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



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 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 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.