The state and the economy, 1939–1970: the emergence of economic management in India

Abstract

The independent India that came into existence on 15 August 1947 was a large, diverse and poor country that inherited many economic problems from its colonial past. The most decisive break with the past that was achieved in economic matters by independent India was in the role of government policy and state agencies in the running and directing of the economy. The most important set of controls that were devised in the late 1940s concerned the development of industry through the rationing of capital issues and planning of future economic development. Since the level of savings and capital investment in agriculture was so low during the 1950s it is not surprising that the growth in agricultural output which took place was largely the result of enhanced labour utilisation on an expanding area of unirrigated land. Between 1939 and 1971 a particular type of economy emerged in India in which official planning and government economic management played a crucial part.