Geography Reference
In-Depth Information
In the event, and despite much propaganda and promises to respect Gandhi's
vision, the government has led India predominantly down the path indicated by
Nehru, with state control over a programme for heavy industry, to be carried
through by a series of five-year Plans. In recent times these have been less
important because of privatization, but in the early decades, the Plan was all-
important. The process began with the First Plan in 1950-55, which attempted to
give some balance between agriculture and industry. But by the Second Plan,
only 3.6 per cent of Plan expenditure was on village and small-scale industry,
while 17.5 per cent was on large-scale industry and minerals. Of the 3.6 per cent
for small-scale works, most was spent not on Gandhian craft industries, but on
small industrial estates for modern industry (Farmer 1993).
India has thus gone down the path of self-sufficiency in all possible products,
to be attained by giving high protection to domestic producers, and by
state ownership and investment in industry. Public ownership of the railways,
airlines, post and telecommunications, major banks and insurance companies,
atomic and all other energy sources, has been carried through since the early
days, and only in the late 1990s are these national organizations being broken up.
Joint ventures are used to give the state influence and control over steelmaking,
cars, heavy machinery, hotel chains, and even retailing. Nehru's lead was
followed in attempting to build up the heavy industries such as steel and heavy
engineering, shipbuilding and chemicals. All of these industries were developed
for the domestic market, and little attention was paid to the possibility of
exporting. The growth achieved by this method was slight, always less than 3 per
cent per annum, which was accepted stoically by Indian economists as “the
Hindu rate of growth”. India, prior to the changes of 1991, was stylized by Rohwer
(1996) as “the tortoise in its shell”.
There was a regional element to the policy, which was intended to induce
maximum equality between the regions. This was added on to an already high
level of control, so that India in the 1960s and 1970s presented a virtually unique
case of the degree of state intervention in planning the economy (Bhagwati
1995). Thus, for example, in the textile industry, import substitution policy meant
that the whole industry was protected from outside competition. But in addition,
the large-scale sector was prevented from expanding too much, because there
was a Gandhian interest in maintaining the small-scale craft and textile industry.
Control was exerted through the system of licensing, whereby each firm had to
have a licence for its annual amounts and types of production. This hamstrung
the large-scale modern firms, and prevented them from expanding successfully
into synthetic fibres. Beyond this control, there were further controls to ensure
that the industry would be spread equitably amongst all the states involved in
textile production, in a complete regional spread. This ensured a highly
inefficient production system, as the more efficient producers could never
expand to displace the weaker ones. Even more seriously, it encouraged a high
level of corruption in the politicking by states and producers to gain licences for
their production. Too much energy was wasted in “rent-seeking” activities, i.e.
Search WWH ::




Custom Search