Performance Of Indian Economy After Independence

Ishita Biswas
Mar 23, 2020   •  51 views

It has been seventy-one years since India emerged from its oppressive age to rely on Nehru’s

words that had been embarked upon them, the possibility of ranging opportunity building the

basic foundations on which India thrives upon.

It was on 14th August 1947 that Nehru had declared – ‘The achievement we celebrate today is

but a step, an opening of opportunity, to the great triumph and achievements that await us.’

He reminded the country that the tasks ahead included “the ending of poverty and ignorance

and disease and inequality of opportunity”. Keeping these words in mind, India has

developed to be home to almost a sixth of the global population is one of the fastest-growing

emerging economies today.

At first, India found itself progressing as a planned economy with the objective to strengthen

its sectors to be able to be self-sufficient instead of relying on the resources of another. The

first few plans focusing on the growth of the manufacturing sector emphasizing heavy

industries to form the backbone of the economy, other areas composed of agriculture and

social development, mainly housing and poverty alleviation.

We saw a changing economic structure with objectives to be achieved within a democratic

political framework with agriculture which initially comprised of over 60 per cent of the GDP,

significantly reduced to 26 per cent and services taking the majority to 75 per cent of the GDP

growing from 30 per cent. Using the mechanism of a mixed economy where both private and

public economies co-exist, the public sector playing a more dominant role as the government

tried to pull the country out of the state of stagnation.

India initiated the planning for national economic development with the establishment of the

Planning Commission, which came up with its First Five Year Plan (1951-1956) to raise

domestic savings for growth and to help the economy resurrect itself from colonial rule. It

was the Second Year Plan (Nehru-Mahalanobis Plan) that broke through the barriers to evoke

the entrepreneurial role of the state, to develop the industrial sector, the industrial policy

retaining its objectives to be of a high growth rate, national self-reliance, reduction of foreign

dominance, building up of indigenous capacity, encouraging small scale industry, bringing

about balanced regional development, prevention of concentration of economic power,

reduction of income inequalities and control of the economy by the State. The planners and

policymakers suggested the need for using a wide variety of instruments like state allocation

of investment, licensing and other regulatory controls to steer Indian industrial development

on a closed economy basis.

Performance of Indian Economy after Independence

These plans were established to eventually ensure that the benefits of the growth trickle down

to the poor once the growth process gets established, although most doubted the effectiveness

due to the external factors. Even as the country has progressed in laying out the basic

the framework to take the economy to high growth path by building roads and ports and ramping

up the food grain production, a fast-growing population and infrastructure woes demand more

work to be done on multiple fronts.

The Quantitative changes are as follows:-

1. Rising trend of National Income and Per Capita Income:

The economic growth of any country is measured by the increase in national and per

capita output. During the plan period, the national income of the country has certainly

gone up. In 1950- 51, net national product at factor cost or national income (at

1999-2000 prices) stood at Rs.2, 06,493 crore. It rose to Rs. 27, 60,325 crores in

2007-08 (at 1999- 2000 prices).

The performance of the Indian economy in this direction in the 1980s, 1990s was

certainly praiseworthy since it recorded a growth rate of more than 6 p.c. p.a. GDP

growth rate in the 2000s is unprecedented. Yet, it is inadequate compared to the

needs of the country, the problem of scarcity and how the country deals with the


2. Increase in Agricultural and Industrial Output:

Over the plan period, the Indian economy experienced a higher growth rate in

agriculture as well as in industry. Pre-plan period recorded an agricultural growth

rate of 0.3 p.c. while the plan period showed a growth rate of 2.66 p.a.

Performance of the industrial sector is certainly a better one. During the plan

period, 1950-2007, the overall achievement in this sector is more than 4.8 p.c

3. Qualitative Changes or Structural Changes:

During the plan period, the ‘growth plus change’ took place in India that changed

its entire outlook, India witnessing structural changes that led to benefit them in

the coming times. This signifies the inter-relationship among the different sectors,

that is, primary (agriculture and allied activities), secondary (manufacturing and

industries) and tertiary (trade and services) sector.

Performance of Indian Economy after Independence

When India had been allotted as a low level of the economic development area, one

finds the predominance of the primary sector, which suggests that its contribution

towards national income is the largest. It also means that the majority of the

population is involved or is dependent on the sectors dominant presence and

derives their livelihood from its workings. Therefore, as economic development

proceeds, the inter-relationships tend to change and the previously adopted sectors

tend to lose importance.

4. Occupational Pattern:

The Clark- Fisher thesis says that, in an expanding economy, employment

situation shifts more and more in favour of secondary and tertiary sectors.

That is to say, the number of people engaged in the primary sector tends to decline

while it tends to rise in the other two sectors. Although, throughout the 20th

century it can be observed that the percentage of people engaged in the primary

sector has not fallen significantly.

However, the occupational structure in India is often considered as static with the

reasons that there has been a massive rise in population and unfortunately inadequate

growth of both the industrial and service sector.

5. Economic and Social Capital Formation:

By social capital, we mean transport, irrigation, power, education, health, etc.

Building up of social capital is one of the prerequisites of economic development.

Infrastructural development helps quicker economic development. So, social

capital formation is equivalent to economic development. During the plan period,

we have made rapid strides in respect of the construction of railway lines, irrigation,

power, health and sanitation, education, etc.

Performance of Indian Economy after Independence

While concluding I’d like to express that India has witnessed enormous changes with

the considered criteria for development, which simultaneously help with the process

of development. Although we have managed to escape the ‘low-level equilibrium

trap’, the black stains of underdevelopment and inefficiency are still prominently

existent. Nevertheless, India is ultimately termed as an ‘Underdeveloped-developing

economy’ that is yet to come to its peak in this competitive world.