Performance Of The Indian Economy Over 1951-91: An Appraisal

Performance Of The Indian Economy Over 1951-91: An Appraisal



performance Of The Indian Economy Over 1951-91: An Appraisal


Performance of the Indian Economy Over 1951-91: An Appraisal                                                                                                                                                                                                                                                                                                                                      We can assess the performance of the Indian Economy in two ways. 

First, we can look at the objectives of planning as well as the targets that were set for many indicators.

Such as growth of national income, investment etc. Performance of the Indian Economy Over 1951-91: An Appraisal

In many plans, and see how far these objectives  realized and the targets achieved in each Plan.

Alternatively, we can see what broad strategies adopted.

What policies followed and what been the outcome of these policies.

We can see if these policies been unsound person, or if they were sound, whether they implemented proper.

It even be possible that while these policies were appropriate and correct initial.

Over time they outlived their use and continued long after they abandoned and discard.

In fact, to look at the performance by the first method necessary involves adopting the second one.

Because when we try to see whether targets reached and whether objectives realized.

Performance of the Indian Economy Over 1951-91: An Appraisal

We have to see the behavior over time of the variables that influenced by the strategies followed.

Performance of the Indian Economy Over 1951-91: An Appraisal


As mentioned in the previous unit, the basic objectives of all the plans in India large been three-fold

First, to make the economy grow, that is, to aim for a sustained increase in national income.

Second, to ensure that social justice provided to people.

Social justice broad encompasses ideas of equity, poverty alleviation, meeting minimum and basic needs.

Generation of employment.

Third, the achievement of self-reliance. The concept of self-reliance has undergone a change in meaning over time.

Although broad objectives of planning stayed the same, what changed, particularly after 1991.

The strategies and the policy framework.

Performance of the Indian Economy Over 1951-91: An Appraisal


The planning process assumed that investment in basic and capital goods industry was desirable.

The Plans also assumed that capital goods could or  not imported.

Because of this, priority  not given to exports of industrial products.

Moreover, since the planning strategy focused on development of capital goods and heavy industry.

A dynamic growth of consumer goods industry did not take place.

As a result, the capacity utilization in the capital goods sector was sub-optimal.

This pushed up the price of capital goods and made them higher than those prevailing in international market.

Another weakness of the planning process as well as the democratic system been the structural weakness of the Indian State.

Large number of interest groups and pressure groups sprang up in this period.

Which competed for the benefits of development and led to sub-optimal resource allocation.

Often the benefits did not go to the intended beneficiaries.

Finally, the Indian planning process did not provide adequate incentive for capital formation.

In the private sector and for entrepreneurship.

Performance of the Indian Economy Over 1951-91: An Appraisal


Two main targets of the planning process were, first, to generate the investment necessary for the targeted growth.

For this, it was necessary to make investors believe in the possibility of growth so that they induced to invest.

Second, the planning process was to be able to generate enough savings for this purpose.

Before planning process started in India, the rate of saving was low.

Performance of the Indian Economy Over 1951-91: An Appraisal

 What been the performance of the Indian economy over the period 195 191?

In this period the national income increased at the rate of around four percent per mum.

Since population increased at the rate of about two percent per annum per capital.

Income increased at the rate of two percent per annum.

This was not enough to raise a large section of the poor above the poverty line.

Moreover, the pattern of growth was not such as to absorb labour and create employment.

Performance of the Indian Economy Over 1951-91: An Appraisal

 GDP and Population Growth

The First Five Year Plan had modest objectives.

For one, it wanted to raise national income from about Rs.9100 crore (1952-53 prices) to Rs. 10,000 crore.

Implying an annual growth rate of 2.13 per cent.

Another target was to raise the investment rate from about 5 per cent of the national income to 7 per cent.

These targets achieved. The First Five Year Plan was actually a collection of modest projects-aimed at basic reconstruction of the economy.

For most of the 1950’s, the economy performed favorable.

The Second and subsequent Five Year Plans targeted at an annual growth rate of GDP around 5 per cent.

The targets for growth of GDP were 5 per cent for.

The Second and Third Five Year Plans, 5.5 per cent for the Fourth and Fifth Five Year Plans.

While the target lowered to 5.2 in the Sixth Five Year Plan.   

Performance of the Indian Economy Over 1951-91: An Appraisal


Over the period 1980-8 1 to 1989-90, the actual growth of GDP was 5.18 percent per annum.

As compared to 3.52 per cent per mum over 1950-51 to 1980- 8 1.

Over this period, population grew at a rate of 2.1 5 per cent per annum.

Even in the period 1980-8 1 to 1989-90, population grew at 2.13 per cent per mum.

Taking the entire period of 1950-5 1 to 1989-90, per capital GDP grew at 1.55 per cent per mum.

The first Five Year Plan projected that the per capital GDP would double in about 27 years.

However, in reality GDP doubled in 40 years. Performance of the Indian Economy Over 1951-91: An Appraisal

This high rate of population growth implied that the labour force would grow fast.

Indeed it grew at the rate of 2.4 per cent per annum over the period 1960- 1990.

Growth in employment, however, lagged behind, growing at 2 per cent per annum,

In the 1960s and 1970s, and at 1.8 per cent per mum in the 1980s.

The growth in employment in agriculture was low in the 1980s-less than per. Performance of the Indian Economy Over 1951-91: An Appraisal


Agricultural Production as a whole has grown at a fair constant rate of 2.6 percent per annum over the period 195 1 – 1990.

In the 1950’s, much of the increased production came through the expansion of cultivated area.

Later on, the scope for bringing in additional area under cultivation decreased.

Then in the mid- 1960s the New Agricultural Strategy, popular known as the Green Revolution, launched.

This entailed the use of four complementary inputs

i) High Yielding Variety (HYV) seeds,

ii) chemical fertilizers,

iii) machineries such as tractors and harvester-threshers, and

iv) irrigated water facilities.

Thus in the period since the mid 1960s; much of the increase in output has come through increases in yield.

But at the same time it is true that fluctuations and instability in the production of food grains increased.

In the period since the Green Revolution was put into operation.

Performance of the Indian Economy Over 1951-91: An Appraisal

Performance of the Indian Economy Over 1951-91: An Appraisal


What been the main features and patterns of agriculture in India in the period from Independence till circa 1990?

Remember that agricultural growth was actually negative in the 15 years preceding independence.

Moreover, agricultural production was slight lower in 1947 than in 1901, for undivided India.

So definitely in the period since Independence, agricultural growth and productivity shown marked progress.

Although it is well behind the yield level achieved in developed countries.

India achieved self-sufficiency in food grains during the mid 1970s that is India no longer resorts to massive imports of food grains.

But some problems remain. The geographical base of high performing regions to  expanded.

It confined to Punjab, Haryana, western part of Uttar Pradesh and some other regions. Second, public (government) investment

in agriculture declined since the 1980s. This led to sluggish growth rates in agriculture in the 1990’s.

Sustained use of high yielding seeds and intensive cultivation led to deteriorating soil fertility.

Ground-water over exploited, so that there is a depletion in water-table.


The share of manufacturing in the country GDP increased six-fold between the quadrennium 195 1-55 and 1 985-90.

Growth in manufacturing was faster in the first three plans than during the late 1960s and 1970s.

The late 1980s saw a revival of industrial growth.

Over the period 195 1-90 medium and large industry grew faster than small and cottage industries.

Also within the small sector, household type industries using traditional techniques declined sharp.

This sector also seen a sharp rise in employment. A notable feature of industry in India been the diversification of industrial base.

Performance of the Indian Economy Over 1951-91: An Appraisal

This occurred particularly in the factory sector but also in the small industry sector.

In 1950 about 65 per cent of industrial output consisted of consumer goods, about 25 per cent was intermediate goods and the rest capital goods.

By the late 1980s, the three categories had roughly equal shares in factory sector output.

Another characteristic of Indian industry been the rise in indigenous enterprise.

The emergence of several new centers of manufacturing.

The Sixth Five Year Plan (1980-1985) recognized that.

The policy of reservation for small-scale sector tended to be negative in character and that it overprotected.

The Sixth and the Seventh Five Year Plans suggested that development of the small and large industries proceed in an integrated manner.

Performance of the Indian Economy Over 1951-91: An Appraisal


A source of stability-in the economy is that of stability in the general price level.

This roughly means inflation should be low and stable.

When inflation is high it has adverse effects on savings and investment, and hurts the poorer sections of the population.

Over the plan period there been a steady rise in the general price level.

In this period 1950-70 inflation varied between 5 and 6 per cent per annum, while in the 1970s and 1980s it was roughly around 10 per cent per annum.

Foreign Trade

India foreign trade performance analyzed in terms of three aspects: volume of trade, composition of trade and direction of trade.

Direction of trade denotes the nations with which India traded. In the period 1950-1966, India exports hardly increased.

In 1966, the Indian rupee devalued to bring domestic prices alignment with international prices.

However, exports did not grow immediately. Exports picked up only after 1972-73.

Since 1986-87, a sharp rise in exports taken place. In 1950-5 1 exports as a percentage of India national income was 6.8in 1960-61.

It was 4.2 in 1970-71 it fell to 3.8; it increased to 5.4 percentage.

In 1 980-8 1 and 6.9 in 1990-9 1.

India exports- as a percentage of world exports was 2.2 in 1950-51, 1 per cent in 1960-61,0.64 per cent in 1970-7 1,0.42 per cent in 1980-8 1, and 0.52 per cent in 1990-91.

Performance of the Indian Economy Over 1951-91: An Appraisal

This shows that although India exports grew over this period, world exports grew much faster.

This means that India could not seize the opportunity for export led-growth especially over 1960-1 990.

Performance of the Indian Economy Over 1951-91: An Appraisal

                      Over the period 195 1-1 990, the composition of India exports has undergone a remarkable change.

In the beginning of the period, exports consisted large of primary products like tea.

Over the period, processed gems and jewellery, engineering goods, and textiles sharp increased their share in the export basket.

                     As far as imports concerned, the government adopted the import control policy.

This included measures like import licensing, quotas, banning of some imports, as well as tariffs (that is, taxes on imports).

The initial objective behind these policies was to conserve foreign exchange and protect domestic industries. Performance of the Indian Economy Over 1951-91: An Appraisal

Employment Generation

Employment generation can take place through expansion of industries large, small and cottage industries.

Also the agriculture and service sectors create jobs, for people.

However, in India employment generation been slower than the growth in labour force.

Large investment in the public sector helped in creation of employment in the organised public sector.

The slow growth in employment  been because of many factors such as slow growth in agricultural production.

Slow expansion of the manufacturing sector, and concentration of investment in the capital goods industry.

This resulted in unemployment in the economy. Performance of the Indian Economy Over 1951-91: An Appraisal

Distributive Justice

India has had an unenviable record in distributive justice.

In the agricultural sector some positive achievements recorded in terms of abolition of zamindars and security of tenure.

For the country as a whole, however, the progress in land reforms been poor, although a few states performed remarkable well.

Performance of the Indian Economy Over 1951-91: An Appraisal

Since the mid-1960’s when the green revolution launched, insecurity of tenure has gone up in many areas.

Although there some limited increase in capitalist farming, it not led to a perceptive rise in employment.

Moreover, the benefits of green revolution due to irrigation, HYV seeds and mechanization large to richer farmers.

The inequality in distributions of income and wealth does not see to have gone down in rural areas.

In the industrial sector there taken place over time and increase in monopoly and a rise in the concentration of economic power.

The industrial licensing policy pursued till 1991 promoted neither efficiency nor equality in industrial sector.

Performance of the Indian Economy Over 1951-91: An Appraisal

India lacked a consistent, well-formulated strategy for balanced regional development.

This been true both in the absence of an effective policy regarding location of industrial projects.

As well as in the high selective nature of agricultural growth in terms of regions.

What can be said is that over the period 1950-91, regional disparity did not go down.

Added to this is the fact that some states have high per capital state domestic product compared to other states.

Moreover, many of the richer states in 1951 continued to be so in 1990, while some states that were among the poorest in 1951 were also poor in 1990.

Performance of the Indian Economy Over 1951-91: An Appraisal

                    Alleviation of poverty and raising the standard of living been integral components of social justice in India.

These also been among the central objectives of economic planning.

In the first four decades, two phases of poverty alleviation discerned.

In the first phase which continued till the Fourth Plan, the primary emphasis was on economic growth because it was felt that growth will itself take care of equity.

That the benefits of growth will trickle down to the poorer sections. Beginning with the Fifth Plan, poverty was sought to removed through a direct attack on poverty.

To this end several explicit anti-poverty programmes  launched and directed towards selected target groups.

                    If we take the rise in real (adjusting for inflation over time) income per capital.

As a rough overall measure of well-being, some improvement taken place over the last four decades, with per capital income at constant prices almost doubling between 1950-5 1 and 1990-9 1.

Per capital availability of food grains increased by about 13 percent over this period.

Enrollment in primary school level in the age group 5-14 risen from 25 per cent to 50 per cent.

Overall literacy rate has gone up from 18 per cent to 52 per cent.

Life expectancy at birth increased from 32 years to 60 years. Overall death rates as well as infant mortality rate declined.

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