Rebuilding India 8

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)