43] Since independence, India has become one of the largest producers of wheat, edible oil, potato, spices, rubber, tea, fishing, fruits, and vegetables in the world.[46] The Ministry of

Agriculture oversees activities relating to agriculture in India. Various institutions for agriculture related research in India were organized under the Indian Council of Agricultural Research (est. 1929). Other organizations such as the National Dairy Development Board (est. 1965), and National Bank for Agriculture and Rural Development (est. 1982) aided the formation of cooperatives and improved financing. The contribution of agriculture in employing India's male workforce declined from 75.9% in 1961 to 60% in 19992000.[47] Dev (2006) holds that 'there were about 45 million agricultural labor households in the country in 19992000.'[48] These households recorded the highest incidence of poverty in India from 1993 to 2000.[49] During 2003-04, agriculture accounted for 22 % of India's GDP and employed 58 per cent of the country's workforce.[50] India is the world's largest producer of milk, fruits, cashew nuts, coconuts, ginger, turmeric, banana, sapota, pulses, and black pepper.[50] India is the second largest producer of groundnut, wheat, vegetables, sugar and fish in the world.[50] India is also the third largest producer of tobacco and rice, the fourth largest producer of coarse grains, the fifth largest producer of eggs, and the seventh largest producer of meat.[50] The green revolution introduced high yielding varieties of crops which also increased the usage of fertilizers and pesticides.[51] About 90% of the pesticide usage in India is accounted for by DDT and Lindane (BHC/HCH).[52] There has been a shift to organic agriculture particularly for exported commodities.[53]

Agricultural Growth and the Green Revolution

After independence India depended on foreign countries for food. Let us examine what we achieved later through various activities in the agricultural sector. India constructed several huge dams which laid the foundation of agricultural progress. Gather information on them and present in the class. Dependence on other countries for food will adversely affect the development of an agricultural country. So, Jawaharlal Nehru, Lal Bahadur Sastri and Indira Gandhi, our former Prime Ministres, took initiative in bringing about basic changes in the agricultural field. Thus a new agricultural policy was framed. Let us examine its salient features. Use of high quality seeds Use of fertilisers and machines

Increase of irrigation facilities Facilities for soil testing Provision for agricultural loans. The age of Green Revolution comes after the implementation of land reform legislations which gave ownership of land to the peasant. In the absence of agriculture in the public sector the active participation of peasants was un avoidable for increase in production. Land reforms helped to equip them in this regard. Thus we aimed at Green Revolution, a big leap in the agricultural field. Steps were taken to ensure fixed price for our agricultural products. This led to increase in food production. By 1980 India attained self sufficiency in food with a surplus of about 30 million to. India which imported food items before the Green Revolution began to export it. What were the transformations in areas like economy and occupation that followed the growth of India from food shortage to food self sufficiency. Gather information and add to Enquiry Note.

The prolonged neglect of agriculture in India meant that there was almost no growth in the agricultural sector. From 1891 to 1946, output of all crops grew at 0.4 percent a year; the rate for food grains was only 0.1 percent per year. The land tenure system led to exploitative agrarian relations and stagnation (see Land Tenure, this ch.). Farmers had little incentive to invest, and despite great strides in foreign agricultural technology, Indian agricultural technology stagnated. Specifically, there were few improvements in seeds, agricultural implements, machines, or chemical fertilizers. At the time of independence in 1947, agriculture and allied sectors provided well over 70 percent of the country's employment and more than 50 percent of the gross national product. Agricultural development was a key to a number of national goals, such as reducing rural poverty, providing an adequate diet for all citizens, supplying agricultural raw materials for the textile industry and other industries, and expanding exports. In the mid-1960s, the goal of self-reliance was added to this list. The central government has played a progressively more important role on the agricultural front by providing overall leadership and coordination, as well as by providing a significant part of the financing for agricultural programs. However, the primary responsibility for the design and implementation of agricultural programs, in accordance with the constitution, remained with the states in the late twentieth century. India's agricultural growth strategy after independence evolved over three distinct phases. In the first phase, roughly covering the period through the Second Five-Year Plan, agricultural growth rested on removing basic socioeconomic constraints through land reform, change in

the village power structure, reorganization of the rural poor into cooperatives, and better citizen participation in planning. The initial assumption was that changing the land tenure system by abolishing the zamindar system--a method of revenue collecting and landholding developed during the Mughal and British colonial periods--would stimulate agricultural output (see The Mughal Era; The British Empire in India, ch. 1). The second phase occurred during the Third Five-Year Plan (FY 1961-65). The continuing shortages of food in the 1960s and the consequent crises convinced planners that raising agricultural output, especially food grains, was essential for political stability and independence from foreign food aid. Self-sufficiency in food-grain production and development of an adequate buffer stock through procurement became clearly defined goals in the mid-1960s. Keeping in mind the variety of socioeconomic and agroclimatic differences, the government adopted an area-specific approach, and emphasized programs such as the Intensive Area Agricultural Programme and the Intensive Agricultural District Programme. The third phase in India's economic development is identified predominantly as the Green Revolution. This phase relied on better seeds, more water via irrigation, and improved quantity and quality of fertilizer during the Fourth Five-Year Plan (FY 1969-73), the Fifth Five-Year Plan (FY 1974-78), and the Sixth Five-Year Plan (FY 1980-84). The Green Revolution was successful in meeting the goals of self-sufficiency in food-grain production and adequate buffer stocks by the end of the 1970s. Production was more than 100 million tons in 1978 and 1979. Imports were negligible, and the year-end buffer stocks from 1976-79 averaged more than 17 million tons. After 1980 buffer stocks fell below 10 millions tons only once, in 1988. In the mid-1990s, the major goals of agricultural policy continued to be self-sufficiency in food staples and adequate food supplies at affordable prices for consumers. Expanding cereal production continued to be a major objective because of the population growth rate of almost 2 percent per year. The budgetary share of agriculture, together with irrigation and flood control projects, remained almost constant in the first six plans, varying between 21 percent and 24 percent. The Eighth Five-Year Plan (FY 1992-96), as conceived in the early 1990s, not only aimed at continued self-sufficiency in food production, but also included plans to generate surpluses of some agricultural commodities for export. It also aimed at spreading the Green Revolution to more regions of the country with an emphasis on dryland farming.

Policy Changes
We often hear a lot about globalization. Let us examine the beginning of globalization in India. There are arguments that Indias self sufficient economy is not suitable to the new age and development is impossible without foreign

capital. As the production capacity of Indian industries was low, modern technology was necessary. As the government could not invest money in public sector, privatisation was found necessary. It was on thesse grounds that the New Economic Policy was accepted in 1991. The government declared that this change of policy is to exploit the benefits of globalisation. Let us examine its main features. Commercial and Industrial regulations were liberalised. Import regulations were dropped Aimed at the gradual privatisation of public sector. Industrial license policy was given up The restrictions on multinationals were lifted. Foreign investment was encouraged How does the New Economic Policy affect India? Organise a discussion with special reference to Agriculture, Industry, Education and Health. Record your findings in the discussion note.