State-Led Economic Development: India 1947-1984 - Essay Example

Led Economic Development: India 1947-1984 A discussion of economic development in India during the period of 1947 (marking independence from British rule) to 1984 involves an extremely complex set of factors. Economic development is closely tied to cultural, political and religious ideas and ideals which are very important to the Indian people and often conflict with one another. This state of affairs simply means that India has had a great deal of difficulty instituting economic reforms that benefit the great number of extremely poor in the population. Crisscrossing the large nation was a well-developed transportation network of decent roads and, of course, the railroad. At the beginning of the period between 1948 and 1984, this infrastructure did not reach every village along the way, making it incredibly difficult for those who did produce goods to sell them to a larger market (Guttman, 1980). As the period advanced, infrastructure was improved, and as the communications revolution has progressed world wide these technologies are reaching into smaller and smaller villages across India (Saith, 1981). Along with these advancements have been improvements in education. Both the development of infrastructure and the improvement of education have helped India economically, with the advancements picking up speed in the mid-1980s. The cotton and jute industries were thriving before Indian independence from British rule, and these industries experienced continued growth—with the criticism that foreign trade was not developed properly in order to take international advantage of these industries (Rose, 1968; Rajaraman, 1975). Historical Background Leading Up to Independence from British Rule In a 1960 speech, Ambassador Braj Kumar Nehru observes the progression of world events from pre-World War I to that point in history. From his point of view, the Victorian Era had created a stable but unjust world in which the superpowers dominated politics and culture and nations like India were supposed to stand on the sidelines and admire the superpowers. The two world wars changed the superpowers, redrew national boundaries, upended set cultural practices, and plunged the world into economic and political chaos. (Nehru also points out the steep rise in Muslimism across the world, which had a definite impact in how his nation was ultimately partitioned.) The nation of India rose up just at the end of the struggles, and from Nehru’s perspective in 1960 it was poised as an example for other Asian and African developing nations to follow. It must be kept in mind that this assessment comes from an Indian ambassador to the United Nations who was a relative of Jawaharlal Nehru, India’s first prime minister. The Earl of Halifax (1947) sums up the history of India as a part of the commonwealth of Great Britain, from a British point of view, by observing that the partitioning of India was a necessary but sad consequence of differing religious, social and economic points of view. At the end of British rule, India was divided into India and Pakistan primarily along religious lines. The differing social, political and economic beliefs of the Hindus and the Moslems created a situation that had to be resolved through forming two nations out of the formerly unified (under British rule) India. The nation of India set about creating an independent democratic-socialist style of rule which shaped the formation of the modern economy (Galbraith, 1958; Gandhi, 1972). At the beginning of autonomous rule, India was a nation where the social structure was somewhat backwards from developed nations: the cities such as Calcutta, Delhi and Bombay were actually on the fringes of the Indian society; 83 percent of the Indian population lived in the some 612,000 villages (Galbraith, 1958). Because such a vast majority of the population lived away from major infrastructure including communications and transportation, economic decision-making necessarily had to be fragmented. The village leaders, such as they were, harbored a deep mistrust of the centralized government, creating difficulties in nationwide economic policies (Rose, 1968). Although attempts were made to create a socialist economy, government regulation of various enterprises fell far short of being controlled by the government, and this created “the world’s greatest example of functioning anarchy” in regards to the economic structure (Galbraith, 1958, p. 590). At the time of the partition, half of India’s GDP was based in agriculture and 70 percent of the population depended on agriculture for their livelihoods (Galbraith, 1958). Rose (1968) observes that even by 1968, 45 percent of India’s national income still came from farming, while taxes gathered from landowners contributed less than 1 percent to the economy. As with all agrarian cultures, there was a small handful of large landowners, a larger handful of smaller landowners, and underneath, “the world’s most unfortunate men—the mass of landless laborers for whom idleness, hunger and privation are endemic” (p. 588). The ideals of socialism and democracy worked in the urban centers to some extent. Transferring those ideals to the vast rural population proved to be somewhat more difficult, based mostly on how the political structures viewed economic reform. The Rural Agricultural Economy With most of the population concentrated in villages with poorer infrastructure and individualized leadership, political conflict arose. One side of the economic policy felt that explosive growth for India as a nation was in its best interest—more industry, more large agriculture, more manufacturing. These types of growth are typically concentrated in large cities. The other side of the economic development question felt that helping the people would boost India’s economy—forming cottage industries for individuals and helping small farmers grow more and better food. While developing cottage industries helps raise the GDP of villages and families, its effect on the overall GDP for a nation is small and slow. Ambassador Nehru (1960) sums up the driving force of the argument by observing, “The attachment to human liberty and dignity in India is strong enough for people to be satisfied with a slower rate of economic growth… but it is very possible that it is not strong enough to withstand the forces generated by a relative stagnation of economic life” (p. 686). In other words, would slow growth which benefitted individual people across the nation be fast enough to keep the nation from economic collapse? Compounding the problems of individualized economic growth was the caste system and certain beliefs of the Indian people that if they were poor, God must have wanted it that way (Rose, 1968), so a cultural expansion had to happen at the same time the economic expansion was taking place. In his 1980 assessment of the agrarian economy, Joel Guttman points out the complex interplay between politics and the economy. He notes that large landowners tend to employ a great number of locals in the farming enterprise. The workers depend upon the large farmer for their income, putting them in a dependent relationship. The workers depend on the success of the large farmer for their own success. The more powerful landowner can then influence (directly or indirectly) the democratic vote of his workers—thus ensuring that the political candidate who has the land owner’s interests in mind gets elected. Because of this interdependence and strong influence, the political and parliamentary structures cannot institute wide reform for the good of the nation. The candidates depend on the vote; the voters are influenced by the local success of the most powerful people in the village. True, sweeping reform has a great deal of difficulty occurring in such a political structure. Economic reforms which could benefit the masses are sometimes ignored or modified to benefit the few and more powerful. Varshney (1993) reaches the same conclusions from a different angle: the power of numbers in rural India blocked national reform. Varshney observes that in 1993, about 40 percent of India’s parliament had a rural background, compared with less than 20 percent representation in the 1950s when land reforms were initially proposed by the parliament. Unfortunately, stronger rural representation did not result in sweeping socialist reform of land ownership. Fragmented castes, families and villages created difficulties for overall reform, with corruption and nepotism playing an accepted, though contrary, role in reform. Thus, there could be no united interest in reform—each parliamentary representative focused on the needs of his or her smaller region. A 1978 observer (Singh, 1978) examines the progress of the agrarian economy and concludes that some farmers progressed quickly and some, unfortunately, more slowly. Both Tyagi (1981) and Saith (1981) observe the same phenomenon from slightly different angles, observing that economic growth (and a rise in wages) varies wildly from state to state, and even within similar regions. The variations in growth were tied to the implementation of reforms and the amount of guidance different regions received from the central government. For instance, reforms in irrigation practices resulted in increased farm yields—in the areas where irrigation practices were supported by local farmers and the central government. The Five Year Plans: Did These Planning Sessions Result in Growth? The parliamentary government of India decided to follow a planning structure to regulate and encourage economic growth across the nation. They termed these actions as Five Year Plans. The plans attacked somewhat differing parts of the economy and through carefully orchestrated efforts joined public and private enterprises together for the overall growth of the national economy (Galbraith, 1958; Nehru, 1960). The first two Five Year Plans attempted to expand food production through irrigation development and sought to increase India’s industrial bases, especially in steel and engineering concerns. The continuing succession of Plans attempted to address both sides of the economic growth issue, and resulted in some economic growth for the nation as a whole as well as growth for villages and families (Galbraith, 1958; Gandhi, 1972). In hard numbers, the growth was almost nothing, leading some to criticize the whole idea of Five Year Plans. Assessment of the theoretical ideals behind the plans varies depending on who is talking about them, where that person is writing from in history and that commentator’s position on the contemporary state of the Indian economy. The various continuing Five Year Plans were either successful or not successful, depending on the perspective of the commentator. Indian insiders (Nehru, 1960; Gandhi, 1972) felt the plans fit with the national ideals and their execution was helpful to the Indian people and overall national growth. Outside commentators (Rose, 1968, Rajaraman, 1975; Pedersen, 1993) viewed the plans as less than successful because there was still a great deal of work to be done, progress was slow and the gap between rich and poor remained in place. The Conflict between Democratic Ideals and the Need for Bread Ambassador Nehru (1960) says simply, “There are two human needs that organized society has to meet—the need for liberty and the need for bread” (p. 686). Indira Gandhi echoes this sentiment in 1972 by saying, “But our own unvarying concerns have been two: to safeguard our independence and to overcome the blight of poverty” (p. 65). British rule left the nation with its own ideals for liberty, and the vast size of India and its large population left it with a great challenge for providing bread. When these ideals are applied to the actual culture, they come up short. Saith’s (1981) discussion about political leaders celebrating the fact that the growth in poverty had slowed for the average Indian citizen shows that planners and politicians should not celebrate victories of this nature. He harshly comments, “Moreover, to describe the recent decades to, say, planners and politicians…implies that the growth-distribution processes characterizing the Indian economy are ‘neutral’, and do not exacerbate the incidence of poverty” (p. 199). Neutral growth in gross poverty numbers is not a positive result of planning and reform. The people need positive growth in economic independence (Tyagi, 1981). As late as 1993, Thakur (1993) criticized the central Indian government with this comment: “If the stifling regulatory regime could be lifted and the dead hand of the state removed, then India could exploit its super base for rapid and substantial industrial expansion” (p. 154). Rose (1968) views economic development in India from an outsider’s point of view, and concludes the large gaps remained between the rich and the poor in the nation. Rajaraman (1975), educated at Cornell University, concludes much the same thing after carefully studying and measuring poverty levels over the course of the 1960s decade. Basically, when hard numbers are measured the economic policies of India during the 1947-1984 period resulted in little help for the masses in the population (Thakur, 1993). Concluding Remarks It is possible to combine the theoretical political ideals of the central government with the real economic needs of the individuals in the culture (Guttman, 1980). It is possible, but in India’s case, the outcome has been less than ideal. The land reforms of the 1950s, the encouragement of charismatic leaders to “share” their lands with others, and the general understanding that economic autonomy is directly tied to the production of something on the part of the individual all point to good theoretical models. In practice, the land reforms were not enforced, the appeals of leaders led to some sharing, and still, by 1984, and a vast majority of the Indian population lived in extreme poverty (Guttman, 1980; Rajaraman, 1975; Thakur, 1993). The Indian ideal of complete independence from outside influences—a truly parliamentary democracy with solid socialist ideals—has not decreased dependency among its population. The cultural systems, religious systems, and in some ways the political systems have perpetuated the economic problems in the nation. Viewed theoretically, the economic development during this period fell into direct line with the political and cultural ideals of the nation. The two competing needs of the Indian people—freedom and bread—have unfortunately not been completely met on either count. There is no doubt that the Indian political system is firmly a democracy, with the wide number of political parties (and candidates) competing among the voters throughout the nation. One important ideal of “democracy” has not been met in India yet, however. This is the idea that even though the nation functions as a democracy, and theoretically values the individual political opinions of each citizen, the central government can perform actions that benefit the people as a whole. During the period between 1948 and 1984, India had a great deal of difficulty setting aside individual and small group motivations to enact reforms which would economically benefit both the nation and the individual citizens. 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