Recognize the role of society in the economy
India remained a very vibrant nation since the
ancient times. India’s contribution in diverse fields over many millennia is
remarkable by any standards. Even the invasions and the alien disturbances that
became a regular occurrence over several centuries could not hinder the
performance of India completely. That was the reason why when the Europeans
landed here for the first time they saw a prosperous and peaceful nation.
The reason for all the
achievements of India is the genius of the Indian society. On the one hand it
emphasized continuous engagement in diverse activities aiming for perfection. The
concept of karma yoga explains this. On
the other hand, peaceful life and spiritual orientation were taught as the
ultimate goals to be realized. Contemporary studies make it clear that for a
higher performance of the economy there are two essential elements. A country
needs large number of hardworking and enterprising sections. Besides, an
atmosphere of goodwill and trust in the society would provide a conducive
atmosphere for smooth economic activities. Fortunately, India has both the
above elements to a large extent even today.
More than 4000 years
ago, the Indus-Saraswathy civilization was believed to have devastated due to the natural
calamities. But that did not deter the spirit of India from aspiring for better
performance during the subsequent periods. India is perhaps one of the few
countries that suffered innumerable attacks over several centuries resulting in
severe damages. Details for the previous millennia show as to how people used
to rise again and again with more vigour in the quickest period of time after
each attack from outside. But ultimately the colonial rule proved to be very
dangerous, as India had to lose all her superiority. With the result, the Europeans
had made India a poor and underdeveloped country much before independence.
Table 1 presents the
basic figures relating to the Indian society during 1950-51.
Table 1
Social Indicators (1950-51)
|
Population
( crore)
|
36.01
|
|
Life
expectancy at birth ( in Years)
|
32.1
|
|
Literacy
rate ( percentage)
|
18.3
|
|
Gross
Domestic Saving ( as percent of GDP )
|
9.5
|
|
Gross
Domestic Capital Formation ( as percent of GDP )
|
9.3
|
Source: Economic
Survey 2012-13
The first three
figures indicate the status of the Indian society during those days. Population
was higher even at that time compared to the developed countries. But the average
age of life was very low, due to economic deprivation and destruction of the
native systems during the colonial period. The literacy rate was very less, for
the nation that was considered the most literate one by the British during the
1820s. So there was a higher population living in poor conditions.
The next two figures in
the table indicate the rates of domestic saving and capital formation, the two
critical factors responsible for economic development. Considering the
difficult conditions that prevailed during 1950-51, the saving rate of 9.5 per
cent was very good. It only shows the higher economic consciousness of the
society, even when nearly half of the population was living below subsistence
levels. The capital formation figure indicates that the country was able to
channelize domestic capital to the tune of 9.3 per cent of GDP, soon after
independence.
What do the last two figures
show? They reveal that that even after two centuries of untold miseries and
deprivations, the society had started to assert itself in a very quick time. The
native Indian personality that lay hidden began to breathe a sigh of relief and
rear its head, when it was evident that the nation had come out of the clutches
of the alien domination.
Being used to function
under the alien domination for several centuries, people felt greatly relieved
after Independence. The political freedom itself was a great relief for them to
plunge into different ventures. Hence the economic policies of the government
did not deter much of the enterprising sections, especially those from the
ordinary backgrounds, to enter into different activities.
Several
studies conducted in different industrial and business centres across the
country reveal that the local societies started taking the leads on their own.
They did not wait for the policy announcements or government schemes to promote
ventures. People began began entering into the
entrepreneurial field since the 1950s. What could have been limited initiatives
during those periods, began to be
emulated by many others in the subsequent decades.
With the result the
foundations for several industrial and business centres which would dominate
the regional, national and international markets in future were laid. Moreover
it was the efforts undertaken at smaller levels, which remained the source of
strength and experience for the initiatives on larger scales in the years to
come. The centres witnessed
faster growth during the later decades, paving the way for the larger development
of the country. It was the society led by the enterprising sections, which took
the responsibility for the development of the economy on its shoulders in an
era dominated by the socialistic thoughts during the initial decades of
independence.
Table 2 presents the growth
rates of the major sectors of the economy and the GDP during the 1950s to
1980s.
Table 2
Growth of Indian Economy (1950s to 1980s)
( in percentage)
|
|
1950s
|
1960s
|
1970s
|
1980s
|
|
Agriculture
and allied activities
|
2.7
|
2.5
|
1.3
|
4.4
|
|
Industry
|
5.8
|
6.2
|
4.4
|
6.4
|
|
Manufacturing
|
5.8
|
5.9
|
4.3
|
5.8
|
|
Services
|
4.2
|
5.2
|
4.0
|
6.3
|
|
Real
GDP growth
|
3.6
|
4.0
|
2.9
|
5.6
|
Note: The figures for
1950s are the averages for nine years, from 1951-52 to 1959-60
Source: Adapted from
Uma Kapila
It is significant to note that from the lower
rates of growth during the first three decades of planning, the Indian economy moved on to the higher trajectory from the
1980s, and particularly from the 1990s. The figures relating to the averages of
decennial GDP growth rates (in per cent) for three decades from 1980-81 to
2009-10 provided in Table 3 explain this.
Table 3
Growth of Indian Economy (1980s to 2000s)
( in percent)
|
|
1980s
|
1990s
|
2000s
|
|
Average
growth rates
|
5.59
|
5.81
|
7.26
|
Source: Based on
figures from Economic Survey 2012-13, Govt. of India
The above figures show
that the economy has been growing at higher levels during the past three
decades. The momentum towards higher rates commenced during the mid-1980s,
compared to the earlier three decades.
The average growth rate during the first decade of the twenty first
century touched new high points.
The growth rates
during the past decade, from 2003-04 to 2012-13, have been particularly
impressive, though the rates came down in 2011-12. Table 4 presents GDP growth rates during the
latest decade commencing from 2003-04.
Table 4
GDP Growth Rates (2003-04 to 2012-13)
(in percentage)
|
Year
|
Growth
rate
|
|
2003-04
|
8.1
|
|
2004-05
|
7.0
|
|
2005-06
|
9.5
|
|
2006-07
|
9.6
|
|
2007-08
|
9.3
|
|
2008-09
|
6.7
|
|
2009-10
|
8.4
|
|
2010-11
|
8.4
|
|
2011-12
|
6.5
|
|
2012-13
|
5.0
|
Source: CSO quoted in Handbook of Statistics
2011-12, Reserve Bank of India
Note: 2012-13 figures are budget estimates.
Meanwhile, there has
been a marked improvement from the social points of view also. Table 5 provides
figures related to a few basic social and economic indicators for 2010-11.
Table 5
Social Indicators (2010-11)
|
Population
( crore)
|
117.7
|
|
Life
expectancy at birth ( in Years)
|
66.1
|
|
Literacy
rate ( percentage)
|
74.04
|
|
Gross
Domestic Saving ( as percent of GDP )
|
30.8
|
|
Gross
Domestic Capital Formation ( as percent of GDP )
|
35.0
|
Source: Economic
Survey 2012-13, A2
The history of
economic performance after independence reveals that India has been growing,
despite the wrong approaches of the successive governments. There has been no
serious initiatives to understand the functioning of the economy from the
Indian perspectives. Policies are framed on the basis of western assumptions. Hence
there are severe problems and the nation is not able to realize its potential.
In the process, large sections of people have been facing serious difficulties.
But in spite of the wrong
approaches of the state, India has been consistently growing. Moreover India
has recently emerged as one of the most dominant economies at the global level.
The credit for all these achievements go to the Indian society and its innate
economic wisdom. The major factors that drive the economy such as higher rates
of savings, higher levels of entrepreneurship and prevalence of social capital
are all due to the strong foundations of the Indian society. Indian society defies the standard economic
ideologies of the state and continues to march forward.
Hence it is essential
that we recognize the role of the society in the Indian economy. We need to understand that the Indian economy
is not run by the text book approaches that the policy makers believe in, but is
largely sustained by the Indian society shaped by thousands of years of
traditions and beliefs.
References:
1.
Economic Survey 2012-13, Govt. of India, New
Delhi
2.
Handbook of Statistics 2011-12, Reserve Bank
of India, Mumbai
3.
Uma Kapila (Ed.), Indian Economy since Independence, Academic Foundation, New Delhi,
2002
( Yuva Bharathi, Vivekananda Kendra, Chennai, May 2014)