Economic History of India since Independence

Economic history of India since independence in 1947 can be divided into two parts,viz pre-P.V.Narasimha Rao period and post P.V.Narasimha Rao  period. The pre Narasimha Rao  period was marked by,government’s control over economy, nationalization of private companies and banks etc, slow economic development, heavy borrowings from foreign countries and international organisations, grants from developed countries, competition with other developing countries for getting foreign grants and loans etc. The importance of a bureaucrat/Minister was judged by his ability to negotiate loans and grants from foreign countries. The private sector  was seen as villains and it was a fashion with economists and some politicians to condemn private sector. This period saw very slow or negative growth in real terms. Indians professionals, government officials, tourists, businessmen etc. were treated very badly by foreign countries. They were not welcome in most countries.The quality of Indian products was very poor and these were sold in foreign countries for very low prices.

The liberalization/globalization of the Indian economy by Narasimha Rao saw the government treating private sector as partners in economic development of the country, removing some restrictions and controls on private sector. However, the government  appeared to depend on foreign companies for industrializing the country.  The governments of different political parties- United Front, NDA, and Congress  which followed Rao’s  governmernt,  implemented some of the projects(roads for example) initiated by him and followed all his liberalization policies. The present  government  also follows  Rao’s government.policies.

Today. foreign countries including developed countries seek Indian investment in their countries, Indian governments extend loans and grants to several countries, many countries are competing with each other to attract Indian tourists, issue of visas by foreign governments to Indians has been liberalized. In this connection, it is recalled that a foreign embassy in a third country  wanted to interview a member of the family of Indian VVIP before issuing visa. Of course finally visa was issued without interview.

Of cource, Rao’s policy initiatives coincided with the collapse of communism in most of the countries.

Rao’s birthday should be celebrated all over the country suitably

INDIAN AUTOMOBILE INDUSTRY-NO NEED FOR EXPANSION

India has a population of 120 crores. The number of households will be about 25 crore. As of now, India produces about 25 lakh cars annually. Assuming that cars have a life of about 10 years, there will be about 2.5 crore cars in working condition in the country shortly.

The annual production of two-wheelers in the country is about 1.4 crores. Here also it can be assumed that the life of a two- wheeler is about 10 years. This means that there will be about 14 crore two-wheelers in the country shortly.

Besides cars and two-wheelers there are three wheelers, commercial vehicles etc. There are also bicycles, battery cycles etc.

As in Japan, India should also recondition vehicles on a large scale so that the vehicle life can be extended.

Taking all vehicles into account there will be one vehicle per family shortly. Considering the acute fuel shortage, traffic jams, shortage of parking space etc in the country, government and the banks should discourage people from owning more vehicles.

Considering all the above, the existing capacity for automobiles appear to be sufficient. Vehicle manufacturers should devote attention on improving the quality and performance of the vehicles rather than on expanding the capacity.

Agriculture- Bangladesh performs better than India

According to FAO, India has arable land of 157 million hectares(ha). It has a population of about 1250 million people. The density of population per ha of arable land is about 8 persons.

Bangladesh has arable land of 7.7.million ha and a population of about 155 million. The density of population per ha of arable land is about 20 persons i.e. about 2.5times that of India.

Bangladesh annually produces about 51 million MT of food grains, mostly paddy(not rice).i.e. about 330kg per head per year while India annually produces about 280 million MT(paddy taken into account- not rice)i.e. only about 225kg per head per year. It is strange that even with low per capita production India occasionally exports food grains while Bangladesh imports food grains.

Bangladesh receives rainfall of about 265 cm annually while India receives only about 110 cm of rainfall. But low production of grains in India is not due to shortage of water,It is due to under utilization of water as can be seen from the very large quantity of river water joining the sea in various parts of India.There shold be more lakes and dams in India and river and rain water should be drained in these lakes and dams .

Bangladesh takes two/three crops in a years on larger proportion of land than India. Average paddy yield in Bangladesh is also high at around 4.3 MT/ha while in India it is about 3.5 MT/ha. Thus while on an ha of arable land Bangladesh produces about 6.5 MT of food grains, India produces only about 1.8 MT(India produces coarse grains on rain fed areas where the yield is very low and this brings down annual production on an ha of land.

India needs to spend more time and energy on finding ways for better utilization of rain/river water -by linking rivers with rivers, rivers with lakes, recharging ground water etc.

Bihar,least developed major state

Among the major states, Bihar is the least developed state. The main problem is the excess population and high population growth rate. While population in the 0-14 years age group, developed states have only about 25% of the total population, in Bihar it is 35%. The active working age people are in the age group 15 to 59. In this age group, developed states have over 65% of the total population, while in Bihar it is only about 55%. Bihar should give high priority to population control. Otherwise it will be impossible for any administration to develop the economy.

If Bihar is to catch up with the rest of the states, it should make people work as much as possible. Since the number of workers is proportionately less in Bihar, as a short term measure, the employees should be asked to put in an extra hour work i.e. 9 hours a day against 8 hours in other states.

Work should be provided to all able bodied persons. Till adequate number of factories are established, the existing factories should be asked to work 3 shifts a day. Government should establish factories and transfer ownership to the industrialists later.

Indian Roadways

Extract from 1998 manuscript”WHAT AILS INDIAN ECONOMY”

“Roadways: According to government statistics, in 1995, India had 1.2 million km of unsurfaced highways(road) and 1.4 million km of surfaced road, which was mostly one lane and partly two lanes.

France, for an area of about 5 50 000 sq. km has road length of about 8 50 000 km. India for an area of about 33 00 000 sq km should have about 5.1 million km of road length. If we take population, France, for a population of about 60 million has 850000 km and India for a population of nearly 1000 million should have a road length of about 14 million km. Germany,for an area of about 3 57 000 sq.km has a road length of 656000 km and India at this rate should have over 5.7 million km of road length. If Germany with a population of about 83 million has road length of 656000 km,India with a population of 1000 million ,should have road length of over 8 million km. Japan for an area of about 378000 sq.km has a road length of 1160 000 km and India for its area should have about 10 million km of road length.Poplation wise also,India with a population of about 8 times that of Japan should have highways of over 9 million km.

From the above, it is clear that India needs to expand its roadways, at least by about two million kilometres of new roads taking the total to about 4.6 million km, widen at least a million kilometres of surfaced road to two/four/six lanes from the existing one/two lanes and convert the 1.4 million kilometres of unsurfaced roads into surfaced roads. There is also an immediate need to construct fly overs at thousands of unmanned and manned railway crossings and road crossings to avoid accidents and to facilitate smooth running of automobile and other traffic on the roads.”

Though the governments at the centre and states have undertaken a number of road projects, these have not changed the situation to any significant extent.

Bihar under Mr. Nitish Kumar’s rule has not changed.

When Mr. Nitish Kumar assumed office of the Chief Minister of Bihar in 2005 (earlier he was CM for a few days in 2000) there were great expectations. Under his leadership, Bihar was expected to improve in the law and order situation, infrastructure and the economy. At that time Bihar had the lowest per capita net state domestic product(NSDP). Now after years of his rule Bihar still has the lowest NSDP of Rs.20,000 (2010-11) Haryana’s NSDP is over Rs.92000. There is no significant improvement in the law and order situation or in infrastructure.

In spite of his best intentions and efforts the CM could not effect much improvement because it seems that the people are not in a mood to work hard and honestly. It is time to urge people to put in hard work and be honest and committed in work. The other reason is that the state is too large to govern effectively. It has a population of over 10 crores (of course UP and Maharashtra are bigger). Bihar is bigger than about 180 countries out of about 193 countries in the world. For administrative convenience and faster economic development and social improvement, Bihar should be divided into two states. Even with less efficient administrations, both the new states will develop much faster than now.

Bringing more people in the work force

In the past -in 50s and 60s,the minimum qualification required for admission to most of the trades in Industrial Training Institutes (ITIs) is pass in 8th Class,while at present only for a very few-one or two-courses the minimum qalification required is 8th Class,while for the rest, it is 10th class. Similarly one could go for Teachers Training course after passing 8th class, to be able to teach in primary schools, while at present it is pass in 12th class. With a view to bring more people to work force, it would be useful if minimum qualification required for admission to ITIs and Teachers’ Training Institutes is brought down to 8th class.

Similarly,there was a category of doctors who spent just 3 years after school education to become doctors. This course should be revived.

The school education now consists of 5 years of primary education, 3 years higher elementary education,2 years high school and 2 years higher secondary school edcation, making a total of 12 years. This can be reduced initially to 11 years and later to 10 years. One should go for university education- degree course in Arts, science,medicine etc after completing 10 years of school education. Thls will make available to the country about 10% additional work force.

In India, life expectancey at birth has increased to about 67 years now (2011)from around 32 in 1951. Correspondingly the retirement age should also go up. It would probably be just to increase retirement age to 65.This alone will increase the strength of the work force by about 10% – 15%

The larger the work force the higher the GDP of the country. One of the reasons for higher Per capita GDP in developed countries is that over 65% of the population there work.Similarly one of the reasons for lower Per capita GDP in developing countries paticlarly the ones in Africa is that there the work force is less than 50% of the population,mainly due to high birth rates.

Tamilnadu voters’ list- discrepancies

The population of Tamilnadu as per the 2011 census is 7.21 crores. The population of children in the age group of 0-14 in Tamilnadu is around 35% as per the earlier census.
The population of those in the age group 15-18 is more than 5%. Thus the population of people less than 18 years is about 40%. In other words the population of people above the age 18 years, who are eligible to vote, would be only about 60% of the total population. This comes to 4.326 or 4.33 crores. But according to Government figures as reported in the media, the number of voters in Tamilnadu is over 5.00 crores. Assuming an increase of over 1 % during the period of one year since the census was taken in 2011, the voters’ list should contain a maximum of 4.40 crores names. Thus the latest voters’ list prepared by the government seems to contain around 60 lakhs additional names which need to be corrected.

Further the population figures include a large number of immigrant workers from other states like Bihar, Orissa, Jharkhand, Assam, West Bengal, Kerala etc. Most of these workers are unlikely to have registered as voters in Tamilnadu, as they would have registered in their native states. Thus the voters’ list contains much more than 60 lakhs extra names which need to be removed.

Guyana- easy and quick way to increase per capita income.

Guyana is a midsized country in terms of area, with about 215000 sq.kilometres. However in terms of population, it is a very small country with a population of only about 750000 which works out to a density of less than 4 people per sqkm. The world average is about 14 people per sq.km. Guyana has fertile land, receives good amount of rainfall with a number of perennial rivers.The country can easily sustain a population of over 10 million, but unfortunately, the population is declining by about 0.5%.(mainly due to migration to USA, Canada)every year. This is why,the country is unable to exploit its natural resources like land, rainfall, bauxite, gold etc. Its per capita income is only about US$7000/- Guyana can raise its per capita income to about uS$15000/- within a short period of about 5 years, if the goverment leases out just 2 million hectares of its land to foreigners.The population may increase to about 1 million and the GDP would go up to about 15000 million.

Tamilnadu population 2011-natural growth and immigration

According to provisional 2011 census data, the population of Tamilnadu state, India increased during 2001-2011 by 97 lakh(9.7million) from 6.24 crores(62.4 million) to 7.21 crores. The birth rate was 15.3 per 1000, death rate was 7.6/1000 and the natural increase was 8.6/1000. The natural increase works out to 53 lakhs, the balance of 44 lakhs being net immigaration(incoming migration-outgoing migration) from neighbouring states and mostely from high population growth states like Bihar, Jharkhand etc. But for the immigrants, the economy of Tamilnadu would have been in very bad shape. There would have been no growth at all. Does this mean that there is shortage of labour?

Actually, the economy has not expanded so much as to lead to labour shortage.(In fact even with immigrants,the economy has not grown as much as it could have been) What has happened is that a large number of people of Tamilnadu have been taken away from the labour force because of the so called welfare measure of the government of Tamilnadu, like free food items, free clothig, free shelter, free schooling etc(Free medical treatment however is necessary). Because of the freebies, a person needs to work only fo 4-5days in a month to earn for his requirements For the rest of the days, people are made to lie idle. Hence, there has been need for people from other states to migrate to Tamilnadu.

The migrants who drive the growth engine of the state need to be looked after better. They have to be provided with all the welfare measures as are the local people. The goverment should allot house sites to them on a priority basis. In other words, government should encourage these migrants to settle in Tamilnadu permanently so that the farmers will intensify agriculture, industriliast will think of expanding their busiesses,service providers will enlarge their activities. Simultaneously, the government should minimise the welfare measures, so that the local labour is also fully available for agricultural, industrial and other activities.
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