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After gaining independence in 1947, India faced the immense task of building a strong and self-reliant economy. The country adopted a mixed economic system, combining socialist principles with private enterprise, and launched Five-Year Plans to guide development. Policies focused on agriculture, industry, and trade to promote growth, equity, modernisation, and self-reliance, shaping India’s economic journey during its first four decades of independence. In this blog, we will cover all the important pointers on each aspect of this chapter. These notes summarise key concepts for effective revision. You can also download the free PDF for revision.
Contents
Explore Notes of Class 11: Indian Economic Development
| Chapter 1 | Chapter 3 | Chapter 4 | Chapter 5 |
Introduction
After independence in 1947, India faced the challenge of building a new economy. Leaders aimed to create a system balancing growth, equity, and democratic freedoms.
- India became independent on 15 August 1947, ending 200 years of British rule.
- Leaders needed to choose an economic system that promoted welfare for all.
- Jawaharlal Nehru favoured a socialist-oriented mixed economy:
- Strong public sector
- Presence of private property
- Democracy maintained
- Extreme socialism (like the Soviet Union) was unsuitable for India due to democracy and private ownership.
- India sought a middle path between capitalism and socialism.
Types of Economic Systems:
| System | Key Features | Distribution Principle | Example |
| Capitalism | Market decides production & methods | Based on purchasing power | USA, UK |
| Socialism | Govt decides production & distribution | Based on needs | Cuba, China |
| Mixed Economy | Both market & govt decide | Mix of needs & purchasing power | India |
Planning:
- A plan guides how national resources are used.
- India adopted Five-Year Plans for medium-term goals and Perspective Plans for long-term vision.
- Goals may conflict (e.g., modern technology vs. employment).
- Govt leads planning; private sector complements.
Goals of Five-Year Plans
The Five-Year Plans aimed to direct India’s resources towards development. They focused on growth, modernisation, self-reliance, and equitable distribution of wealth. Here are the important goals of the Five-Year Plan laid out by the government:
- Growth – Increase national output; measured by GDP.
- Modernisation – Use new technology and adopt progressive social practices.
- Self-Reliance – Reduce dependence on imports, promote domestic production.
- Equity – Ensure economic benefits reach all sections, especially the poor.
Agriculture
Agriculture was crucial as most Indians depended on it. Land reforms and the Green Revolution transformed productivity and promoted equity across rural areas. Here are the important aspects of agriculture in the Five-Year Plan:
Land Reforms:
- Abolition of intermediaries (zamindars, jagirdars) to give land ownership to tillers.
- Introduced land ceilings to reduce concentration.
- Success varied across states; Kerala and West Bengal were most successful.
Green Revolution:
- Introduction of High-Yielding Variety (HYV) seeds for wheat and rice.
- Required irrigation, fertilisers, and pesticides.
- Phase 1: Mid-1960s to mid-1970s – benefited richer states (Punjab, Andhra, Tamil Nadu).
- Phase 2: Mid-1970s to mid-1980s – spread to more states and crops.
- Result: Self-sufficiency in food grains and reduced food prices.
Marketed Surplus:
- Portion of agricultural produce sold in the market.
- Increased availability benefited low-income groups.
Role of Government:
- Provided subsidies and low-interest loans to small farmers.
- Ensured equity in benefits from the Green Revolution.
Debate Over Subsidies:
- Supporters: Needed for risky farming, equity for poor farmers.
- Critics: Subsidies often benefited the fertiliser industry & wealthy farmers; may burden govt finances.
Industry and Trade
Industrial growth was essential for employment, modernisation, and overall economic progress. Policies focused on balancing public sector leadership with regulated private participation.
Industrial Development:
- At independence, India had limited industries (cotton, jute, iron & steel).
- The government played a major role due to a lack of private capital and market size.
Public vs. Private Sector:
- Public sector controlled “commanding heights” (key industries).
- The private sector is encouraged but regulated through licenses.
Industrial Policy Resolution (1956):
| Category | Ownership & Role |
| I | Government only |
| II | Govt-led, private can supplement |
| III | Private sector with regulation |
Small-Scale Industries:
- Labour-intensive, generates employment.
- Protected via product reservation, tax concessions, and low-interest loans.
Trade Policy – Import Substitution:
- Promote domestic production instead of imports.
- Protection via tariffs (tax on imports) and quotas (import limits).
- Initially inward-looking, export promotion began only in the mid-1980s.
Effect on Industry:
- Industrial GDP share rose 13% → 24.6% (1950-91).
- Public sector-led diversification and small-scale industry growth.
- Criticisms:
- Inefficiency in some public sector enterprises
- Excessive licenses
- Protectionism
Conclusion
India achieved significant progress in agriculture and industry, but faced challenges like inefficiency, excessive regulation, and protectionism, prompting economic reforms in 1991.
- Achievements (1950-1990):
- Diversified industry
- Self-sufficiency in food grains
- Abolition of the zamindari system
- Growth in small-scale industries
- Limitations:
- Inefficient public sector firms
- Excessive regulations → reduced entrepreneurship
- Over-protection → limited quality improvement
- Inward-oriented policies → weak export sector
- Need for reform: Led to the New Economic Policy in 1991.
Also Read: NCERT CBSE Class 10 Chapter 3 Economics Notes
Important Definitions in NCERT Notes Class 11 Indian Economic Development Chapter 2: Indian Economy 1950–1990
This section lists key terms for clarity and revision:
- Zamindari System: A Land revenue system where zamindars collected rent, often ignoring agricultural improvement.
- Commercialisation of Agriculture: Shift to cash crops for British benefit.
- De-industrialisation: Decline of handicrafts, making India a raw material supplier.
- Export Surplus: Excess exports used for British expenses, not Indian benefit.
- Drain of Wealth: Transfer of India’s wealth to Britain through trade and administration.
Explore Solutions of Class 11: Indian Economic Development
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Related Reads
Explore Notes of Other Subjects of NCERT Class 11
FAQs
The British aimed to make India a supplier of raw materials and a market for British goods, prioritising Britain’s economic growth over India’s development.
Agriculture stagnated due to the zamindari system, low technology, lack of irrigation, focus on cash crops for British industries, and minimal investment in farmers’ welfare or infrastructure.
British policies caused de-industrialisation, leading to the decline of handicrafts, slow industrial growth, unemployment, and increased dependence on imported British manufactured goods.
Railways facilitated trade and long-distance travel but mainly served British interests, promoted cash crops, and weakened the self-sufficiency of Indian villages.
India faced low literacy, high infant mortality, short life expectancy, poor health facilities, and widespread poverty, reflecting poor social development under colonial rule.
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