India After Independence: 1947-2000 (82 page)

India has had consistent growth over the years in agriculture and industry and in national income. Indian economy has been remarkably stable and little susceptible to world cyclical swings. It was able to withstand without serious damage three major adversities in the world
economy: the oil-shock of the seventies, the collapse of the socialist countries of Europe with which India had close and significant economic ties, and the East and South-east Asian economic crisis of 1997. It was also able to recover from the 1991 fiscal and foreign exchange crisis without serious cost or dislocation.

Stagnation of the colonial period in agricultural production and productivity has come to an end with agriculture growing more than three and a half times since 1950. India has achieved self-sufficiency in food with foodgrains production having grown at 3 per cent per year. Famines have become a distant memory, despite periodic droughts. The effect of the monsoons on agricultural production lessens with the passage of time.

Industry has grown more than seventeen times since 1950. It has, moreover, undergone structural transformation and considerable diversification. The weakness in the basic and capital goods sector has been overcome to a considerable, though not to the desirable extent. The share of this sector in total industrial production has gone up sharply, and India’s dependence on the advanced countries for basic goods and capital equipment has been greatly reduced.

There has also been a massive expansion of power, transport and banking sectors. India has also become more or less self-sufficient in defence production with capacity to produce long-range missiles and atomic weapons, though it still has to purchase some items of highly sophisticated defence equipment from abroad. It has also acquired a large trained scientific and technical force.

India’s national income has grown more than seven-fold since 1950 and its per capita income by two and a half times despite a very high rate of population growth.

Referring to the Indian economy, a sympathetic scholar, Francine R. Frankel, had written in 1978: ‘During much of the later 1960s and into the 1970s, there were chronic food shortages, sharp inflationary price spirals, low availability of domestic raw materials, shortfalls in industrial output, underutilized capacity in consumer goods industries, stagnant or declining rates of public investment, and diversion of scarce foreign exchange for imports of foodgrains and raw materials.’
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Such a situation is not easy to conceive today. And her prediction that India was likely to ‘return to a low-level equilibrium in which growth rates did not significantly exceed the rate of population increase’
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was proved false in the eighties itself.

India has during the last few years entered a period of high economic growth and is on the way to becoming an important global economic power. As such it is bound to play a major role in the world economy of the twenty-first century.

All the same the economic problems that India is yet to solve are enormous. It is likely to face major new challenges in the first few years
of the new millennium. India is still a poor and backward country by world standards, and the economic gap
vis-à-vis
the advanced capitalist countries has widened instead of getting narrowed. This is especially true of the technological gap between the two. Despite the long strides Indian economy has taken, it still does not manage to fully satisfy the basic needs of all of its people, what to speak of their aspirations, in part because of the skewed income distribution.

Nor is India’s economic independence irreversible. We are living in a world capitalist system which is utterly unequal and still divided into core and peripheral countries. The world system even now consists of competing sovereign states and national economies; and the core, developed countries do everything to maintain their privileged position in the world economy while trying to weaken still further the relative position of the states and economies of the periphery. India’s economic development, though independent so far, has not reached that stage where its economy because of being incorporated into and integrated with the world capitalist system, no longer faces the danger of re-peripheralization, that is, subordination and subservience to the core economies.

Under Nehru and Indira Gandhi it was attempted to bridge the gap between India and the advanced countries by concentration on heavy industry and electricity generation. This was a necessary task for India had to compress in a few decades what Europe had achieved in more than 150 years. But while we were running to catch up with the past, the present was moving into the future in the advanced parts of the world. While the vision and the objectives of the Nehru era—that of catching up with the western world while being self-reliant and retaining economic independence and on that basis building a more egalitarian and just society—have to continue to inspire the Indian people, the means and goals of technological transformation have to undergo a change. The world economy has entered a new, momentous phase. Application of science to industry, agriculture, trade and communication has taken another leap forward.

Today, economic development or the fourth industrial revolution is based on micro-chip, bio-technology, information technology, new sources of energy and advanced managerial techniques. All these rely overwhelmingly on the development of intellect or what may be described as ‘brain-power’ or the developed scientific, technical, managerial and other intellectual capacities of the citizens. There is every danger that there may be a new international division of labour where advanced technology, research and development and other ‘brain’ activities would get concentrated in currently advanced or core countries while India and other underdeveloped and developing countries would be confined to production of traditional consumer and producers’ goods and to ‘muscle and nerves’ activities.

The danger of peripheralization also takes the form of domination through the investment of financial or industrial capital. But, obviously, not all foreign capital investment poses this danger. Indian economy, the Indian capitalist class and the Indian state have reached a stage where they
can definitely take in a certain quantum of foreign capital, especially to serve the dual purposes of absorption of technology and organizational structures and skills and provide a degree of competition to indigenous entrepreneurs, private or state. What India has to avoid is the pattern of Latin American style dependent development where the multinational corporations control key economic sectors and positions and determine the predominant patterns of internal production and international exchange. There is the great danger that though foreign capital investment would result in industrial development it would simultaneously perpetuate technological backwardness relative to the advanced capitalist countries. While some industries of the earlier phases or even of the latest phase of industrial revolution would be transferred to India, the advanced ‘brain’ activities would largely continue to be kept out of it and would remain the monopoly of the core, that is, advanced countries. While there is a need to moderate our former hostility to foreign capital, the policy of controlling its direction and role has to be continued.

Because the latest phase of the Industrial Revolution is based on brain-activity, education, especially higher education, acquires great significance. However, its quality and not merely its spread is important. The fact that the education imparted to the overwhelming majority of students in rural as well as urban areas is of extremely low quality means that the country is deprived of the vast potential of its brain-power. In fact, this weakness may be described as internal brain drain. The task of renovating the utterly insufficient and defective educational system, therefore, acquires added urgency. Any populist effort, in its many guises, to neglect the quality of education has to be opposed, for the cost of neglect in this sphere is as great as the neglect of machine-making and other capital goods industries in the earlier periods.

For various reasons, India has been subjected to large-scale brain drain to the United States and Europe. Ways and means have to be found to prevent and reverse this trend. More than NRI (Non-Resident Indian) capital we need the NRIs physically back in India; and we have to find ways to somehow check the continuing outflow.

Planning and an active role of the state in economic development, including the role of the public sector in production, still retain their great significance for without them India cannot hope to compete in the new technology sector. However, the public sector has to be not only maintained but also made more productive through the more efficient use of resources and competition with the private sector. It also needs to be freed from the stranglehold of political patronage and the ill-fitting and incompetent bureaucracy.

Wide prevalence of poverty, inequality and social injustice and the poor quality of life of the vast majority of the people are the major areas of
darkness in India’s social and economic development. The Indian people enter the twenty-first century with a low per capita income, an intolerable level of illiteracy and a lowly position on the world index of human resources development, despite commendable achievements in terms of economic growth and political democracy. A change in the social and economic condition of the people has occurred since independence but at too slow a rate.

Putting forward the social objectives of planning before the parliament in 1954, Jawaharlal Nehru had said:

We are starting planning for the 360 million human beings in India . . . What do the 360 million people want? . . . it is obvious enough that they want food; it is obvious enough that they want clothing, that they want shelter, that they want health . . . I suggest that the only policy that we should have in mind is that we have to work for the 360 million people; not for a few, not for a group but the whole lot, and to bring them up on an equal basis.
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When placing the Second Five Year Plan before the parliament, Nehru defined socialist society as a ‘society in which there is equality of opportunity and the possibility for everyone to live a good life.’
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These objectives have been only partially fulfilled. A humane, egalitarian and just social order has still to come into existence. For too many, ‘a good life’ is still a pie in the sky.

We have dealt with social injustice and the efforts to overcome it in chapters 34 and 35. In the next two sections we will deal with the problems of poverty and the quality of life.

In over fifty years, independent India has failed to eradicate poverty despite consistent economic growth. This is a major blot on its record. Yet, it is also true that though poverty remains, it has been lessened.

In the early sixties, the Planning Commission formulated the concept of the poverty line. Below this line were people whose consumption, especially of foodgrains, did not come up to a minimum level in terms of calories. While no figures were available for the colonial period or the early years after independence, it was calculated that in 1970-71 nearly 59 per cent of the population was living below the poverty line. Since then, this figure has been steadily going down. It had declined to 51.3 in 1977-78, 44.5 in 1983, and 36 in 1993-94. The obverse side of these figures is that over 300 million people, equal to the population of India at the moment of freedom, are still below the poverty line. Moreover, poverty varies across different states, being as high as 63 per cent in Bihar, and 20 per cent in Punjab and Haryana in 1993-94. The main brunt of poverty is borne by landless agricultural labourers, small and marginal farmers and the urban poor.

The reduction in poverty levels was largely the result of various anti-poverty, mostly employment generating, programmes initiated in the mid-seventies by the Indira Gandhi government under the guidance of one of India’s finest and socially committed economists, Sukhamoy Chakravarty. These programmes have been pursued more vigorously, though still inadequately financed, since 1984-85. As the figures show, they have had a significant impact despite corruption and the failure to always reach the targetted groups. Particularly effective has been the Employment Guarantee Scheme (EGS) in Maharashtra. In this context, it may be pertinent to point out that what made possible the taking-up and implementation of the anti-poverty programmes, was the radical restructuring of the Indian economy brought about by the Nehruvian planning strategy during the fifties and sixties.

Even apart from the proof of the poverty line statistics, it is observed that Indians no longer live in abysmal poverty as they did under colonialism. The mass starvation of that period has been conquered. India has not had a major famine since the Bengal famine of 1943. In the worst drought of the century in 1987-88 very few died of hunger or disease. The same was the experience of the serious droughts of 1965-67 and 1972-73.

Similarly, in the colonial period and the immediate post-independence years a vast number of Indians went without two meals a day, several months in a year, and sometimes without even one meal. A recent study has shown that the number of people who could not obtain two square meals a day had dropped to 19 per cent of the households in 1983 and to less than 5 per cent in 1994.
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The reduction in the incidence of poverty is also indicated by the greater availability of foodgrains and other food items over the years. For example, while per capita foodgrains consumption fell by over 24 per cent between 1901 and 1941, it increased from 394.9 grams per day in 1951 to 468.8 grams per day in 1971 and 507.7 grams per day in 1995—an overall increase of 28 per cent. This growth in availability is also evident in the case of several other items of consumption. The annual availability of cloth per head was 9 metres in 1950, 15 metres in 1960 and 29.3 metres in 1995. The chart below presents the picture of annual per head availability of certain other important articles of consumption.