B.A. (Hons.

) Political Science Semester-V

Discipline Specific Elective (DSE-2)

Development Process and Social Movements
in Contemporary India
Study Material : Unit 1- 4

SCHOOL OF OPEN LEARNING

University of Delhi

Editor : Dr. Mangal Deo

Dr. Shakti Pradayani Rout
Department of Political Science
 Graduate Course

Discipline Specific Elective (DSE-2)

Development Process and Social Movements in
Contemporary India

Contents
Pg. No.
Unit-1 : Development Process since Independence
(a) : State and Planning Dr. Rajesh Kumar 01
(b) : Liberalization and Reforms Dr. Rajesh Kumar 20
Unit-2 : Industrial Development Strategy and its Impact on the Social Structure
(a) : Mixed Economy, Privatization, The Impact on Organized
and Unorganized Labour Revathy V Menon 38
(b) : Emergence of the New Middle Class in India Revathy V Menon 57
Unit-3 : Agrarian Development Strategy and its Impact on Social Structure
(a) : Green Revolution and its Impact Dr. Sonu Kumar 72
(b) : Agrarian Crisis in India: Impact of Neoliberal Economic
Reforms on Farmers Anjani Kumar 86
Unit-4 : Social Movements Dr. Santosh Kumar Singh 97

Edited by:
Dr. Mangal Deo
Dr. Shakti Pradayani Rout

SCHOOL OF OPEN LEARNING

UNIVERSITY OF DELHI
5, Cavalry Lane, Delhi-110007
 Unit-1 : Development Process since Independence

(a) State and Planning

Dr. Rajesh Kumar

1.1 Structure
1.1.1 Introduction
1.1.2 Learning Objectives
1.1.3 Post-Independence Development
1.1.4 Planning in India
1.1.5 Planning Machinery
1.1.6 Planning Commission
1.1.7 Role of State
1.1.8 Evaluation of Planning
1.1.9 Summary
1.1.10 Future Reading
1.1.11 Practice Questions

1.1.1 Introduction
The economic system of India is characterized as a mid-income growing market economy.
India has made remarkable progress in terms of economic growth, income levels, and living
standards. From independence in 1947 till 1991, all the successive governments promoted
protectionist monetary policies, with significant state intervention and monetary regulation.
This is characterized as dirigisme, withinside the form of the License Raj. The end of the
Cold War, the disintegration of the USSR, and the acute stability of payments disaster in
1991 brought about the adoption of an immense monetary liberalization in India. Resultantly,
Since the beginning of the twenty-first century, the annual average GDP growth has been 6%
to 7%, and from 2013 to 2018, India changed into the globe’s fastest developing core
economy, surpassing China. India’s economy was the fifth-largest in the world with a GDP of
$2.94 trillion, overtaking the UK and France in 2019. but in this corona pandemic
circumstances, IMF reported India's rank is 7th in global GDP with $ 2.72 trillion in 2021.
India has a long list of accomplishments to its name in its 75 years of independence. It
has developed a modern economy (the second-fastest growing economy in the world),
remained a democracy, lifted millions of people out of poverty, become a space and nuclear
power, and established a strong foreign policy. In the 1950s, the government of India pursued
a unique economic development strategy: fast industrialization through the implementation of
centrally drafted five-year plans that included huge resource mobilization and investment in

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the building of large industrial state-owned economies (SOEs). The capitalist and socialist
models of growth are the two types of development. India combined both of these models to
form the “Mixed Economy.” In the world, India, as a developing country has a mixed
economic system. Low per capita income, overcrowding, maximum population below the
poverty line, insufficient infrastructure, agro-based economy, and a lower rate of capital
formation are the
1.1.2 Learning Objectives
In this lesson, we will look at the goals and methods that were envisioned shortly after
independence and how they've evolved. The economy's performance will also be reviewed
with the objectives;
 discriminate between the nature of economic planning in a controlled economy and a
free-market economy;
 make clear the functions of a state in a market-oriented economy;
 work out the role of the planning commission in the varying economic environment;
 escalate the role of the state in the course of the economic development;
 find out the role of Niti Aayog and its achievements.
1.1.3 Post-Independence Developments
The National Planning Committee, chaired by Shri Jawahar Lal Nehru, was established near
the end of 1938. The Committee published several papers on various aspects of economic
development. Aside from the National Planning Committee, eight of India's prominent
industrialists formulated the Bombay Plan, a plan for economic development. Shriman
Narayan had also created a Gandhian strategy. All of these designs were only historically
significant because they were simply paper plans which were never carried forward. Nothing
notable happened post-independence period, except for the release of a resolution on
industrial policy in 1948. This resolution expresses the Government's intention to establish a
National Planning Commission, which would formulate development programs and oversee
their implementation, in addition to the State's engagement in important areas of the
economy.
The Planning Commission, on the other hand, was established as an extra-constitutional
entity by a cabinet decree on March 15, 1950, far after independence and fifty days after the
Constitution was promulgated. It is critical to read the Cabinet Resolution to understand the
Commission's responsibilities. The Planning Commission was instructed to construct a six-
year development plan for the Colombo Plan (for Cooperative Economic Development in
South and Southeast Asia) from July 1951 to June 1957, as requested by its member countries
in May 1950. However, the Indian government later decided to become independent and
requested that it provide a blueprint for a Five-Year Plan as soon as possible. The plan was to
begin in April 1951, and it did, but the Draft Outline was not completed until July 1951. In
December 1952, the final Plan (Report) was published.

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 It was said that the Draft Outline (of the First Plan) was intended to spark a vibrant
debate across the country among various groups. Planning is a social rather than a technical
activity in a democratic state. Intellectuals and industrialists, citizens and parties, the press,
and lawmakers all took part in the debate, as per reports. But, more importantly, this Draft
Outline proposed the construction of the National Development Council, which would be
chaired by the Prime Minister and comprised of Chief Ministers. A Cabinet Resolution dated
August 6, 1952, re-established this Council.
1.1.4 Planning in India
India became a republic after gaining independence. She chose the path of social and
economic development planning,' which meant that the state would take the lead in selecting
“what, how, how much, where, and whom” in the state's economic and social activities even
while respecting, for the most part, private property and market institutions. Even though our
Constitution granted the market a scope to operate, it also asked the state to intervene in the
market's operation.
As a result, we chose the middle route, the mixed economy approach, in which the public
and private sectors balance each other while staying active partners in the development's
common goals. We chose democratic planning to achieve a high and sustained rate of growth,
progressive improvement in people's living conditions, and the abolition of poverty and
unemployment to establish the groundwork for a self-sufficient economy. In 1990s, the role
of the state concerning the market altered dramatically in favor of the market.
1.1.5 Planning Machinery
There are two bodies at the national level: the first is the Planning Commission, which is
established by the Union Government. It develops plans for the entire country, incorporating
the plans of the various states. Second is the National Development Council, is made up of all
state chief ministers, members of the Planning Commission, and some Union ministers. This
body provides the Commission the go light to formulate a specific Plan with some broad
boundaries. Before the Plan is presented to Parliament, it is also reviewed and approved.
In an ex-officio capacity, the Prime Minister chairs the Commission. The Deputy
Chairman, on the other hand, is the Commission's executive head, in charge of its day-to-day
operations. There are a few Minister-Members, most of whom are Finance and Planning
Ministers, as well as several full-time Members, each of whom is responsible for a group of
subjects. General divisions (such as long-term planning, policy, and financial resources),
subject divisions (such as agriculture, industry, housing, education, health, labor, science and
technology, social welfare, trade, project appraisal, and so on), area divisions (for states or
zones such as hill areas), and service divisions (concerned with administration, general
services and accounts e.g., publicity, computer service division, etc.) The subject divisions
maintain contact with relevant ministries, state governments, and other official and non-
official entities, as well as organize research studies on their own or in collaboration with

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other institutions/organizations. Expert evaluation studies are conducted by the Program
Evaluation Organization to analyze the impact of accepted plan programs.
There is only one National Plan, which includes all State Plans. State Budgets are self-
reliant, but State Plans are not. There are State Planning Boards. The Amalgamation for State
Plans has a provision for formula-based resource transfers rather than scheme-based transfers.
The Planning Commission, on the other hand, coordinates and integrates the development
programs of the Union Ministries with those of the State Governments into a single national
plan.
Furthermore, because our planning is comprehensive, private sector planning is included.
However, this is a hypothetical exercise that combines forecasting and policy-induced
economic activity projections. The plan's implementation will necessitate resources. Specific
finance systems are developed for the Union and each of the States, as well as the requisite
efforts for extra resource mobilization. These flows are then combined with the overall flow
of funds for the entire economy.
1.1.6 Planning Commission
Planning commission is a governmental body that makes decisions about planning and
development. Theoretical exertions for making planning and plan began much earlier, even
before independence The Indian National Congress established the National Planning
Committee in 1938, the Bombay Plan and Gandhian Plan in 1944, the Peoples Plan in 1945
(by the Indian Trade Union's Postwar Reconstruction Committee), and Jaiprakash Narayan's
Sarvodaya Plan in 1950 were all advances, working in this direction. After independence, a
formal planning approach was adopted, and on March 15, 1950, the Planning Commission
was instituted. The Planning Commission was established without the approval of the Indian
Constitution or any statute; it is a department of the Indian government. India’s planned
economic development initiated in 1951 with the establishment of the First Five Year Plan.
1.1.6.1 Planning Objectives and Plan Objectives
There is a distinction to be made between “plans” and “planning.” Planning is a method of
actively discussing the goals, objectives, methods, and tasks that must be accomplished. The
documentation of planning is known as a plan. Plan updates are required regularly because
things change.
Basis Planning Objectives Plan Objectives
Aim They are long term objectives to be They are objectives to be achieved in
achieved over a long period over 20 short periods say 1 to 5 years.
years.
Goal They are general goas. They are specific goals.
Nature They are common to all plans They vary from plan to plan.

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 Changes They aim at structural changes They aim at quantitative changes.
Plans  They are extensive goals,  They are planned with greater
which development plans precision
pursue to achieve.
 They are also called five-year
 They are also called plan.
perspective plan.

Planning Objectives
National planning is a method of setting national targets and making programs and policies
that will help reach those targets. The policies and plans must be reliable with each other,
safeguard optimal use of state resources both financial and physical, and be based on an
empathetic of the response of the economy to these involvements. Growth, modernization,
self-reliance, and social fairness are the primary goals of Indian planning. In reality, these
goals are the driving principles of Indian planning. Each development plan, based on
immediate requirements and limits, offers some priorities within this basic framework of
objectives.
1. Economic Growth
The primary goal of Indian planning is for the economy to grow as quickly as feasible within
a democratic framework. Raising national income has always been the primary goal of
development planning in a country with a low per capita income and a low standard of living
for the majority of the population. Except for the First Five Year Plan, where the aim was
modest at 2.1 percent, the target growth rate of national income has consistently been around
5%, with somewhat higher rates in other plans. During the Second Five Year Plan, the
expected rate of growth was 4.5 percent, which was boosted to 5.6 percent for the Third Five
Year Plan, and then to 5.7 percent for the revised Fourth Five Year Plan. The revised Sixth
Five Year Plan's aim, however, was lowered to 5.2 percent (1980-85). For the Seventh Five
Year Plan, a target or expected rate of growth of at least 5% was set (1985-90). The 5.6, 6.5,
8.1, and 9.0 percent growth targets for the eighth, ninth, tenth, and eleventh plans,
respectively, were set.
The Twelfth Plan period offers both challenges and opportunities. The Plan originated at a
time when the worldwide economy was going through another financial crisis, caused by the
sovereign debt glitches of the Eurozone which exploded in the last year of the Eleventh Plan.
The crisis exaggerated all countries including India. Our growth slowed down to 6.2 % in
2011-12 and the deceleration continued into the first year of the Twelfth Plan, once the
economy is projected to have grown up by only 5 %. The latent of the economy to nurture
much faster is evident from the Eleventh Plan experience, which shaped an average growth
rate of 8 % for the period 2007-08 to 2011-12. This was lesser than the Eleventh Plan goal of
9 percent but higher than the Tenth Plan success of 7.6 percent and also the uppermost
growth rate ever recorded by the Indian economy in a somewhat Plan period.

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2. Modernization
The economy's modernization has been the second primary goal. This entails structural and
institutional changes in economic operations that result in a progressive, contemporary
economy. This necessitates modernization in all three economic sectors, namely agriculture,
industry, and services. One of the most significant goals is to change the contribution of
agriculture to national income from agriculture to industry and services. As a result of the
colonial legacy, agriculture has been the largest of the three industries in terms of production
and employment. Another significant part of modernization is the creation of a diverse
economy that generates a wide range of goods, including capital goods.
This entails the creation of new industries in the domains of engineering, chemicals,
petroleum, and other related fields. One of the most important aspects of economic
modernization is the advancement of technology and innovation in order to make the
economy more efficient by improving product quality and/or lowering costs, as well as
enhancing labor and other resource productivity. Certain institutional reforms are required for
the economy's modernization and development.
3. Self-Reliance
The third primary goal of Indian economic planning, at least until the 1980s, was to make the
country self-sufficient. This entails reducing, and eventually eliminating, reliance on foreign
aid and imports for some vital commodities. This necessitates import substitution, which
entails making the same goods at home rather than importing them. This needs the increase
and diversity of exports so that we may pay with our own foreign exchange profits. In the
case of agriculture, however, the emphasis is on self-sufficiency in the production of food
grains and industrial raw materials. With the globalization and opening of the Indian
economy after July 1991, the country's economy shifted to service sector.
4. Social Justice
Another key objective is to guarantee social justice for all, particularly the poorest members
of society. This entails raising the living conditions of the poorer parts of society, such as
landless agricultural laborer, craftsmen, members of scheduled castes and tribes, women and
children, and so on. This also entails reducing income and asset distribution inequities,
particularly in rural areas where land, the primary source of income, is unequally divided.
This also includes a number of welfare programs for the poor, such as special employment
programs for the poor, land reforms in terms of small farmers, and the provision of
concessional or subsidized commodities for both production and consumption.
Thus, the primary goals of our development planning have been to ensure rapid economic
growth, modernization, self-sufficiency, elimination of income and wealth disparities,
prevention of economic and political consolidation, and the promotion of values and attitudes
that promote a free and equal society.

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Plan Objectives
After Independence, India's First Five-Year Plan (FYP) was introduced in 1951, under the
socialist influence of Prime Minister Jawaharlal Nehru. The process began with the
establishment of the Planning Commission in March 1950, in order to achieve the
government's stated goals of promoting a rapid rise in the people's standard of living through
efficient exploitation of the country's resources, increased production, and providing
opportunities for all to work in the community's service. The Planning Commission was
tasked with assessing all of the country's resources, supplementing those that were
inadequate, devising plans for the most efficient and balanced use of resources, and
determining plans.
The emphasis on the first eight Plans was on a growing public sector with massive
investments in heavy and basic industries, but since the introduction of the Ninth Plan in
1997, the emphasis on the public sector has faded, and contemporary thinking on planning in
the country is that it should develop more symptomatic.
Outlines of Various Five-Year Plan
First Plan (1951-56)
 Actual growth was 3.6 % while target was 2.1%.
 It was constructed on The Harrod-Domar Model.
 At the start of the first five-year Plan, the country was confronted with an influx of
migrants, a serious food scarcity, and rising inflation.
 Agriculture, price stability, power, and transportation were all addressed in the plan.
 The strategy was a success owing to good yields in the last two years of the plan. The
objectives of refugee rehabilitation, food self-sufficiency, and price control were mostly
met.
Second Plan (1956-61)
 Actual growth was 4.3 % while target was 4.5 %.
 Simple aggregative Harrod Domar Growth Model was used again for general projections,
and the resource allocation method to broad sectors such as agriculture and industry was
based on Prof. P C Mahalanobis' two and four sector models. (This plan is also known as
the Mahalanobis Plan.)
 The second plan was designed in a stable economic environment. Agriculture was
thought to be given a lower priority.
 The plan emphasized fast industrialization, particularly in the heavy and fundamental
sectors. Large imports using foreign borrowing were advocated.
 The Industrial Policy of 1956 was founded on the purpose of economic policy being to
develop a socialistic pattern of society.

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 Due to a severe shortage of forex, development targets were trimmed, prices rose (by
nearly 30%) compared to the previous Plan, and the second FYP was only partially
successful.
Third Plan (1961-66)
 Actual growth was 2.8 % while target was 5.6%.
 At the time of its inception, it was thought that the Indian economy had reached a
“takeoff stage.” Its goal was to make India a “self-sufficient” and “self-generating”
economy.
 Agriculture was given high priority to support exports and industry, based on the
experience of the first two plans (agricultural production was considered as a limiting
element in India's economic development).
 Due to unanticipated developments such as the Chinese invasion (1962), the Indo-Pak
war (1965), and severe drought in 1965-66, the Plan failed miserably to meet its
objectives. Due to disputes, the focus moved from development to defense and
development in the final stages.
Three annual Plan (1966-69)
 The failure of the Third Plan, which included rupee depreciation (to stimulate exports)
and an inflationary slump, resulted in the Fourth FYP being postponed. Instead, three
Annual Plans were introduced. A current agricultural crisis and a severe food deficit
prompted a focus on agriculture during the Annual Plans.
 During the implementation of these programs, a completely new agricultural approach
was developed. It entails widespread distribution of high-yielding seed varieties,
considerable fertilizer use, irrigation potential exploitation, and soil conservation.
 The economy was able to absorb the shocks caused by the Third Plan during the Annual
Plans.
 It paved the way for the anticipated expansion.
Fourth Plan (1969-74)
 Actual growth was 3.3 % while the target was 5.7 %.
 The refusal of allies to deliver crucial equipment and raw materials during the Indo-Pak
conflict resulted in the Fourth Plan's dual objectives of “development with stability” and
“progressive realization of self-reliance.”
 The main focus was on agriculture's rate of expansion in order to allow other industries to
advance. The plan's first two years saw record production. Due to weak monsoon
conditions, the previous three years failed to meet expectations. The Plan's key objectives
included the implementation of family planning programs.
 The influx of Bangladeshi migrants before and during the 1971 Indo-Pak war, as well as
the price situation developing to crisis proportions, was a major issue, and the strategy is
seen as a major failure.

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Fifth Plan (1974-79)
 Actual growth was 4.8 % while the target was 4.4 %.
 D.P. Dhar drafted and launched the final draft of the fifth plan against the backdrop of an
economic crisis resulting from out-of-control inflation fueled by soaring oil prices and the
government's failure to take over the wholesale wheat trade.
 It suggested achieving two key goals: “poverty eradication” (Garibi Hatao) and “self-
sufficiency.”
 Promotion of a high rate of growth improved income distribution, and considerable
increases in domestic savings rates were seen as crucial instruments.
 Cost estimations for the Plan were utterly incorrect due to high inflation, and the original
public sector spending had to be revised upwards. Following the declaration of
emergency in 1975, the focus switched to the implementation of the Prime Minister's 20-
Point Plan. When the Janta Party came to power in 1978, the FYP was consigned to the
background, and the Plan was canceled.
Rolling Plan (1978 - 80)
There were two Sixth Plans in total. In contrast to the Nehru Model, which the government
criticized for the concentration of power, expanding inequality, and rising poverty, the Janta
Government proposed a strategy for 1978-1983 that focused on employment. The
government, on the other hand, only lasted two years. When Congress regained power in
1980, it embarked on a new strategy aimed at directly confronting the problem of poverty by
creating conditions conducive to economic growth.
Sixth Plan (1980-85)
 Actual growth was 5.7 % while the target was 5.2 %.
 The start of economic liberalization was highlighted by the Sixth Five-Year Plan. Ration
shops were closed and price limits were removed. This resulted in a rise in food prices as
well as the expense of living.
 Nehruvian socialism came to an end at this point. The Shivaraman Committee
recommended that the National Bank for Agriculture and Rural Development be founded
for the development of rural areas on July 12, 1982.
 In order to avoid overpopulation, family planning was also expanded.
 Unlike China's rigid and obligatory one-child ban, India's policy was not based on threats
of coercion.
 Increased national revenue, technological modernization, ensuring continual reductions in
poverty and unemployment through schemes for transferring skills (TRYSEM) and
(IRDP) and providing slack season work (NREP), population control, and so on were all
part of the plan.
 In general, the Plan was a success since most of the objectives were met, despite the fact
that many sections of the nation experienced severe famine during the previous year
(1984-85) and agricultural output was lower than the previous year's record output.

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Seventh Plan (1985-90)
 With a focus on 'food, work, and productivity,' the Plan attempted to increase food grain
output, increase employment opportunities, and raise productivity.
 The strategy was a huge success, as the economy grew at a rate of 6% instead of the
targeted 5%, despite the fact that the economy was still trying to climb out of the 'Hindu
Rate of Growth in the 1980s.
Eighth Plan (1992-97)
The eighth plan was suspended by two years because of political uncertainty at the Centre.
 The growth targeted was 5.6% but achieved more than the target 6.8%.
 Generation of adequate employment for near full employment by the turn of the century
 Containment of population growth through people’s cooperation and scheme of
incentives and disincentives
 Universalization of elementary education and eradication of illiteracy among people in
the age group 15-35.
 Provision of safe drinking water and primary health care facilities, elimination of
scavenging
 Growth and diversification of agriculture to achieve self-sufficiency in food and to
generate surpluses for exports
 Strengthening infrastructure to support growth process on a sustained basis
Ninth Plan (1997-2002)
 Target was 6.5 but the actual growth was 5.4.
 Priority to agriculture and rural development for generating adequate productive
employment and eradication of poverty
 Acceleration in growth rate with stable prices
 Food and nutritional security for all, especially vulnerable sections
 Provision of safe drinking water, PHC facilities, UPE, shelter, and connectivity to all in a
time-bound manner
 Restraint of population growth
 Environmental sustainability of development process through social mobilization and
people’s participation from all sections
 Empowerment of women and socially disadvantaged groups (SC, ST, OBC, minorities)
as agents of change and development
 Promotion and development of people’s participatory institutions like PRIs, cooperatives,
and SHGs
 Strengthening efforts to build self-reliance
Tenth Plan (2002-2007)
 Indicative target growth rate of 8.0 per annum Actual growth was 7.6.

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 Enhancement of well-being
 Availability of food and other consumption items
 Access to basic social services of health, education, sanitation and drinking water
 Expansion of social and economic opportunities for all individuals and groups reduction
in disparities
 Participation in decision-making
 Significant allocation of resources to the social sector and foremost improvement in
governance for effective use of resources
 Acceleration in growth rates of slowly growing states
 Poverty to be reduced to 15 percent by 2007 and to 5 percent by 2012
 High-quality employment to additional labor force during the plan
 All children to be in school by 2003 and all children to complete Class V by 2007
 Gender gap in literacy and wage rate to be reduced to 50 percent by 2007
 Population growth to be decelerated to 16.2 percent during 2001-2011
 Literacy rate to be raised to 75 percent by 2007
 Infant mortality rate to be reduced 45 by 2007 and to 28 by 2012
 Maternal mortality rate to be reduced to 2 by 2007 and to 1 by 2012
 Forest cover to be raised to 25 percent by 2007 and 33 percent by 2012
 All villages to be given sustained access to drinking water by 2007
 Cleaning of major polluted rivers by 2007 and other notified stretches by 2012.
Eleventh Plan (2007-2012)
 The eleventh Plan was aimed “Towards Faster & More Inclusive Growth “after UPA rode
back to power on the plank of helping Aam Aadmi (common man).
 By closing the Tenth Plan, India had become one of the world's fastest-growing
economies. Savings and investment rates had risen, the industrial sector had performed
admirably in the face of global competition, and foreign investors were eager to invest in
India. However, many groups, particularly SCs, STs, and minorities, did not regard the
growth as sufficiently inclusive, as evidenced by data on poverty, malnutrition, mortality,
current-day employment, and other factors.
 The Eleventh Plan got off to a good start, with growth of 9.3% in the first year, but with
the global financial crisis, growth slowed to 6.7 percent in 2008-09. In 2009-10 and 2010-
11, the economy recovered significantly, with growth rates of 8.6 percent and 9.3 percent,
respectively.
However, a second session of global recession in 2011 caused by the European sovereign
debt crisis, along with internal factors such as tight monetary policy and supply-side
bottlenecks, resulted in a 6.2 percent growth rate in 2011-12. As a result, during the Eleventh
Plan, the average annual growth rate of Gross Domestic Product (GDP) was 8%, which was
lower than the goal but higher than the Tenth Plan's accomplishment. Given the two
worldwide crises that occurred during this time period – one in 2008 and the second in 2011

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– the 8% growth rate may be considered satisfactory. During the 11th Plan period, the
agricultural, industry, and services sectors are expected to grow at 3.7 percent, 7.2 percent,
and 9.7 percent, respectively, compared to growth targets of 4 percent, 10-11 percent, and 9-
11 percent.
Twelfth Five Year Plan (2012-17)
The Twelfth Plan began at a time when the world economy was experiencing a second
financial crisis, triggered by the Eurozone's sovereign debt issues, which erupted in the
Eleventh Plan's last year. All countries, including India, were affected by the crisis. In 2011-
12, our growth dropped to 6.2 percent, and the trend persisted into the first year of the
Twelfth Plan, when the economy is expected to increase by only 5%. As a result,
 The Twelfth Plan emphasizes that the economy's top aim must be to restore rapid growth
while ensuring that it is both inclusive and sustainable. The subtitle reflects the
overarching goals and aspirations that the Twelfth Plan intends to achieve:
 Faster, Sustainable, and More Inclusive Growth.
 Inclusiveness is achieved through poverty reduction, boosting group equality and regional
balance, alleviating poverty, and empowering people, whereas sustainability is reached
through environmental sustainability, the accumulation of human capital through
improved health, education, skill development, nutritious food, information technology,
and the development of institutional capabilities, such as power, telecommunications,
roads, and transportation, and the development of institutional capabilities, such as power,
telecommunications, roads, and transportation.
This apart from the global slowdown, the domestic economy has been hampered by a number
of internal issues. Following the fiscal expansion conducted after 2008 to provide a fiscal
stimulus to the economy, macro-economic imbalances have surfaced. Inflationary pressures
are increasing. Major energy and transportation investment projects have lagged due to a
number of execution issues. During the financial year 2012–13, some changes in tax
treatment created concern among investors. As a result of these events, the rate of investment
has slowed and economic growth has slowed.
As a result, the policy issue in the Twelfth Plan is two-fold. The immediate challenge is
to halt the current slowdown in growth by restarting investment as soon as feasible. This
necessitates immediate action to address infrastructure implementation difficulties that are
delaying significant projects, as well as measures to address tax-related issues that have
generated uncertainty in the investment environment. In the long run, the Plan must
implement policies that capitalize on the economy's various strengths in order to restore its
true growth potential. Mid of this plan, Government of India shut down this by creating a Niti
Aayog.
Niti Aayog
In Sanskrit word NITI means morals, administration, conduct, etc. But, in present milieu, it
means policy and the NITI stands for National Institution for Transforming India. The

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Planning Commission was shut down by the Narendra Modi government in 2014. It was
superseded by the newly created NITI Aayog, which better represents India's current needs
and aspirations. In one hand, NITI Aayog is a public policy think tank established with the
goal of achieving sustainable development goals through cooperative federalism by
encouraging state governments to participate in the economic policy-making process using a
bottom-up approach on the other hand, the Planning Commission had the authority to enforce
policies on states as well as projects that it had approved. The NITI Aayog has not been
granted the authority to allocate funds. The Prime Minister appoints the CEO of NITI Aayog.
This Aayog came in to being after submitting an assessment report by the Independent
Evaluation Office to the Prime Minister of India with the recommendation to replace the
Planning Commission with a “control commission.” in January, 2015. All state Chief
Ministers, as well as the Chief Ministers of Delhi and Puducherry, Lieutenant Governors of
all UTs, and a vice-chairman appointed by the Prime Minister, make up the NITI Aayog
council. Temporary members are also chosen from top universities and research institutions.
A chief executive officer, four ex-official members, and two part-time members make up this
group.
NITI Aayog is constructed on the 7 pillars of operative governance – (1) Pro-People (2)
Inclusion of all (3) Participation (4) Empowering (5) Pro-Activity (6) Transparency and, (7)
Equality.
Objectives of NITI Aayog
 To encourage cooperative federalism with the States on a continuous basis through
organized support initiatives and processes, understanding that strong states make for a
strong nation.
 To develop systems for developing feasible plans at the village level and at that time
aggregating them at higher levels of government.
 To guarantee that the objectives of national security are unified into economic strategy
and policy in areas that are predominantly addressed to it.
 To bestow special attention to those in our society who may be at peril of not benefiting
adequately from economic progress.
 To provide guidance and stimulate collaboration between important stakeholders and
like-minded think tanks on a national and worldwide level, along with educational and
policy research organizations.
 To provide a platform for inter-departmental and inter-sectoral issues to be resolved in
order to speed up the implementation of the development agenda.
 To manage a cutting-edge Resource Center, aid as a repository for research on good
governance and best practices in equitable and sustainable development, and assist in
their dissemination.

13
Achievements
The latest report 2019-20 mentions the achievements of Niti Ayog: Monitoring and
Analyzing Food and Agricultural Policies (MAFAP) program in India-It is a collaborative
research project between Niti Aayog and the United Nations food and Agriculture
organization:
 It aims to watch, analyze and reform food and agricultural policies.
 The first phase of the MAFAP programme ran between 23rd September and 31 December
2019.
 The second phase of the MAFAP programme is scheduled between 1st January 2020 and
31st December 2021.
 The Niti Aayog governing council promoted Zero Budget Natural Farming.
Additionally, natural farming is being promoted as the ‘Bhartiya Prakritik Krishi Paddhati’
programme under Paramparagat Krishi Vikas Yojana (PKVY).
Village Storage Scheme has been conceptualized. Similarly, Union Budget 2021 has
proposed Dhaanya Lakshmi Village Storage Scheme, yet to be implemented.
NITI Aayog and Planning Commission: Comparison

NITI Aayog Planning Commission

NITI Aayog has not been given the The Planning Commission had the authority
command or powers to impose strategies to execute policies on States and for the
and policies on States. NITI Aayog is schemes accepted by the Planning
fundamentally a think-tank or an advisory Commission.
body.
The NITI Aayog has not been granted the The Planning Commission had the authority
authority to allocate funds. The Finance to allocate funds to the State Governments
Ministry has the power to allocate. and many Central Government Ministries
for various projects and programs at
National and State Levels.
State Governments have to play a proactive State Governments did not have much role
role in NITI Aayog, to play not together from taking part in the
meetings. The State Government’s role was
confined to the National Development
Council (NDC).

Based on the requirements, there are part- The Planning Commission did not have any
time members appointed in NITI Aayog. provisions for the appointment of part-time
members.

The Governing Council of NITI Aayog has The National Development Council (NDC)
Lieutenant Governors of Union Territories had Lieutenant Governors and State Chief
and State Chief Ministers. Ministers. Planning Commission had to

14
 report to the National Development
Commission.

The CEO of NITI Aayog is appointed by Planning Commission secretaries were

the Prime Minister. Secretaries are known appointed through the usual process.
as CEO.

The number of full-time members in NITI The last Planning Commission had eight
Aayog could be lesser than the numbers that full-time members.
the Planning Commission had.

New positions – CEO and Vice-Chairperson The Planning Commission organizational

were formed as part of the NITI Aayog structure consisted of full-time members,
organizational structure. The position of member secretary and a Deputy
CEO is equivalent to that of a secretary. Ex- Chairperson.
officio members would be four Cabinet
members. Two part-time and five full-time
members make up the NITI Aayog.

In NITI Aayog, the final policy would bear The Planning Commission first developed
fruit after due consultations are held with policies, after which state governments were
State Governments in the policy formulation consulted on funding allocations for
stage. programs and projects.

Since it is not named in the Indian The now-defunct Planning Commission was
Constitution and was not constituted by an an Executive Body.
Act of Parliament, NITI Aayog is likewise
an Executive Body. However, it can be
turned into a Statutory Body, if necessary,
by passing a statute in Parliament; UIDAI is
one example.

1.1.7 Role of the State

When studying India's development strategy experiments and experience, it is necessary to
take into account the political-institutional structure that was built by the first generation of
leadership following independence. The most crucial institutional parameters in this regard
are the framework of parliamentary democracy and the form and character of the Indian
federal system. All of these parameters were formalized in India's constitutional apparatus,
which began its voyage on January 26, 1950, with operational effect in the republic of India.
At the moment of independence, India inherited a weak, depleted economy; in pursuit of
its “tryst with destiny,” India attempted to achieve rapid economic growth by maintaining
social balance. Without the state's active participation, the goal would be impossible to attain.

15
Various fields of economic activity, like industry and trade, required the state to take an
active role. The government has to come up with detailed development plans and then figure
out how to put them into action. The government also had to fill in the holes in the
entrepreneurial sector.
As a means of growth, five-year plans were adopted. It was hoped that the commanding
heights would be transferred down to the public sector. To guide private capital and activity
in the proper directions, a thorough system of rules and regulations was established. A
strategy for inward-oriented growth was devised. Import substitution, rather than export
promotion, became the primary point of attention as part of this economic strategy. Behind a
wall of strong protective barriers, domestic industries were to be established. Foreign capital
inflows were restricted to borrowings and a small amount of minority ownership investment
in companies collaborating with Indian capital.
The state was envisioned as the pilot of a growth machine in this growth paradigm. It
was regarded as the final decision-maker. The government made its mark on the economy by
organizing for the production of items as diverse as milk and bread, as well as heavy
electrical equipment and chemicals.
When the state couldn't generate enough resources to meet its domestic and international
obligations, it ran into problems. On the domestic front, it began borrowing even to cover its
current consumption needs, and its current account deficits grew alarmingly large. The
domestic production structure, which had been designed in a carefully protected environment,
was unable to withstand the winds.
1.1.8 Evaluation of Planning
After the collapse of the Soviet Union in 1989, several countries appear to have lost interest
in planning as a credo. Only a few books with the title 'planning' are released. In the
economic domain, the complexity of national development planning is rapidly changing from
“doing by state” to “watching by state.” Physical infrastructure and social services are two
important areas where the government still has a role to play. In the former, public-private
partnerships are often advised as the primary mechanism, whereas in the latter, NGOs are
encouraged to participate. It must act as a regulator between players in the economic and
financial realm. Despite the fact that the public sector continues to account for a significant
portion of economic activity.
Planning, on the other hand, will continue to be vital as a teleological exercise. Within
the mixed economy policy framework, we began thorough planning for the country as a
whole. Despite a transformation in our major planks of strategy in the late 1980s and early
1990s, we continue to cling to the planning process, if not the ideology. As the term suggests,
the strategy should be based on the realities of time, and as a result, it should vary even if our
goals remain the same. With this viewpoint, we may examine the scene.
Furthermore, it is only by state planning that we will be able to break decisively from the
colonial past. Not only has our growth trajectory shifted from around 1% per year in the first

16
half of the twentieth century to 3-4 percent per year in the third quarter and 5-7 percent per
year in the fourth, but we've also been able to lay a solid foundation with the diversification
of economic activities, adequate food grain production, and technological competence in
modern areas.
1.1.9 Summary
As a mixed economy, India is in the process of transitioning from underdevelopment to
development, from poverty to prosperity, and from scarcity to abundance. We are also
seeking two other basic changes, namely political decentralization (i.e., devolution of power
from the Centre to the States and from the States to local self-government bodies) and social
empowerment, in addition to economic transition (for traditionally disadvantaged and
discriminated groups). The speed with which India may travel this long journey will be
determined by a number of factors, including the availability of resources, the state's
economic strategy, and so on. However, it is more vital for India to reject what Keynes called
“the tyranny of the status quo” in order to boldly pursue a new pattern of interaction between
the state and the market.
We adopted a mixed-economy policy framework with detailed planning. While mixed
economy refers to the coexistence and mutual support of the public and private sectors,
comprehensive planning means that our planning process will take into account both the
economic and social spheres, as well as the public and private sectors.
We talked about objectives and the difference between planning and plan objectives.
Growth, employment, and inequality alleviation were identified as long-term planning
objectives, to which the goal of minimizing inter-regional imbalance may be added.
The planning strategy is separated into two phases, which we refer to as the control and
regulatory phases. While our early strategy focused on tighter control of many critical flows,
the State is increasingly withdrawing from doing and managing, save in a few domains, while
building a regulatory framework. The interventionist state, the expansion of the public sector,
the development of heavy industry, self-reliance, and import substitution were the main
characteristics of the early phase. Liberalization, privatization, and globalization were
identified as key aspects of the latter phase, to which were added programs aimed directly
attacking poverty.
Finally, we addressed the successes and failures of planning during the last more than
fifty years, dating back to 1951. We made it clear that we had made significant progress in all
areas. Our growth rates accelerated in each succeeding period, despite the fact that we fell
short of our goals. When compared to what was going on prior to independence, our
achievements were truly remarkable. This is due to our policy of social and economic
development planning. However, we were only partially successful in lowering poverty and
eliminating unemployment. We completely failed to reduce wealth or economic power
concentration in the industrial domain.

17
1.1.10 Future Reading

 Dhingra, Ishwar C. (2012): The Indian Economy: Environment and Policy, (27th ed.).
Sultan Chand & Sons, New Delhi.
 Basu, Kaushik (ed.) (2010): The Oxford Companion to Economics in India, Oxford.
 Srinivasan, T.N. (2004): Eight Lectures an Indian Economy, Oxford.
 Chakravarty, Sukhamoy (1987); Development Planning: The Indian Experience,
Oxford University Press, New Delhi.
 Datt, Ruddar and Sundharam, K.P.M. (2005); Indian Economy, S. Chand & Co., New
Delhi.
 Gupta, S.P. (1989); Planning and Development in India: A Critique, Allied Publishers
Private Limited, New Delhi.
 Krishnamachari, V.T. (1962); Fundamentals of Planning in India, Orient Longmans,
Bombay.
 Planning Commission (2012); Tenth Five Year Plan, New Delhi.
 Niti Aayog: An Annual Report 2020-21, New Delhi.
http://www.niti.gov.in/
1.1.11 Practice Questions
1. “With a shift in development strategy, India's economic environment has changed
dramatically.” Make a list of the changes.
…………………………………………………………………………………………
…….……………………………………………………………………………………
……….…………………………………………………………………………………
…………….……………………………………………………………………………

2. What important economic changes have occurred in India over the previous seven
decades?
…………………………………………………………………………………………
…….……………………………………………………………………………………
……….…………………………………………………………………………………
…………….……………………………………………………………………………
3. Examine briefly the potential for growth in the Indian economy's service sector.
…………………………………………………………………………………………
…….……………………………………………………………………………………

18
 ……….…………………………………………………………………………………
…………….……………………………………………………………………………
4. When planning commission was set up?
…………………………………………………………………………………………
…….……………………………………………………………………………………
……….…………………………………………………………………………………
…………….……………………………………………………………………………
5. In which plan, India achieved the fasted economic growth?
…………………………………………………………………………………………
…….……………………………………………………………………………………
……….…………………………………………………………………………………
…………….……………………………………………………………………………

19
 Unit-1

(b) Liberalization and Reforms

Dr. Rajesh Kumar

1.2 Structure
1.2.1 Introduction
1.2.2 Study objectives
1.2.3 Problems Faced by the Economy in 1990
1.2.4 The Set of Economic Reforms
1.2.5 Advancement of Economic Reforms
1.2.6 Significant Features of Economic Reforms
1.2.7 Crisis within 30 years of Reform
1.2.8 Summary
1.2.9 Further Readings
1.2.10 Practice Questions

1.2.1 Introduction
With a glorious vision of a growing India, India, after independence accepted the regime of
economic planning. Its goal was to march steadfastly forward while assuring a fair division of
the nation’s resources. Licensing policies primarily targeted the public sector, making the
inexperienced industry an argument for implementing import substitution policies, trade
barriers, and other restrictions. Inefficient resource usage, over-protection, mismanagement
of enterprises and the economy, significant revenue deficits, foreign exchange shortages, and
poor technical growth resulted from these policies. As a result of the stress and pressures that
resulted, the administration was obligated to rethink its policy framework. The result was a
set of adjustments in economic policy that became known as economic reforms in a broad
sense. The main goal of economic reforms was to escort in a new era of globalization, which
entailed: a) free flow of products and services, b) free flow of technology, c) free flow of
capital, and d) free movement of people, particularly labour, across countries. As a result,
economic reforms required linking the Indian economy with the global economy, and the
focus on economic reforms moved from import substitution to export-led growth.
In 1991, the Indian government began a significant economic reform programme with
the goal of transitioning the Indian economy from a planned to a market-oriented framework.
In order to achieve this, the administration made a number of policy initiatives aimed at
reassuring fiscal discipline, financial market liberalization and deregulation, privatization of

20
public sector enterprises (PSEs), and foreign investment. These economic reforms can be
characterized into three categories: liberalization, privatization, and globalization.
There is a prevalent belief that Nehru’s development model was unbecoming. Socialism
failed for the reason that it was unable to generate money on a reliable basis. Nonetheless,
undeveloped socialist worries about inequity and poverty have not disappeared. Although
India’s essential goals have not altered, the necessity to change its growth approach is
becoming more widely understood. There is a passive consensus in favor of the development
strategic shift. Consequently, the real issue in the environmental reform process is not the
“sterile debate” between “the state and a pure market,” but rather “how to manage the
transition: (i) from undue to abridged state intervention; (ii) from intervention in the mistaken
areas to intervention in formerly neglected important areas; and (iii) from one form of policy
trust on quantity controls to another form of policy trust on prices.”
In the context of reforms, there has been a lot of discussion on how private investment,
both domestic and foreign, behave. Economic reforms are a re-examination of the
government, or more broadly, the state’s, position in the market. Most, if not all, economies
had begun a programme of deceasing and redefining the role of the state by the early 1990s.
This occurrence clearly denotes a new trade-off between ‘market failures’ and ‘State failures’
or what might be referred to as new realities in the State-Market interaction.
1.2.2 Study Objectives
This unit will explain you how to:
● define terms like “liberalization,” “privatization,” and “globalization”;
● explain the need for and importance of liberalization in the framework of the Indian
economy;
● explain the rationale for economic reforms; and
● explain why economic reform was adopted in 1991.
1.2.3 Problems Faced by the Economy in 1990
Before examining the numerous options for economic restructuring, it is vivacious to
understand the most pressing issues challenging the Indian economy in 1990, which take into
account the following:
● A huge fiscal deficit, with expenditures outperforming revenues is the root cause.
● A massive foreign debt, with a debt-to-exports ratio and high debt-service ratio, which
resulted in the state’s credit rating being downgraded and major repayment issues.
● Low levels of productivity across the economy, resulting in immense resource waste.
● More recently, agricultural output is sluggish, the industrial sector is in recession, and the
economy all together has low growth prospects, all of which are accompanied by a
substantial inflationary problem.
21
The economy’s and nation’s status in mid-1991 was dire. The balance of payments (BOP)
situation had got worse so dramatically, and foreign exchange reserves (FOREX) had
plunged, that payment evasion was a diverse possibility. While the Indian economy executed
outstandingly well in terms of real growth between 1985 and 1990, the fiscal position
deteriorated dramatically. The budget deficit, as well as the overall fiscal imbalance, had
risen dramatically, resulting in a large increase in money supply on the one hand and a steep
rise in interest payments on the other. The combined budget deficit of the national
government and the states, which was at 7.5 percent of GDP in the late 1970s, had ascended
to around 11 percent by 1991. The central government’s fiscal deficit, which was below 6.0
percent in the late 1970s, had ascended to 8.5 percent by 1991.
As a result, interest payments had become the single largest expenditure element in the
Central Government’s budget, growing from 2% of GDP in 1980-81 to over 4% of GDP in
1990-91. As a result, the country started the 1990s with an unsustainable fiscal deficit.
1.2.3.1 Need for Economic Reforms
The reforms were needed because:
● India’s credit rating was downgraded, making commercial loans problematic;
● Funds flow from west Asia dried up after the Kuwait crisis; substantial withdrawals of
NRI savings occurred in the initial part of 1991; and foreign direct investment (FDI)
was short.
● Aid to poorer countries was becoming scarce due to rising claims by former Soviet
states and increased domestic expenditure needs in the United States. The necessity of
making well-organized use of aid encouraged the circumstance for reform.
● With traditional assessments crumbling around the world and the intensification of a
global market, India had no choice nonetheless to embark on economic policy
reforms.
1.2.3.2 Ideas of Economic Reforms
Reforms, on the other hand, cannot be traced solely to economic pressures. In the 1980s, the
need for macroeconomic reforms was progressively gathering traction. The ‘permit raj’s
control regime had become controversial. As a result, the time was ideal for an attack on the
system, which would be met with relief. It is commonly known that structural change
necessitates difficult decisions. The choices are defined as difficult because they frequently
entail consequences that are unpopular with the general public, at least in the short term.
1991 was a watershed moment in the Indian economy. To bring the economy back from
the edge of a balance of payments and fiscal catastrophe, radical steps were adopted. To free
the economy from the shackles that had been holding it for decades, foreign trade, investment
and sweeping market-oriented reforms in industry, were implemented. The most important
criterion for its success is whether it creates circumstances for long-term growth. The crisis
highlighted the necessity to initiate a series of structural adjustments in the trade,
22
manufacturing, and financial sectors in order to deliver the required catalyst for the economy
to liftoff on its own.
When the Congress government headed by Mr. P.V. Narsimha Rao assumed office in
June 1991 the task before it was twofold:
A. to restore macroeconomic stability by eliminating fiscal and balance-of-payments
deficits, and
B. to finish the economic reform process, i.e., a structural adjustment that has been
carried out on a limited basis, gradually and intermittently during the past 10 years.
C. The current economic changes’ stated goals strike a revolutionary ring. Reforms
aimed at achieving the following goals:
D. fiscal, monetary, and exchange rate policies that stabilize and balance the economy;
E. a liberalized trade administration with no tariff rates and import licensing similar to
other industrializing developing countries;
F. an exchange rate system that makes rupees convertible, at least intended for current
account balance of payments transactions;
G. a competitive financial system with comprehensive regulations; and
H. an industrial sector free of many controls;
All of these measures have a common thread running through them. The goal is
straightforward to increase the system’s efficiency. Even in the public sector, the regulation
process incorporating a plethora of rules has divided capacity and restricted competition. The
goal of the economic reforms, also known as the New Economic Policy (NEP), was to make
the economy more competitive in order to increase system efficiency and productivity. This
will be proficient by reducing entrance limits and obstacles on business expansion.
1.2.4 The Set of Economic Reforms
It’s critical to know exactly what the economic reform package was and, more importantly,
what it wasn’t. Economic reforms can be summarized as a bundle containing three distinct
sets of policies: (1992, Arun Ghosh);
A. Economic stabilization entails bringing aggregate demand and supply into balance,
with the discrepancy being primarily created by massive and endemic deficits in the
Central Government’s budget throughout 1980s, which resulted in rise inflation at
home and a deficit in external payments abroad. In this case, the measures chosen are
credit and budgetary policies.
B. The restructuring of the Indian economy with the goal of making Indian industry
more competitive on a global scale. The policies adopted in this framework range
from foreign trade and industrial policies to financial institution (including Bank)
lending policies, the pattern of public investment, including public sector policy, and
23
 government expenditure and the approach to sick units and subsidies in general, as
well as the subsidization of small farms and businesses in particular.
C. The Indian economy globalization, which includes opening up the import of all
commodities, including consumer goods, allowing free inflow of foreign capital
(including short-term capital), lowering customs tariffs, opening up the service sector
to foreign capital, particularly in banking, insurance, and shipping, and reinstating
the rupee’s full convertibility.
1.2.4.1 Consequences of Reforms
The three-pronged approach, according to Dr. Arun Ghosh, has substantial consequences for
the economy’s operation and future direction. They imply an abrupt and complete break with
the past, and several issues arise, including:
A. the desirability of the development pattern pursued;
B. the timing of the countless policies and, more importantly, their sequencing (and, in
fact, the wisdom of the frequent policy changes that have the effect of creating
uncertainty in the Indian economy); and
C. the relative significance allocated to various components of policies, such as inland
concerns relating to education, health, and employment, and economic globalization;
and
D. the possible consequence of the policy package. Even though the stabilization
policies were intended to address shortcomings and set the house in order in the short
term, the structural reforms were considered to accelerate economic growth in the
medium term.
Structural reform measures cannot succeed unless there is some kind of stabilization.
Stabilization will not be sufficient in and of itself unless fundamental improvements are
implemented to avoid a repetition of the issues seen in previous years. Industrial licensing
and regulation, foreign trade and investment, and the banking system all received structural
reforms. In terms of international trade policy, the goal was to liberalize the regime in terms
of imports and strive to bring exports and imports closer together. Another goal is to lower
tariff rates. In terms of import tariffs, India’s approach has been gradual, with the tariff rate
gradually decreasing in order to avoid a high-cost economy. In terms of foreign investment,
the new policy measures are unquestionably a departure from the past. In terms of rupee
depreciation, partial convertibility scheme, the Exim Scrip Scheme, subsequent complete
convertibility and unified currency rate, on the current account are all designed to ensure that
import growth does not overtake export growth.
1.2.5 Advancement of Economic Reforms
What exactly did the economic changes entail? We have compiled a summary of the most
important economic policy decisions made since the program began.

24
● Rupee depreciation: Around 19 percent in two short stages.
● Trade Policy Reforms: Export Subsidies are no longer available. Since August 1994,
partial convertibility of the rupee on the trade account (the 40:60 formula), complete
convertibility of the rupee and a single exchange rate, on the current account have
substituted EXIM Scrip.
● Industrial license is no longer required, with the exception of six businesses that are
either produce hazardous or strategic items.
● The entire part of the Monopolies and Restrictive Trade Practices Act, which was
supposed to avoid economic power concentration, is repealed.
● The clause of convertibility was repealed. Beforehand, this clause allowed term-
lending financial institutions to convert industrial loans into equity at a price and time
that they determined.
● Substantial relaxation of international private investment laws and procedures.
The Foreign Exchange Regulations Act (FERA) was liberalized to allow 50 percent
equity participation in most businesses; the FERA was superseded with the Foreign
Exchange Management Act (FEMA).
● The public sector’s exclusive domain has been condensed. Only five industries are
now protected for the public sector (defense-related industries, atomic energy,
minerals, oils, and mining). However, even in these cases, the private sector is
welcome to apply. In addition, partial privatization of several profit-generating state
firms has begun. As a result, the actions made in relation to PSUs concern:
o denoting sick PSUs to the Board of Industrial and Financial Reconstruction
(BIFR),
o disinvesting the share of the PSUs’ shareholding,
o granting more autonomy to PSUs through the instrument of Memorandum of
Understanding (MOU); and
o emerging a safety net for workers who are expected to be retrenched as an
outcome of measures to wrap up sick units or rationalization of the state policy.
● The origin of the black money problem was addressed; certain measures were
instigated to reduce the development of new black money (the flow), while others
were instigated to repurpose the black money produced (the stock) for constructive
uses.
● Fiscal policy reforms:
o fixed to minimize government spending;
o slashed rates and simplified individual income, excise, corporation, and customs
levies.
25
 ● So far, the following financial sector reforms have been implemented:
o mutual funds were permitted in the private sector;
o foreign institutions, such as pension funds, were permitted to invest in portfolios
in Indian companies;
o deposit interest rates were liberalized;
o the SLR (Statutory Liquidity Ratio) was reduced for the first time ever, and by a
significant amount; the banking sector was unlocked to private enterprise; and the
insurance sector was also unlocked to private enterprise.
● The steel industry was deregulated.
● There was a policy pronouncement pointing the small and tiny sectors.
● Gold policy reforms were instigated, with gold imports permitted under baggage
rules.
● Significant decompression of imports, with only a small negative list to shrink. It
should be declared, however, that the process is far from comprehensive. There are
many half-finished projects, which can be categorized into three groups. They are:
o Whatever has been proficient is only the beginning. In each of the prior
categories, the process has further to be carried out and consolidated;
o there are other areas that have yet to be touched, and
o The implementation of changes has uncovered certain previously unpredicted
issues that must be explored and handled.
In comparison to the license permit raj that grew up in the 1960s and 1970s, the above
packages represent a significant shift in policy thought. Efforts to lessen rules were made in
the late 1970s and 1980s, but they faded in comparison to what is currently going. Witnesses
of the Indian scene were surprised by how quickly the government published policy
statement after policy declaration. This decision-making speed was truly astonishing. When
relevant policy decisions are compared to what is necessary to be proficient under the
reforms’ fundamental goals, however, the track record of policy decisions does not look as if
to be all that outstanding. What has befallen thus far is undoubtedly a optimistic start, but
there are still numerous gaps to be filled. The list of concerns that will need to be addressed is
wide-ranging.
1.2.5.1 Components of Economic Reforms
In an instant, the primary policy changes known as economic reforms, or liberalization, are:
A. Macroeconomic stabilization measures, which comprise:
a. managing the balance of payments problem,
b. managing the fiscal deficit, and
26
 c. correcting monetary policy.
B. Major sectoral structural adjustment reforms, which consist of:
a. industrial policy reforms,
b. trade policy (and related policy) reforms,
c. policies to attract foreign direct investment, technology, and equity
participation,
d. public sector policy reforms,
e. tax structure reforms,
f. administrative reforms for faster investment approvals,
g. tariff reforms for both capital and consumer goods, and
h. financial sector reforms.
C. Social cost-sharing measures, such as reforming the public distribution system (PDS)
and establishing a national renewable fund (NRF).
The new industrial policy (NIP) of July 1991 led to in some significant policy changes,
including the near-abolition of licensing, the relaxation of the severity of MRTP and FERA,
the lessening of the list of industries to be held in reserve for instinctive sanctions of foreign
technology agreements, the public sector, and 51 percent foreign equity, the definition of a
new role for state electricity boards, consumer protection, private investment in
infrastructure, and a new liberal location policy for industries. The main goal of these highly
liberalized policy initiatives was to boost Indian industry productivity and efficiency by
fostering a competitive environment.
1.2.6 Significant Features of Economic Reforms
During the economic reform process, the New Economic Policy (NEP) represented
neoliberalism. The Industrial Policy, introduced by the government in 1991, offered the
foundation for economic reforms. ‘Continuity with change’ was the company’s primary
principle. The main goals are:
● to liberate the Indian industrial economy from superfluous bureaucratic constraints;
● to bring liberalization in order to integrate the Indian economy with the global
economy;
● to abolish prohibitions on foreign direct investment (FDI) and to loosen the
Monopolies and Restrictive Trade Practices (MRTP) Act’s restrictions on local
entrepreneurs;
● to dilute public sector monopolies and foster competition from new private firms.
Liberalization, Privatization, Globalization, and Public Private Partnerships have all been key
developments in economic reform.
27
1.2.6.1 Liberalization
The term “liberalization” refers to a change in economic policy. Liberalization has been the
characteristic of economic policy around the world for the past decade. Almost every
government has taken attempts to increase the role of private sector in economic activity.
Liberalization strategies have been implemented using a varied range of techniques. As
previously stated, there is (i) a complete change of regime, as in former centrally controlled
economies of East Europe, (ii) a major change in the philosophy and approach to fostering
development, as in Latin American economies, and (iii) a change in the government’s role, as
seen in Europe’s leading economies. The detachment of the state from the production of
goods and services across just about the entire economy, as well as the construction of legal
and institutional frameworks acceptable to the functioning of a market economy, was
required as part of the regime change. The role of the state has been decreased and remodeled
in economies that rely mostly on private industry to organize production. These measures
have culminated in the privatization of state firms in both managed transition and market
economies. In market economies, government controls on private sector activities have been
significantly reduced, with some regulations being revamped to fit developing requirements,
such as in finance and environmental protection.
Advantages of Liberalization
External transactions have been a crucial component of liberalization plans in all countries.
This is because international trade, investment, and capital movements liberalization can
boost allocative efficiency and dynamism in an economy, resulting in quicker economic
growth. The following are some of the projected benefits of expanded trade openness:
● Due to external rivalry, domestic enterprises’ innovativeness and productivity have
improved.
● As a result of increased international rivalry and specialization, customers benefit
from a wider range of goods and services as well as lower pricing. Economies open to
the competition from overseas are also presumed to be efficacy improving.
● Producers gain the ability to adapt to negative external shocks and are less likely to
engage in inefficient rent-seeking.
● Increased factor mobility, particularly capital and, with it, technology, can assist a
country avoid being bound by static comparative advantage and accomplish the
ongoing adjustments in its resource endowments required for sustainable productivity
advances and economic growth.
● Capital mobility liberalization means that the link between domestic investment and
domestic savings can be improved, i.e., domestic investment does not have to be
hampered by high domestic savings and poor domestic saving behavior, can travel
overseas where they are needed to.

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Progress of Liberalization
In terms of commerce, investment, and finance, however, liberalization has occurred at
different rates and in diverse methods. While there are still many areas where liberalization is
only partial, such as agriculture and clothing and textiles, which are predominantly important
to developing countries, international trade liberalization has made significant progress.
The liberalization of investment has been far more uneven. Changes often involved
lowering or removing barriers to foreign investors, establishing norms for their treatment, and
providing incentives to encourage increasing foreign direct investment (FDI), with some
efforts also made to assure effective market functioning. In addition, these liberalization
measures were frequently accompanied by other measures besieged at improving the
investment milieu for Transnational Corporations (TNCs), mostly by providing better
protection to foreign investors. Financial transactions have become more liberalized as trade
and FDI regimes have become more liberalized. In emerging countries, financial
liberalization is often less progressed, but the rate of change has been much faster. In many
developing countries, inward investment by non-resident investors is essentially unrestricted.
In recent years, a rising number of developing countries have embraced capital account
convertibility for export transactions. The liberalization of foreign exchange transactions
among people has developed significantly. Indeed, there has been a tendency to encourage
residents to keep their foreign exchange deposits in inland institutions. The extension and
intensification of regional integration activities have influenced trade and investment
liberalization.
1.2.6.2 Privatization
To different people, privatization means different things. In its most basic form, it refers to
the transfer of rights from public (unidentified bureaucrats and politicians) to private
(identified persons) hands. In a broader sense, it refers to the process of instilling
competition, also known as marketization or liberalization, in which demand and supply are
permissible to play their private roles rather than being directed or controlled by any
centralized authority. Between these two extremes, there is a version in which the
government sells a large or insignificant share of the equity of PSUs to the private sector, a
share of some of the PSE’s activity is controlled out to the private sector, a previously
reserved sector or industry is opened to the private sector, an erstwhile public service is
withdrawn, a memorandum of understanding (MOU) is made between the government and
the management of the PSE, and so on. The work on all of these form options has been done
with changing outcomes. Moreover, privatization is branded by several names all about the
world. In the United Kingdom, e.g., it is identified as “de-nationalization.” “prioritization” in
Australia, “Dis-incorporation” in Mexico, “transformation” in Thailand, “asset sales
program” in New Zealand, “dis-investment” in Pakistan and “people-ization” in Sri Lanka,
are all terms used in the trade. In 1983, The Penguin Dictionary of Economics defined
privatization as follows:

29
 a. “The sale of government-owned shares to private investors in nationalized industries
or other commercial firms, with or without harm of government control;”
b. privatization as a notion that incorporates denationalization (wherever the government
sells its stake);
c. deregulation (where legal barriers are removed to permit private businesses to
compete); and
d. franchising (where contracts are granted for a set period of time – where private sector
produces and public sector distributes).
In addition to the sale of government-owned equity in an organization, “other types of
privatizations may take the procedure of deregulation of a state-supported union or the
contract out to the private sector of work mainly performed by state employees,” according to
the newest edition of the “Dictionary of Economics.” To improve development under
globalization, the key task is to combine characteristics of the state with aspects of the
market. The impoverished should be actively involved in this process. As a result,
privatization encompasses a broad range of options, ranging from denationalization to market
discipline:
A. Public assets (enterprises, parts of firms—’partial privatization’) or individual assets
are transferred (sold) to private individuals.
B. Contracting out of individual public supply tasks to private individuals; also,
functional privatization.
C. Transition from public to private corporate management in the sagacity of profit
maximization.
D. Extending the margin of independence for public-sector management.
E. Debureaucratisation, in the sagacity of removing administrative directives and formal
requirements.
F. Decentralization in the sagacity of delegating decision-making, planning, and action
authority.
G. Aligning the conditions that apply to public enterprises with those that apply to
private businesses.
H. Market procedures boost competitiveness (or market-like systems of incentives).
I. Dismantling of governmental monopolies that are justified using the typical ‘natural
monopoly’ rationale.
J. Approval of salaries and working employment conditions alike to those in the private
sector: job privatization.
K. A drop in the nature and scope of public services on an informal basis.

30
 L. Public-sector resource privatization.
M. Privatization of public revenue: revenue from private access to public capital and
revenue, or public investments transformed into private profits.
N. Denationalization: worldwide competition pressures; increased activity in the foreign
markets; take–over of rights of disposal and capital shares by foreigners.
1.2.6.3 Globalization
Depending on which level we choose to focus on, globalization can be described in a variety
of ways. Globalization can refer to the entire world, a single corporation, a single country, or
function within a company or even a specific line of business. Globalization refers to the
increasing economic interconnectedness of countries as seen by increased cross-border flows
of commodities, services, capital, and know-how on a global scale. The following trends
provide clear proof of this:
Amid 1989 and 1999, cross-border commerce in services and products grew at an
average annual rate of closely twice as fast as the world’s GDP, which grew at an average
annual rate of 3.1 percent during the same time. Foreign direct investment increased from 4.8
percent to 9.4 percent of global GDP between 1980 and 1999.and In 1970, cross-border bond
and equity transactions as a percentage of GDP in the United States, Germany, and Japan
were all under 5%. By 1999, these countries’ respective percentages had risen to 149 percent,
202 percent, and 87 percent. Globalization refers to the extent of interconnections between
the world at the national level and a country’s economy. Despite the fact that the globe is
becoming more global, not all states are equally associated into the global economy. Exports
and imports as a proportion of GDP, portfolio investment, and inward and outward flows of
foreign direct investment (FDI) and inward and outward flow of sovereign’s payments linked
with technology transfer are some vital indicators for measure a country’s economy’s global
integration. Globalization refers to the mark to which a company’s competitive position in
one country within a certain industry is interdependent with that of another country. The
higher the benefit a firm may gain from leveraging technology, manufacturing advances,
brand names, and/or finance across countries, the more global an industry is.
What Determines Globalization?
Globalization happens as a result of individual actions made by precise managers in precise
organizations that result in complex cross-border flows of goods, capital, and/or know-how.
Because globalization is becoming both more desirable and practical, managers are making
more of these judgments. At the heart of these changes are four trends. Dhingra, I.C., 2012);
A. The free-market concept is being embraced by a growing number of countries. The
transition of economy policymakers in industrialized and developing countries from a
“planning” mentality to a “market” attitude is well-documented and well-known.
B. The economic center of gravity is ever-changing from wealthy countries to
developing ones. Competition, innovation, new capital investment, efficiency and
31
 faster economic growth are all aided by economic liberalization. Unsurprisingly, the
adoption of market procedures has enabled the world’s emerging economies to begin
catching up to the advanced economies. The economic center of gravity in the planet
is moving. Today, almost every firm seeking to expand has little choice except to go
where the growth is. Such growth is rare in the home market for the great majority of
the world’s top 500 industrial businesses.
C. Communication is always increasing as a result of technological advancements. Since
1980, the cost of air travel, telecommunications, and computers has dropped
dramatically. The cost of shipping goods has declined as transportation expenses have
declined. In the instance of computers and telecommunications, both the rapid cost
reduction and the recent widespread use of technologies like as e-mail and
videoconferencing have made remote operations coordination not only more feasible
but also more trustworthy and efficient.
D. The opening of borders to investment, commerce, and technology transfers not only
expands market prospects for businesses, but also allows foreign competitors to enter
domestic marketplaces. As rivalry heats up, firms strive to service globalizing clients,
leverage economies of scale, take use of the cost-cutting or quality-enhancing
potential of optimal locations, and take advantage of technology improvements
wherever they occur. As a result, globalization has evolved into a self-accelerating
process.
Paybacks of Globalization
“The paybacks of integration with the world economy, through globalization, would flow
only to those countries, which have created the necessary foundations for development and
industrialization,” said Prof. Deepak Nayyar. This entails investing in human resource
development as well as physical infrastructure development. This entails increasing the
agriculture sector’s productivity. This entails the micro-acquisition of technological and
management competences. This entails the establishment of institutions to control, govern,
and facilitate market functioning. Strategic types of governmental intervention are required in
each of these undertakings. Countries that have not established these prerequisites risk
globalizing prices without globalizing earnings. A small part of their population may become
more integrated with the global economy in terms of spending habits or living styles as a
result of this process, while a significant portion of their population may become even more
marginalized.”
Globalization is the process of integrating the world’s economy without obstructing the
movement of products and services, capital, technology, and labor/human capital. It consists
of four parts:
A. Removal of trade barriers such as customs tariffs, quotas, and quantitative limits to
allow free movement of products and services between economies.

32
 B. Creating an atmosphere that allows for the free flow of capital (or investment) across
nations.
C. Creating a conducive atmosphere for open technology transfer; and
D. From the perspective of developing countries, the building of an environment that
allows for the free flow of labor or human resources between countries around the
world.
Globalization is, in essence, a continuation of the international liberalization process. As a
result, it denotes both globalization and liberalization. In India, the globalization process
began in the 1990s with the adoption of the LPG model amid economic reforms. In this
context, some essential features include:
● It had a significant impact on India’s service economy, particularly in businesses like
as information technology (IT), information technology-enabled services (ITES),
outsourcing, telecommunications, tourism, real estate, transportation, banking,
insurance, and entertainment, among others.
● Foreign investment flows (FDIs and FIIs) have been encouraged, resulting in
increased efficiency, competition, profitability, and worldwide standards in
productivity and quality of commodities. Mergers, joint ventures, public-private
partnerships, and outsourcing to foreign companies have expedited India’s economic
development.
● Over the last two decades, economic changes have resulted in a growth in exports,
migration (both domestic and foreign), and other indicators.
1.2.6.4 Public-Private Partnership (PPP)
India is setting a good example for public-private partnerships and encouraging private
investment in vital economic projects. The main benefits of public-private partnerships
include efficient and quick project delivery, alleviation of capacity constraints and
bottlenecks in the economy, innovation and diversity in the provision of world-class facilities,
and tax payer value for money through optimal risk transfer and risk management, among
others. There are several PPP models, however the ones most commonly used in India are:
● build-operate-transfer (BOT), for example, the Mumbai Metro train project led by the
Anil Ambani group;
● build-own-operate-transfer (BOOT), for instance, the Rajiv Gandhi International
Airport in Hyderabad.
● concession
● design-build-finance-operate is a design-build-finance-operat
● asset sale
● management contract
33
1.2.7 Crisis within 30 Years of Reforms
1991 is seen as a watershed moment in India’s economic history. Dr. Manmohan Singh and
Narasimha Rao saved a sinking economy by applying the Liberalization-Privatization-
Globalization philosophy. Many commentators believe that the situation in 2013 is worse
than it was in 1991. The free-falling rupee attempted to reach 70 rupees per dollar, and the
Indian economy seemed to be on the verge of a black hole, with a current account deficit of
$85 billion, or 4% of GDP. As a result, the call for reform is receiving a lot of attention.
However, few people have faith in that the current situation is worse than it was in 1991.
And ‘big bang reforms’ of the similar as in 1991 aren’t India’s only option.
First and foremost, one must recognize that the two situations – one in 1991 and the
other in 2013 – are diametrically opposed. The fundamentals of the economy have altered
over time, according to ex-RBI Governor D. Subbarao. India was a closed economy with
“Red tape mafias” in 1991. The Indian economy is now based on LPG principles. In 1991,
for two months, India’s foreign exchange reserves could only cover imports, however, we
currently can cover imports for eight months.
The rupee was depressed by 20% in 1991, however today’s exchange rate is mostly
market-driven and hence able to handle shocks. External sector vulnerability indices in 1991
were significantly worse than those in 2013.
The state of the western economy is the most important reason that defies any necessity
for reform. Western economies were trying to expand in 1991. They were thriving in their
pursuit of new markets in Africa and Asia. Their economy was in good shape. Western
economies, on the other hand, are now looking inward. The subprime mortgage crisis of 2008
was a devastating blow to industrialized economies. After 2008, the majority of developed
economies began to deteriorate.
After 2008, the majority of developed economies began to deteriorate. They are not as
passionate as they were in 1991 about investing in foreign countries. The European Union,
the United States, and Japan are all attempting to improve their economies.
India must recognize that, even if it receives financial assistance from global economies,
it will be a double-edged sword. Foreign financial assistance will be a foreign trap unless it is
utilized efficiently to enhance domestic production and export. The government should
recognize that this trap will only get more complicated over time. Industrialists who take use
of lower-cost global finance and limited resources such as spectrum, land, coal, and iron
should avoid falling into the trap of playing stock games with the support of the political
class.
India should strive for insulation from global financial ups and downs rather than
isolation. This could simply be accomplished with domestic resources. Allowing larger coal
and iron extraction may easily enhance India’s coal and iron extraction by $20 billion. India’s
coal imports have increased by $10 billion in the last five years. Because India owns Asia’s

34
largest coal reservoir, this wasteful outflow of cash may be simply averted. The government
must persuade the Supreme Court of the advantages of permitting coal mining in Goa and
Karnataka. Coal exports can simply fetch India a few essential foreign exchanges under the
supervision of the Supreme Court.
India should consider broadening the scope of the Food Security Bill. The Food Security
Bill will protect the poor from mounting food prices. This would make RBI’s job easier and
less complicated because the central bank would have more time to focus on manufacturing
inflation. The Reserve Bank of India would then use manufacturing inflation to structure
monetary policies and lower interest rates for the industry.
According to the World Economic Outlook Report 2021, India’s economy would
increase by 12.5 percent in 2021 and 6.9 percent in 2022. However, the pandemic has
resulted in widespread unemployment in the informal economy, and poverty has begun to rise
after decades of reduction. Health and education are two social areas that have fallen behind
and failed to keep up with our economic growth. Inspector Raj is likely to make a
reappearance as part of the e-commerce policy. To finance the budget deficit, India has
returned to its old traditions of borrowing excessively or taking money (in the form of
dividends) from the RBI. The migrant labor problem has exposed the development model’s
flaws. Because India has already elected to opt out of the 16-nation Regional Comprehensive
Economic Partnership (RCEP) trade accord, India’s foreign trade policy is once again
doubting commercial liberalization.
The 1991 reform package was heavily criticized for being dictated by the World Bank
and the International Monetary Fund (IMF). Furthermore, some of the measures were viewed
as a betrayal of capitalists. Such a centralized approach to reforms may not effort now,
according to the 2021 Reforms. Three farm laws have sparked outrage, as evidenced by the
protests.
1.2.8 Summary
The changes were largely intended to liberalize the economy, reduce bureaucratic
regulations, remove limitations on direct foreign investment, and encourage privatization in
order to relieve pressure on public sector firms. The LPG model proposed by the government
with the goal of connecting the Indian economy with the global economy was a fundamental
aspect of economic reforms. Economic reforms have had a favorable influence on GDP
growth and have resulted in a good increase in foreign investment. However, these reforms
have not provided a stimulus to our country’s larger challenges, such as poverty and
unemployment. Agriculture has also been ignored, as seen by the public sector’s near-
stagnation of capital investments in the industry. Economic reforms have also failed to
accelerate industrial expansion.
Economic changes have made it easier for foreigners to enter the Indian market than it
has been for Indians to enter international markets. The fact that the trade deficit continues to

35
grow is proof of this. Regional imbalances have also remained unabated despite economic
improvements. The disparity between the larger and smaller states is widening.
Liberalization is the process of altering economic policies to allow market forces to
operate. Globalization refers to the international movement of products, capital, technology,
and labor. In the case of India, reformulating liberalization policies in line with goals is
necessary in order to maximize the potential benefits of globalization. Privatization can be
perceived in two ways: in its narrow sense and in its broader sense. In its most basic form, it
refers to the transfer of ownership from public to private hands. In a broader sense, it refers to
the introduction of competition, or marketization, in which demand and supply are permitted
to play free roles rather than being controlled or directed by any authority.
We should concentrate national emphasis on seven problems for long-term strategy: I
making quick export growth a “national economic endeavor”; (ii) a high increase in the
savings rate, particularly in the public and private corporate sectors. (iii) to focus more on
exporting; to increase Indian industry’s technological capabilities by encouraging companies
to invest more in R&D. (iv) a higher level of tax compliance (v) a bigger concern for social
justice; (vi) a larger concern for the environment; economic progress cannot continue without
consideration of the environmental consequences of modernization; and (vii) a greater
concern for the environment. (vii) rural development, which will fetch employment
possibilities from the agricultural and industrial sectors to rural areas, resulting in rural
enrichment and the abolition of urban overcrowding and degradation.
1.2.9 Further Readings
⮚ Baru, Sanjay (1993): “NEP: The Equity Dimension”, The Economic Times, March 25.
⮚ Datt, Ruddar (1993): “Impact of New Economic Policy”, Financial Express, January 27
(2000): Indian Economy (Chapter-13), S. Chand & Co. Ltd., New Delhi.
⮚ Datta, Bhabatosh (1992): “Alternative Strategy: The Basic issues”, Business Standard,
August 26.
⮚ Dhingra, I.C. (2012): The Indian Economy: Environment and Policy (27th edition.2012).
⮚ Ghosh, Arun (1992): “Self-reliance, Recent Economic Policies and Neo-Colonialism”,
Economic and Political Weekly, April 25.
⮚ Government of India (1993): Economic Reforms: Two Years After and the Task Ahead.
⮚ Gupta, Anand P (1996) “Political Economy of Privatization in India”, Economic and
Political Weekly, September, 28.
⮚ Kalirajan, K.P. and R.T. Shand (1996), “Public Sector Enterprises in India: Is
Privatization the only answer?”, Economic and Political Weekly, Sept. 28.
⮚ Nayyar, Deepak (1992): “Perceptions (interview column)”, The Economic Times,
February 18 and 25. — (1994): Fiscal adjustment: Why and For Whom?” Times of India,
February 27.
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⮚ Nayyar, Deepak (1995), “Globalization, The Past in our Present” (Presidential address at
the 78th Annual Conference of Indian Economic Association, Chandigarh, December 28-
30).
⮚ Oman, Charles (1995), “Globalization and Regionalization: The Challenge for
Developing Countries”, OECD, Paris.
⮚ Patel, I.G. (1991): “New Economic Policies: A Historical Perspective”, IIM-B
Foundation Day Lecture 1991, Bangalore, October 21.
⮚ Roy, Sumit (1997), “Globalization, Structural Change, and Poverty: Some Conceptional
and Policy Issues”. Economic and Political Weekly, Aug. 16-30.
⮚ Singh, Ajit Kumar (1993): “Social Consequences of New Economics Policies”, Economic
and Political Weekly, February 13.
⮚ United Nations (1996), UNCTAD’s Secretary General’s Report on Globalization and
Liberalization, UN, USA, New York.
⮚ Vyas V.S. (1993): “New Economic Policy and Vulnerable Sections–Rationale for Public
Intervention”, Economic and Political Weekly, March 6.
1.2.10 Practice Questions
1. What are the objectives of India’s economic reform program?
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2. Identify the four elements that are driving globalization?
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3. What have been the most important issues confronting the Indian economy since 1990?
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 Unit 2: Industrial Development Strategy and its Impact on the Social Structure

(a) Mixed Economy, Privatization, The Impact on Organized and

Unorganized Labour
Revathy V Menon*

2.1 Structure
2.1.1 Introduction
2.1.2 Industrial Development in India
2.1.3 Mixed Economy
2.1.4 Privatization in India
2.1.5 Impact on Organized and Unorganized Labour
2.1.6 Conclusions
2.1.7 References
2.1.8 Practice Questions
2.1.1 Introduction
Post independent India’s development programme was intrinsically based on the
administrative decision to adopt a mixed economy. The unambiguity against the adoption of
mixed economy prevailed and still continuing on the grounds that: a high level of government
involvement and control can be witnessed as the Indian economy will face an inadequate
resource allocation and our non-competitive character in the global context, also our
economy will heavily rely on the industrial development. Moreover, a section of the society
opposed the move considering the mixed economy framework as a measure to legitimizing
capitalist authority in close partnership with the state.
Although, it must be admitted that market forces left independently cannot solve the
problem of poverty, as millions of people (majority) live on mere subsistence and a
considerable proportion live below the poverty line. Furthermore, given the evolution of
Indian culture, a centrally planned economy with the State directing social and economic
change is impossibility for the country. As a result, the pursuit of a mixed economy has been
the only viable option. Analyzing the situation of 1950s and present, nothing much has
changed, the severity of poverty, the dependence on government for welfare programmes,
state control over market as a minimal state cannot be a solution to India given the country’s
diversity. Still we can observe the inadequate performance of the public sector it appears that
the pervasive and intrusive role of the state has also lost-its relevance.

*
Guest Faculty, Department of Political Science, School of Open Learning, University of Delhi

38
2.1.2 Industrial Development in India
India was a forerunner of industrialization among the Third World countries, developing
modern infrastructures such as laying communication networks, better transportation system
irrigation systems, etc. since the British rule. Even before the colonial rule in India, we
reflected a highly competitive market depicting higher manufacturing and export
performances and industrial performance which were considered the finest among the world.
Post-independence, as a victim of enormous exploitation, our economy and all the major
sectors were miserably ruined. Therefore India abandoned an open economy in pursuit of its
goal of industrial self-sufficiency. As a result, industrial structure has grown much more
diverse.
Salient Features of India’s Strategy for Development
The following are characteristics of India’s development strategy:
 Planning: India has chosen planning as a development strategy. The most essential
reason for planning’s acceptance was because it was thought to be a superior method
of economic development.
 Mixed Economy: The notion of a mixed economy acknowledges the possibilities of
private and state enterprises coexisting. India is seen as an excellent example of a
mixed economy. In India, the government set aside regions for the growth of both
public and private sector companies.
 Public Sector Role: The public sector was given a dominating role in the development
and strategy. Because heavy industry investment was large, the gestation time was
excessively long, and profitability was low.
 Heavy industry strategy: The foundation of Indian planners’ strategy for the second
plan, and with slight variations for the next three plans, was fast industrialization by
lumpy investment in heavy, basic, and machine building industries.
The basic objectives of India’s Planning are: Growth, Modernization, Self Reliance,
Employment and Social Justice. Let us understand the various dimensions of industrial
growth in India under two major categories: Pre-Reforms period and Post Reforms Period.
Dimensions of Industrial Growth
(a) Pre-Reforms Period:
Since 1951, the Indian economy began to show positive signs of growth with the introduction
of the popular ‘Five-Year Plans’. During the first two decades, notably during the Second
(1956-61) and Third Plans (1961-66), industrial expansion was significant. The Second Plan
(1956-61) was the defining moment in Indian industrial history since it ushered in an
industrial revolution in the nation, particularly in terms of developing fundamental industrial
strength. The pace was maintained throughout the succeeding Third Plan as well. This period

39
of growth can be related as a period of ‘industrial growth with regulation’. The high rates of
industrial growth observed throughout the time were caused by:
 Adoption of economic policies largely based on industrialization,
 Within industrialization, adopting a heavy industry-oriented strategy and realizing the
need of industrial growth as a supreme objective in industrial policy and planning,
 Heavy investments and thereby focusing on capability development of the industrial
sector, contributing to complementary development of other sectors,
 Developing and strategizing consumer demands for variety of new products especially
in urban and relatively better-off regions, etc.
Following the Third Five-Year Plan, industrial growth slowed down with stagnation in the
manufacturing sector, a visible steady decline in per capita domestic availability of key wage
goods, an increase in the number of people living in poverty, and the emergence of an ‘elite-
oriented production-consumption structure’ was visible. Man-made fibres and finer textiles,
beverages, fragrances and cosmetics, other products focusing the elite section of society saw
a comparatively large growth in output. This situation arose as a result of the allocation of
investment grade capital to mass-market items. As a result, there was an imbalance in the
industrial structure until the 1980s.
During the 1980s, the commencement of economic liberalization was highlighted by the
Sixth Five-Year Plan (1980-85). Ration stores were closed and price limits were removed.
This resulted in a rise in food costs as well as the expense of living. During this time, the rate
of industrial expansion increased, and the stagnation of the previous period was dissolved.
Nehruvian socialism came to an end at this point. In order to avoid overpopulation, family
planning was also introduced.
India’s economic liberalization refers to the liberalization of the country’s economic
policies with the purpose of making the economy more market and service-oriented, as well
as increasing the role of private and foreign investment. Liberalization in detail will be dealt
in the section allotted. Along with liberalization of industrial policy, a phase that started in
the early 1980s and has been accomplished since 1985, various other factors contributed to
the comeback such as:
 During the 1980s, public investment played a vital role in influencing the expansion
of Indian industry that was significantly higher than in the 1970s.
 The private corporate manufacturing sector has achieved a noteworthy improvement
in its investment.
 In the 1980s, increased industrial investment was backed up by a sharp increase in
capital goods imports.

40
  The ‘liberal fiscal system’- which refers to a system in which many of the
fundamental principles of public finance have been abandoned- aided rapid
investment in industry.
 Improved infrastructure performance as a result of higher rates and patterns of gross
domestic capital creation in general and public investment in particular.
 A shift in inter-sectoral trade terms in favour of non-agricultural sectors.
 During the 1980s, the state’s involvement in promoting economic recovery was
indirect, i.e., by providing employment and incomes to a growing middle class
through the creation of a large administrative empire.
The significant difference between in the planned development happened during the 1950-
1970s and the 1980s period is that incomes directly generated by the State allows for a
degree of percolation down to slightly lower income levels of demand for commodities that
were previously consumed only by the highest income segments of the population.
(b) Post-Reforms Period
Indian industrial production experienced serious setbacks during 1991-2000. The decline in
industrial production around 1991-94 were majorly caused by import compression, increase
in the cost of imports, a downward adjustment of the rupee’s exchange value, and restrictive
monetary policy: on the supply side and on the demand side: inflationary pressures, reduction
in governmental expenditure, and stringent budgetary discipline, etc. Though, import
compression has never been as severe as it was in 1991-92, when foreign reserves were at an
all-time high. Uncertainties linked with direct foreign investment inflows forced local
producers to postpone their investment plans and put their growth aspirations on hold as well.
This decline turned out to be merely transitory, a direct result of the government’s
stabilisation measures for the economy’s macro-economic adjustment positively geared up
the rate of industrial growth by the end of 1994. The shift in growth rate began to seen as
results of: increased government spending and public investment as the government spending
stimulates growth on both the supply and demand sides of the market. Further the excise and
customs duty cuts, growth in export volumes, continued stability in agricultural output
growth, funds released from the banking system, etc.
The second significant structural shift was increased export competitiveness, which was
reflected in a higher export proportion. The ratio of total exports (trade plus hidden
receipts/GDP) increased dramatically from 16.9% in 2000-01 to 33.2 percent in 2007-08.
Financial deepening is the third development that has occurred in recent years. On the
backdrop of a spike in bank loans, the bank assets/GDP ratio increased from 48% in 2000-01
to 80% in 2005-06. Lower interest rates have been a common component in all three
structural developments. Interest rate cuts aided fiscal consolidation, increased company
competitiveness, and resulted in a massive surge in retail credit. The growth in inflows on
both the current and capital accounts allowed for lower interest rates. In other words, it is

41
apparent that the industrial sector responded to the economy’s strong demand by increasing
its capital stock.
Improved openness of the economy, larger FDI inflows, increased competitive pressures,
increased investment in information and communication technology, and greater financial
depth all led to productivity advances in the industry. As a result, the industry, in tandem with
the services sector, has become a key development engine. Many services, such as
commerce, transportation, communication, and construction, are inextricably related to the
manufacturing sector.
Rising crude oil and other commodity prices, increasing interest rates, the Indian
corporate sector’s effort to raise external capital primarily to support its investment, with
significant role of the international institutions, opening up of the economy, decline in the
construction and real estate sectors sharply slowed down the growth rate in subsequent years
until the 2008-09. Post 2009, consumer durables and intermediate products grew rapidly;
basic and capital goods grew slowly; and consumer non-durables slowed dramatically. For
instance, automobiles, chemicals, wool and silk textiles, rubber and plastic products, wood
products and various manufacturing products saw strong growth in 2009-10; while the non-
metallic mineral products saw modest growth; paper, leather, food, and jute textiles saw no
growth; and beverages and tobacco products saw a slump.
The United Progressive Alliance government (2004-2009) has little opportunity to
privatize public sector enterprises because of the Left’s backing in the Lok Sabha. There
again the government resorted to sell 5 to 20% stakes in state-run firms through public
offerings or secondary ways due to lack of other options for raising funds and an ever-
increasing social sector budget. While boosting retail involvement in the stock market, the
government was able to raise cash without selling a controlling ownership in its companies.
State-run businesses are working on enhancing corporate governance and being more cost-
conscious now that they are accountable to public shareholders. Indians were unchained after
ten years of economic liberalization, and the first decade of the twenty-first century reflected
that.
The Planning Commission was replaced by NITI Aayog in 2014 (NITI stood for
National Institute for Transforming India). The Planning Commission was a Soviet-style
agency that drew up five-year plans for the country and advised on how central funds were
allocated to each state. After consulting with the states, NITI Aayog currently works as the
government’s think tank, establishing medium- and long-term policies and breaking them
down into year-by-year plans. The Indian government announced the demonetization of ₹500
and ₹1,000 banknotes on November 8, 2016. In compensation for the demonetized
banknotes, it also brought in fresh ₹500 and ₹2,000 banknotes. Prime Minister Narendra
Modi asserted that the step will restrict the use of illicit and counterfeit currency that fuelled
unlawful activities and terrorism, as well as curb the shadow economy. The country’s
industrial production and GDP growth rate were both lowered as a result of the shift. The
Indian government had demonetized banknotes twice before, in 1946 and 1978, with the

42
purpose of combating tax fraud via ‘black money’ stored outside the formal monetary system
in both cases.
The Narendra Modi government has prioritized enhancing the ease of doing business. As
part of this, the goods and services tax (GST) was adopted in July 2017. India is presently
one of the few countries with an indirect tax code that combines federal and state tax
regulations. Despite some technical difficulties and increased compliance burdens for
businesses, particularly small and medium businesses, the new system has removed tax
barriers between states and created a single common market, allowing trucks to flow freely
without being stopped at borders for payment of interstate levies.
Young entrepreneurs have experimented with concepts in digital payments, online
shopping, on-demand delivery, education, software, and other areas in India during the last
decade, resulting in a slew of firms. The rise of startups has resulted in the emergence of a
new ecosystem of angel and venture capital, incubators and accelerators, as well as new
societal consumption patterns.
Pattern of Industrialization
The pattern of industrialization followed since Independence is the second major feature of
industrial expansion in India. Industrialization may be divided into two categories: (a)
functional patterns of industries and (b) ownership patterns of industries.
(a) Functional Pattern of Industries
Various industries may be grouped into four divisions based on use-based or functional
categorization criteria:
a) basic industries,
b) capital goods industries,
c) intermediate goods industries, and
d) consumer goods industries
There are five distinct phases relating to the compound rates of growth in various industries.
 The First Phase lasted until the mid-1960s. In the first phase, the rate of expansion of
industries had accelerated dramatically. The basic and capital goods sectors made a
significant contribution followed by an immediate expansion of the basic and capital
goods sectors; and relatively moderate expansion of the consumer goods industry.
This pattern corresponded to the growth plan developed during the Second Plan and
implemented throughout the succeeding Plan.
 The Second Phase was from 1965 until 1975. As previously stated, the rate of
industrial expansion began to accelerate in the following phase, which began in the
mid-1960s, where growth was somewhat high, the majority of the industries belonged
either directly or indirectly to the ‘elite-oriented consumption goods’ sector, such as

43
 consumer durables, which has been dubbed the ‘Cinderella of Indian
Industrialization’.
 1975-1990 was the third phase. During this time, industrial growth was very diverse,
with rates of growth picking up in all of the main segments. Basic goods industries, as
well as capital goods and intermediate goods sectors, grew at a reasonably steady rate.
 From the 1990s to the 2008 forms the fourth phase. While the proportional
contributions of the basic and capital goods sectors decreased throughout the 1990s as
an impact of trade liberalization, those of the intermediate and consumer goods
sectors increased. The spirit of incentivizing international trade, financial, and real
sectors to play their proper roles in economic growth, judgments about the last
element must be made by the industries themselves. There has also been a noticeable
increase in the percentage of consumer durables.
 From 2008-09 onwards, the fifth phase or slowdown phase. The downturn began with
consumer durables in the second quarter of 2007-08, although other use-based
categories, such as intermediates and even consumer non-durables, aided the total
increase, albeit at slower rates. Capital goods output continued to grow at a rapid
pace, possibly reflecting the high investment rates. However, the reduction in
intermediate goods growth from the first quarter of 2008-09 resulted in a steep drop in
total growth, which was amplified in the third quarter of 2008-09 when the remaining
categories also saw a sharp drop in growth. Lower interest rates resulting from an
expansionary monetary policy and salary increases with arrears payments, after the
adoption of the Sixth Pay Commission recommendations, stimulated demand for
consumer durables. Consumer non-durable items, on the other hand, continue to fall
behind in terms of performance. The sector’s growth trend has been quite volatile.
Basic products and intermediates, among other use-based categories, grew faster and
more consistently in 2009-10.
(b) Ownership Pattern of Industries
The architects of the industrial plan, which depended primarily on basic and capital goods
sectors, knew that in order for it to succeed, the government would have to take on the role of
entrepreneur. The public sector in India grew rapidly in the years after the First Plan and
subsequently, to the point that it accounted for about two-thirds of the economy’s net
domestic capital formation. However, following the Third Plan, net domestic capital
formation in the public sector began to stagnate; since then, it has typically been between 45
and 48 percent. These developments are mirrored in the ownership and organizational
structure that has developed throughout time. Thus, starting with a clean slate in the mid-
1990s, the public sector (Central, State and Local) saw its share rise to 4.7 percent of total
factory capacity, 27.4 percent of employment, 55.0 percent of productive capital, 34.3 percent
of emoluments, 25.5 percent of output value, and 30.1 percent of value added. Governments’
proportion of output, value added, and employment, on the other hand, is far lower.

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2.1.3 Mixed Economy
India became a republic after attaining independence and chose ‘social and economic
development planning,’ which meant that the state would take the lead in deciding on ‘what,
how, how much, where, and whom’ in economic and social activities of the system, while
generally respecting private property and market institutions. Despite the fact that our
constitution granted the market room to operate, it also urged the state to intervene in the
market’s operation. As a result, we chose the middle road, the mixed economy model, in
which the public and private sectors complement each other while staying active partners in
common responsibilities or progress. We implemented democratic planning with the goal of
achieving a high and sustained rate of growth, gradual improvement in people’s living
conditions, and the abolition of poverty and unemployment in order to create the groundwork
for a self-sufficient economy. In the 1990s, planning strategy and imagining the role of the
state in relation to the market altered dramatically in favour of the market.
Concept
Mixed economy denotes a separation and harmonization of the public and private sectors. It
forbids the free operation of the market mechanism, and the government intervenes or
controls the private sector in such a way that the two sectors become mutually reinforcing. A
mixed economy provides a feasible balance between individual initiative and societal aims.
Planning and market processes are so tuned that each is employed to achieve the economic
goals to which it is most suited. Both sectors have made a commitment to national objectives
and priorities.
On the basis of ownership of the sectors, mixed economy can be categorized as:
 A cooperative commonwealth is a system made up of cooperative organizations.
 Another sort of mixed economy is created via a system of joint sector organizations.
 The typical mixed economy is a system in which both the public and private sectors
are included.
Depending on the level of coverage by the public sector of the economy’s core sector, this
mixed economy might be ad hoc or systematic. The extent to which the two sectors have
been merged and harmonized with the economy’s overall policy objectives is another factor
to examine. It would be an economy that prioritizes the welfare goals of the poorer parts
through a combination of public distribution systems, poverty alleviation programmes, and
production priorities based on market economy principles. It might also be an economy that
prioritizes social goals such as fairness, employment, and self-sufficiency. Each form of
mixed economy would have a different degree of planning and market economy integration.
It is claimed that every economy is a mixed economy and thus the term ‘mixed
economy’ is neither exact nor practical. However, it is important to recognize that the ideas
of planned and market economies have distinct ideological and practical features. The mixed

45
economy notion is a compromise between these two extremes. This notion is adaptable, with
its own set of tools and strategies for dealing with economic, political, and social challenges.
A mixed economic system has elements of both capitalism and socialism. A mixed
economic system protects private property and permits some economic freedom in capital
allocation, but it also allows governments to intervene in economic activity to achieve social
goals. Mixed economies, according to neoclassical theory, are less efficient than pure free
markets, but proponents of government intervention argue that the fundamental conditions for
efficiency in free markets, such as equal information and rational market participants, are
impossible to achieve in practice. Let us analyse the definition and features of capitalism and
socialism in order to have a better grasp of the notion of mixed economy.
Capitalism: Capitalism is described as an economic system that emphasizes individual
initiative with a key role for a market economy, the profit motive, and private individual and
corporate ownership of means of production. All means of production, including farms,
factories, mines, and transportation, are owned and controlled by private people and
businesses under capitalism. Owners of these industrial assets are free to utilize them as they
see appropriate in order to generate private profit. The state or government plays the least role
in people’s economic activity. Because private persons may not find it lucrative to undertake
such activities, the government handles only defence, foreign affairs, money and coinage, and
some significant civic works such as the construction of roads and bridges. Individual and
societal interests, according to Adam Smith, are inextricably linked. As a result, the
government has no role in economic operations. Such actions were essentially impossible for
the state to carry out. It would be a waste of society’s resources if the government took on
this task. Things should be left to follow their own course; therefore there was no need for
planning or a pre-determined framework to direct people’s economic activity.
Essentials of Capitalism
 The Right to Private Property: Individuals have private ownership of diverse
instruments of production. Individuals can keep, use, or sell them as they see fit. This
right includes the right of inheritance for sons and daughters, as well as other legal
heirs.
 Individual Freedom of Business: An individual’s right to participate in any business
or enterprise for which he has the appropriate resources is unrestricted.
 Profit Motivation: A capitalist society is based on profit motive. Profit drives an
entrepreneur to invest in any economic activity, not humanitarian impulses.
 Competition: There is competition among manufacturers, sellers, customers, job
seekers, employers, and investors, among others. This is accomplished by cost
management, price reductions, marketing, and other methods.
 Consumer Sovereignty: In a free market economy, consumers’ interests and tastes
guide economic activity. The consumer plays an important part in the system.

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  Price System: It is the price system that allows the capitalist economy to run without
any central direction or control over production, consumption, or distribution.
 Income Inequalities-Uneven property allocation among people leads to unequal
income distribution. The affluent and the poor earn vastly different amounts of
money.
Absence of a central planning body to make basic economic choices and so to allocate
productive resources among competing purposes, the market economy relies on the pricing
mechanism, which is critical to the system’s functioning. Any imbalances are naturally
resolved and repaired by the pricing system and demand-supply interplay. Higher
remuneration provides suitable rewards for increased efficiency and hard effort. There is also
an incentive to save and invest in order to provide for current and future generations with
greater earnings.
Socialism: Socialism is a form of economic organization in which the material means of
production are owned by the entire community and are subject to a general economic plan,
with all members having equal rights to benefit from the outcomes of such socialized planned
production. Democratic socialism, on the other hand, is distinguished by public ownership of
at least the strategically significant material means of production while preserving individual
freedom of consumption and activity.
Essentials of Socialism:
 It is built on the principles of social and economic planning, collective ownership of
production elements, social welfare, and collaboration.
 A socialist economy requires a centralized authority to establish society’s goals and
organize the community’s efforts to achieve them.
 A socialist economy is one in which the distribution of resources is planned by the
central authority in order to achieve the society’s aims and objectives.
 In socialism, the allocation of incomes is based on equity.
 A socialist society’s aims are defined by social benefit rather than private profit.
Democratic socialism, a gentler type of socialism, has many characteristics with capitalism,
including the presence of a private sector, income disparity, consumer and producer freedom
(subject to central planning needs), and the existence of a pricing system. Full employment, a
high pace of growth, the dignity of labour and the lack of exploitation, a generally fair
distribution of income and wealth, and the absence of wastages associated with the
capitalistic method of production are all guaranteed by socialism.
Evolution of Mixed Economy
Even though many of the policies connected with it were initially advocated in the 1930s, the
phrase “mixed economy” became popular in the United Kingdom following World War II.

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Many of the supporters were members of Britain’s Labour Party. Critics said that there could
be no middle ground between economic planning and a market economy, and many people
still doubt its legitimacy today when they think it to be a mix of socialism and capitalism.
Those who feel the two notions do not belong together argue that in order for an economy to
function, either market logic or economic planning must be present. Classical and Marxist
thinkers argue that the economy is driven by either the law of value or the accumulation of
capital, or that non-monetary forms of valuation (i.e. transactions without currency) drive the
economy. Because of the ongoing cycle of capital accumulation, these theorists think that
Western economies are still fundamentally founded on capitalism. Starting with Ludwig von
Mises, Austrian economists have argued that a mixed economy is unsustainable because the
unintended consequences of government intervention in the economy, such as the frequent
shortages caused by price controls, will inevitably lead to calls for ever-increasing
intervention to counteract their effects. This implies that the mixed economy is intrinsically
unstable and will always tend to become more socialist over time.
The Public Choice School of Economics highlighted how the interplay of government
officials, economic interest groups, and markets may steer policy in a mixed economy away
from the public interest in the mid-twentieth century. In a mixed economy, economic policy
invariably redirects economic activity, trade, and wealth away from certain individuals,
businesses, sectors, and regions and toward others. Not only may this cause detrimental
economic distortions on its own, but it also invariably results in winners and losers. This
creates enormous incentives for interested parties to divert resources away from productive
activity and utilize them instead for lobbying or other means of influencing economic policy
in their favour.
Allowing supply and demand to determine fair prices, the protection of private property,
promotion of innovation, employment standards, the limitation of government in business
while allowing the government to provide overall welfare, and market facilitation by the self-
interest of the players involved are all characteristics of a mixed economy. Mixed economies
prioritize profit over all else, including citizens’ well-being; there is a high likelihood of
mismanagement at many levels; wealth is not distributed equitably; inefficiency develops as a
result of government engagement; and the working class can be exploited.
Salient Features of Mixed Economy
After describing the two extremes of capitalism and socialism, a mixed economy can now be
defined in functional terms. The following characteristics define a mixed economy:
 one that is organized with some free market characteristics and some socialist
components, and falls somewhere in the middle between pure capitalism and pure
socialism;
 one in which the private ownership and control of most of the means of production
are common, although they are frequently regulated by the government;
 socialize those businesses that are considered necessary or create public goods;

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  are found in all known historical and present economies, while some economists have
criticized the economic impacts of various types of mixed economies;
 a balance between the market economy and the planning mechanism;
 a clear demarcation of the public sector and private sector boundaries, such that “the
core sector and strategic sectors are invariably in the public sector;
 while profit motive influences decision-making in the private sector, the economic
viability criteria for investment decisions in the public sector are based on social cost-
benefit analysis;
 the ownership of means of production as between the public and private sectors;
 there is occupational freedom and consumer choice;
 the government intervenes to prevent undue concentrations of economic power, as
well as monopolistic and restrictive trade practices;
 the government strives to meet the consumption levels and objectives of the poorer
sections of society through public distribution systems, poverty alleviation
programmes, and other means;
 social objectives of equity, employment, and balanced regional development, among
others;
 the doctrinaire rigidities of socialism are avoided, and a pragmatic approach to
decision-making is frequently used to promote economic progress; and
 a mixed economy is more than just an economic notion; individual rights are
acknowledged and maintained, subject only to public law and order and morality
Most modern economies are a hybrid of two or more economic systems, with each economy
lying somewhere along a spectrum. The public and private sectors collaborate, yet they may
fight for the same limited resources. Mixed economic systems do not prohibit profit-seeking
by the private sector, but they do control it and may nationalize enterprises that serve a public
good. In reality, all known historical and present economies are part of the mixed economy
continuum. Pure socialism and pure free markets are both purely theoretical concepts.
Because the government is involved in planning the use of some resources and can impose
control over enterprises in the private sector, mixed economic systems are not laissez-faire.
Governments may try to redistribute wealth by taxing the private sector and utilizing tax
revenue to support social goals. In mixed economies, government involvement can take the
form of trade protection, subsidies, targeted tax credits, fiscal stimulus, and public-private
partnerships. These inadvertently cause economic distortions, but they are tools for achieving
certain aims that may succeed despite the distortions.
In order to attain comparative advantage, countries frequently intervene in markets to
support specific industries by forming agglomerations and lowering entry barriers. This was
widespread among East Asian countries throughout the 20th-century economic model known
as Export-Led Growth, and the area has since evolved into a worldwide manufacturing hub

49
for a wide range of sectors. Some countries have become recognised for textiles, while others
are known for manufacturing, and yet others are electronic component hubs. These industries
grew in importance when governments protected fledgling enterprises as they grew in size
and supported complementary services like shipping.
The ownership of the means of production is shared or centralized in socialism.
Socialists think that through centralizing planning, more good may be achieved for a broader
number of people. Socialists support nationalization of all industry and expropriation of
privately held capital commodities, lands, and natural resources because they do not believe
free market results would accomplish the efficiency and optimization predicted by classical
economics. Mixed economies seldom go to this degree, instead identifying just a few cases
when intervention may produce results that would be impossible to attain in free markets.
In contrast, India pursued a mixed economy model in which the public and private
sectors coexisted. India’s previous industrialization policy was protectionist in character,
focusing on import substitution and license-based industry regulation. It emphasized the
growth of heavy industries and predicted that the public sector would play a major role in the
economy. However, it was quickly apparent that the strategy’s actual outcomes fell
significantly short of expectations. India has been shifting away from state-controlled trade
and toward a market-oriented structure since the late 1980s. India’s economy is diverse.
Agriculture employs about half of India’s working population, indicating a traditional
economy. The services industry employs one-third of India’s workforce and accounts for
two-thirds of the country’s production. The change to a market economy in India has enabled
this segment’s productivity. Several industries in India have been deregulated during the
1990s. Many state-owned firms have been privatized, and foreign direct investment has been
welcomed.
Following economic liberalization in 1991, hitherto exclusive public-sector industries
were introduced to the private sector. As a result, Indian entrepreneurship gained a significant
boost. Although the public sector continues to play a significant role in terms of investment,
this tendency has been on the decline. Coal, petroleum, telecommunications, power
generation, and fertilizers are just a few of the industries where the public sector continues to
dominate. Nuclear power generation is completely monopolized by Central Public Sector
Enterprises (CPSEs).
When looking at the company composition in India 20 years after the liberalization
process began, it is clear that state-owned firms and old conglomerates hold a higher part of
the Indian economy than businesses that emerged following the reforms. Micro, small, and
medium companies (MSME), on the other hand, with 29.8 million businesses in diverse
industries employing 69 million people, have only been able to contribute 11.5 percent of
India’s GDP every year. This is due to the fact that the Indian corporate climate is still
developing and has a number of institutional gaps. Large corporations have been able to
increase their riches by utilizing their economic might to win neoliberal policies and devising
tactics to address institutional deficiencies. Large family businesses that prospered prior to

50
1991 liberalization due to government contacts, understanding of the bureaucratic system,
close-knit joint family structure that fosters family values, teamwork, tenacity, and continuity
have had to reorient themselves in the new, global, competitive environment. Those major
family firms that refocused were successful, while others failed. For example, Tata Motors, a
successful automobile company that is part of a large Indian conglomerate, faced a number of
challenges due to underdeveloped capabilities, including market research providers, dealer
networks, consumer information providers, sources of capital for target customers, and a
vehicle service network. They had to create internal procedures to fill in the holes in the
institutional architecture, but they finally succeeded. Small business owners, as defined by
the MSME sector, however, find such rapid expansion to be limiting.
India adopted mixed economy for several reasons as it: ensures that the public and
private sectors are in a healthy balance. This guarantees that they work together and compete,
which is beneficial to achieving high growth objectives. It enables an effective allocation of
resources in the economy through its price mechanisms, as well as freedoms of production,
consumption, occupation, and the presence of a profit motive. By trying to reduce income,
wealth, and other inequities and getting rid of poverty and unemployment, mixed economy
plays a pivotal role in India. Social wellbeing is maximized in a mixed economy. It possesses
all of the hallmarks of a welfare state.
2.1.4 Privatization in India
Privatization refers to any practice that reduces the government’s/public sector’s involvement
in a country’s economic activities. The 1991 economic reforms, in contrast to the post-
independence desire for government expansion, recognised the private sector as the engine of
growth. The private sector’s role in the development process has been boosted through
policies. Privatization can take several forms in a mixed economy like India, including:
a) Total denationalization, in which all state-owned economic assets are transferred to
private hands. In India, firms such as Allwyn Nissan, Mangalore Chemical and
Fertilizers, and Maharashtra Scooters were sold to private investors.
b) Depending on the nature of the organization and state legislation in this regard, a joint
venture includes the partial insertion of private ownership in a public sector
corporation from 25 to 50 percent or even more. The fundamental purpose is to
improve the efficiency, productivity, and profitability of an organization. There are
three categories of proposals: The firm is owned by the private sector to the tune of
26%. (banks, mutual funds, corporations, individuals). Workers will be incorporated
as well, with a 5% stake in the company. The government will retain 51% of the stock
and sell the other 49% to the private sector. The private sector receives 74 percent of
the equity, while the government retains 26 percent.
c) A worker’s co-operative is a sort of privatization in which a failing public sector firm
is given to the workers. The Indian Coffee Houses, which are run by a network of
worker cooperative groups and were kept out of British government after
independence, are a good example of the Indian situation. It did not, however, play a

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 significant role in economic developments due to the necessity for money for firm
expansion.
d) Token privatization, also known as deficit privatization or disinvestment, is the sale of
5-10% of a profitable public sector enterprise to the market to generate revenue and
reduce budget deficits. The government might raise Rs. 60,000 crore by disinvestment
between 1991-92 and 2011-12. Between 1992 and 2012, disinvestment receipts
managed to cover an average of 7% of the income shortfall and 4% of the fiscal
deficit.
Privatization, or the transfer of state-owned enterprises (SOEs) to private owners, has become
a popular economic policy instrument all around the world. The move toward privatization is
a contentious topic. Indeed, the argument over whether the private or public sectors are
preferable has raged for the past four to five decades. The initial focus of the discussion was
on how the size of the public sector, as measured by government consumption, influenced
economic growth.
Many studies found that privatization did not add to growth but did assist to lessen
income inequality. Inflation, on the other hand, had a negative impact on both economic
growth and income equality. Several economists, on the other hand, believe that privatization,
or the transfer of assets and services from the public to the private sector, is critical for
economic growth. Privatization has recently been implemented by a wide range of political
systems and has expanded to every corner of the globe. The privatization process can be an
effective means to bring about fundamental structural change by formalizing and creating
property rights, which immediately produces strong individual property rights. A free market
economy is based on well-defined property rights that allow individuals to make their own
decisions in their own best interests.
The following are some of the main reasons for privatization: To relieve the government of
its load:
 To improve competition
 To enhance the state’s finances
 To support infrastructure development
 Shareholder accountability
 Lessening unnecessarily intrusive behavior
 A more disciplined workforce is a plus
Through costless bargaining, driven by individual interests, the private sector has successful
strategies in addressing the problem of externalities. Privatization may be divided into three
categories:
 Delegation: The government retains control while private enterprise handles all or
part of the product and service delivery.

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  Disinvestment: The government relinquishes control.
 Displacement: As a private company grows, it progressively supplants the
government organization.
Privatization is unquestionably advantageous to the progress and long-term viability of state-
owned businesses.
Privatization and Indian Economy
The Indian government adopted a mixed economy in which both the public and private
sectors are allowed to function. The private sector had to comply with the Industries
(Development and Regulation) Act of 1951, as well as other related laws. In this context, the
Industrial Policy Resolution of 1956 declared that private-sector industrial enterprises must
conform to the State’s social and economic policies and will be subject to regulation and
control under the Industries (Development and Regulation) Act and other related legislation.
The Government of India understands that it would be preferable to provide such ventures as
much flexibility as possible to develop in accordance with the national plan’s ambitions and
objectives.
Privatization is unquestionably advantageous to the progress and long-term viability of
state-owned businesses. Several contemporary industries have been formed in the private
sector over many decades. Important consumer goods businesses arose throughout the years
leading up to independence. Cotton textile sector, sugar industry, paper industry, and edible
oil industry are only a few examples. These industries arose as a result of opportunities
presented by market forces. They were ideal for the private sector since they provided strong
profits and required less cash to set up. Despite the fact that engineering industries were not
created before to independence, Tata started the iron and steel industry in Jamshedpur.
Following independence, the private sector established a variety of consumer products
sectors. In terms of consumer products, India is nearly self-sufficient at the moment.
“Industries manufacturing intermediate products and machineries can be established in the
private sector,” according to the 1956 decision. Chemical industries such as paints, varnishes,
and plastics, as well as companies producing machine tools, machinery, and plants, ferrous
and non-ferrous metals, rubber, paper, and other materials, have sprung up as a result.
In order to improve India’s economic standing, enterprises must have been privatised.
Though PSUs have made significant contributions to the development of the country’s
industrial base, they continue to suffer from a number of shortcomings, such as:
 Many PSUs have been suffering and declaring losses on a regular basis. As a result, a
significant number of PSUs have already been referred for as low performing units.
 The PSUs are answerable to a variety of agencies. Delay in project implementation,
resulting in cost increases and other implications.
 Management is ineffective and inefficient to a large extent.

53
  Many public sector organisations are overstaffed, resulting in decreased labour
productivity and strained labour relations.
The following are the major effects of privatization on the Indian economy:
 It frees up resources for more productive use.
 Private enterprises are more profit-driven and transparent in their operations, since
private owners are always looking to make money and eliminate sacred cows and
stumbling blocks in traditional bureaucratic administration.
 As the system gets more transparent, all basic corruption is reduced, and owners have
more freedom and motivation to maximise profits, therefore they tend to eliminate all
freeloaders and vices inherent in government duties.
 Eliminates employment discrepancies such as freeloaders or overworked departments,
minimising resource pressure.
 Reduce the financial and administrative burden on the government.
 Minimizes corruption and optimises output and functionality.
 Private companies are less tolerant of capitulation and appendages in government
departments, and as a result, they tend to right-size human resource potential to meet
the organization’s needs, which can lead to resistance and disgruntled employees who
are accustomed to the benefits of working for the government.
 Allow the private sector to participate in economic growth.
 Increasing general budget resources and diversifying revenue streams.
2.1.5 Impact on Organized and Unorganized Sector
When it comes to the Indian economy’s structure, the formal or organized sector and the
informal or unorganized sector are both present. All occupations in the organized sector have
set working hours and regular salaries, and the worker’s job is guaranteed. The employees are
employed by the government, the state, or private businesses. It is a registered business that is
required to pay taxes. Large-scale activities, such as banks and other corporations, are
included. Informal or unorganized sectors, on the other hand, are those in which employees
or workers do not have regular working hours or salaries and are not subject to taxes. It is
primarily focused with the production of basic goods and services with the primary goal of
providing small-scale employment and income. An unorganized economy is exemplified by a
street seller who sells his agricultural items on the street to produce and earn his daily bread.
A portion of the unorganized economy includes rag pickers, moneylenders, and brokers. It’s
also known as the “grey economy.”
The unorganized sector employs a large portion of the Indian population. According to
new employment data from 2000 to 2010, the unorganized sector accounted for almost 76
percent of the 6.4 million new job possibilities registered. Furthermore, of the 24% newly
hired in the official sector, 81 percent were informally employed. Furthermore, of the 24%

54
newly hired in the official sector, 81 percent were informally employed. Low-value-added
unorganized sectors are considered low-value-added. Agriculture, dairy, horticulture, and
associated occupations employ 52% of the workforce in India. In comparison to the
organized sectors, it pays less. In the former, incentives including as bonuses, paid leave, and
set working hours are provided, not to mention maternity leave, which is not available in the
unorganized sector.
Furthermore, it lacks legal and economic security. As a result, employees who are
beyond the scope of labour regulations are more vulnerable owing to a worker’s lack of
social protection and worker’s rights. Women, in particular, are more vulnerable than males.
Workers enjoy economic and social security by default since the organizations and
unorganized sectors have been legalized and are regulated by governments. In India, the
unorganized sector accounts for 25% of urban employment. Domestic workers, home-based
labourers, street sellers, and rubbish pickers are among them. In India, the unorganized sector
accounts for 25% of urban employment. Domestic workers, home-based labourers, street
sellers, and rubbish pickers are among them.
The unorganized sector employs the vast majority of India’s people. The fundamental
reason behind this might be that the majority of Indians are economically disadvantaged.
They are unable to pay taxes. They struggle to make ends meet on a daily basis. As a result,
they prefer to work in jobs that are easily available to them, such as farming or selling things
on the street without having to pay taxes. The government requires the unorganized sectors to
be licensed and to collect taxes. These are generally large private companies and
organizations.
In a nutshell, the Indian economic sector is made up of the organized and unorganized
sectors. The main distinction is that the unorganized sector is tax-free, and it employs the
majority of India’s people. Those in organized sectors enjoy social protection, economic
security, and specific incentives, but workers in unorganized industries do not have these
benefits.
2.1.6 Conclusions
Since our independence, one of the foundations of our approach to economic development
and progress has been planning. Today, however, the relevance and need of planning are
being questioned in the context of globalisation, liberalization, the expanding significance of
market forces in economic decision-making, the growing percentage of private sector
investment, and the country’s generally changing economic conditions. Market reforms,
according to free market fundamentalists, are incompatible with planning. They believe that
the market system is adequate for coordinating all development and other economic
operations. They also believe that if the market is unable to regulate the operations of
numerous agencies, the government would never be able to do so.
However, in a nation like India, where huge development expenditures are required over a
number of locations and years, plans are required to distribute and organise these

55
expenditures. There’s also a sense that, particularly at the state level, fiscal priorities are
increasingly dictating investments. The finance departments, rather than the planning
departments, are in charge of selecting development priorities. As a result, funds, rather than
strategies, decide development priorities. This begs the question of whether officially
planning for development is really necessary or relevant. Planning as a function, on the other
hand, will never go out of style. It is not only the government that must plan; everyone, to a
smaller or larger extent, must plan. In the private sector, corporate planning is just as
important as it is in the public sector.
2.1.7 References
1. “A short history of Indian economy 1947-2019: Tryst with destiny & other stories”,
https://www.livemint.com/news/india/a-short-history-of-indian-economy-1947-2019-
tryst-with-destiny-other-stories-1565801528109.html
2. T.J. Byres (ed.) State, Plan, Development and liberalist in India, OUP, Delhi, 2000.
3. K. Rajaram (ed.) Indian Economy, Spectrums India Private, Ltd., New Delhi, 2004.
4. B.L. Fadia, Indian Government and Politics, Sahitya Bhawan Publication, Agra, 2007.
2.1.8 Practice Questions
1. Do you agree with the view that the development policies followed in post–globalization
period have not made much difference to lives of poor in India? Give reasons for your
answer.
……………………………………………………………………………………………
……………………………………………………………………………………………
……………………………………………………………………………………………
……………………………………………………………………………………………
2. Discuss the planning strategy in a mixed economy.
……………………………………………………………………………………………
……………………………………………………………………………………………
……………………………………………………………………………………………
……………………………………………………………………………………………
3. Discuss the features of India’s strategy for development.
……………………………………………………………………………………………
……………………………………………………………………………………………
……………………………………………………………………………………………
……………………………………………………………………………………………

56
 Unit-2

(b) Emergence of the New Middle Class in India

Revathy V Menon1

2.2 Structure
2.2.1 Introduction
2.2.2 Meaning of Middle Class
2.2.3 Emergence of Middle Class in India: 1947-1980
2.2.4 The Growth of the New Middle Class: 1981–2015
2.2.5 Middle Class in India: Post 2015
2.2.6 Categorization of the Indian Middle Class
2.2.7 Present Indian Government Provisions to the Indian Middle Class
2.2.8 Indian Middle Class and the COVID-19 Pandemic
2.2.9 Critical Evaluation
2.2.10 Conclusion
2.2.11 Practice Questions

2.2.1 Introduction
The term “middle class” refers to persons and households who, in a socio-economic structure,
fall between the upper class and the working class. Persons in the middle class have more
educational qualifications, disposable money and may own property than the working class
but relatively lesser than the upper class. Middle-class people are frequently employed as
professionals, managers, and public servants. The term “middle” may be deceptive in that it
implies that persons in the middle class earn in the centre of the income distribution, which
may not be the case. Middle-class families typically own their own home (albeit with a
mortgage), own a car (albeit with a loan or lease), send their children to college (albeit with
student loans or scholarships), save for retirement, and have enough disposable savings to
afford certain luxuries such as dining out and vacations.
2.2.2 Meaning of Middle Class
The “middle class” are generally defined as the “…the class traditionally intermediate
between the aristocratic class and the laboring class or the class of people intermediate
between the classes of higher and lower social rank or standing; the social, economic, cultural
class, having approximately average status, income, education, tastes, and the like” In simple
terms, the term “middle class” refers to persons who are in the centre of the social structure.

1
Guest Faculty, Department of Political Science, School of Open Learning, University of Delhi.

57
Its application has frequently been ambiguous, whether defined in terms of work, income,
education, or social standing. Modern social theorists, particularly economists, have defined
and re-defined the word “middle class” to achieve their own social or political purposes.
Within capitalism, the phrase “middle-class” originally referred to the bourgeoisie, as
opposed to the aristocracy, but when capitalist countries grew to the point where the
“capitalist” became the new governing class, the term came to be synonymous with “petite
bourgeoisie.” When describing how capitalism works, Karl Marx referred to the middle class
as part of the bourgeoisie (i.e., the “petit bourgeoisie,” or small company owners), in contrast
to the working class, whom he referred to as the “proletariat.” The word “middle class” has
evolved through time, from referring to those with the resources to compete with nobles to its
current connotation, which is more equivalent to the upper end of the working class.2
The expectation of earning a salary that allows for the ownership of a home in a
suburban or comparable neighbourhood in rural or urban settings, as well as discretionary
income that allows for access to entertainment and other flexible expenses such as travel or
dining out, is part of the concept of middle-class society. While middle-class households are
expected to earn enough to meet living expenses and save for retirement. One common idea
among the middle class is that via professional advancement and pay rises, they would be
able to enhance their income to higher economic stratum. The rate at which these aspirations
for upward mobility have changed over the decades; with the cost of goods and services
outpacing salary growth at certain circumstances.
The global economy was primarily driven by the middle classes of all countries in the
preceding century. Global economic growth has occurred during the previous several
decades, attributed mostly to increased spending among the middle classes in the United
States, Europe, and other advanced countries. This group has long been seen as a thriving and
energizing economic force.3 They provide a firm basis for productive investment and are a
vital component in encouraging other social processes that encourage growth and the
dissemination of factors that contribute to the development of a healthy society. The middle
class is a significant market for the majority of products and services. This group collects a
significant share of a country's tax money, either directly or indirectly, and they also
contribute significantly to the country's political stability. According to Thurow, a substantial
middle class is required for a healthy democratic society and there is no political or economic
middle ground in a society made up of affluent and impoverished individuals.4
The middle class as the term suggest is located in the centre of the social order, between
the working and upper classes in terms of the socio-economic status. Due to cultural and
economic differences among nations, the definitions of what comprises members of this class

2
Marx, K. (2005). Marxists Internet Archive, 2002.
3
Brosius, C. (2012). India’s middle class: New forms of urban leisure, consumption and prosperity. Routledge.
4
Thurow, Lester C. (1984, February 5). Business Forum; The Disappearance Of The Middle Class. The New
York Times. nytimes.com/1984/02/05/business/business-forum-the-disappearance-of-the-middle-class.html.

58
vary greatly. Purchasing power, educational levels, opinions of who constitutes the affluent,
and levels of social services, among other things, all influence what constitutes the “middle
class” in a given country. The developing world’s middle class is defined as those who are
not deemed “poor” by the standards of developing countries but are still poor by the
standards of rich countries. Individuals who live on less than $2 per day are considered poor
by organizations such as the World Bank and the Organization for Economic Cooperation
and Development (OECD) while according to the 2015 purchasing power parities, middle-
class incomes range from US $10 to $100 per day.5 The Economist reported in February 2009
that more than half of the world's population had reached the middle class, owing to rapid
development in emerging economies.6 This was mostly due to permissive international trade
regulations allowing foreign corporations access to cheaper labour in these nations.
Subsistence farmers abandoned their fields to work in industries for fixed pay, resulting in
rapid urbanisation in many nations.
In India, it is believed that 50 percent of the population reached this status in 2015.
Estimates of the number of middle-class Indians vary greatly. As of 2017 the Economist
estimates 78 million Indians under the middle-class, as they were earning more than $10 a
day.7 Several researches include individuals earning $2–$10 per day in the list and the figure
rises to 604 million, later termed as the “new middle class.” The major factors examined
include demography, lifestyle, property or wealth, and education. According to the World
Inequality Report 2018, elites (the top 10percent of the population) are amassing money at a
faster rate than the middle class, and India's middle class may be disappearing rather than
rising.8
2.2.3 Emergence of Middle Class in India: 1947-1980
The concept and categorization of the middle class are not new in India. During the British
colonial period in the early nineteenth century, the phrase came to be used for a newly
emerging group of people in urban centres, namely in Calcutta, Bombay, and Madras, three
towns built by the colonial rulers. This middle class gradually expanded its influence to
neighboring Indian urban centres. With the development and expansion of the Indian
economy following independence, the size of the Indian middle class rose dramatically.
Beginning in the 1990s, the trajectory of the Indian middle class saw a significant transition.
With the implementation of economic reforms, the speed and patterns of its growth altered.
The 'neoliberal' shift helped India significantly accelerate its economy by motivating private

5
Blackburn, McKinley & Bloom, David, (1985). What Is Happening to the Middle Class?, American
Demographics 7, no. 1:19–25.
6
Special Reporter. (2009, February 14). Who's in the middle? The Economist.
https://www.economist.com/special-report/2009/02/14/whos-in-the-middle
7
Special Reporter. (2018, January 11). India’s missing middle class. The Economist.
https://www.economist.com/briefing/2018/01/11/indias-missing-middle-class
8
Ibid.

59
capital and attracting international investment in India.
The Indian middle class, defined as “…the class of individuals, who arose from roughly
the middle of the eighteenth century to contemporary times, as a result of changes in the
British social policy and the introduction of the new economic system and industry, as well as
the following emergence of new professions.” The variables that contributed to the creation
of the Indian middle class differed from those that contributed to the emergence of the middle
class in the West. In the latter example, the middle class arose primarily as a result of the
eighteenth-century Industrial Revolution, which resulted in large-scale mechanical
manufacturing as a result of economic and technical progress. The Indian middle classes
arose as a result of changes in British land and legal policy, followed by the introduction of
Western education and technology, modern capitalist enterprise, increased communications,
and economic growth throughout the course of nearly 200 years of British rule.
According to the role they performed in the new economy, the emerging middle-class
was divided into four divisions.
1. In the second half of the eighteenth century, the commercial middle-class of
intermediaries and brokers was discovered with foreign enterprises and local
mercantile and banking institutions. In remote locations, the indigo plantations
spawned a clerical and managerial group of people, as well as a network of
contractors who disbursed advances and supplied the plants. With the opening of
commerce, banks, and the managing agency system in 1833, a new class of
business administration professionals emerged.
2. The moneylenders, brokers, baniyas, agents, and creditors, i.e. the new rich and
powerful class, put their money into land that became transferable as a result of
British policy. There were also persons who controlled land on behalf of the indigo
manufacture on a lease (for before 1830 planters were not permitted to buy lands of
their own). In 1765, the affirmation of the rights of the under-tenures ushered in the
emergence of a landed middle class.
3. Due to the sluggish expansion of industry, the industrial middle class was modest.
The English Civil Servants were the first to invest money in industry, followed by
other Europeans, then Bengalis in Calcutta and Parsis in Bombay.
4. The educated middle class, which formed with the advent of Western education
and technology, was made up of professionals. A new class of attorneys emerged as
a result of changes in the legal system followed by doctors, engineers, publishers,
etc.
Europeans and Anglo-Indians dominated all upper technical and administrative
positions. The four segments that made up the Indian middle class had one thing in common:
they gained reputation not through the social status but by education, income, and power. The
educated middle class has become aware of their interests as a result of the class
consciousness. They were opposed to any measures that benefited the peasantry or the

60
working class, and exclusively supported commerce and industry. The upper middle class
spread Western ideals and ways of life, launching reformist organizations like as the Brahmo
Samaj and the Prarthana Samaj. The lower middle class, on the other hand, was mainly
composed of traditionally educated individuals with limited income who founded the Arya
Samaj revivalist movement in order to resurrect traditional religion and ideals in resistance to
foreign dominance in education and religion. They launched the freedom movement in India
to regain the lost independence. The Congress has been majorly associated with the lower
middle class, despite the fact that it was supported by the higher middle class.
The nature of the middle class in the decades after independence was often that of a paid
and professional class, with direct engagement in trade, commerce, industry, and but with
limited financial resources and abundant institutional advantages. It gained its authority
largely from the state's relative autonomy throughout this time period. The middle class
frequently hijacked the state machinery and programmes for its own profit due to its power
over the bureaucratic system.
During the initial time, the Indian middle class depicted an internal diversity based on its
particularistic traits resulting from the ethnic and socio-economic positions such as caste,
language area, or religion, shaped its identity, politics, and interaction with the state and
economy. Affirmative action (reservations) policies for the Scheduled Castes and Scheduled
Tribes in state-run educational institutions, jobs, and legislative bodies broadened the social
base of the middle class with the institutionalization of electoral democracy, economic
development (industrial and rural). The traditionally marginalised groups of Indian people
were given leadership and a voice by these developing elements of the middle class.
India achieved independence from British control in 1947. The country's population was
about 300 million people at the time. The country was dominated by a single party (the
Indian National Congress) and the Nehru–Gandhi family except for a brief period from 1977
and 1980. Private businesses were discouraged, and the former Soviet Union's economic
policies were adopted. Most developing industries, like as automobiles and steel, were
protected from foreign competition by setting high import tariffs. While the country's general
growth rate remained static, certain industries, notably banking and coal, were nationalized.
According to the Economic Survey, India's middle class remained modest in the 1950s,
consisting mostly of about five million workers in the national, state, and local government
divisions, six million more were added during the next two decades, bringing the total to 11.2
million in 1971.9
There was a trend toward a mixed economy in the 1970s and 1980s, with the private
sector providing a significant amount of new jobs. With the country's steady move toward a
market-led capitalist economy, the “colonial” middle class of the period before to 1947 was
gradually transformed into a “new” middle class, which was increasingly defined by

9
Bhattacharya, P. C., & Sivasubramanian, M. N. (2003). Financial development and economic growth in India:
1970–1971 to 1998–1999. Applied Financial Economics, 13(12), 925-929.

61
purchasing behaviour. India tried with democratic socialism for the first four decades after
achieving independence from the British, but it failed to generate robust development. After
adopting free market ideas in the 1990s, the country began to grow.
Many modern Indian observers see the rise of the middle class as proof of a fundamental
shift in social relations and the mentality of the ordinary man, the aam admi. This rise of the
middle class is also seen as the solution to all of India's difficulties and challenges in the
twenty-first century. Once organized, the middle class has the power to overthrow the
country's corrupt political elite and inept bureaucracy, transforming it into an efficient and
contemporary nation-state. Individual members of this class, they claim, have already
demonstrated their worth in other countries and can do likewise in India if the system allows
them to.
2.2.4 The Growth of the New Middle Class: 1981–2015
The decline of the Nehruvian state, social and political churning, the rise of new social
movements around questions of rights and identities, the rapidly changing global political
economy, and economic reforms accelerating the rate of economic growth usher in a new
phase of the Indian middle class in the 1980s. During this time, the discourse about the Indian
middle class undergoes a paradigm change. The “new” middle class, which forms the social
foundation of a market-led capitalist economy, is increasingly characterized and analyzed in
terms of its consumer behaviour. The lens of consumption as the defining attribute of the
middle class, on the other hand, tends to compress it to a single income group. The term
“middle class” encompasses a larger range of people than the term “income group.”
Following a market downturn in 1991, the Indian government, then led by the Indian
Congress Party, began opening markets and implementing an economic liberalization
programme.10 The fast rise of this class was mostly due to the encouragement of private
capital investment and the opening of the economy to international investors. In the 1990s,
the middle class accounted for roughly thirty million people, or less than one percent of the
population. The percentage of persons in the middle class steadily increased in 2004,
reaching roughly 5percent of the population.11
Economic liberalization resulted in a significant shift in the size and character of India's
middle class. Previously, it was essentially a state-created entity, with the majority of its
members being government personnel. However, with government employment essentially
static since then, the private sector's increase has been the principal engine of its expansion
and, having ridden economic expansion, the great majority of the lower-middle class is the
first generation of their family to belong to this category. However, many people are
regressing as a result of India's economic turmoil. On the one hand, the rise of a middle class

10
Pedersen, J. D. (2000). Explaining economic liberalization in India: state and society perspectives. World
Development, 28(2), 265-282.
11
Varma, P. K. (2007). The great Indian middle class. Penguin Books India.

62
was supposed to have a transformative impact on the economy, while on the other, it was
expected to modernize Indian society and politics. The former would be accomplished
through its consumption potential, which would fuel domestic demand, while the latter would
be accomplished by putting pressure on the polity to confront corruption and transcend
identity politics.
India's annual GDP growth rate was continuously below 4percent until 1990, when it
was stabilized at a more robust pace of 6 to 7 percent per year following its 1991 economic
reforms.12 Between 2004 and 2012, the middle class expanded from 300 million to 600
million individuals. In 2015, India's middle class were estimated between 300 and 600
million by the Deutsche Bank Research. In 2015, less than 19 percent of the Indians were
approximated who lead life in poverty, compared to a 22 percent in 2011. India's household
savings rates doubled between 2005 and 2015, showing that many more Indian households
now have significant disposable income.
Post 2010, economists began to completely rely on the ‘new middle class’ definition
once they deal with the class. For instance, in 2017 the Indian middle class comprised of all
those customers who spend between $2 and $10 per capita per day.13 Studies also depict the
huge increase in number of the lower middle classes, who spend variedly in between $2 and
$6 per day and the class consisting of street vendors, drivers, craftsmen, construction
workers, decorators and painters, leather and textile industry workers, etc. majorly engaged in
the unorganized sector. The ease to enter this group was felt in most areas as there was
merely any restriction and the income slab was comparatively affordable to most sections.
Many of them post spending on food and shelter saved a part of their income for
discretionary expenditure further enabling them to purchase other essential goods and
services such as education, medical treatments, and related.
2.2.5 Middle Class in India: Post 2015
According to a United Nations estimate, by 2022 India's population is predicted to overtake
that of China's. Moreover, the Indian middle-class population is predicted to rise quickly over
the next decade surpassing China soon and surpassing that of the United States and Europe
by 2027. Besides these, our proportion of global GDP is expected to rise significantly from
the 7.6 percent of 2017 to an estimated 8.5 percent in 2022, according to current predictions.
This is believed to result in a situation were more individuals in the country can escape or
deal with the conditions of poverty in the succeeding decade. Estimates also claim the
expansion of even the global middle class through 2030 with a large number of Indian and
diaspora joining the same category. This may further lead to a tremendous increase in the
demand for various goods and services owing to increased branding and product
differentiation.

12
Neog, Y. (2017). Structural shift in components of Indian GDP: An empirical analysis. ZENITH International
Journal of Business Economics & Management Research (ZIJBEMR) Vol, 7(9), 77-83.
13
Krishnan, S., & Hatekar, N. (2017). Rise of the new middle class in India and its changing
structure. Economic and Political Weekly, 52(22), 40-48.

63
 Recent studies from various fields related to the middle class and economic expansion,
contemplates that Indian middle class-both lower and upper-in the coming decades will boost
the domestic spending and simultaneously contribute towards domestic and international
travel. It is predicted that in a post-COVID situation this may even rise tremendously close to
$45 billion by 2022, though the predicted worth for 2020 was $40 billion14 and the popular
destinations will be Singapore, Thailand, the United States, etc. The Renub Research also
claims that Indians spend most on their vacations to the United States, related to the
expansion of the upper middle class and the study also highlights the presence of different
tourist offices in various parts of India completely dedicated to particular regions. Moreover,
a global survey indicates that the present trend of global middle-class consumers currently
reside in the European Union (EU) and the United States, but over the next decade, the
majority will migrate to India, China, and other Asian countries, excluding Japan.15 Moreover
if the present trend continues, by 2035, India is expected to house one in every four middle-
class consumers.
Recent surveys also estimate a dramatic rise in the Indian middle class population from
the five to 10 percent of total population in 2005 to an exorbient 90 percent of the country’s
total population in the group by 2039 or in other terms including a billion individuals to the
class. In continuation to this, Farell & Beinhocker (2007) noted that we can observe that the
average per capita family spending of an Indian family was around $3.20 per day in 2005 and
a meager population had daily revenues above $5 per day. Despite the economic stagnation
and other cumbersome phenomenon in the global market, the half of the population has rose
to the position of spending above $5 per day by the 2015. By 2025, at least half of the Indian
population is expected to earn more than $10 per day.16 Presently, India is the world's third-
largest middle-class market, succeeded China and the United States in the first two positions
respectively which is believed to be overtaken in the next twelve years as several studies
contribute to the prediction that between 2016 and 2050, India will continue to expand at a
greater pace, perhaps adding a billion more consumers to the global middle class.
2.2.6 Categorization of the Indian Middle Class
The middle classes are distinguished by four factors: location (rural or urban); employment;
education (high school or college); and vehicle ownership (2-wheeler or car).17 The criteria
for location and employment are self-explanatory, as is the criterion for education, with one
clarification: the Rising Middle Class is defined as having a high school or college degree but
having illiterate fathers (not mothers). The fourth element pertains to vehicle ownership since

14
Renub Research. (2017, September 13). India Outbound Tourism Market: Outbound Tourists, Purpose of Visit,
Tourist Spending and Forecasts, 3rd ed.
15
Kharas, H. (2010). The Emerging Middle Class in Developing, Development Center Working Papers No 285.
16
Farrell, D., & Beinhocker, E. (2007). Next big spenders: India’s middle class. Business Week, 28.
17
Krishna, A., & Bajpai, D. (2015). Layers in globalizing society and the new middle class in India: Trends,
distribution and prospects. Economic and Political Weekly, 69-77.

64
automotive assets are more likely to be a reliable indication. Their arguments for this choice
are threefold: assets, unlike income and expenditure, are less susceptible to seasonal
fluctuations; people identify the possession of incremental assets as intrinsic markers of
vertical mobility; and there is social status associated with assets, particularly certain types.
In any case, there is a strong link between asset data and income/expenditure data.
According to these criteria, India has five middle classes: Rural Middle Class, Public
Sector Middle Class, Urban Private Sector Middle Class, Trader Middle Class and Rising
Middle Class. Contrary to expectations, India's rural middle class is the single largest
segment, accounting for 13.7 percent of the total. When the Rural Trader middle class and the
Rural Rising middle class are included, the total size of the Rural middle class in India is two-
thirds of the entire middle class. The Urban Private Middle Class has grown sevenfold from
0.4 percent to 2.7 percent, and while this is still a modest fraction, this class has a
disproportionately high agenda-setting power. The Rising Middle Class is a sizable and
rapidly expanding demographic. In the next decade, this may become the single largest
category among the many middle classes.
2.2.7 Present Indian Government Provisions to the Indian Middle Class
The Indian Middle Class is noted for its tenacity, hard work, and aspiration. In fact, their
contribution to national progress is one of the prerequisites for propelling India towards next-
generation growth. In the perspective of today's politicians, supporting and fostering them is
consequently a requirement. The prevalent argument among the middle class was that the
issues that affected them were not prioritized. Health, education, enterprise, infrastructure,
public transportation, and openness were not priorities for the government at the time.
Although some attempts were made in this regard, deep-rooted reform was rarely seen.
Successive administrations abandoned them, and they remained electorally marginalised,
despite the fact that increased consumerism gave an outlet for them to assert themselves
economically. Presently, they are openly establishing their national identity throughout the
world, largely by structural incentives from leadership that are firmly anchored in the ethos
and values of the land.
To begin with, the middle class has been guaranteed of security at numerous levels,
whether it is in the form of owning a home, expanding their money, or even protecting their
interests by punishing those who abuse them. A number of government initiatives have had a
transformative influence on the lives of middle-class families. Lakhs of middle-class
individuals have already benefited from price reductions on vital medications, heart stents,
and knee implants, as well as the availability of medicines at low-cost through Pradhan
Mantri Jan Aushadhi Kendras.
Although economically poor and suffering significant uncertainty in everyday life, the
“aspirational middle class” aspires to a higher quality of living and is greatly affected by
mainstream and social media, as well as the spending habits of higher-income groups.
Government schemes such as direct benefit transfers (for instance, the Pradhan Mantri Kisan

65
Yojana), financial inclusion agenda (Jan Dhan Yojana), LPG subsidies, affordable housing,
large-scale toilet construction, micro-health insurance, and micro-pension schemes, among
others, have benefited this category in both urban and rural areas. The development of casual
or contract work, particularly in the services sector in metropolitan areas, has helped this
segment as well. The ruling party's sustained success in national, regional, and municipal
elections may be due in part to its ability to meet the ambitions of this class.
Salaried employees in middle- and upper-management posts, professionals (such as
accountants, physicians, and attorneys), and small company owners make up the “affluent
middle class,” which typically holds financial assets, bank accounts, and real estate. Despite a
drop in GDP growth in the pre-Covid period and throughout this continuing epidemic, this
class has benefited from widely growing real estate and stock values. Small company owners
have encountered certain difficulties as a result of GST implementation concerns and
competition from bigger enterprises, but they have also profited from access to increasing
markets via digital platforms and, most recently, government-guaranteed bank loans during
the Covid-19 crisis. The expansion of the wealthy middle class has been accompanied by an
increase in foreign and domestic travel, as well as an increase in the number of Indian
students studying in foreign institutions in the United States, Europe, Canada, and Australia,
as well as increasing discretionary expenditure.
The “middle-middle class,” which has reasonably secure but low-paying occupations,
lives on month's pay, and has minimal savings, may have benefited the least. Nonetheless, its
earnings have not declined much in the medium run. The development of contractual and gig
economy labour replacing permanent positions poses issues for this class. This class has long
viewed education as a means to maintain or advance to the affluent middle class, but the
growing expense of both public and private education threatens its precarious hold on its way
of life.
The middle class was much relieved from daily burdens of rushing from one government
office to another for attestations and document submissions. The bulk of government contacts
and processes are now conducted online. Facilities such as Digi-Locker, which allows for the
submission of copies of documents at various interfaces, or the facilitation of online IT
returns that are simple and quick are examples of the drive toward the simplification and
digitalization of standard government operations.
The middle class is being encouraged to strive through expanding educational and
entrepreneurial options. Higher education institutions' total capacity has been increased, while
new institutions have been opened to accommodate more bright minds. More autonomy for
these institutions guarantees that they may embrace best practices and evolve into world-class
education institutions without being hampered by current politics. Entrepreneurship,
particularly via startups (Startup India18) and innovation, has become household names in
India, with Indians, particularly the middle class, increasingly becoming individuals who

18
Refer https://www.startupindia.gov.in/

66
support themselves and take chances.
A restoration of economic development in the post-Covid-19 period would help both the
higher and lower strata of the middle class more. The widespread distribution of vaccinations
and the anticipated rapid post-Covid economic rebound will benefit the affluent middle class
the most, but a rising tide will certainly raise all boats. Further improving the ease of doing
business, direct tax reforms, skill upgrading, and infrastructure spending will be critical for:
(a) creating the millions of jobs required for the growing aspirational middle class, and (b)
generating sufficient tax revenues to fund social welfare and transfer programmes and
prevent social discontent among this class. Reforms to improve the ease of doing business
must be supported by continued efforts to improve the daily lives of the middle class.
2.2.8 Indian Middle Class and the COVID-19 Pandemic
About the impact of the pandemic during 2020-2021 on major economies including India and
China, were analyzed by the Pew Research Centre of the United States.19 The study
concluded that the unique coronavirus-caused economic catastrophe is wreaking havoc on
global living standards, forcing millions of people out of the middle class and into poverty.
These developments are influenced in India and China, the world's third and largest
economies, respectively. However, the economic impact of the epidemic on India and China
has been considerably different. With 1.4 billion people each, India and China account for
more than a third of the world population and the path of the epidemic in these two nations –
and how each recovers – will have a significant impact on changes in global economic
distribution. While India was forced to enter a major recession in 2020, China has been able
to avoid this. Economic estimates from the World Bank in January 2020 predicted that India
(5.8%) and China (5.9%) will increase at about the same rate in real gross domestic product
(GDP) in 2020. The World Bank modified these growth predictions downward to -9.6% for
India in January 2021, over a year after the epidemic began, but forecasted 2% growth for
China.
According to the PRC research, India's middle class will now have fallen by 32 million
in 2020 as a result of the decline, compared to what it may have been without the epidemic.
This is responsible for 60% of the global decline in the number of persons in the middle-
income tier (defined as those with daily incomes of $10.01-$20). Meanwhile, the COVID-19
recession is believed to have increased the number of impoverished people in India by 75
million (those with daily earnings of $2 or less). This is also responsible for roughly 60% of
the global increase in poverty. Coincidentally, media reports from India indicate an increase
in participation in the country's rural employment programme – which was designed to tackle
poverty in agricultural regions – as many people who have lost jobs due to the crisis look for
work. The current number of participants is the highest in the program's 14-year existence.
Prior to the epidemic, it was predicted that India will have 99 million individuals in the

19
Kochhar, R. (2021). The Pandemic Stalls Growth in the Global Middle Class, Pushes Poverty Up Sharply:
Advanced Economies Also See a Decrease in Living Standards, by Rakesh Kochhar. Pew Research Center.

67
global middle class by 2020. This number was predicted to be 66 million a year into the
epidemic, down by a third. Meanwhile, India's poor are estimated to number 134 million,
more than twice the 59 million predicted previous to the recession.
Multiple assessments and polls have concluded that Indian government’s investment in
response to the epidemic has somewhat helped buffer the vulnerable people from the harshest
effects of the pandemic since 2019. Even as the economy was significantly harmed by a
succession of lockdowns, the government did not choose for extra spending above the
authorized expenditure during the second wave of Covid-19. According to the Centre for
Monitoring Indian Economy Research, while the government collected record taxes in the
first quarter of current fiscal year, approximately a third of ministries responsible for
significant economic growth expenditures reported a year-on-year reduction in spending in
the June 2021 quarter.20 The government's actions in limiting spending during a crisis and
implementing austerity measures remain comprehensible.
Since the outbreak of the pandemic, the Reserve Bank of India has been at the forefront,
keeping interest rates low and channeling money into the financial system by purchasing
government bonds and securities using Quantitative Easing21. However, rather than flowing
to the actual economy and productive sectors in the form of loans, the money pushed into the
economy by the RBI has ended up in the stock markets. Increased fiscal investment targeted
at the poor, small companies, and lower middle class helped to improve domestic demand but
also help in India's rapid economic recovery. Furthermore, a shift to an economic model that
promotes mass purchase of consumer goods, as well as education, healthcare, and cheap
housing, would had a significant impact on the economy.
2.2.9 Critical Evaluation
Prior to independence, the Indian middle class was more like to that of nineteenth-century
Europe. The class was based on urbanisation and vocations such as lawyer, doctor, teacher,
and engineer. They were not members of the landed elite, peasantry, or industrial workers.
The roots of this middle class were laid by the professions and higher education, both of
which were based in cities. India's middle class was minuscule at the time of independence.
Its following growth was primarily in the public sector. From the 1950s through the 1980s,
the development of the public sector was responsible for the majority of middle-class growth.
The bureaucracy and defence sectors were the other sources of government job growth. This
increase was fueled by the spread of higher education in government colleges and the rising
urbanisation of India. Since the early 1990s, employment in the public sector has been
stagnating. Since then, middle-class development has been primarily attributed to larger
increases in population income, with a greater contribution from the private sector. The great

20
Chandra, A. (2021). Covid-19: Rebooting the Indian Economy?. International Journal of Research
Publication and Reviews, 2(4), 569-572.
21
When we buy bonds to cut interest rates on savings and loans, we call it quantitative easing. That helps us to
keep inflation low and stable.

68
majority of these people come from the lower middle class, and their parents were most likely
poor. This segment is more concerned, both because of their lower salaries and because their
job is frequently not in the formal sector, which provides extra benefits such as healthcare
and pensions. They understand that their hard-won victories are vulnerable and that they can
simply revert.
Despite the fact that being middle class in contemporary India is a matter of status in
many respects, persons in the middle class tend to see themselves as among those with a
fragile sense of security. They, like the poor, frequently whine about the affluent and
powerful, the deceitful elite, manipulating and “corrupting” the economic and political
system. From the colonial period to the present, middle-class political involvement has been
vital in contemporary India. Leaders who question established power structures and offer
fresh direction to social movements of all types are often from the middle class.
The Indian middle class has also been criticized of being a self-serving, self-absorbed
group that is unconcerned about the impoverished and downtrodden. To keep the poor out of
its sphere of advantages, the middle class constructs obstacles and limits. The impoverished,
on the other hand, strive to reach the middle class and work hard to do so. Even if parents
can't afford to feed their children nutritious food, they send them to private English medium
schools in the hopes that education would help them rise out of poverty and into middle-class
neighborhoods.
Apart from being used to describe social structures and spheres of inequality and power,
the term “middle class” is also used to describe the emerging Indian who, through education
and hard work, is attempting to move upwards with his or her own resources, transforming
the country into a modern and developed nation. In neoliberal times, it is middle-class Indians
who have extended themselves over the most valuable and vital avenues of opportunity,
therefore increasing the Indian and global economies. For instance, software developers,
specialists in management and similar, who have risen to prominence practically everywhere
in the globe today, are all from middle-class backgrounds.
The middle class's third popular articulation is in regard to the market. The middle-class
individual is the quintessential consumer as an economic agent. The purchasing power of the
middle class is what keeps the modern bourgeois economy afloat. The middle class is said to
be fascinated with consuming due to its position. For the middle class, consumption is both
an act of economic reason and a source of identity. Shopping malls, mobile phones, and the
expanding reach of the media are all symptomatic of the middle class's rising importance in
India. The middle-class customer is the target of much of the advertising business.
Identifying who belongs to the middle class appears to be rather straightforward: people
who fall somewhere in the centre, between the impoverished and the wealthy. Surprisingly,
this is how much of today's debate has been framed, formed and discussed by economists and
policymakers. The use of objective criteria, such as income, consumption, or something else,
for defining the borders on the two ends of the centre has been perhaps the single subject of
controversy among mainstream economists.

69
 However, such a statistical perspective is restricted and incorrect since it reveals nothing
about the actual social processes that arise when middle-class social formations evolve, and
how middle-class social formations impact social, cultural, and political life in countries like
India. As a result, the term “middle class” should be viewed as a historical and social
construct. It appears as the contemporary capitalist society, with markets and cities, develops.
Its growth heralds the creation of a new type of social order: a ranking and categorization
system. It alters the nature of social relationships within communities and homes, as well as
between men and women and young and elderly.
It does not necessarily modify everything in the pre-existing social structures of social
disparity because it originates historically within a certain social environment. Even though
the emergence of the middle class changes the way people think, conduct, and interact with
one another, caste and communal inequities persist. Those attempting to rise in the new social
and economic order make use of their available resources and networks, including caste and
familial networks, to stabilize and strengthen their positions in the new social order, which is
based on a new framework of inequality.
The middle class is diverse in terms of income and wealth, as well as position and
privilege. Depending on income, education, occupation, housing, and lifestyle, the middle
class is sometimes subdivided into “upper,” “lower,” and “those in-between” groups. As
previously said, persons who identify as 'middle-class' or are classed as such retain their other
identities, particularly those that have historically served as sources of privilege, such as
caste, community/religion, and region/ethnicity. The growth and consolidation of a middle
class within an “ethnic” or cultural group may serve to intensify rather than erode or
eliminate those identities.
2.2.10 Conclusion
Ed Fuller (2015) rightly notes that the Indian middle class continues to play a vital role not
just in India, but also in other parts of the world.22 For instance, the phenomenal growth of
the global software sector, in which Indians flourish and continue to be in demand, is
producing a new, modern, mobile middle class. Furthermore, individuals are constantly
moving between Silicon Valley and Bangalore, India, leading in the emergence of a new
global consumer.23 The presence of Indian diaspora outside the country majorly in the Middle
Eastern regions like Dubai or in United Kingdom or United States can considerably high and
these majorly comprise of the middle class.
Despite India's excellent growth and middle-class potential, a number of challenges must
be addressed. According to the United Nations, by 2022, the country will be the world’s most
populous with a population of around 1.8 billion and a country with about India's 1.3 billion

22
Fuller, E. (2015). India: Asia’s next economic dynamo. Forbes, forbes.com, 10.
23
Radhakrishnan, S. (2008). Examining the “global” Indian middle class: Gender and culture in the Silicon
Valley/Bangalore circuit. Journal of Intercultural Studies, 29(1), 7-20.

70
people are under the median age of 29 making it one of the world's youngest population.24 If
the government is able to properly harness the “demographic dividend” and create
appropriate opportunities for the 250 million people who will be seeking for work in the
country by 2030, this population rise might sustain continuing middle-class expansion.
To sustain the population going, it's thought that we'll need to attract a lot of foreign
direct investment, and business processes will need to be enhanced even more. Infrastructure,
bureaucracy, arduous regulatory requirements, and financial concerns all remain major
roadblocks to growth, and all must be considerably addressed in order for the country to
reach its full potential. The Economist has recommended against over-optimism in entering
the Indian market, even if multinational firms continue to do so. Finally, manufacturing's
share of GDP (now 2percent of GDP) must grow at a faster rate. This proportion is expected
to rise to roughly 3.5 percent by 2022, according to the current government's “Make in India”
plan. Our 100th rank on the World Bank's “Ease of Doing Business” rating can help assist the
creation of jobs for a growing population.25 As their discretionary income grows, India's
middle class will play a larger role in the global economy, allowing them to buy more
consumer goods, afford better health care, and spend more in their children's education.
2.2.11 Practice Questions
1. How the Indian middle class has evolved since Independence? Critically analyse its
changing role in today’s Indian society and polity.
…………………………………………………………………………………………
…………………………………………………………………………………………
…………………………………………………………………………………………
………………………………………………………………………………………….
2. Differentiate between the middle class and the new middle class in India. Discuss the
growth and structure of the new middle class in India.
…………………………………………………………………………………………
…………………………………………………………………………………………
…………………………………………………………………………………………
………………………………………………………………………………………….
3. The beginning of the twentieth century represents a transition in the national
movement from middle-class intelligentsia to masses. Comment.
…………………………………………………………………………………………
…………………………………………………………………………………………
…………………………………………………………………………………………
………………………………………………………………………………………….

24
“India’s Demographic Dividend,” Thomson Reuters. https://tinyurl.com/yb4t4jvl.
25
Ease of doing business rankings, The World Bank. https://www.doingbusiness.org/en/rankings

71
 Unit-3 : Agrarian Development Strategy and its Impact on Social Structure

(a) Green Revolution and its Impact

Dr. Sonu Kumar

3.1 Structure
3.1.1 Introduction
3.1.2 Colonial Legacy of Indian Agriculture
3.1.3 Green revolution
3.1.4 Features of Green Revolution
3.1.5 Green Revolution: Discussion on Impact
3.1.6 Sustainable Green Revolution
3.1.7 Practice Questions
3.1.8 Endnote

3.1.1 Introduction
In the 1960s, due to the new technology adopted under agriculture, there was an
unprecedented increase in agricultural production, which scholars called the Green
Revolution. It also influenced the social and political system of India. On the other hand,
regional disparity, individual dissatisfaction and ecological imbalance also rose. In this
article, along with the discussion related to the impact of Green Revolution, the Second
Green Revolution or Evergreen Revolution has also been included, in which an attempt is
made to solve the problems arising from the first Green Revolution.
3.1.2 Colonial Legacy of Indian Agriculture
It is well known that no section of the Indian society remained untouched by the ill effects of
colonial rule. The condition of the peasants in colonial India had become more pathetic as
compared to other classes. The reason for this was that in order to increase the amount of land
revenue, the company adopted a variety of land revenue system eg: Permanent Settlement,
Mahalbari and Ryatwari but the sole purpose of all these was the exploitation of the farmers.
Whereas British historians associate these systems with agricultural development, these
exploitative systems badly affected the self-reliant Indian rural economy. The concept of
private property started in the agricultural sector and a new structure and new classes like
Landlord and Agricultural laborers emerged in the agricultural sector. As a result, the
development of agriculture was stunted.
The impact of colonial rule on the agricultural system was reflected in many forms. For
example, decline in the productivity of food crops, commercialization of agriculture and
increasing dependence of farmers on commercial agriculture etc. It was observed that from
1901 to 1941, the per capita agricultural production decreased by 10-15 percent. It was found

72
that during these years there was a gradual decrease in the production of food grains also.1
Similarly, during 1894 to 1946, the productivity of almost all crops decreased to 0.01 percent
and during 1921-46 the productivity of food grains also decreased and it decreased to 0.44
percent.2 The effect of commercialization of agriculture was that instead of food crops, cash
crops were promoted in agricultural production. Agricultural production started not for the
rural masses but for the national and international market. There was an unprecedented
increase in the production of cash crops like tea, coffee and rubber. Along with this, the
condition of the farmers kept deteriorating day by day. They did not have the capacity to face
natural calamities like famine and starvation. Due to this, many peasant movements also took
place in South India3. Nanavati and Anjariya have reported that between 1800 and 1950,
there were more than 60 famines in different regions in India. And these famine caused the
untimely death of several crore people. In 1943, there was a severe famine in Bengal and 1.5
crore people died in Bengal alone.4
From the above types of agricultural problems, it can be speculated that what type of
farming system was inherited by independent India just as the famine that occurred during the
British period is a proof that agricultural facilities were not developed properly. Even during
the British period, no effort was made to make the irrigation system profitable.5
In 1947, India became independent with many problems. On the one hand, there were
problems of partition, on the other hand there was also the question of livelihood of such a
large population. However, when the foundation of planned development was laid in 1951-
52, agriculture was given an important place in it. In the First Five Year Plan (1951-56), the
top priority was given to agriculture related projects along with irrigation and electricity.6
Similarly, appropriate provisions were made for the development of agriculture in the
subsequent plans also. Despite such efforts, there was such a serious problem of food grains
that India signed an agreement with America on 10 July 1954, which was named Public Law-
480 Program (PL 480 Program). Under this agreement, the import of food grains started from
1956.7 In the first year, 30 lakh tonnes of food grains were imported. The volume of imports
increased every year and reached 4.5 million tonnes in 1963. At the same time, despite the
increase in the production of food grains in the two Five Year Plans, this increase was not
sufficient for the rapidly growing population. Drought, famine and war also affected
agricultural production.
3.1.3 Green Revolution
The term Green Revolution was coined in 1968 by William S. Gaud, the Director of
American Agency for International Development. It was later used in India as well as in
Pakistan and other developing countries.8 The credit for starting the Green Revolution in
India goes to the then Agriculture Minister C. Subramaniam, his key aide M.S. Swaminathan
and senior agricultural scientist Norman Borlaug. Along with this, Prime Minister Lal
Bahadur Shastri and Smt. Indira Gandhi, who gave importance to the agriculture sector and
farmers, also played an important role in giving direction and momentum to this revolution.

73
 It has been discussed earlier that agriculture development has been given priority in the
Five Year Plans. The 1960s has been the most important decade in the history of Indian
agriculture when it comes to agricultural development. 1961-1966 was the period of the Third
Five Year Plan. During this period, new technology was used in the agriculture sector.
Initially this experiment was implemented in seven districts as a pilot project and it was
named ‘Intensive Agriculture District Program-IADP’. The seven districts where this
program has been implemented are Thanjavur (Tamil Nadu), West Godavan (Andhra
Pradesh), Shahabad (Bihar), Aligarh (Chhattisgarh), Raipur (Madhya Pradesh), Ludhiana
(Punjab) and Pali (Rajasthan).9 In this program an attempt was made to bring a dynamic
change in Indian agriculture through the use of high quality seeds, use of chemical fertilizers,
proper irrigation system and use of pesticides. Due to this, it is also called ‘Seed Fertilizer –
Irrigation Technology’. In the agriculture sector, this combined technology has seen amazing
results in a short time. That is why agricultural experts and politicians have termed this
unexpected progress as Green Revolution.
3.1.4 Features of Green Revolution
Being an agricultural country, 60-70 percent of the total population is still dependent on
agriculture for their livelihood. The biggest problem of Indian farmers is to supply food
grains for their families. In India, 75 percent of the agricultural land is used for food crops
only. The contribution of rice, wheat, millet, barley and various types of pulses as food crops
is about 70 to 90 percent.10 To understand its characteristics, it is necessary to observe the
following points:
 High Yielding Variety Seed Program - The use of this type of seeds started in India
after 1960.
The main objective of the use of such seeds was not to increase the production of food crops,
but the main emphasis was being given to make India self-sufficient in the matter of food
grains by increasing the area and use of seeds of improved varieties.11 But in India, the
cultivable land was limited and what was there was also almost in use. That is why the main
solution to increase food production was to increase the yield.12 However, the use of such
innovative techniques in India was not very encouraging. There are many reasons for this.
People here have been accustomed to traditional agriculture and some are resourceful. Here,
the use of improved varieties of seeds was started mainly for Five crops- Wheat, Rice,
Barley, Jowar and Bajra. The main characteristics of such crops are as follows”:13
(i) These crops prove to be relatively more suitable for fertilizers.
(ii) These crops are two times to four times more fertile than native crops.
(iii) The special feature of these crops is that they take less time than the indigenous crops,
so that the land can be used for other main crops.
(iv) These crops are also capable of withstanding drought, except for certain crops.

74
The commercial use of these crops grew at a very rapid pace during 1966-69.14 While only
4.66 million acres of land was used by these seeds during 1966-67, it expanded to 22.97
million acres in 1968-69. The target was to increase its expansion area to 60 acres by the five
year plan.15 The Government of India established the National Seed Corporation (NSC) in
1963 to encourage the production and distribution of certified seeds of various crops.16 The
result of such institutional efforts was that the total food grain production almost doubled in
1969-70 as compared to 1950-51. Presently, the food production was 210 MT, which was
targeted to be increased to 420 MT by Evergreen Revolution.
Use of Fertilizer
Proper use of fertilizers is also important in new agricultural technology because without the
use of fertilizers, the crop with improved seeds cannot prove to be more effective. Fertilizers
are generally divided into two categories: Organic fertilizers and Inorganic fertilizers.
Inorganic fertilizer is also called chemical fertilizer. They have three forms – Nitrogen (N),
Phosphorus (P) and Potassium (K) fertilizers (NPK). Organic fertilizers are Natural fertilizers
also known as biofertilizers. These fertilizers are cheap and environment friendly. Initiatives
are being taken by the government to promote their use. In this sequence, a project was
started in the Sixth Five Year Plan under which the National Bio-fertilizer Development
Center (NBDC) was established in Ghaziabad (Uttar Pradesh). In 2004, its name was
changed to National Center for Organic Farming (NCOF). Presently, the government is
providing Grants to the farmers to promote the use of organic fertilizers like vermicompost.
For the production of, 50 percent of the total cost is being given by the government as a grant.
Extension of Irrigation
The expansion of irrigation as a feature of the Green Revolution is also an important
achievement. HV YSP availability of irrigation is the primary condition for proper
development of hybrid seed crops under H.V.Y.S.P. The farmer cannot depend on irregular
monsoons for these crops. The use of fertilizers or pesticides on these seeds/crops proves to
be effective only when they are irrigated in proper amount on time.17 But even today there are
many areas in India where farmers are dependent on monsoon for irrigation. The proper
system of irrigation has been made in about 40 percent of the areas only. HVYSP has proved
to be effective only in those areas where there is a good system of irrigation.18 However, later
on, many efforts were made by the Government of India to improve the irrigation system. For
example, Command Area Development Program was started in 1974-75. Its main objective is
to achieve rapid and optimum utilization of irrigation potential of selected major and medium
irrigation projects. In this sequence, the Accelerated Irrigation Benefits Program (AIBP) was
launched in 1996-97. Its main objective was to encourage the states to complete the
incomplete Irrigation projects and programs through central loan assistance.19
In addition to the above irrigation arrangements, continuous efforts are being made by
the Government to increase the area of irrigated land. In this direction, ‘Micro Irrigation
Scheme’ has been started by the Central Government in 2006 to encourage irrigation through

75
drip irrigation system and sprinkler. In this sequence, Agreements have been signed with
countries like Israel, America etc. to promote Drip Irrigation technology. The basic objective
of the river King project is to develop irrigation in dry areas. It has started with the ‘Ken-
Betwa Link’. This Project started in the name of ‘Amrit Kranti’ can be called a successful
effort in the context of interlinking of rivers. At the same time, river basin development
program, ‘Watershed Management Program’ and ‘Rain Water Harvesting’ etc. are being
promoted to overcome the shortcomings of the Command Area Development Program.
National Water Mission was launched by the government in April 2011, whose main
objective is to ensure water conservation, water management and equitable distribution of
water among the states.
Use of Pesticides
The risk of infection in seed plants of improved species is also higher than that of native
crops because this type of hybridization plants do not develop proper immunity to face
destructive pests and diseases.
For this reason, it becomes inevitable to use insecticides in the right and proper quantity
for their protection. This leads to a manifold increase in crop production. The result of this
increase is that in 1955-56, where 5.9 million acres were used for these pesticides. In 1968-69
their use increased to 98.8 million acres.20 Simultaneously, efforts are being made to
encourage the use of Organic pesticides.
Agriculture loan
There is a close relationship between agricultural development and Agricultural Credit.
Availability of credit at the right time and at the right rate of interest brings increase in
agricultural production. The Indian farmer receives credit from many sources. Generally,
these sources can be divided into two categories: Non-institutional sources and Institutional
sources. In Non-Institutional source, local rural moneylenders, zamindars, native bankers,
and commission agents etc. can be kept. While institutional sources can include cooperatives,
commercial banks, regional rural banks, land development banks, etc. Loans from non-
institutional sources are not suitable for farmers because through this, loans are made
available to the farmers at very high interest rates and they are exploited by taking advantage
of their poverty. Along with this, they are forced to sell their crops at low prices. The effort
made by the government to get rid of this type of problem is commendable.
With the nationalization of banks in 1969, there was a change in the agricultural credit
system. A new turn has come in this regard. The Multi Agency Approach was developed
through which many institutions emerged to promote agricultural credit. Among these are co-
operative societies, commercial banks, regional rural banks and farmers’ service societies,
which were institutions working at the village level.21 The most important step regarding
agricultural credit was the National Bank for Agriculture and Rural Development in 1982.
NABARD is considered to be the apex institution of the rural credit system. It is doing many
commendable works to make agricultural credit accessible. These include the introduction of

76
Kisan Credit Card. A single platform approach: Window approach where there is a system of
multipurpose credit at one window and linking SHGs with banks has been prominent. .
In addition to the above types of institutional efforts, continuous efforts are being made
by the government to facilitate agricultural credit. Of these, 5 Regional Rural Banks were
established on 2 October 1975, whose current number of branches has increased to 17588.22
Similarly, the Land Development Bank has been established to meet the long-term needs in
the agriculture sector.
Agriculture Insurance
In 1999-2000, the National Agricultural Insurance Scheme was established to provide
financial assistance to farmers in the event of crop damages, resulting from disaster, insect
disease etc. Agricultural Insurance Company of India Limited is the implementing agency of
the scheme. The Central and State Governments share 50:50 per cent of the valid premium
subsidy.
Agricultural Marketing
Proper and satisfactory marketing of agricultural products is a necessary and important
condition of agricultural development because farmers will be motivated to adopt advanced
technology and invest in agricultural capital only when they get a fair price for products.
Agricultural marketing is not flawless here as the farmers do not get fair price for their
products. To protect the interests of the farmers and to ensure the price of their products, the
government has taken several steps. Following are some of the major steps for farmers:
(i) Co-operative Marketing Societies- 10 or more farmers can form cooperative
marketing societies or multipurpose government societies for the purpose of selling
their products.
(ii) Regular Markets- Such markets are established under a law made by the state or
local government. Their main objective is to eliminate the unhealthy, fraudulent and
unwanted practices prevalent in the market.
(iii) National Federation of Agricultural Cooperative Marketing Of India- Agriculture
Cooperative Marketing Federation (NAFED) is the apex organization of agricultural
marketing, which was established on 2 October 1958. Its main function is to obtain
certain agricultural commodities, their distribution, export and import. This
organization promotes inter-state trade and export of agricultural commodities.
NAFED played an important role in stabilizing the price level and protecting the
interests of both producers and consumers in the market.
In addition to the above types of institutions, the Tribal Cooperative Marketing Council of
India (TRIFED) was established in 1987 to protect the interests of farmers. Along with this,
warehousing facility is also being provided to control the supply as per the demand,
stabilization of price and to maintain the buffer stock.

77
3.1.5 Green Revolution: Discussion on Impact
What was the effect of Green Revolution in India? There has been a lot of discussion on this
topic and it is still going on. Some scholars have discussed all its social, economic and
political dimensions in their discussion, while some scholars have limited their views only to
its productive effect.
Rudolph and Rudolph have pointed out that the Green Revolution resulted in the
emergence of a newly organized pressure group consisting mainly of wealthy farmers and
agricultural capitalists. This pressure group later played an effective role in determining
Indian politics. Rudolph and Rudolph have termed this group of farmers as ‘bull cart
capitalism’. This was a group that had land ranging from2.5 to 15 acres. They used to
cultivate themselves and were deprived of agricultural facilities. They had more than a couple
of oxen with which they used to plough the field. This section of farmers could not get any
benefit of Green Revolution. 23
Norman Borlaug, while discussing its effect, says that the biggest advantage of this was
the development of agricultural infrastructure in the third world countries. Many laboratory,
agricultural scientists and trained labor force also developed. Along with this, new research in
the field of agriculture was also encouraged.24
Sudipta Kaviraj has considered the Green Revolution as an example of Gramshi’s
Passive Revolution. According to them the entire Indian region was not affected by this
revolution. Only a limited number of people benefited from this revolution.25
Positive Impact
As a result of this revolution, significant progress was made in the agricultural sector in the
country. Due to the adoption of new technologies in the agriculture sector, there was a
qualitative improvement in this sector. Food production increased and self-sufficiency came.
Along with this, commercial agriculture was encouraged. As a result of this revolution,
agricultural production increased in general and the production of wheat and rice increased in
particular. Rice production was 35 million tonnes in 1960 which increased to 83 million
tonnes in 1997-98. During the same period, the production of wheat increased from 11
million tonnes to 66 million tonnes.
While sugarcane production increased from 110 million tonnes to 260 million tones, its
effect was limited to wheat, jowar and bajra in the initial phase26. But, gradually its effect was
also reflected on other crops like rice, cotton, jute and sugarcane etc. At present, India is self-
sufficient in food grains like rice, wheat etc. as well as is capable of exporting them.
Along with the increase in the production of food grains, this movement had many other
positive effects. Keeping in mind the problems of the farmers, the government developed
various types of institutions. Prominent among them are National Cooperative Farmers
Corporation (1963), Agricultural Refinance Corporation (1963), Agricultural Price
Commission (1965), Food Corporation of India (1965), State Farm Corporation of India

78
(1969), etc. Minimum Support Price Policy in respect of food grains in the country was also
started in 1964. It is the price that farmers will necessarily get for their crops. The minimum
price is announced by the government before sowing the crop. It is a type of insurance which
is given by the government to the farmers to protect them in case there is a fall in the price
after a good harvest and excess supply. Whereas, procurement price is the price which is
announced by the government after sowing the crop. The government buys food grains at this
price which is equal to or more than the minimum support price. The main objective of
recovery price is to provide farmers with more produce.
Similarly, in order to expand agricultural education under the agricultural policy, the
government has established the first Agricultural University in 1960 at Pantnagar and a
Central University at Imphal (Mizoram). Indian Council of Agricultural Research has been
constituted for agricultural research, under which 53 Central Institutes, 32 National Research
Centers and 12 Project Directorates are functioning.27
The Green Revolution also influenced national political aspects. As a result of the Green
Revolution, a small and prosperous class emerged as a newly organized pressure group
consisting mainly of rich farmers and agricultural capitalists. This resulted in the emergence
of the politics of demand. Many demands were raised by this group for agricultural prosperity
such as: higher prices of agricultural products, availability of better agricultural techniques at
lower prices and other structural and institutional facilities.28
This organized pressure group gave a new shape to the peasant movement after
independence. The pre-independence peasant movements were directly against the state and
were relatively less organized. The movement started by them after the Green Revolution was
not based on ideology but based on issue and economic strength which proved helpful in
strengthening the organization. The issues raised by them played a central role in the
emergence of many institutions.29
In 1967, Chaudhary Charan Singh formed the Bharatiya Kranti Dal (BKD) as the leader
of the farmers. He created Jats in Uttar Pradesh and adjoining areas, organized Gurjars,
Tyagis etc. who were basically farmers and backward castes. The Bharatiya Kisan Union
(BKU) was formed by Mahendra Singh Tikait in 1986. It also participated in representative
elections in the late 1980s but did not get the expected success. But in this process, peasant
leaders emerged from many states. For example, Devi Lal in Haryana, Chandra Shekhar in
Uttar Pradesh, Nanjundaswamy in Karnataka, C. Narayanaswamy Naidu in Tamil Nadu,
Sharad Joshi in Maharashtra etc, were prominent. Along with this, many organizations
related to farmers also emerged e.g. Karnataka Rajya Ryot Sangh (KRRS) in Karnataka,
Setkari Sangathan in Maharashtra, etc.30
Thus, the rise of these regional leaders and their growing political base influenced the
Indian party system. The establishment of several regional parties can be seen as an indirect
effect of this. For example: in Uttar Pradesh, Rashtriya Lok Dal (RLD), PSP. (P.S.P.) etc.
Now instead of the politics of command, the characteristics of the politics of demand began

79
to be reflected in Indian politics. The emergence of backward and middle class castes as a
powerful political class is being witnessed as a result of the Green Revolution.
Negative Impact
Apart from the above types of positive effects, there are also some negative effects of Green
Revolution. It is true that with the increase in production, the income of the agricultural
sector has increased as a result of the government-supported price policy, but as a result,
inter-personal and inter-sectoral inequality has increased in rural areas.
As regards inter-personal equality, it has been found that this revolution is only for the
rich farmers, it is not suitable for ordinary or marginal farmers.31 The reason is that it is very
expensive to do agriculture under the new policy such as: employing improved seeds,
fertilizers, irrigation, pesticides, etc. is something beyond the reach of ordinary farmers.
Second reason is that special knowledge is required for the use of technology. Third major
reason is that Indian farmers are conservative in nature and they are skeptical in adopting new
technology and are afraid of taking risks. This is the reason why big and wealthy farmers
were able to take advantage of this new agricultural strategy and small farmers were deprived
of taking advantage of this policy. As a result, inter personal inequality increased .
Inter-sectoral disparity was also encouraged due to the new agricultural strategy as this
type of technology could be used only in those areas where there was proper irrigation system
and the farmers were mentally and financially strong enough to take risks. This was the
reason that the spread of this revolution could not be done as it was needed. The Green
Revolution was helpful in increasing the productivity of wheat and rice, but could not
substantially increase the production of pulses, oilseeds and cash crops.
Ecological problem has arisen due to excessive use of fertilizers and pesticides. Soil
salinity, alkalinity, soil erosion, aquatic problems like degradation etc. have arisen in the
ecosystem.
The spread of this revolution was confined to some areas of Punjab, Haryana, Western
Uttar Pradesh, Gujarat, Maharashtra and Karnataka. The most benefited states were Punjab
and Haryana. The reason that these two states are the most benefited is that these states come
in the minimum monsoon zone, due to which the development of irrigation was already done
here. The second reason was that the farmers here were ready to invest capital and take risks.
Apart from this, due to political-administrative will power, its use and distribution got a boost
in this area and farmers could adopt the variables of Green Revolution on a large scale. Other
reasons can be attributed to the large holding size in these areas and the minimization of
institutional and structural problems.
Apart from the above types of limitations, there are many other problems which have
hindered the spread of Green Revolution. Migration of rural youth to cities due to lack of
basic facilities in rural areas is the biggest obstacle to agricultural development.32 The
National Commission on Farmers constituted in 2004 also recommended that the National

80
Policy for Agriculture should be made attractive and keeping in mind the interest of the
farmers, then only educated youth can be encouraged to take up agriculture.
Green Revolution: Key Facts
 Start of green revolution -1960
 Concerned agricultural scientists: M.S. Swaminathan and Norman Borlaug,
 Agriculture Minister: C. Subramaniam
 Prime Ministers: Lal Bahadur Shastri and Indira Gandhi etc.
 Major crop: Wheat, Rice, Jowar, Bajra, Cotton, Jute and Sugarcane
 Beneficiary States: Haryana, Punjab, Western Uttar Pradesh, Karnataka, Tamil Nadu
and Maharashtra
3.1.6 Sustainable Green Revolution or Second Green Revolution
From the above explanations, we have become aware of the limitations of Green Revolution.
In the present time, many ill effects of Green Revolution are also being reflected. In such a
situation, today there is a need for second green revolution in the field of agriculture. In the
present context, in addition to the traditional challenges before agriculture, some new
challenges have emerged because the productivity of the agricultural sector has to be
increased without ignoring the environmental protection. Despite the huge increase in
agricultural production, today we are facing shortage of food grains. The main reason for this
is the disappointing performance of the agricultural sector. Stagnant productivity of the
agricultural sector, declining public investment in the agricultural sector etc. have weakened
the site of food production. In such a situation there is a need for another revolution like the
Green Revolution.
It is true that the Green Revolution came at a time when it was much needed and it also
increased the production of food grains. But this revolution was only for limited crops,
limited farmers and limited areas. The need is that the above limitations should be removed in
the Second Green Revolution. Therefore, in the second green revolution, sustainable
development has been kept in mind. The second green revolution is a complete revolution in
the agriculture sector. Concept of Second Green Revolution by A.P.J. Abdul Kalam, written
by M.S. Swaminathan has called it an evergreen revolution. It is related to the entire
agricultural activities like cash crop, animal husbandry, pisciculture, sericulture etc. apart
from food grains.
Senior agricultural scientist M.S. Swaminathan has given the following Suggestions:
 Concept of 4Cs (Conservation, Cultivation, Consumption, Commerce) to increase
production and profits.
 Opportunities should be promoted for women so that they can take up Agriculture
sector as self employment. In this direction, the Women’s Biotechnology Park has

81
 been established in Chennai by the government. Along with this, in the budget of
2010-11, with the then Finance Minister Pranab Mukherjee’s initiatives, Women
Farmers Empowerment Project has also been started under the Aegis of Ministry of
Development.
 Establishment of Climate Risk Management Research and Extension Centers in 127
agro-climatic sub-zones, based on agricultural systems and weather patterns in
different parts of the country by the Indian Council of Agricultural Research.
 Establishment of Village Resource Center with the help of Indian Council of Space
and Research, which is connected to 127 agro-climatic sub-regions through satellite
connection. Linking these 127 agro-climatic sub-zones to the National Monsoon
Mission.
 Establishment of computer model seed and grain bank keeping in view the various
weather conditions.
 Pulse Village: To bridge the gap between demand and supply, M.S. Pulse Village has
been established by Swaminathan Research Foundation in Pudukottai and
Ramanathapuram districts of Tamil Nadu. In the Union Budget 2011-12, a budgetary
allocation of ` 380 crore has been made for setting up 60 thousand pulse villages.
 To improve soil health, it is necessary to provide organic and physical micro
elements. Therefore, along with chemical fertilizers, organic and compost, there is
also a need to use manure.
 Where there is lack of irrigation system in rainfed areas, there is a need to develop
sustainable water conservation systems so that better production can be achieved
through dry agriculture there.
 There is a need to make Rain Water Harvesting mandatory, as well as empowering
Gram Sabhas as ‘Jal Panchayats’ for efficient use of water.
 Institutional problems in Indian agriculture, mainly in the direction of land reform,
special efforts need to be made so that agricultural investment can be encouraged.
 Initiatives will have to be taken in the direction of credit reforms, as well as providing
necessary assistance to small and marginal farmers for agricultural development.
Small and marginal farmers in India are more than 80 percent who are deprived of the
benefits of Green Revolution. Therefore, it is necessary to provide them loans at
concessional rates and encourage them for cooperative agriculture. For this, there is
also a need to encourage strong leadership in them.
 In addition to increasing agricultural productivity for small and marginal farmers, it is
necessary to encourage alterative employment on and off the farm. These include
food for work, employment programs like ‘MNREGA’ (MGNREGA) etc.

82
  Efforts are necessary to provide various employment in rural areas through agro-
processing. In addition, promotion of agro-based industries is required.
 Agriculture should also get the facilities that industries get. They should be linked to
the market. In this regard, Contract Farming and Agro-Economic Zone (A.E.Z.) can
be important efforts. In this direction, bridging the gap between scientific knowledge
in agriculture and its implementation at the grassroots level is a dire need. Krishi
Vigyan Kendras will have to be strengthened, as well as it is necessary that in each
Panchayat one woman and one man should be appointed as Krishi Vigyan Manager
and full information should be given about the rights of farmers.
By adopting the above types of suggestions, the second green revolution can be made
successful and the problem of agricultural raw materials for food and industry can be solved.
Dr. Swaminathan has also emphasized on lab to land demonstration programs’ so that theory
can be converted into practice and manure can be used on the basis of its usefulness in the
soil. According to an estimate by the United Nations Population Agency, the world
population is projected to reach 8 billion by 2025. In such a situation, according to Norman
Borlaug, the success of the Green Revolution may prove to be short lived if the rapidly
increasing population is not stopped because the growth rate of population is high only in
developing countries like India.
3.1.7 Practice Questions
1. What is Green Revolution? Describe about its main features.
………………………………………………………………………………………….…
…………………………………………………………………………………………….
…….………………………………………………………………………………………
..…………………………………………………………………………………………..
2. Underlined the recent and historical factor which responsible for emergence of Green
Revolution.
………………………………………………………………………………………….…
…………………………………………………………………………………………….
…….………………………………………………………………………………………
..…………………………………………………………………………………………..
3. Write a essay on impact of Green Revolution.
………………………………………………………………………………………….…
…………………………………………………………………………………………….
…….………………………………………………………………………………………
..…………………………………………………………………………………………..

83
4. Is Green Revolution provide a new dimension of Indian politics?
………………………………………………………………………………………….…
…………………………………………………………………………………………….
…….………………………………………………………………………………………
..…………………………………………………………………………………………..
5. Discuss the limitation of Green Revolution.
………………………………………………………………………………………….…
…………………………………………………………………………………………….
…….………………………………………………………………………………………
..…………………………………………………………………………………………..
6. Which is not feature of Green Revolution:
a. Fertilizer b. irrigation
c. Pressure group d. Pesticide

3.1.8 Endnote

ु ा मुखजीर् एवं आिद य मुखजीर्, (2009) आजादी के बाद का भारत, िद ली िह दी मा यम कायार् वयन 

1
  िवपन च द्र, मद
ृ ल
िनदे शालय, िद ली िव विव यालय, िद ली, प.ृ  12 
2
  िवनीत कुमार िस हा, (2014), ‘अथर् यव था एवं  समाज’ अभय प्रसाद िसंह (सं.)  भारत म उपिनवेशवाद, नई िद ली, 
ओिरयंट  लैक वान, प.ृ  53 
3
  वही, प.ृ  55 
4
   Nanavati, B. Motilal and J.J. Anjaria, (1970), Indian Rural Problem, Table 1, p. 39 
5
  िम  एवं पुरी, (2011), ‘भारतीय अथर् यव था’, (तेरहवाँ सं करण), मुंबई, िहमालय प्रकाशन, प.ृ  48-49 
6
  भारत, (2012), सूचना एवं प्रसारण मंत्रलय, भारत सरकार, प.ृ  915 
7
   www.Swapsushias.blogspot.in/2009/08 down/dated on 16/10.2014  
8
   Norman  E.  Borlaug,  (2011),  'The  Green  Revolution  :  Past  Success  and  Future  Challenges',  in 
Think India Quarterly, Volume 14, No. 3, New Delhi, p. 53 
9
   www.agropedia.iitk.ac.in/content/....downloadedon 16/10.2014 
10
   Result of Diet Surveys in India, 1935-48, (1951),  Special Report Series No. 20, New Delhi, Indian 
Council of Medical Research, , p. 13 
11
   A.K. Chakarvarti, (1970), 'Foodgrain Sufficiency patterns in India', Geographical Review, Vol. 60, p. 
209 
12
   S.P. Sinha, (1965), Indian Agriculture: Its fluctuating fortunes, Allahabad: Kitab Mahal, p. 64. 
13
   A.K. Chakravarti, Sep. (1973), Green Revolution in India' in 'Annals of the Association of American 
Geographers', Vol. 63, No. 3, Pp. 320 
14
   W.C.  Hendix,  J.J.  Naive,  and  W.E.  Adams,  (1967-68  to  1970-71),  'Accelerating  India  food  Grain 
production',  Foreign  Agricultural  Economic  Report  No.  40  (Washington:  Department  of  Agriculture, 
Economic Research Service, 1968), p. 7. 
15
   Government  of  India,  Directorate  of  Economics  and  Statistics,  Area  under  High  yielding  varieties 
programme  (H.V.P.)  All  India  (1966-67  and  1968-69,  New  Delhi,  India  :  Ministry  of  Food  and 
Agriculture, mimeographed 1969, Statesman I and II.  

84
16
   R.W.  Comings,  (1970),  'Seed  production  in  India'  in  A.H.  Banting,  (ed.),  Change  in  Agriculture, 
New York : Praeger pp. 137-145. 
17
   A.K. Chakravarti, (1970), op.cit, p. 324 
18
   Government of India (1970), Census Atlas,  Census of India  1961, Vol. I part 9, Delhi, India : The 
Manager of publications, p. 153  
19
  एस.एन. लाल एवं एस.के. लाल, (2014), भारतीय अथर् यव था : सवक्षण तथा िव लेषण, इलाहाबाद : िशवम ् 
पि लशसर्, प.ृ  4:12  
20
   James  H.  Bowlware,  (1970),  Brief  on  Indian  Agriculture,  (New  Delhi,  India  :  Office  of  the 
Agriculture Attache, American Embassy), p. 28.  
21
  लाल एवं लाल, (2014), उपरोक्त, प.ृ  4:13 
22
   www.banks-India.com/banking news...downloaded on 17/10/2014   
23
   John  Harris,  (2014),  'Class  and  Politics'  in  Niraja  Gopal  Jayal  and  Pratap  Bhanu  Mehta  (eds.), 
The Oxford Companion to Politics in India, New Delhi : Oxford University Press, p. 145 
24
   Norman, E. Brolaug, (2011), op.cit., p. 56 
25
   Stuart  Carbridge,  (2014),  'Politics  and  Culture'  in  Niraja  Gopal  Jayal  and  Pratap  Bhanu  Mehta 
(eds.), The Oxford Companion to Politics in India, New Delhi : Oxford University Press, p. 145 
26
  लाल एवं लाल, (2014), उपरोक्त, प.ृ  4:24 
27
   www://hi.wikipedia.org/s/77kg...downloaded on 20/9/14 
28
   Partha Chatterjee, (2014), 'The State' in Niraja Gopal Jayal and Pratap Bhanu Mehta (eds.),  The 
Oxford Companion To Politics in India, New Delhi : Oxford University Press, pp. 4-5 
29
   Sudha  Pai,  (2014),  'Farmers  Movement'  in  Niraja  Gopal  Jayal  and  Pratap  Bhanu  Mehta  (eds.), 
The Oxford Companion to Politics in India, New Delhi : Oxford University Press, p. 394. 
30
   Ibid., p. 395 
31
   D.N.  Dhanagare  (1987),  Green  Revolution  in  India  in  Economic  and  political  weekly,  Vol.  XXII, 
Nos. 19, 20 and 21, p. 138 
32
   M.S.  Swaminathan,  (2011),  'Rio+20:  Green  Economic  with  Inclusive  Growth'  in  Think  Idia 
Quarterly, No. 14, Vol. 3, p. 7 
 

85
 Unit-3

(b) Agrarian Crisis in India: Impact of Neoliberal Economic

Reforms on Farmers
Anjani Kumar

3.2 Structure
3.2.1 Introduction
3.2.2 The Post-independence Scene
3.2.3 Bretton Woods and the Deepening Economic Immiseration
3.2.4 The Socio-cultural Landscape
3.2.5 Conclusion
3.2.6 Practice Questions
3.2.7 References

A study of neoliberal reforms in India becomes essential in today’s scenario due to the
widespread panic across the country over farmer suicides. Most studies discuss these suicides
in the light of changing political economy. They focus on debt as a central reason for the
suicides. However, a comprehensive analysis must take into account the nuances of the larger
socio- cultural and political practices. With neoliberalisation of the Indian economy, since the
early 1990s, the spaces for solidarity and community belongingness have withered away.
Multiple forms of alienation have come into play resulting into individualization at a broader
level.
We must note, here that farmers involved in committing suicides have historically been
from marginalized communities where indebtedness has been a common phenomenon in
their lives throughout. The precariousness of the farmers in both colonial times, and post-
independence phase, must be read into with the underlying assumption that though
precariousness existed in earlier times as well, often the community itself acted as safety net
for both material as well as mental health needs. Neoliberalism has attacked that very
premise, resulting into widespread hopelessness and immiseration.
3.2.1 Introduction
Agrarian sector has always remained the backbone of Indian economy. Since the times of
colonial rule to pre- reform era, this sector has contributed in a significant manner1. During
the time of British rule when all other sectors of economy were crumbling under distress, this
was the last resort for each and every section of the society. However, the British rule had

1
It contributed more than 60% in the GDP of Indian economy during post- colonial phase. Please find Sen and
Dreze’s work here : https://press.princeton.edu/books/hardcover/9780691160795/an-uncertain-glory

86
seen barely any large scale improvement in this sector2. In fact the condition of agriculture
was more severe than any other sectors of economy. Not only exploitation and extraction was
at its zenith, the discrimination based on caste, religion and gender made this sector more
vulnerable than any other. British introduced altogether a different land system3 under whose
burden the farmers were crushed not only in terms of heavy taxation, which they were
compelled to pay after each harvest, but also several other privileges which zamindars and
money lenders extracted from them.
The complete apathy of colonial State towards making any kind of reform in agrarian
sector, the harsh and at times, forceful extraction of rents by zamindars, the complete
dependence of farmers on nature for irrigation, crop failure, debt were common feature in
agrarian sector during the time of colonial government. People died of hunger, starvation,
diseases yet the case of farmers suicide in such a large number barely existed.
3.2.2 The Post-independence Scene
Even during post-independence phase despite all its promises of development and
modernisation, agrarian sector was not redeemed of the crises. Although Indian state- through
legislating on land ceilings; abolishing Zamindari system; curbing money lending and
intermediaries; introducing Planning Commission to supervise the development of
agriculture- attempted to improve the condition of farmers, the deprivations and inequalities
continued to exists. The daily crisis in the lives of farmers only changes characteristics, not
content. It is evident that land reforms remained a major failure for Indian state. The entire
objective of land reforms which was to remove hindrances from the path of improved
agricultural production and eliminate all elements of exploitation and social injustices within
the agrarian system remained a distant dream. Reforms were meant to provide security for the
tiller of the soil and assure equality of status and opportunity to all sections of the rural
population never materialised Though green revolution, to an extent, marked changes in the
condition of agrarian productivity and led to development of bullock capitalism4 in certain
regions, the overall picture of the farmers was still fragile5.
One can understand the situation better by understanding how State interacted with
agrarian sector from independence till 1990s. Though, Indian State, post independence,
appeared to have imbibed certain socialist tendencies towards leading conversations on social

2
Dadabhai Nairoji, in his work Drain of Wealth, highlighted how the sole purpose of British government was to
loot and plunder the resources of India.
3
British government introduced Zamindari, Ryotwari and Mahalwari systems in different regions of India. All
of them were there to extract rents from farmers.
4
The term bullock capitalist was used by Rudolph and Rudolph to highlight the beneficiaries of green
revolution especially the middle-class peasants.
5
Green revolution was not all a pan- Indian programme. It was planned in certain parts of the country,
especially Punjab, Haryana and western UP where there was easy availability of water and highly fertile soil.
The condition of farmer remained fragile in the sense that it was mainly upper caste and upper class peasants
who appropriated all the benefits of green revolution. Even in certain sections, it reached middle caste peasant
yet its reach was limited and not all the middle caste peasants benefitted from it similarly.

87
justice and economic redistribution, but in reality its commitment to private capital remained
intact6. The State, was promoting the interest of the bourgeoisies, in socialist garb. Since
bourgeois in the country were not in the position to dominate the state and there were several
other dominant classes7 whose interests clashed with that of the bourgeoisies, Indian state
sought to wear a mask of socialist character and promote the interest of private capital.
Scholars like Partha Chatterjee, regards it as the project of passive revolution imbibed by
Indian state in order to ensure the primitive accumulation of capital. According to Chatterjee,
Planned development was a subtle strategy adopted by Indian state to foster and nurture
capitalist development. By creating a hegemonic idea of ‘development of nation’, Indian state
took up the task of primitive accumulation of capital in myriad ways. Large tracts of lands
were acquired for the purpose of building dams along with large factories and industries. The
private capital lacked both initial investment capital and technological knowhow, so State
took upon the task itself. Institutions like Planning Commission, which was kept out of the
fold of constitution, served significantly into fulfilling this objective. It is through this
institution that heavy amounts of money were outlaid for building heavy and capital intensive
public industries–which latter on were transferred to private capital. What Planning
Commission also did was to relegate the specific demands which emerged from different
sections of society, on the State, into the domain of the economy thus neglecting the
infrastructural development of agrarian sector.
The welfarism that the state propagated through its relative autonomy was a compromise
between the dominant forces on the one hand, and among the dominant forces and poorer and
weaker sections on the other. The major objective remained to propel the capitalist growth.
Given that situation, the condition of farmers, with certain modifications, remained
unchanged. After first two plans, the focus of the Planning Commission shifted towards
developing big and heavy industry. The dream of raising the productivity was not
materialized till the launch of the green revolution.
India, by mid-1960s was under deep crisis for food grains. PL 480 programme,
supported by the USA, somehow sustained India for few years but the situation that India was
trapped into was of acute food shortage which required in- depth crises resolution. It was only
during Indira Gandhi’s regime, that green revolution was launched and an attempt was made
to make India food sufficient. However, the criticism against green revolution is that the
major benefits of green revolution went to rich farmers rather than the poor. The
discrimination in terms of use; accessibility of technology and resources; and regional
concentration of the fruits of the green revolution, signify the limitations of this ‘glorious’
6
Partha Chaterjee highlights how deal was struck with bourgeois much before the independence of Indian State.
After 1938, Haripura congress session was held where planning for planning was discussed for first time and a
committee was headed by JL Nehru was formed. The members of that committee included leading industrialist
and capitalist of that time Purushottamdas Thakurdas, AD Shroff, Ambalal Sarabhai and Walchand Harichand.
A consensual proposal for the capitalist development through an institution called planning commission was
approved.
7
Pranab Bardhan has classified three types of dominant classes: bourgeois class, bureaucratic class, landed elite.
Their interest were always conflicting so there was constant push and pull of state to serve their interest.

88
phase of Indian agriculture. Although the amount of food stock rose in the FCI storage
facilities, and the institutions like Public Distribution System, claimed the distribution of food
grains and other necessary items but the struggle for food, land continued to exist. The
Naxalbari movement that emerged in West Bengal, and later on expanded till Andhra Pradesh
and Bihar explains the condition of small scale and landless farmers. They rose into revolt
against the oppressive State and system which denied them even basic amenities of life. But
beside the Naxalbari movement, there also emerged several strong peasants and farmers’
movements which made strong demand on the State regarding increase in the welfare policies
and their better implementation. These demands on the State always corresponded to
demands towards increasing opportunities in the lifeworld of farmers, raising their standards
of living8.
During Rajiv Gandhi years, there was maximum welfare in terms of poverty alleviation
programmes, national food for work provisions, etc. However, the condition of farmers did
not improve beyond a certain point. Some mobility arrived in their lives after independence,
as the State abolished taxation in agriculture, the per capita consumption of food increased
among poor farmers9 but the major beneficiary of all these policies were the rich and middle
peasants.
The question of bare survival10 was still pertinent in their life world. Scholars like Sudha
Pai argue that the exploitation got more intensified and assumed a diabolic tail in post-
independent India, especially when Dalits started to make claims up on the land and take
possession of it. The exploiter now no more remained in the upper caste but middle castes too
who picked up arms against the Dalits. Thus, the imagination that the post independent India
brought well-being to farmers was an empty rhetoric. . The condition of farmer remained
unchanged, despite the several farmers movements led by agrarian leaders like Chaudhary
Charan Singh and Mahendra Singh Tikait, that India witnessed in late 1970s and 1980s. The
piecemeal benefits that the state granted in term of its welfare policies reached to the farmers
in more insignificant amount and quality11.
The condition of farmers, thus remained intact in poverty, debt, exploitation by higher
castes and classes, and middle peasants, even during colonial and post- colonial phase. What

8
Rudolph and Rudolph rightly summaries it into a shift from command politics to demand politics. The shift is
also evident from the fact that the new movements which emerged after Naxalbari, largely talked about
inequalities; subsidies rather than the class question. This was much more about a welfarist State than a socialist
State.
9
Patnaik’s work discusses this in detail. Utsa, Patnaik’s work "The Republic of Hunger and Other Essays."
Three Essays Collective, Delhi (2007) brings into light the appropriation as well as the accumulation process
which india witnessed post green revolution.
10
Both Karl Marx and Giorgio Agamben raises the concern about the Bare Survival. The concept of bare
survival in their writings highlights the socio- economic condition under which a labourer exists. It explains the
precarious life world of the working class.
11
Pai, Sudha. Dalit assertion and the unfinished democratic revolution: The Bahujan Samaj Party in Uttar
Pradesh. SAGE Publications India, 2002.

89
has changed in recent times is what led to the massive scale suicides of farmer. How one
should read the suicides then? Are the cases of suicides acts of protest by a conscious agency
or is the agency itself in question during suicides? Locating suicides in post reform India is a
feasible way to understand the precarity of farmers in India, today.
Apart from the political economic explanation for these suicides, one also needs to locate
the cultural aspect while evaluating the cases of the suicides.
Suicide has not been a common phenomenon among farmers historically. Although the
distress and hardship continued to exist throughout history, suicides as a mass phenomenon
emerged recently. The neoliberal ideology, and its large- scale operation across India ,
through reforms and innovations, have caused a depleting in community values and social
security derived out of shared spaces of struggles and solidarities, where the basis for daily
battles to ensure livelihood and bare survival has taken over empathy and collective
concerns.12 Neoliberal ideology does not only permeate the economic frontiers but it also
invades the social and cultural aspect more significantly generating existential crises at mass
level. Farmers in India has been victim of this epidemic. Economic exploitation has always
been an adage into farmers life world especially those who are committing suicides these
days but what is compelling them to perform this act is the robbing of social and cultural
consistency. Even though poor farmers always existed, under a feudal system as well as the
much argued semi-feudal equations, provided for patronage which often helped the farmers
meet their basic minimum needs. Food, shelter and clothing, in the village society, was
therefore never a severely individualistic affair. This equation depleted away under economic
reforms that attacked the revenue generation of feudal systems. Whereas the State was only
12
Between 1995 and 2006, official records indicate that 166,304 farmers died by suicide in India (16,000 per
year) and that at its peak, 18,000 farmers were taking their own lives every year. The issue received significant
news coverage, mainly over claims surrounding the introduction of the Monsanto developed BT cotton (a
genetically modified cotton crop that provides resistance to bollworm and other pests) to the region.
Some have said that there is little evidence suggesting a particular suicide crisis amongst farmers in recent years
However, numerous reports state that farmers have died by suicide at rates exceeding those of the general
population. The 2013 National Crime Records Bureau (NCRB) statistics (considered the official domestic
figures) estimate the suicide rate for the general population at 11.2/100,000 people, increasing from
10.5/100,000 people in 2002 [6]. Breaking down the NCRB figures, Nagaraj estimates that as of 2001, the
overall suicide rate for farmers across India was 15.8/100,000 people, ∼50% higher than the general population
rate, and that this has been increasing at a rate above that of the general population.
Analysis of the regional disparities indicates that the large majority of farmer suicides occur in a geographically
contiguous region that K Nagaraj terms the Group I states (Maharashtra, Karnataka, Andhra Pradesh,
Chhattisgarh, and Madhya Pradesh). Combined, these have significantly higher suicide rates of 28.7/100,000
farmers, accounting for 30% of India’s farming population but over 60% of its farmer suicides. Here, the
problem is so acute that the official rate for farmers is between 59% and 83% higher than the general
population’s, depending on whether “all cultivators”, or just “main cultivators” are included, respectively. Not
only are the absolute figures high, they have been increasing at a rate of 5.4% per annum, suggesting a doubling
every 14 years if they continue unchanged. Another estimate of farmer suicide rates in Maharashtra suggested a
worse picture, with rates increasing from 15/100,000 people to 57/100,000 people between 1995 and 2004, with
the general population rate having only increased slightly from 17.4 to 20.3. Farmers in this region have gone
from having lower suicide rates than the population to rates significantly higher, with a quadrupling of suicides
from 1083 per annum to 4147 per annum in this period .

90
correctly addressing a traditional system of oppression, it hardly provided for the social
security that was an utmost essential for this transition. The old evil, thus, made way for a
more globally situated and aggravated crisis.. One needs to evaluate all these aspects while
reading suicides among farmers.
3.2.3 Bretton Woods and the Deepening Economic Immiseration
The commitment of Indian State to develop the capital has always been in its primary agenda
but the help rendered by the State to capital has not been in overt manner before 1990s. It was
primarily because of the social contract13 through which the independence of the State was
achieved. 1990s become a watershed because at that juncture a new formation in the social
contract took place.. Capital attained maturity and Indian State openly embraced it. After
Bretton woods agreement, the shackles of socialism was thrown away and neoliberal policies
started to define the character of the State. The flood gates were open which once again
allowed the entry of neo colonial powers to exploit and plunder the nations resources and its
people.
With the opening of market, not only the subsidies that the State once granted to the
farmers came to halt14 but the farmers of India, whose maturity was yet to be achieved was
thrown to global competition15. There was significant change in the cropping pattern16. The

13
We believe that it is the inalienable right of the Indian people, as of any other people, to have freedom and to
enjoy the fruits of their toil and have the necessities of life, so that they may have full opportunities of growth.
We believe also that if any government deprives a people of these rights and oppresses them the people have a
further right to alter it or abolish it. The British government in India has not only deprived the Indian people of
their freedom but has based itself on the exploitation of the masses, and has ruined India economically,
politically, culturally and spiritually. We believe therefore, that India must sever the British connection and
attain Purna Swaraj or complete independence”.
This draft for complete independence made by our first Prime Minister Jawaharlal Nehru during freedom
struggle movement against the British rule highlights the social contract through which the Indian state came
into existence. Every citizen of this country was made party to it who was also entitled to abolish or alter the
state if it fails to perform its duty.
14
As per the terms of loans granted by the world bank and IMF, strict advises were made to curtail welfare
policies including subsidies on seeds, fertilizers to Indian farmers.
15
Patnaik highlights that the competition existed at both the level, from the farmers of post- colonial countries
as well as the farmers from the advanced countries. The prices become dependent upon the market
vulnerabilities i.e. the demand and supply at global level started to dominate the Indian market. While the
American farmers continued to get benefits from the government in terms of special budget allocation the
financial sources of Indian farmers were dying out. As a result American product of cheap prices started to
dominate the Indian market leading to major crises in Indian market.
16
Patnaik in her work Republic of hunger notes the reasons for changes in cropping pattern that emerged in the
wake of globalization. Farmers started to grow the commercial crop instead of the traditional one. As the market
for these crops were lucrative and they promised initially a good prices, it attracted the Indian farmers to tend
toward growing these crops. Moreover the other reason one can note is that of difference of soil. European
farmers were unable to grow the variety of crops which the subcontinent farmers can grow due to difference in
climate and soil. Since European started to focus more on their life style, they needed variety of products which
can ensure a healthy life to them, finding themselves unable to grow those crops, importing them under
liberalized and competitive environment serves their purpose. As a result, not only the crops like BT cotton got
significance but also food items and subsistence food crop also got exported from the country by under
consumption at own nation.

91
focus toward producing cash crop grew significantly but there was heavy amount of risk
associated with it. The absence of State support and the high cost of input, along with it the
failure of crops due to lack of monsoon, diseases, dubious seeds, lack of information about
use of pesticides and other fertilizers made the position of farmer precarious17. The formal
institutions of credit started to crumble18 and with the increased cost of input, farmers were
forced toward seeking loans from informal sources at high rate of interest leading to debt
trap. Several scholars19 who evaluated suicide in states like Maharashtra, Punjab, Kerala and
Andhra Pradesh attributes indebtedness as the central reason for suicide of farmers in India.
Although indebtedness can be attributed as one of the significant factor for farmer
suicide in India, what the paper contradicts is that most of the farmers committing suicides
come from lower strata of society20. Indebtedness is not new to them. Most of them have

17
Precariousness can also be evaluated from the fact that those commercial crops which the farmers were
growing required heavy amount of water. Since the farmer in India lack proper irrigation facilities they were
completely dependent upon the monsoon. Their vulnerability also came from the fact that they were directly
competing along with global market. State had no role in the procurement of those crops leading to wide range
of vulnerabilities
18
A Sadanandan shows that after 1989, the percentage of total bank loans going to agriculture began to reduce
sharply, from approximately 20–12% by 1994. By the 2000s it had halved, with even less 8% being lent directly
to farmers. This drop does not appear to simply mirror the decline in agriculture’s part of the country’s gross
domestic product, but is a decline in formal sources of finance that has led to higher rates of loans from non-
institutional sources, such as local moneylenders, who charge much higher interest rates. Across India,
Sadanandan found that where there was more foreign and private competition amongst banks, farmers had more
debt and relied more on private moneylenders for credit, suggesting that these were significant factors
explaining why farmers died by suicide more in certain states. The impact of foreign banks on Indian agriculture
may partly be explained by the priority sector lending demands the Reserve Bank of India places on commercial
banks. Domestic commercial banks must lend 40% of their deposits to priority sectors, with 18% of the total
targeted to agriculture, while foreign banks currently have a lower target of 32%, with no specific agriculture
target. While foreign banks are a small part of the Indian banking system overall, holding 7% of banking
deposits, it is plausible that in regions where they have made an impact, they may have pushed out banks more
amenable to lending to farmers, and thus forced many to use informal sources. For more refer here:
https://papers.ssrn.com/sol3/ papers.cfm?abstract_id=2942490
19
Dongre and Deshmukh found that farmers in the Vidarbha region of Maharashtra ranked debt as the most
important reason for farmer suicides, followed by addictions, environmental problems, and price issues,
amongst others. Two other studies concluded that unpaid loans are a correlate of those who die by suicide. Kale
found that in a small sample from Vidarbha, 95% of farmer suicide victims were indebted, while of control
households, this was only 25%. Another in the same region found that 197 of 200 victims (98.5%) were
indebted. Mishra also found that debt was the most common factor in Maharashtra at 86.5%, followed by
deterioration in the farmers’ economic status (73.9%). A comparison of these farmers with those who had not
died by suicide showed they had three times as much debt, and the difference was significant to the 95%
confidence interval. An investigation of the socioeconomic causes of farmer suicide in Karnataka also found
that agricultural debt was given as the primary factor, leading to farmer suicides in 29/30 suicide cases and
Gedela calculates that indebtedness is one of the statistically significant factors identifying suicide farmers from
controls in Andhra Pradesh. Refer to Dongre and Deshmukh’s work here https://www.researchgate.net/
publication/51060533_Farmers'_suicides_in_the_Vidarbha_region_of_Maharashtra_India_A_qualitative_explor
ation_of_their_causes and Narayan Kale’s works here https://scholar.google.com/citations?user=
iiMbf4YAAAAJ&hl=en .
20
According to scholars like A.R Vasavi the major victims of this epidemic were those who were non benefited
from green revolution and were the marginal farmers having a land holding upto 1-4 hectare of land. The
scholar notes in most of the cases they were from the backward class groups or low ranked caste. In her case
study in Warangal she noted that the peasant were Yadav, Chakli, Telaga, Walda, Mangali, Padmashali and

92
remained under huge indebtedness from time immemorial. There is certainly some other
factor which needs to be located while reading suicides.
3.2.4 The Socio-cultural Landscape
With the emergence of neo liberalism there has been some significant changes in social and
cultural practices in Indian society. The dialectical relationship between tradition and
modernity seems to have disappeared and modernization has taken a wider course enmeshed
with the idea of capitalist development. This has led to development of one dimensional
man21 remained trapped in vulgar economic interest and practices. The conception of
community is breaking down and the common sources of knowledge and practices which
were in consonance with ecology are withering away. It’s manifestation can be seen in
farmers section more vividly. While earlier there used to be common knowledge of
agricultural practices cutting across caste and class boundary, such kind of understanding has
ceased to operate. Farmers are completely dependent upon the market based information. In
lack of state organized information22, farmers have converted their fields into laboratory. All
sorts of experiments associated with seeds, fertilizers, pesticides without any proper
understanding of it’s use both in terms of quality and quantity have resulted into not only
rising the cost of input but also alienating farmers from their land23.
The more specialization and mechanization that has emerged with strong element of
competitiveness among farmers to produce more is breaking up the collective aspect of
agrarian society and leading it toward individualization where the attempt is to monopolize
the entire benefit. In regions where the suicide has taken place one can locate the frequent
decline of the collective bonding and solidarity which existed. Several scholars notes through
their ethnographic accounts that farmers suicide has also to do with humiliation which
emerges from inability to perform their responsibility as a father, son, husband so on and so
forth for instance, marriage of daughter, performing last rites of the deceased. Earlier society
as a whole would augment resources for these responsibilities. With growing atomization in
the social world individual is left to its own capacity to perform such acts. This proves to be

Lambada, While in Anantapur district, most of the victims were from the nonagricultural castes of Sale, Besta
and Uppara, although there were some from the traditional cultivating castes such as the Reddy and Baliga. In
Amravati and Yavatmal districts, most were also from the middle or non-cultivating castes of Telis, Beldars and
Banjara or from the Scheduled communities of Mahar, Nav-Buddha, Matang, Chamar, and Dhangar. For the
Vidharbha and Marathwada region, the TISS report (2005) identifies a spread across the caste groups but a
predominant number were from the OBC 27 percent and SC 36%.
21
Marcuse, Herbert. One-dimensional man: Studies in the ideology of advanced industrial society. Routledge,
2013.
22
Data from the NSSO Survey no 499 (2005) indicates the absence of public agencies in rural India and the lack
of knowledge dissemination to a significant proportion of people. Only 8.4 percent of agriculturists had accessed
information from the Krishi Vigyan Kendras (Farmers Science Centres), 17 percent received information from
other agriculturists and 13 percent from agricultural input dealers.
23
Land no more is treated with generosity. There is extreme pressure on land to produce more beyond its
capacity. Such was not the case earlier. There was a deep cultural value attached to land where it was attributed
a living form. Such understanding is changing and adopting a more commodified form. Vasavi calls it as “de
skilling”.

93
serious crises emerging in agrarian society at the larger scale which has deep seated impact in
the life world of farmer.
Since most of the farmers committing suicide comes from lower strata, finding these
spaces of interpersonal communication blocked, finding these shared experience/ knowledge
to be a belied belief, facing discrimination from both market and upper castes, absence of
patronage which existed earlier, deep competition among own people who while offering
loans charges huge amount of money in interest and failing to pay leads to humiliation, deep
alienation from land all these too account for development of Anomie among farmers leading
to wide scale suicide.
3.2.5 Conclusion
The economic reforms have undoubtedly aggravated economic miseries of the peasantry
class but it has also altered the socio- cultural dynamics which has caused severe agrarian
distress. The prominent facet of that distress is manifested in the form of farmer’s suicide.
Studies suggests how the first phase of neoliberal reforms have adversely affected farmers of
Maharasthra, Tamil Nadu, Andhra Pradesh, Gujarat. However, It is not like that the farmers
of other states are insulated from agrarian distress. They too are victim of it. These socio-
cultural and economic structural changes are rapid in other states as well and farmers of those
states are equally precarious. More and more people are leaving agriculture as their option
and migrating to urban center. This has led to massive increase in the size of informal sector.
Most of the workers who forms the part of need economy in contemporary times, were
somehow related to agrarian sector. Their decision to leave agriculture and move to cities
does not come out of choice but compulsion. This is a serious concern that the state and
society needs to undertake and address collectively. There is urgent need to improve the
infrastructure of the agrarian sector, which requires active state intervention. Local
governments need to be empowered and entrusted with the responsibility of making
programmatic and pragmatic transformation in the agrarian sector while the state needs to
facilitate the national level welfare schemes.
3.2.6 Practice Questions
1. Mention the condition of agriculture after independence.
……………………………………………………………………………..……………
………………………………………………………………..…………………………
…………………………………………………..………………………………………
……………………………………..……………………………………………………
2. Mention the factors of agrarian distress in India.
……………………………………………………………………………..……………
………………………………………………………………..…………………………
…………………………………………………..………………………………………
……………………………………..……………………………………………………

94
3. What was the impact of the neo-liberal policy on agriculture?
……………………………………………………………………………..……………
………………………………………………………………..…………………………
…………………………………………………..………………………………………
……………………………………..……………………………………………………

3.2.7 References
Agamben, Giorgio. “Homo Sacer: Sovereign Power and Bare Life.” Trans. Daniel Heller-
Roazen. Palo Alto: Stanford up (1998): 3-18.
Bardhan, P. (1999). The Political Economy of Development in India: Expanded edition with
an epilogue on the political economy of reform in India. OUP Catalogue.
Bhagwati, J. N. (1988). Protectionism (Vol. 1). mit Press.
Chatterjee, Partha. “Democracy and economic transformation in India.” Economic and
political weekly(2008): 53-62.
Chatterjee, Partha. “State and politics in India.” (1998).
Dongre, Amol R., and Pradeep R. Deshmukh. “Farmers' suicides in the Vidarbha region of
Maharashtra India: a qualitative exploration of their causes.” Journal of Injury and Violence
research 4.1 (2012): 2.
Gruère, Guillaume, and Debdatta Sengupta. “Bt cotton and farmer suicides in India: an
evidence-based assessment.” The journal of development studies 47.2 (2011): 316-337.
Kale, N. M. “Productivity, annual income and indebtedness position: A comparative study of
farmers who committed suicides with others.” Karnataka Journal of Agricultural Sciences
24.3 (2011).
Kaviraj, Sudipta. “A critique of the passive revolution.” Economic and political weekly
(1988): 2429-2444.
Marcuse, Herbert. One-dimensional man: Studies in the ideology of advanced industrial
society. Routledge, 2013.
Mishra, Srijit. “Farmers' suicides in Maharashtra.” Economic and Political Weekly (2006):
1538-1545.
Nagaraj, K. (2008). Farmers' suicides in India: Magnitudes, trends and spatial patterns.
Bharathi puthakalayam.
Pai, Sudha. Dalit assertion and the unfinished democratic revolution: The Bahujan Samaj
Party in Uttar Pradesh. SAGE Publications India, 2002.
Patel, Vikram, et al. “Suicide mortality in India: a nationally representative survey.” The
lancet 379.9834 (2012): 2343-2351.

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Sadanandan, Anoop. “Political economy of suicide: financial reforms, credit crunches and
farmer suicides in India.” The Journal of Developing Areas 48.4 (2014): 287-307.
Vasavi, A. R. “Agrarian distress in Bidar: Market, state and suicides.” Economic and
Political Weekly (1999): 2263-2268.
Vasavi, A. R. “Suicides and the making of India's agrarian distress.” South African Review of
Sociology 40.1 (2009): 94-108.

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 Unit-4

Social Movements
Dr. Santosh Kumar Singh

4. Structure
4.1 Introduction
4.2 What is Social Movement?
4.2.1 Old Social Movement
4.2.2 New Social Movement
4.3 Theories on Social Movement
4.4 Social Movements in India
4.4.1 Tribal, Peasant and Workers Movements
4.4.2 Dalit and Women’s Movements
4.4.3 Civil Rights Movements
4.5 Conclusion.
4.6 Practice Questions
4.7 Multiple Choice Questions
4.8 References

4.1 Introduction
Social movement is considered as one of the key component for the social change. Social
movement plays pivotal role in the democracy. It works as a link between the people and the
government. In the contemporary era, popular movements and political activism have taken a
decisive form all over the world. Social movement represent as a tool voice of the people
along with the tool to pressurise the local and national government. In the developed country
Most of the social movements have seen in the form of civil and political rights, where the
people have raise the rights related to equality, liberty and the various forms of the
discriminations.
The term social movement has gained the momentum in Europe during 18th and 19th
century. This was the period when Europe has witnessed the many revolutions and the social
upheavals. This was the period van people have started demanding their political and
democratic rights. India has also witnessed the social and political reforms during 18th and
the 19th century. Apart from this post-independence India has also witnessed the several
civil, political, environmental movements.

97
4.2 What is Social Movement?
The term Movement has evolved from the French word Movoir it means to move or to impel.
According to Oxford dictionary the term movement means “a series of actions and
endeavours of a body of persons for a special object”. Karl Marx has employed the term
movement in terms of historical movements, as a series of activity and endeavours off a body
of persons for a special object (Wilkison, 1972: 12). It also considers as a collective actor
constitute through the people who take themselves on the subject of common interests and
plays important part of their social existence a common identity (Scott, 1992). The term also
represents the autonomy, the independent action by the group of people according to the law
or disciplined principles.
Social movement represents a type of group action. It is largely in the form of informal
groupings of individuals and the organisations. It’s mostly based on the specific political or
social issues. As it has been mentioned by the Sidney Tarrow (1994) that social movement is
collective challenges by people with common purposes and solidarity in sustained interaction
with elites, opponents and authorities. Social movement is a form of collective action that
aims to raise and solve the society’s issue.
According to Cameron (1966: 788) social movement starts when a group pf people
gather and demand in large number in order to alter or support some position of existing
culture or social order or to redistribute the power of control within a society. On the other
hand, T.K. Oomen defined some features of social movement; a movement evolves with
conscious effort on the part of a group to mitigate its deprivation and secure justice; a
movement is conditioned by the factor in the social structure; a movement is perhaps the
chief mechanism through which the deprived section demonstrates its power complied with
an ideology or readdress the evils of grievances (Paul 1990: 17-18).
All revolutionary or reformist social movements provide crucial building blocks of civil
society in its defensive, emergent, and mobilisation stages. In the defensive stage, movements
work as the foundation for a possible civil society because through their collective action
campaigns, they strive to defend an associational realm in which constituents can freely
express their values and interests to authorities. In the emergent stage, movements nurture
and expand the autonomous public discursive realm sanctioned by the State and thus protect
another central foundation of civil society. Finally, in the mobilisational stage, in their
capacity as expressions of constituent’s values and norms in dialogue with authorities, social
movements participate in the formation of the norms of governance. In conclusion, the four
building blocks of civil society, associational life, the public discursive realm, hegemonic
norms, and a legitimate State, are all moreover in place in the institutional phase of civil
society. As Mark Swilling has said:
Social movements rooted in civic society exist when a socially significant
network of associations, organizations and institutions exist at the base of
the societies that are: independent of the State and political parties; not
dependent on the for-profit sector for resources and support; capable of

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 organizing the poor and articulating their grievances; capable of
negotiating with mandates on behalf of their constituencies with the State,
parties, business, development agencies, and donors; and in a position to
deliver their members and supporters into a negotiated deal or programme
(Swilling 1990: 156).
A social movement must evince a minimal degree of organization, commitment to change,
collective and spontaneous in nature. In contemporary era, the social movement has evolved
do to increase in education and mobility of labour due to industrialization and the
urbanization. The number of social movements has also increased due to the increase of the
process of democratising and the time increase the democracy across the world. The social
movement can be divided into the two important types. These are old social movement and
the new social movement.
4.2.1 Old Social Movement
The term ‘Old social movement’ represents the traditional forms of the movement. Most of
these traditional movements were associated with the struggle over resources and the political
rights. During the industrial revolution, the European countries has witnessed the working-
class movement whereas the colonies have witnessed the nationalist movement. Both the
movements were based on the model of to get rid of discrimination and the exploitation.
during this. The socialist movement has also evolved which were trying to establish the
socialist state.
Rajni kothari has mentioned that India has witnessed the social movement do too
growing dissatisfaction of the people on the subject of parliamentary democracy. He has said
that the state is being captured by the elite class and the poor class issues were not solved.
due to this the democratic system men India past no longer effective to get the poor people
voice is work heard. Thus, it can be said that the old social movements are mostly based on
the class and the economic factor. It is also the product of industrial society, that has created
the two class—rich and the poor. It has also witnessed the formation of trade and the labour
union today's the voices of labour's and the individuals in the society. During 19th century in
the Europe and the other parts of the world it has been witnessed that the people were
demanding rights and the voice against the social and economic discrimination search as
labour rights, rights etc.
4.2.2 New Social Movement
In the beginning of 20th century, the nature of social movement has been changed. The new
term new social movements have evolved that represent to a various form of social
movements that have evolved up in various European and western societies since 1960s and
1970s. These movements are very different from the traditional modes of movement, most of
the traditional movements were based on the economic centric such as labour movement,
recent movement etc. Thinkers like Claus Offe, Alain Touraine, and Jürgen Habermas
Related the traditional movements were associated with post materialist area. The new social
movement is basically try to lifestyle, culture, environment, and specific changes in the

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public policy for economic change. According to some theorist the new social movement is
based on the tissues off new middle class or the service sector professionals. It is also
associated with the intellectual and the knowledge-based movement.
However, some thinkers like Paul Bagguley and Nelson Pichardo questioned the model
of new social movement. According to them the traditional movements are still existing in
the contemporary era, like farmers movement, labour's movement etc. it has also been
criticised buy them due to lack of empirical evidence. It is also criticised on the point of the
new social movement is more concerned with the left-wing movement. On the other hand,
Paul Byrne Have criticised the new social movement as ‘relatively disorganised’. Moreover,
the new social movement tries to adopt a tactics of protest campaign to achieve the wider
range of change such as environment movement, lesbian and gay rights etc.
4.3 Theories on Social Movement
Social movement can be seen from three different theoretical traditions, these are the Marxist,
liberals and traditionalist. The theories of social movement can be tracked from the industrial
revolution and the era of enlightenment such as John Locke Thomas Hobbes and the Adam
Smith. Durkheim has described the social movement as product of intellectual environment
since the 19th century. Hegel’s view social movement contains three stages: (a) a system of
needs (b) the administration of justice (c) the public authority and competition. According to
him social movement is a sphere where individual seek to satisfy each other’s demands
through protest and raise voices.
The Marxist thinkers have discussed the social movement especially in the context of
social conflicts. These social conflicts have been explained through Class struggle. In the
Communist Manifesto (1848) Karl Marx mentioned “The history of all hiterto existing society
is the history of class struggles.” for the Karl Marx the history has witness the revolutionary
conflicts between the classes of individual. These classes were based on the model of
economic and the political power. According to the Marxist thinkers at the level of economic,
political and the social it has always been divided into the two groups haves and the haven’t.
The social movement has transformed the economic, social and the political situation, it led
to the ultimate realization of proletarian victory over the bourgeoisie. Marxist thinkers have
also talked about the evolution of labour's movement in Soviet Union, Cuba and other
countries in the world. According to Marxist philosophy the state is a necessary evil state
was a capitalist organisation, which was used by the capitalists to crush the workers and the
peasants. As the capitalists were able to acquire vast majority in the legislatures, it could not
be expected of them that they would give justice to the common people. The state was
exploited by the capitalists, to control the means of production and distribution and to create
monopoly conditions so that they may be able to exploit the workers. The peasantry could
play in bringing about the revolution, particularly in predominantly agricultural societies. He
put this principle in actual practice by organising a successful revolution in Russia in 1917.
They have mentioned that from the history to the contemporary world has witnessed the
movement against the discrimination and the subordination by the rich class towards the poor

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class. In disregard India has also witnessed the peasant movement, workers movement and
the labour's movements.
The liberal thinkers I've mentioned that social movement is a product of European
enlightenment. The philosophers like Thomas Hobbes and John Locke have mentioned about
the natural right—in terms of good government, social order, natural law, science and reason.
These liberal thinkers have given but most important to the individuals especially in the
context of their demand and the protection of natural rights—right to life, liberty and the
property. The initial liberal thinkers were concerned with the social order natural law,
science, and the reason.
4.4 Social Movements in India
Social movements are organized around ideas which give the individuals who adhere to the
movement new forms of social and political identity. India has seen some social movements
like as Tribal movement, Dalit movement, peasant movement, backward caste/ class
movements, student’s movements, industrial working-class movement, and middle class
movements. Some of the current and important movements are:–
4.4.1 Tribal, Peasant and Workers Movements
The term peasant movement can be defined as mutual and collective action and the activity of
the peasants to raise their issues and the problems through the mode of protest and the
campaign. India has witnessed the present movement during both the periods post-
independence as well as pre independence. Most of the peasant movement were based on
socio-economic in nature. During the independence more than 70% population word
dependent on agriculture for their livelihood. After period and time, the peasant’s nature has
been gone under considerable changes.
India has witnessed majorly three peasant movements—Tebhaga, Telengana and
Naxalbari movement. Most of the present moment were based on the against the taxation
system, compelled to grow the cash crop, cultivate the crop according to the wishes of
landowners, And the miserable condition of peasants.
The term Tebhaga literally means the shares of harvests. This movement started during
the 1946. This movement was basically based on the model of taxation. During this period
the peasants were forced to give 50 percent of crops to the landowners. The peasants work
protesting against the discriminatory tax system. the peasants were saying that the whole year
they used to do the hard work—sowing, reaping and harvesting the grain whereas to
landowners do not perform any activity directly or indirectly in the production of agriculture
product. This movement has also started due to the Bengal serious famine. Add this period of
the time, most of the peasants were struggling for three-time meals. The demand of the
peasants where the landowners should only collect one third (around 30 percent) of the
agriculture production. Most part of time the presents were demanding their issues in a
peaceful mode such as peaceful March and the voices against the text system. it was due to

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this movement the government of West Bengal passed the Bargardari Act 1950, to
incorporate the all the demands of peasants.
The Telangana movement begin at the Hyderabad against the Nizam. It was against the
agricultural structure which was based on the feudal system. There were two kinds of Land
taxation system was prevalent, namely, Ryotwari and Jagirdari. This was one of the most
significant modern India's social movement. In the early phase of Telangana movement was
based on the severe feudal suppression and the exploitation of the peasants. But later in. This
movement has change into the means of agrarian armed revolution. Under this revolution
more than 3 thousand villages were liberated from oppressive and the discriminatory ruling
system. along with this around 10,00,000 acres agricultural land redistributed amongst the
peasants.
4.4.2 Dalit and Women’s Movements
India has witnessed the Dalits and women’s movement. The Dalits and women were
characterised marginalised sections of society. Due to caste system in India the Dalits word
discriminated whereas due to the patriarchal structure of Indian society the women’s word
discriminated. They were also excluded from the mainstream of the society, and we're
allowed to perform only marginal occupations. During 1972 in Mumbai Namdev Dhasal
founded the social organization ‘Dalit Panther’ to stop the discrimination and atrocities
against the Dalits. this movement was inspired from the America's Black Panther Party. this
movement has opened several branches all over the Maharashtra. This movement has given
the inspiration to the many persons like Kansiram-who was tried to look the problem of
harassment of employees and bring out the effective solutions. In 1980s, Kansiram started the
road show that was named as ‘Ambedkar Mela’. This Mela has telecasted the life of Dr.
Bhimrao Ambedkar and his thoughts in the philosophy. He has also established the Dalit
Soshit Samaj Sangharsh Samiti (1981). Through this he has tried to fight against the
discriminatory practices and the attack on workers who were spreading awareness on caste
system in India.
The women movements in India had their beginning in the nineteenth century when for
the first time Arya Samaj and Brahmo Samaj organised Mahila Mandals to effect
improvement in the condition of women by reforming the laws and imparting education to
them. Several social reformers like Raja Ram Mohan Roy, IshwarchandraVidyasagar,
Jyotirao Phule, Swami Dayanand, Keshub Chandra Sen, Hari Deshmukh etc. Since post-
independence India has witnessed several women movements.
Tamil Nadu Women's Forum (TNWF):
It has started in 1991. It was established in order to train women for more leadership, to
strengthen women's movement, and to build up a strong women’s movement. TNWF
espouses awareness on discrimination against Dalit women, mobilizes movements and
lobbies at national and international levels to eradicate the evil of untouchability, to abolish
caste system and to uphold the rights of Dalits as human rights. It was running campaign for

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women's reservation, against violence on women, child abuses, female infanticide and
foeticide, food without poison, food security, in combating communalism and globalisation,
and illegal patent by the MNCs.
TNWF major objectives is to elucidate the Dalit women on the provisions and
procedures of availing lands for Dalit women, to motivate Dalit women to lobby for
achieving the land rights, to facilitate Dalit women to secure political awareness to achieve
political power envisaged in the 73rd and 74th amendments to the Indian constitution and to
evolve a collective common strategy for achieving land rights for women.
TNWF has also organized conferences on August 27th to 28, 2006 at Palavoy,
Arakkonam. The highlight of this year conference was on the “Land and Political Rights for
Dalit Women”. The movement exists to assert the rights of Dalit women at State Level.
Every year the movement organizes conferences focusing on different themes as per the
contextual relevance. The conference creates wider level awareness among Dalits and other
caste people. The Dalit women themselves after each conference have taken up many local
issues.
Narmada Bachao Andolan
Narmada bachao andolan is one of the important and landmark social movement in India's
history. This social movement has initiated by the farmers, adivasis, and the environmentalist.
This movement was based on the issue of Sardar Sarovar Dam on the river narmada.. the
people were protesting on the subject of construction of Sardar Sarovar dam over the
Narmada river.
The Narmada River passes through the Madhya Pradesh Gujarat in the Maharashtra.
During 1947 the Government of India have instigated to utilise the water off river Narmada
for the Madhya Pradesh Maharashtra and Gujarat people. These states were demanding for
the equal share of Narmada River. The government has constituted the Narmada water
dispute tribunal to solve the Interstate issues. The tribunal has decided to construct the 30
major, 135 minor, and 3000 is more dams on the river. it has also suggested that the height of
the dam will be increased. In 1985 after listening this judgment from the tribunal, the social
activist Medha Pathkar along with the local people initiated the campaign against the Sardar
Sarovar Dam. In this regard, she met with Ministry of Environment and Forests, Government
of India. The local native people were raising the issues of not fulfilling the basic
environmental terms and condition in this project. The villages were protesting on the subject
of the government has not taken the permission from the landowners. The Medha Pathkar
also approached the World Bank which is a financing agency to the project.
In the Narmada Bachao Andolan several groups are involved Such as Narmada
Asargrastha Samiti, Gujarat-based Arch-Vahini, Madhya Pradesh-based Narmada Ghati Nav
Nirman Samiti, etc. in 1989 these groups joined as a National Coalition of environmental and
human rights activities. this National Coalition has started the campaign against the Sardar
Sarovar dam. In this regard the Supreme Court has also given the verdict, fierce Supreme

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Court has said that immediate stop the construction work of dam. quote has said that first
complete the rehabilitation and the replacement process. Cortez deliberated the issue further
and finally allowed the construction of dam.
Nirbhaya Movement:
On 17th December 2012, New Delhi has witnessed horrific crime against the women—a
woman was gang raped by the group of people in moving bus they thrown the woman on
highway and escape themselves. In this horrified crime against the women has raised several
questions related to the safety of women and the law against the search criminal activities.
After this incident across the India the people were demanded stringent laws and punishment
for such kind of horrific crime.
After the incident the massive demonstrations and the protests has been done by people
across India. The people were demanding for the stringent laws and the punishment to the
culprits. Due to this, the government has passed new juvenile justice bill along with the
criminal law act 2013. This act has widened the definitions of rape and punishment for the
culprit. Due to the protest and the demonstrations the government has created Nirbhaya fund
in the 2013 budget. In this project, the thousand crore rupees allocated to the safety security
and the empowerment of women.
4.4.3 Civil Rights Movements
The term civil right represents the fundamental rights available to each citizen in terms of
liberty equality, justice and to protect them from any forms of the discrimination. During the
independence struggle Gandhi has played dynamic role to organise civil movement such as
Satyagraha and the civil disobedience movement. Since independence India has witnessed the
emergence of civil rights movements during the emergency period (1975-1977). During this.
India has witnessed the catastrophic events and barbaric mass sterilization and many more
things. Due to this thousands of people have participated in the massive protest and the rallies
against the anti-democratic acts. Due to this India has witnessed the birth of several social
movement-based organisations like Civil Liberties and Democratic Rights (PUCLDR) and
Chhatra Yuva Sangharsh Vahini etc.
In this regard, activists Judge like justice PN Bhagwati has initiated the new role of
judiciary as a judicial activism—mostly Based on the model of PIL (public interest
litigation). Along with this, India has also witnessed several other forms of environmental
movements too in which some of them were limited towards the regional level whereas some
of them have bro at the national and local level some of these were Chipko movement, Chilka
movement, Bhagirathee Bachao Andolan etc.
Chipko Movement (Stick to Tree): India has experienced some environment related
movement’s such as the Chipko Movement (literally “to stick” in Hindi). In this movement,
the villagers tied themselves with the trees to save. In Uttarakhand under the leadership of
Dhoom Singh Negi, along with Bachni Devi and many villagers tried to save the tree by
hugging the tree. This movement has also made one slogan ‘soil, water and pure air.’ the

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people were trying to protect the tree from cutting. The people were also claiming their
traditional forest rights which were threatened by contractor system of Uttarakhand state.
This movement has initiated in the Chamoli district on 1st April 1973. Later on, it has
spread in the many districts of Himachal Pradesh and Uttar Pradesh this movement has
gathered the worldwide attention to fight against the deforestation and protecting ecology and
the society. In this movement the woman has played a key role to protect that tree from
cutting. In recent years, it can be seen that the trees are not only protecting the environment
but also helping to stop the landslides.
In this light, it can be seen that the Chipko movement has achieved the success to combat
the cutting off trees along with generating awareness among the people about the
environment. Due to this protest, it has achieved a victory when the government has
announced ban on the cutting of trees in Himalaya Forest by the India's Prime Minister. This
movement has also spread the message two across the India about to protect the trees and
environment. The central India, South Rajasthan, north Karnataka has witnessed the people
awareness about the protecting environment and trees. In this way, it can be said that the
chipko movement have not only raised is the issue of cutting off trees also generated the
awareness among the people about the environment and ecology.
Save Bhagirathi Movement (BBS): Ganga is India is one of the most important lifeline. It can
be said that it is a lifeblood of India. The water of Ganga is very important for the people of
India not only for the cultivation of crops but also for the drinking purpose. It was on 11th
May, 2008, when the Local people along with the farmers launched a campaign to save the
river Ganga. The campaign was “Stop the Disappearance of the Ganga”. The river Ganga
originates from the Himalayas Gangotari glacier and flows till the West Bengal. it can be
found that the river captures most of the north India high density region. It can be said that
around 1/3 of the India's population dependent on the river Ganga.
The river not only holds great significance for river gange and for the vegetation process
of India. Bhagirathi Bachao Sankalap (BBS) but also represents enormous cultural,
ecological, and economic value to India and the world. Unfortunately, the health of the
Ganges is being destroyed in a number of levels. Not only by the human and industrial
pollution, but it is now also being threatened by the construction of massive dams. Six dams
are being constructed on the river Ganges between the Gangotri glacier and Uttarkashi for
generation of Hydropower.
To make things worse, in 2007, the UN Climate Report indicates that the glaciers
feeding the Ganga may disappear by 2030. In addition to affecting the flow of the Ganga, the
process of building dams involves a great deal of destruction to local ecosystems through
blasting, drilling, deforestation and submergence. This construction threatens to displace both
wildlife and local populations.
Environmentalists and social activists led by G D Aggarwal hand headed for Delhi to
continue with their campaign against construction of power projects between Gangotri and
Uttarkashi. Campaign was preceded by a large-scale demonstration. After forcing the

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government in Uttarakhand to suspend work on the 480 MW Pala Maneri and 381 MW
Bhairon Ghati Hydro Projects.
4.5 Conclusion
At the end it can be said that the social movement is one of the important tools to raise the
voices of people. In contemporary era, it has been witnessed that most of the social
movements were not only limited towards the self, but it has also initiated on the subject of
global or the impact on others too. In this regard, it can be said that India has experienced
several social movements—peasants, women, environmental and other right based
movements. These social movement have not only helped to raise the voices of people but
also paved way to solve their problems.
4.6 Practice Questions
1. What do you understand by the term social movement?
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2. Critically examine the role and nature of social movements in India.
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3. Discuss the contributions of social movement in Indian democracy.
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4. ‘Do you think that social movement is one of the important tools for the Indian
democracy’? Comment.
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5. Describe the nature of peasant and environmental movements in India.
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 6. Short Notes
(a) Nirbhaya Movement
(b) Narmada Bachao Andolan
(c) Peasant Movement
(d) Women’s Movement

4.7 Multiple choice Questions

1. Various types of pressure groups exist in India. Which one of the following category
of pressure groups has been wrongly listed?
(a) Peasant Organisations
(b) Students Groups
(c) Labour and Trade Unions
(d) None of the above
2. Which one of the following has been wrongly listed in the category of peasants?
(a) small and marginal farmers
(b) shareholders
(c) tenants
(d) None of the above
3. During the pre-independence period majority of land was under the control of
(a) zamindars
(b) share-croppers
(c) small and marginal farmers
(d) tenants
4. Which one of the following feature of peasant movement has been wrongly listed?
(a) It is a movement based on agrarian needs.
(b) It seeks salvation from suppression by political lords.
(c) It wants to share a part of the power or overthrow the whole power hierarchy.
(d) None of the above
5. Telangana Movement was launched by the peasants in
(a) the erstwhile state of Hyderabad
(b) the erstwhile state of Junagarh
(c) the state of Bombay
(d) the state of Andhra Pradesh

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6. Which one of the following movements stood for establishment of commune system
after confiscation of lands from the zamindars?
(a) Tebhaga Movement
(b) Telagana Movement
(c) Peasant Movement in Thanjavur
(d) All the above
7. Which one of the following peasant movements encouraged the peasants to forcibly
take possession of lands of Zamindars?
(a) Tebhaga Movement
(b) Thanjavur Movement
(c) Naxalbari Movement
(d) All the above movements
8. The peasant moments in India took a different shape in the 1970's and were
characterised by various features. Which one of the following features has been
wrongly listed?
(a) Different political parties and organisations took up the cause of peasants.
(b) Constitutional methods were used to build up pressure on the government to
provide better prices to farmers for their produce.
(c) Emphasis was laid on payment of adequate wages to the farmworkers.
(d) None of the above
9. Which one of the following statements is correct?
(a) Peasant movements in post-independent India have been spearheaded by non-
peasant leaders.
(b) Peasant movements in post-independence India have been led by rich landlords.
(c) Peasant movement in post independent India have been led by the Communist
Party alone and other political parties have kept away from the same.
(d) None of the above
10. Tebhaga Movement was launched in the state of
(a) West Bengal
(b) Andhra Pradesh
(c) Bombay
(d) None of the above

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Carroll, W (ed.) (1997), “Organizing Dissent: Contemporary Social Movement in Theory and
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Diani, Mario (1992), “The Concept of Social Movement.” The Sociological Review, 40(1).
Fisher W (1995), “Towards Sustainable Development?: Struggling Over Narmada River”,
M.E. Sharpe Publication, London, pp-14.
Guha, Ramchandra (1989), “New Social Movements: The Problem”, Seminar, 355(March).
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