Pattern and technique of India's economic development v.1

The subject of India's economic development-its pattern and technique is a fascinating study. The subject chosen is so wide and multi-dimensional that two big volumes have been inevitable..

Underdeveloped countries in modern times differ considerably from underdeveloped countries of the past and, therefore, they will have to adopt a pattern of growth and a set of techniques much different from those adopted by developed countries during their initial stage of development. The State has to play a de cisive role through investment in public enterprises and through. control over private enterprises. In this set-up controls are in evitable though they should be as non-discretionary as possible. The dilemma is that India's planned economy could not do away with administrative machinery, and corruption and inefficiency defeated the very purpose of planning. The solution seems to be in making administration as incorrupt as possible.

Industrialisation is crucial to India's development strategy as that alone can radiate stimuli throughout the economy and lift it out of stagnation. Agriculture and industry have their mutul problems which can best be solved by industrialisation based on modernisation. Investment should be such that maximises output, conserves foreign exchange, reduces underemployment and unemployment and improves the distribution of real income; and there should be vertical growth of industries-from basic to in termediate and from intermediate to consumer goods in perspec tive investment programme. In respect of location of industries, agglomerative tendencies continue to be intensified till diminishing returns begin to influence the centrifugal or deglomerative ten dencies with a view to produce another nucleus; and develop ment of backward regions acquires a special importance in con nection with location of enterprises. Labour intensive technique of production if applied under traditional conditions would not raise productivity per man-hour and the best index of growth is productivity of workers as that alone under the stagnant conditions can promote capital formation. The author is of the view that in the first phase the traditional and intermediate techniques may work together, but the latter should gradually replace the former, In the final stage modern and sophisticated technology alone would serve the purpose.

While examining the working of the industrial policy it is distinctly worked out that the Government's licensing policy was not fully effective as it was not related to industrial policy as envisaged under the five-year plans. Ad hoc criteria were followed in the granting of or in the rejection of industrial licences; and usually short-term considerations prevailed in granting licences.

In the course of preparing the manuscript the author has be nefited from the advice and encouragement of his teachers, col leagues and friends. He is indebted to the late Professor A. N. Agarwala who had encouraged him and had gone through the first draft of the work. He is greatly indebted to Professor P. C. Jain, Head of the Department of Economics, University of Allahabad with whom he had many useful discussions and who was kind enough to go through the manuscript and make valuable comments and suggestions.