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Foundations of India's Development Strategy

The document discusses the foundations of India's development strategy following independence. It describes the Nehru-Mahalanobis approach which emphasized rapid industrialization through public investment in heavy industries. It aimed to overcome capital scarcity and structural limitations to generate surplus for reinvestment. However, this strategy led to relative neglect of agriculture and inflationary pressures over time. The new agriculture policy under D.R. Gadgil aimed to boost farm output through land reforms, irrigation expansion, credit access, and improved inputs.

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Drashti Choudhary
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33 views8 pages

Foundations of India's Development Strategy

The document discusses the foundations of India's development strategy following independence. It describes the Nehru-Mahalanobis approach which emphasized rapid industrialization through public investment in heavy industries. It aimed to overcome capital scarcity and structural limitations to generate surplus for reinvestment. However, this strategy led to relative neglect of agriculture and inflationary pressures over time. The new agriculture policy under D.R. Gadgil aimed to boost farm output through land reforms, irrigation expansion, credit access, and improved inputs.

Uploaded by

Drashti Choudhary
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Foundations of India’s Development Strategy

Indian Economy

Indian Economy (M.Sc Econ) © G. S.


Autumn 2022
Hiremath (IIT Kharagpur)
Indian Planning: Basic Strategy and Analytics

• Structural break in fifties

• Analytical ideas underlying planning

• Market Vs plan

Indian Economy (M.Sc Econ) © G. S.


Autumn 2022
Hiremath (IIT Kharagpur)
The Nehru-Mahalanobis approach

• Genesis of the Nehru-Mahalanobis approach

– Gandhian approach vs Nehru’s modernist approach

– Bombay Plan

– Socialist framework

Indian Economy (M.Sc Econ) © G. S.


Autumn 2022
Hiremath (IIT Kharagpur)
The Nehru Mahalanobis approach

• Deficiency of capital

• Limitations of speed of accumulation of capital

• Structural limitations – savings – productive investments

• Low growth agriculture – Industrialization – absorption of surplus labour

• Low savings

• No question of Keynesian type of unemployment and assumption of nearly


closed economy

Indian Economy (M.Sc Econ) © G. S.


Autumn 2022
Hiremath (IIT Kharagpur)
The Nehru-Mahalanobis approach

• Dominant role to public investment.

– Where this investment should go – debate

• Emphasis on heavy industries or capital goods industries Vs Textile first


policy

• Variant of Soviet model or Lewis’s model?

• Adoption of mixed economy and competition for scarce capital

• Trade as an engine of growth?

Indian Economy (M.Sc Econ) © G. S.


Autumn 2022
Hiremath (IIT Kharagpur)
The Nehru Mahalanobis approach

• Forging backward and forward linkages – industrial production was


impressive during 1950-1965

• Relative de-emphasis on agriculture in second Five year Plan and later –


large scale import of food grains

• Sharp increase in defence spending in post Indo-China war and failure of


successive monsoons

• Annual plans

• Inflationary tendency

Indian Economy (M.Sc Econ) © G. S.


Autumn 2022
Hiremath (IIT Kharagpur)
New agriculture Policy of D. R. Gadgil

• The question of land reforms

• Shift in emphasis from major to minor irrigation

• Adequate provision of credit

• An alteration in the input base of agriculture

• The development of fertilizer-sensitive varieties of grains

Indian Economy (M.Sc Econ) © G. S.


Autumn 2022
Hiremath (IIT Kharagpur)
The Nehru Mahalanobis approach

• Distributional aspects in the first three plans – growth with redistribution

• Emphasis on trickle down effect?

Indian Economy (M.Sc Econ) © G. S.


Autumn 2022
Hiremath (IIT Kharagpur)

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