Ramesh Singh Test : Evolution Of The Indian Economy - UPSC MCQ

• Almost no presence of the infrastructure sector, i.e., power, transportation and communication.

• Negligible presence of the infrastructure industries, i.e., iron and steel, cement, coal, crude oil, oil refining and electricity.

• Lack of investible capital—either by the government or the private sector.

• Absence of required technology to support the process of industrialization and no research and development.

• Lack of skilled manpower.

• Absence of entrepreneurship among the people.

• Absence of a market for industrial goods.

• Many other socio-psychological factors which acted as negative forces for the proper industrialization of the economy.

The obvious choice for India would have been the agriculture sector as the prime moving force of the economy because:

• The country was having the natural resource of fertile land which was fit for cultivation.

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  Human capital did not require any kind of higher training.

• Looking at the resources available, agriculture would have been the obvious choice as the prime moving force (PMF) of the economy (i.e., cultivable land and human power).

• But as Indian Agriculture was using traditional tools and technology its modernisation, as well as future mechanisation (later to some extent), would have been blocked due to the lack of indigenous industrial support.

• If India would have gone for import this would have required enough foreign reserves and a natural dependence on foreign countries.

• The industrialisation of India was also neglected by the colonisers—the infrastructure was not built to industrialise India but to exploit its raw materials.

• Indian capitalists who did emerge were highly dependent on British commercial capital and many sectors of the industry were dominated by British firms, e.g., shipping, banking, insurance, coal, plantation crops and jute.

India selected agriculture as the prime moving force in place of industry in 2002:

• The economy will be able to achieve food security with an increase in agricultural production. Besides, the agricultural surplus will generate exports in the globalising world economy benefiting out of the WTO regime.

• The challenge of poverty alleviation will be solved to a great extent as the emphasis will make agriculture a higher income-generating occupation and induce growth in the rural economy by generating more gainful employment.

• The situation of India as an example of ‘market failure' will cease.

Electricity 7. Natural Gas 8. Fertilizers

• Similar to the infrastructure sector, these basic industries also require a high level of capital, technology, skilled manpower and articulation in entrepreneurship which was again considered not feasible for the private sector of the time to manage.

• Even if the private sector supplied goods from the basic industries', they might not be able to sell their products in the market due to the lower purchasing power of the consumers. Perhaps, that is why again the responsibility of developing the basic industries was taken up by the government.

• The government went on creating new PSUs without analysing the fiscal repercussions-moreover believing them to be the real engine of equitable growth.

The employment generation responsibility of the PSUs was extended to such an extent by the government that most of them had over-supply of the labour force which started draining its profits on account of salaries, wages, pensions and provident funds (the latter two had a late financial impact).