The socio-economic setting of India is a complex, multi-dimensional structure shaped by its historical

legacy, diverse cultures, regional disparities, economic transitions, and political systems. India, as one
of the largest democracies and emerging economies, exhibits a distinct socio-economic landscape that
combines traditional agrarian systems with modern industrial growth and urbanization. India, with its
vast diversity in terms of culture, language, religion, and geography, presents a unique case study for
political economy. Below is an analysis of this setting, broken down into key aspects:
1. Demographics
India is the second most populous country in the world, with over 1.4 billion people, and is projected
to overtake China as the most populous nation. The demographic structure is young, with a significant
proportion of the population being under 30 years old. This youthful population presents both
opportunities and challenges in terms of employment, education, healthcare, and social services.
 Urbanization: India has witnessed rapid urbanization over the last few decades, though a
majority of its population still lives in rural areas. Cities like Delhi, Mumbai, Bengaluru, and
Kolkata are major urban centers, while rural areas face challenges like poverty, limited access
to education, and healthcare.
 Diversity: India is known for its cultural, linguistic, and religious diversity. There are over
2,000 distinct ethnic groups and more than 1,600 languages spoken across the country, with
Hinduism, Islam, Christianity, Sikhism, Buddhism, and other religions practiced.
2. Economic Structure
3. Income and Inequality
4. Education
Education in India has seen substantial improvements, yet challenges remain, especially regarding
access and quality.
 Literacy Rate: India has made significant progress in increasing its literacy rate, which
stands at around 77%. However, literacy rates vary significantly between rural and urban
areas, and between genders, with women often having lower literacy levels.
 Education System: system is one of the largest in the world, with a wide network of public
and private institutions. However, there are issues like overcrowded classrooms, outdated
curricula, and a lack of infrastructure. While having world-class institutions like the IITs and
IIMs, the quality of education at the primary and secondary levels remains inconsistent.
 Higher Education: India produces many graduates, especially in science, technology,
engineering, and mathematics (STEM) fields. However, employability remains an issue, with
many graduates not possessing the skills required by the job market.
5. Health and Healthcare
faces significant challenges, despite improvements in various health indicators.
 Access to Healthcare: Healthcare is a major challenge in both urban and rural India. While
urban areas have relatively better healthcare infrastructure, rural areas often lack basic
medical facilities, trained personnel, and access to medications.
 Public vs. Private Healthcare: The healthcare system in India is predominantly private,
though the government runs a large number of public hospitals. Private healthcare is often
unaffordable for a large section of the population, leading to inequality in access to quality
care.
  Health Indicators: India has made progress in reducing mortality rates, improving life
expectancy, and tackling diseases like polio. However, challenges like malnutrition, maternal
and child health, and diseases such as tuberculosis and malaria remain widespread.
6. Social Issues
India faces several deep-rooted social issues that affect its socio-economic landscape.
 Poverty: Despite economic growth, poverty remains a significant issue, particularly in rural
areas. There are over 200 million people living below the poverty line, with a majority of
them in rural areas. The government has various poverty alleviation programs, but the
effectiveness of these programs is often limited by corruption, inefficiency, and poor
implementation.
 Caste System and Social Inequality.
 Gender Inequality: While gender-related policies have improved in recent years, issues like
child marriage, dowry, violence against women, and unequal pay persist.
7. Infrastructure
Infrastructure development is a crucial area of focus for the government and private sectors.
 Transportation: India has an extensive transportation network, including roads, railways, and
airports. However, road congestion, inadequate public transportation systems, and the need
for more modernized infrastructure in rural areas remain key challenges.
 Energy: energy deficits in certain regions, although it has made progress in expanding its
energy infrastructure, including renewable energy sources like solar and wind power. Energy
access is still an issue in rural areas.
 Urban Development: Rapid urbanization has put pressure on urban infrastructure, leading to
issues such as pollution, housing shortages, and slum development.

1. Historical Context
India’s socio-economic structure has been deeply influenced by its colonial past and the transition
from a largely agrarian society to a modern industrial nation post-independence.
Colonial Legacy:
India's political economy has been deeply influenced by British colonial rule (1757–1947). The
colonial system was largely extractive, with British policies aimed at exploiting India's resources for
the benefit of the colonial power. This created a dependency on external markets and a structural
underdevelopment in the Indian economy. The British colonial rule left India with underdeveloped
industrial sectors, weak administrative structures, and an agrarian economy that relied on subsistence
farming. These factors have contributed to several socio-economic challenges, such as poverty,
illiteracy, and economic dependency, which continued even after independence in 1947.
Post-Independence Planning: After independence, India's policymakers, led by figures like
Jawaharlal Nehru, aimed to transform India’s economy through state-led industrialization, land
reforms, and the development of public sector enterprises. This was reflected in the “Mixed
Economy Model,” which combined elements of state planning with private enterprise. The goal was
to address the economic inequalities and create a foundation for sustainable growth. The Indian state
took an active role in planning and economic intervention, with policies aimed at achieving self-
sufficiency and reducing poverty. This era saw the establishment of a large public sector and a focus
on industrialization.

2. Economic Structure
India has a mixed economy that blends elements of both capitalism and socialism. Historically, the
Indian economy was largely agrarian but has undergone significant transformation in recent decades,
transitioning from a primarily agrarian base to a more diversified economy, with key sectors being
agriculture, industry, and services.
Agriculture:
 Despite the rapid growth of other sectors, agriculture still forms the backbone of the Indian
economy. Although agriculture contributes a smaller percentage to the GDP (around 17-
18%), it remains a major source of employment, with over 50% of the population engaged in
farming and related activities, directly or indirectly dependent on agriculture
 The Green Revolution of the 1960s helped India become self-sufficient in food production,
leading to a rise in agricultural productivity, though challenges persist.
 Agrarian distress and the debate over farmer welfare policies (such as the recent farm laws)
remain significant issues in India’s socio-economic setting.
 Issues like poor irrigation facilities, climate change, and agrarian distress are major concerns
in rural areas, over-dependence on monsoons, land degradation, and low income for farmers
Industry and Manufacturing:
 India's industrial sector has grown rapidly, particularly after the economic reforms of 1991.
 The country is home to a growing number of industrial hubs, ranging from the traditional
textiles and handicrafts industries to modern electronics, chemicals, and automobiles.
particularly in areas such as (IT), manufacturing.
 India has emerged as a global leader in the IT and software services industry, with cities like
Bengaluru and Hyderabad being global hubs for tech companies.
 However, challenges such as low labor productivity, the informal economy, and the slow
pace of industrialization in rural areas continue to affect India’s industrial landscape.
Services Sector:
 The services sector has emerged as the most dynamic sector of the Indian economy,
contributing over 50% of GDP (largest) key driver of India’s economic growth.
 India is recognized globally for its Information Technology (IT) and Business Process
Outsourcing (BPO) and knowledge-based sectors, especially in cities like Bangalore,
Hyderabad, and Pune.
 It includes IT services, telecommunications, banking, finance, education, healthcare, and
entertainment. The sector also includes finance, retail, telecommunications, healthcare, and
education, and has been a major source of foreign exchange earnings and employment
opportunities, particularly for young professionals.
Labor Market and Employment
  Informal Economy: A significant portion of India's workforce is employed in the informal
sector, including agriculture, small businesses, and services. This segment lacks social
security, job benefits, and faces precarious working conditions.
 Youth Unemployment: Despite rapid economic growth, unemployment crisis. The education
system, while large, often does not meet the needs of the labor market, and there is a
mismatch between the skills of the youth and the jobs available in the economy.

3. Social Structure
India is home to a deeply diverse society, with a variety of ethnic, linguistic, religious, and cultural
groups. Socio-Economic Inequality and Social Divides. analyzed through various lenses:
Caste System:
 The caste system has historically played a significant role in India’s social and economic
organization. Despite the abolition of "untouchability" and affirmative action policies, caste-
based inequalities continue to affect access to resources, education, and political power, social
hierarchies and inequalities remain, particularly in rural areas.
 India's political economy cannot be understood without considering the social hierarchies,
particularly the caste system.
 Scheduled Castes (SCs), Scheduled Tribes (STs), and Other Backward Classes (OBCs)
continue to face systemic disadvantages in education, employment, and political
representation. Policies like reservations (affirmative action) have been introduced to address
these inequalities, though debates persist about their effectiveness and scope.
Religion:
 India is a multi-religious society, with Hinduism being the dominant religion, followed by
Islam, Christianity, Sikhism, Buddhism, and other smaller faiths. Religious communities have
a significant impact on political discourse and socio-economic dynamics.
 Tensions between different religious groups, such as communalism, have influenced the
political landscape at various points in history, especially around elections and policies.
Urbanization and Migration:
 India has experienced rapid urbanization over the last few decades, leading to the growth of
major urban centers. However, rural areas remain crucial to India’s economic and social
fabric.
 Rural-to-urban migration, driven by better employment prospects and lifestyle, has led to the
expansion of cities and the rise of informal labor markets. Urban slums, poor living
conditions, and migrant labor are important socio-economic challenges.
 Urban-Rural Divide: While cities have become hubs for modern industries, rural areas still
largely depend on agriculture, which is often characterized by low productivity, indebtedness,
and limited access to basic services.
 Regional Disparities: India also faces significant regional disparities. States like
Maharashtra, Gujarat, and Tamil Nadu have benefitted from industrialization and
urbanization, while others, especially in the northeastern and central parts, remain
underdeveloped. These regional disparities often manifest in political tensions and demands
for greater autonomy.
4. Poverty and Inequality
India continues to face significant poverty, although it has made strides in reducing it since
liberalizing its economy in the 1990s. The poverty rate has been reduced substantially, but a large
percentage of the population still lives below the poverty line. However, economic inequality remains
a significant issue.
Inequality:
 Income inequality in India remains high. There is a stark contrast between the wealthy urban
elites and rural poor. While some parts of India have experienced rapid growth and
industrialization (especially urban centers like Mumbai, Delhi, and Bangalore), large swathes
of the country, particularly in rural areas, remain impoverished. There is a wide disparity in
income distribution, with a large gap between the rich and the poor. A significant portion of
the population lives below the poverty line, particularly in rural areas. Urban poverty is also a
growing concern, with slums expanding rapidly in many major cities.
 Wealth distribution is uneven, with the richest 1% of Indians holding a disproportionately
large share of the country's wealth, while the majority of the people struggle with low wages
and informal sector employment. Social stratification based on caste, region, and gender
further complicates the situation.
Human Development Indicators:
 India’s Human Development Index (HDI), which measures life expectancy, education, and
per capita income, has improved over the years but still lags behind many other emerging
economies.
 Challenges in education, healthcare, sanitation, and nutrition continue to affect socio-
economic development in both urban and rural areas. The public health system faces strain,
especially in rural regions, leading to poor health outcomes like high infant mortality rates
and maternal mortality.

5. Political Economy and Governance: Role of the State

The Indian state has played a central role in shaping the socio-economic framework through both
interventionist policies and liberalizing reforms.
State-led Development (Post-Independence to 1991):
 Economic Models and Planning: The Indian state initially adopted a planning model under
the leadership of Jawaharlal Nehru, aiming for self-reliance through state-controlled
industries, public sector enterprises, and centralized planning. The Indian state has been an
active participant in the economy, both through its public sector enterprises and its regulatory
role. However, the role of the state has evolved, especially with the rise of privatization and
deregulation in the post-liberalization period.
 promoted protectionist policies, with significant state intervention and monetary
regulation. This is characterized as dirigisme, withinside the form of the LPQ Raj. In the
1950s, the government of India pursued a unique economic development strategy: fast
 industrialization through the implementation of centrally drafted five-year plans that
included huge resource mobilization and investment in the building of large industrial
state-owned economies (SOEs).
 Public Sector Dominance: The government controlled several sectors such as energy,
telecommunications, and transportation. The state also played an active role in land reforms,
education, and health services, though with limited success.
 Corruption and Bureaucratic Inefficiency: India's political economy is also marred by
corruption, which hinders economic development. The bureaucracy, in some cases, continues
to be inefficient, and the nexus between politicians, businesses, and bureaucrats leads to rent-
seeking behavior that undermines the economic potential.
 Political Instability: India's political landscape is characterized by a multi-party system, with
frequent shifts in power. While this has led to a robust democratic process, it has also resulted
in political instability at times, which can affect economic decision-making.
 Green Revolution: In the 1960s and 1970s, transformed India's agriculture, leading to
increased food production and the country becoming self-sufficient in grains, especially
wheat and rice. This had a significant impact on rural economies and alleviated some poverty.
 License Raj: The period between 1947 and the 1990s, where strict controls and regulations
governed business activities, leading to inefficiencies and corruption.
Economic Liberalization (Post-1991 Reforms):
 Shift to Market Economy - In 1991, India underwent significant economic reforms aimed
at liberalizing its economy, including privatization, deregulation, and trade liberalization.
These reforms marked a shift from India moved from a heavily regulated, state-controlled
economy towards a market-driven economy and led to rapid growth, especially in services
and technology sectors. This included devaluing the rupee, removing restrictions on foreign
trade, and encouraging foreign investment.
 The end of Cold war, disintegration of USSR and acute stability of payments disaster in 1991
brought about the adoption of an immense monetary liberalization in India. Resultantly, , the
annual average GDP growth has been 6% to 7%, and from 2013 to 2018, India changed into
the globe’s fastest developing core economy, surpassing China. India’s economy was the
fifth-largest in the world with a GDP of $2.94 trillion, overtaking the UK and France in 2019.
but in this corona pandemic circumstances, IMF reported India's rank is 7th in global GDP
with $ 2.72 trillion in 2021.
 Inequality: While the liberalization era spurred economic growth, it also led to rising
inequality. The benefits of economic growth were unevenly distributed, with urban areas and
certain sectors like IT seeing significant gains, while rural and agrarian sectors continued to
face challenges. Despite the growth, the reforms have led to regional disparities.
Globalization and Its Impact
 Integration into Global Markets: The economic liberalization of 1991 made India more
integrated into global markets, particularly in areas like technology, pharmaceuticals, and
business outsourcing. The rise of India's service sector, especially IT and BPO, has made the
country a global economic player.
  Challenges of Globalization: While globalization has provided economic opportunities, it
has also presented challenges such as increased competition, the vulnerability of certain
sectors (e.g., agriculture), and the loss of traditional jobs in some industries.
Welfare Policies and Subsidies:
 The government has implemented several welfare programs aimed at poverty alleviation,
including the Public Distribution System (PDS), Mahatma Gandhi National Rural
Employment Guarantee Act (MGNREGA), and various health, education, and housing
schemes.
 However, the implementation of these policies often faces challenges related to bureaucratic
inefficiency, corruption, and political patronage, limiting their effectiveness.

6. Challenges and Future Outlook

India’s socio-economic setting faces several challenges:
 Unemployment: Despite high economic growth rates, India struggles with job creation,
especially for its youth. The informal sector dominates employment, and job quality remains
low.
 Environmental Sustainability: With rapid industrialization and urbanization, India faces
severe environmental challenges such as pollution, deforestation, and water scarcity.
 Regional Disparities: The socio-economic divide between India’s states and regions remains
significant. While states like Maharashtra, Gujarat, and Tamil Nadu have seen rapid
industrialization, others like Bihar, Uttar Pradesh, and Odisha lag behind.
 Social Inclusion: Despite advances in social policies, groups like SCs, STs, and women still
face significant socio-economic exclusion.

Conclusion
The socio-economic setting of India is a blend of traditional structures and modern challenges. It is a
complex interplay of social, economic, and political factors. It is deeply influenced by its colonial
history, post-independence planning, and subsequent economic liberalization. As a nation, it continues
to balance its rich cultural diversity with its aspirations for economic growth, social justice, and
political stability. Understanding India's political economy requires looking at the intersections of
economic policies, social structures, and governance, as these elements continue to shape its
development trajectory. It has developed a modern economy (the second-fastest growing economy in
the world), remained a democracy, lifted millions of people out of poverty, become a space and
nuclear power, and established a strong foreign policy.
While India is one of the world’s fastest-growing economies, its development is uneven, with
substantial disparities. The government faces the ongoing task of addressing regional disparities,
improving human development indicators, ensuring inclusive growth, and managing the challenges
posed by environmental sustainability and social equity. Low per capita income, maximum population
below the poverty line, insufficient infrastructure, agro-based economy, and a lower rate of capital
formation. As India progresses, these dynamics will continue to shape its future trajectory in both
domestic and global contexts. Addressing the socio-economic challenges of poverty, inequality,
education, and healthcare will be crucial for India’s continued progress and inclusive development in
the future.

BOOK
Bardhan offers convincing factual evidence to support identification of the industrial bourgeoisie (as a
whole) as the dominant proprietary class and the principal beneficiary of state policies. This class,
under the leadership of the top business houses, supported the government policy of encouraging
import substituting industrialization, quantitative trade restrictions providing automatically protected
domestic markets, and of running a large public sector providing capital goods, intermediate products
and infrastructural facilities for private industry, often at artificially low prices.
The other main proprietary class is the agrarian bourgeoisie or rich-farmer class, which is numerically
far more important than the industrial bourgeoisie. Land reforms, like the Zamindari Abolition and
Tenancy Acts of the 1950s, helped promote the rise of this class. Its members have been the main
beneficiaries of government agricultural policies providing institutionalized credit and liberal and
subsidized inputs of various kinds (fertilizers, seeds, water, electricity, and so on); they have also
benefited from ever-escalating procurement or ‘floor’ prices which have been well above average
costs of production since the mid-1960s for wheat, and since the mid-1970s, for rice (Bardhan 1984).
If size of landholdings is used as a criterion for classification, then, according to Bardhan, roughly 19
per cent of the rural agricultural population, accounting for 60 per cent of cultivated area and 53 per
cent of crop output (in 1975), could be considered as belonging to the rich-farmer category.
Bardhan introduced a notion of ‘cultural capital’ - privileged access of this class to education and
technical skills is said to give them an extra ‘rent’ income related to scarcity. they are able to multiply
this through corruption stemming from their manipulation of a vast array of public controls over
private industry and trade.

SOL

1.1.3 Post-Independence Developments

Aside from the National Planning Committee, eight of India's prominent industrialists formulated
the Bombay Plan, a plan for economic development. Shriman Narayan had also created a Gandhian
strategy. All these designs were only historically significant because they were simply paper plans
which were never carried forward. the release of a resolution on industrial policy in 1948. This
resolution expresses the Government's intention to establish a National Planning Commission,
which would formulate development programs and oversee their implementation, in addition to the
State's engagement in important areas of the economy. The Planning Commission was established as
an extra-constitutional entity by a cabinet decree on March 15, 1950. the Indian government requested
that it provide a blueprint for a Five-Year Plan as soon as possible. The plan was to begin in April
1951, and it did, but the Draft Outline was not completed until July 1951. In December 1952, the
final Plan (Report) was published, which sparked a vibrant debate across the country among
various groups. this Draft Outline proposed the construction of the National Development Council,
which would be chaired by the PM and comprised of Chief Ministers.

1.1.5 Planning Machinery

There are two bodies at the national level: the first is the Planning Commission, which is
established by the Union Government. It develops plans for the entire country, incorporating the plans
of the various states. Second is the National Development Council, is made up of all state chief
ministers, members of the Planning Commission, and some Union ministers. This body provides the
Commission the go light to formulate a specific Plan with some broad boundaries.
State budgets are self-reliant but state plans are not. There is only one National Plan, which
includes all State Plans. Furthermore, because our planning is comprehensive, private sector
planning is included - a hypothetical exercise that combines forecasting and policy-induced
economic activity projections. Specific finance systems are developed for the Union and each of the
States, as well as the requisite efforts for extra resource mobilization. These flows are then combined
with the overall flow of funds for the entire economy.

1.1.6 Planning Commission

1.1.6.1 Planning Objectives and Plan Objectives

The planning strategy is separated into two phases,
1. control –
 tighter control of many critical flows
 The interventionist state, the expansion of the public sector, the development
of heavy industry, self-reliance, and import substitution

2. regulatory.
 withdrawing from doing and managing, save in a few domains, while
building a regulatory framework.
 LPG to which were added programs aimed directly attacking poverty.
Planning is a method of actively discussing the goals, objectives, methods, and tasks that must be
accomplished. The documentation of planning is known as a plan. Plan updates are required regularly
because things change. National planning is a method of setting national targets of long-term growth
and making programs and policies for a short-term that will help reach those targets.
primary goals of our development planning - to ensure rapid economic growth, modernization, self-
sufficiency, elimination of income and wealth disparities, prevention of economic and political
consolidation (social justice). In reality, these are the driving principles of Indian planning.
Plan Objectives - promoting a rapid rise in the people's standard of living through efficient
exploitation of the country's resources, increased production, and providing opportunities for all to
work in the community's service.
1. Economic Growth
The primary goal of Indian planning is for the economy to grow as quickly as feasible within a
democratic framework. Raising national income has always been the primary goal of development
planning in a country with a low per capita income and a low standard of living for the majority of the
population. Except for the1st five-year plan. where the aim was modest at 2.1%, the target growth rate
of national income has consistently been around 5%, with somewhat higher rates in other plans.

2. modernisation
This entails structural and institutional changes in economic operations that result in a progressive,
contemporary economy. necessitates modernization in all three economic sectors, namely
agriculture, industry, and services. creation of a diverse economy that generates a wide range of
goods, including capital goods. creation of new industries in domains of engineering, chemicals,
petroleum, and other fields, and the advancement of technology and innovation to make the
economy more efficient by improving product quality, lowering costs, enhancing labour and resource
productivity.
3. Self-Reliance
at least until the 1980s, was to make the country self-sufficient. This entails reducing, and eventually
eliminating, reliance on foreign aid and imports for some vital commodities. This necessitates
import substitution, which entails making the same goods at home rather than importing them. This
needs the increase and diversity of exports so that we may pay with our own foreign exchange
profits. In the case of agriculture, however, emphasis is on self-sufficiency in production of food
grains and industrial raw materials.
4. Social Justice
guarantee social justice for all, particularly the poorest members of society. This entails raising the
living conditions of the poorer parts of society, such as landless agricultural labourer, craftsmen,
members of scheduled castes and tribes, women and children. reducing income and asset
distribution inequities, particularly in rural areas where land, the primary source of income, is
unequally divided. a few welfare programs for the poor, such as special employment programs for
the poor, land reforms in terms of small farmers, and the provision of subsidized commodities for
both production and consumption.

Niti Aayog
In Sanskrit word NITI means morals, administration, conduct, etc. But, in present milieu, it means
policy and the NITI stands for National Institution for Transforming India. The Planning Commission
was shut down by the Narendra Modi government in 2014. It was superseded by the newly created
NITI Aayog, in January, 2015, which better represents India's current needs and aspirations. In one
hand, NITI Aayog is a public policy think tank established with the goal of achieving sustainable
development goals through cooperative federalism by encouraging state governments to participate in
the economic policy-making process using a bottom-up approach on the other hand, the Planning
Commission had the authority to enforce policies on states as well as projects that it had approved.
The Prime Minister appoints the CEO of NITI Aayog. All state Chief Ministers, as well as the Chief
Ministers of Delhi and Puducherry, Lieutenant Governors of all UTs, and a vice-chairman appointed
by the Prime Minister, make up the NITI Aayog council. Temporary members are also chosen from
top universities and research institutions. A chief executive officer, four ex-official members, and two
part-time members make up this group.
NITI Aayog is constructed on the 7 pillars of operative governance – (1) Pro-People (2) Inclusion of
all (3) Participation (4) Empowering (5) Pro-Activity (6) Transparency and, (7) Equality.
Objectives of NITI Aayog

• To encourage cooperative federalism with the States on a continuous basis through organized
support initiatives and processes, understanding that strong states make for a strong nation.
• To develop systems for developing feasible plans at the village level

• To guarantee that the objectives of national security are unified into economic strategy and policy

• To provide guidance and stimulate collaboration between important stakeholders and like-minded
think tanks on a national and worldwide level, along with educational and policy research
organizations.

• To provide a platform for inter-departmental and inter-sectoral issues to be resolved in order to

speed up the implementation of the development agenda.

• To manage a cutting-edge Resource Centre, aid as a repository for research on good governance
and best practices in equitable and sustainable development, and assist in their dissemination.

Achievements
The latest report 2019-20 mentions the achievements of Niti Ayog: Monitoring and Analyzing Food
and Agricultural Policies (MAFAP) program in India-It is a collaborative research project between
Niti Aayog and the United Nations food and Agriculture organization:
• It aims to watch, analyze and reform food and agricultural policies.
• The first phase of the MAFAP programme ran between 23rd September and 31 December 2019.
• The second phase of the MAFAP programme is scheduled between 1st January 2020 and 31st
December 2021.
• The Niti Aayog governing council promoted Zero Budget Natural Farming.
Additionally, natural farming is being promoted as the ‘Bhartiya Prakritik Krishi Paddhati’
programme under Paramparagat Krishi Vikas Yojana (PKVY).
Village Storage Scheme has been conceptualized. Similarly, Union Budget 2021 has proposed
Dhaanya Lakshmi Village Storage Scheme, yet to be implemented.

1.1.7 Role of the State

As a means of growth, five-year plans were adopted. It was hoped that the commanding heights
would be transferred down to the public sector. To guide private capital and activity in the
proper directions, a thorough system of rules and regulations was established. A strategy for
inward-oriented growth was devised. Import substitution, rather than export promotion, became
the primary point of attention as part of this economic strategy. Foreign capital inflows were restricted
to borrowings and a small amount of minority ownership investment in companies collaborating with
Indian capital. The state was envisioned as the pilot of a growth machine in this growth paradigm. It
was regarded as the final decision-maker. When the state could not generate enough resources to meet
its domestic and international obligations, it ran into problems. On the domestic front, it began
borrowing even to cover its current consumption needs, and its current account deficits grew
alarmingly large. The domestic production structure, which had been designed in a carefully protected
environment, was unable to withstand the winds.

1.1.8 Evaluation of Planning

After the collapse of the Soviet Union in 1989, several countries appear to have lost interest in
planning as a credo. Furthermore, it is only by state planning that we will be able to break decisively
from the colonial past. Not only has our growth trajectory shifted from around 1% per year in the first
half of the twentieth century to 3-4 percent per year in the third quarter and 5-7 percent per year in the
fourth, but we have also been able to lay a solid foundation with the diversification of economic
activities, adequate food grain production, and technological competence in modern areas. However,
we were only partially successful in lowering poverty and eliminating unemployment. We completely
failed to reduce wealth or economic power concentration in the industrial domain.

1.1.9 Summary

As a mixed economy, India is in the process of transitioning from underdevelopment to development,

from poverty to prosperity, and from scarcity to abundance. We are also seeking two other basic
changes, namely political decentralization (i.e., devolution of power from the Centre to the States and
from the States to local self-government bodies) and social empowerment, in addition to economic
transition (for traditionally disadvantaged and discriminated groups).
Growth, employment, and inequality alleviation were identified as long-term planning objectives, to
which the goal of minimizing inter-regional imbalance may be added.