5th Edition 2010-11
India's Economic Development Since 1947 Edited by
UMA KAPILA
ACADEMIC FOUNDATION NEW DELHI www.academicfoundation.com
QD
Preface
21
The Contributors
23
Indian Economy Since Independence: ! Major Features ..J...........'„
......:
27
Uma Kapila • The India of 1947 • The Planning Era... • Structural Constraints and the Development Strategy • Role of the State as Visualised in the Fifties • Evolution of-Strategy and Priorities • Changing Perceptions
StracfuraB
:........ 28 , 30 31 33 36 38
g
2. Planning and the Market (Ed. Notes) • •
Role of Planning in a Market Economy Redefining the Role of State
45 45 48
India's Economic Development Since 1947
• The Government, the State and The Market • Cooperative Action
48 50
Growth and Development Experience (Ed. Notes) • The Performance Two Phases of Growth Periodisation of Indian Growth Experience Assessment of Performance Causal Factors What Next? Emerging Indian Economy Growth Prospects International Comparisons Sustaining High Growth , Vision for the Eleventh Plan • Growth and Structural Change Growth and Sectoral Shares, Cross-Country Evidence and Indian Experience Structural Change in terms of Industrial Distribution of Workforce and Occupational Structure • Human Development Human Development Index Progress and Setbacks in Human Development State of Human Development in India • Environment and Development Consequences of Environmental Plunder Environment Policy • Disparities in Growth and Development Regional Sectoral Disparities of Growth Causal Factors • Indian Development Experience in International Perspective Learning from the Experiences of Other Countries • India's Internal Diversities: • A Rich Source of Insights
54 54 56 57 61 63 66 67 71 72 74 76 77 79 84 91 93 94 97 102 104 106 108 114 115 118 121 123
C o n t e n t s . . . .
•
9
Kerala in International Perspective Selected Regional Perspectives: Learning from the Diversity of Development Experience Political Action and Rural Development in West Bengal Social Opportunities in Himachal Pradesh
125
Conclusion
133
126 128 130
4. India's Recent Economic Growth: A Closer Look R. Nagaraj • Industrial and Services Growth • Reliability of Estimates • Understanding Recent Growth • Conclusions
137 138 141 146 156
5. Growth Record of the Indian Economy, 1950-2008: A Story of Sustained Savings and Investment
160
Rakesh Mohan • • • • • • • • • • • •
A Review of the Indian Growth Process Growth Acceleration over the Decades Consistent Growth in Savings and Investment Growing Fiscal Imbalance and Correction Public Sector Savings Performance of the Private Corporate Sector Household Savings Estimation of Savings and Investment Efficiency in the Use of Resources Financial Sector Reforms Prospects for the Next Five Years Issues and Challenges
160 161 163 164 167 169 2 72 1 74 I 74 176 1 79 183
6. Reforms and Regional Inequality in India
190
Sabyasachi Kar, S. Sakthivel • •
Framework of 'New Economic Geography' Studies on Regional Inequality in India
192 193
10
India's Economic Development Since 1947
• • • •
Reforms and Regional Inequality A Decomposition Framework Role of the Sectors Concluding Remarks
197 198 199 205
:
Issues in Indian Economic Policy 7. Population and Human Resource Development (Ed, Notes:) • Population Trends
211 '.
211
• Gender Equity and the Demographic Transition
-215 '.
• Population Policy since 1947 • National Population Policy 2000]
..215 217
Objective of National Population Policy • Implications of Mortality Decline for the Future
217 221
•
Human Resource Development Education Policy in India Public Expenditure and Education Policy
222 223 225
Health Care as a Social Responsibility
230
• Tamil Nadu: The Success Story Enabling Factors The Future
237 237 239
8. India's Demographic Transition and its Consequences for Development
243
Tim Dyson •
India's Demographic Transition
244
•
Urbanisation
250
• The Future
252
•
256
Discussion
C o n t e n t s . . . .
1 1
9. Current Debate on 'Demographic Dividend' in India K.S. • • • • •
James The Concept of Demographic Dividend The Theoretical Confusion Empirical Estimation of Demographic Dividend Statisti'cal'Analysis Conclusions
264 268 269 276 '• 280
10. Growth, unemployment and Poverty (Ed. Notes) • Poverty and Unemployment
,.,,....;..'....
283 284
Poverty Estimates 284 Report of the Planning Commission Expert Group (Tendulkar Committee) Regarding PovertJLines...... 288
•
Poverty Reduction Poverty and Inclusive Growth Poverty Alleviation Programmes
291 297 303
Employment Perspective
303
Long-term Trends in Employment Situation: 1983 through 2005 .< Informalisation of Employment
305 308
• What Explains Lack of Growth in Formal Sector Employment? • The Employment Situation Among the Vulnerable Groups
311 313
• Growth and Employment
31 7
• Weaknesses in Past Performance
319
• •
Employment Projections for the Eleventh and Twelfth Plans
322
Sectoral Employment Perspectives
322
Employment in Manufacturing, Construction and Services • Employment and Labour Policy
263
323 325
12
India's Economic Development Since 1947
• Public Employment Programme for the Unorganised Workers: The Case of NREGA The Performance Success Stories • Conclusion • Indian Labour Laws and Labour Markets
326 328 329 331 331
1 1 . Report of the Expert Group to Review the Methodology for Estimation of Poverty Chairman: S.D.. Tendulkar • Summary
335
335
12. Rural Unemployment 1999-2005: Who Gained, Who Lost?
340
Abhiroop Mukhopadhyay, Indira Rajaraman • • • • •
Introduction Reported Unemployment from the Two Rounds Data and Estimation Findings '. Conclusions
340 341 342 343 351
13. Implementation of Employment Guarantee: A Preliminary Appraisal
354
Pinaki Chakraborty • Budgetary Incidence • Implementation Issues • Spatial Dimension • Summing Up
355 357 359 364
14. Macroeconomic Stabilisation: Trade, Fiscal and Monetary Policy Issues (Ed. Notes) • • • • • •
The Background The Macroeconomic Crisis Rationale for the Reforms Macroeconomic Reforms Fiscal Adjustment and Stabilisation Fiscal Responsibility and Budget Management Act, 2003 • Central Government Finances
366 366 368 368 3 74 3 78 381
366
Contents...
13
• • • • • • •
External Balance Macroeconomic Performance: An Overview Monetary Policy Issues Credit Delivery External Sector Management Global Financial Crisis: Policy Response Global Financial Crisis and Conduct of Monetary Policy • Fiscal Policy Developments • Challenges and Outlook
382 386 386 388 389 390 391 393 395
15. Financial Sector Reforms and Monetary Policy: The Indian Experience
401
Rakesh Mohan • Introduction • Financial Sector and Monetary Policy: Objectives and Reforms • An Assessment • Monetary Policy • Some Emerging Issues • Concluding Observations
401 402 415 421 428 438
16. Agriculture: Issues in Development and Policy (Ed. Notes)..... • Linkage between Agriculture and Industrial Sectors • The Institutional Context • The New Technology • Three Phases of Green Revolution • Reform Period, 1991 to the Present • The Role of Technology in Indian Agriculture • Deceleration in Agriculture Growth • Agricultural Growth during 2005-06-2007-08 • Major Factors Affecting the Growth Potential • National Policy for Farmers, 2007 • Towards Sustainable and Inclusive Growth • Technology • Irrigation
440 440 442 446 447 451 452 456 458 462 471 472 475 4 75
4
India's Economic Development Since 1947
• • .
• • • • • •
Reforming the Three Ts: Investments, Incentives, and Institutions 485 Food Management 489 Food Procurement Policy 490 Public Distribution System (PDS) 492 Food Subsidy 494 Food Security497 Food Security and Future Sources of Growth of Agriculture 500 Towards Elimination of Hunger and Malnutrition....503 The Way Forward 506 Agricultural Price Policy 509 Challenges and Outlook 515
17. Agricultural Growth in India Since 1991 Pulapre Balakrishnan, Ramesh Golait, Pankaj Kumar • Agriculture and the Economic Reforms • Growth of Agriculture Since 1991 • Prices and the Recent Agricultural Growth • Non-price Factors and the Recent Agricultural Growth • Conclusion, with Implications for Policy
521
522 523 525 533 549
18. Food and Nutrition in India: Facts and Interpretations Angus Deaton, Jean Dreze • Introduction • Trends in Calorie Consumption and Nutrition Trends in Nutritional Status • Interpretations • Concluding Remarks
554 554 556" 574 587 611
19. Industrial Development and Policies Since 1947 (Ed. Notes) • Extent and Pattern of Industrialisation during the British Rule • The Industrial Scene at Independence
621 621 621
Contents...
• Industrial Control Regime • The Policy Regime in the 1990s • New Economic Policy Opening up to Foreign Investment Public Sector Reforms, Privatisation and Infrastructure • Industrial Growth Phases of Industrial Growth Industrial Growth in the 90s • Profile of Industrial Growth Shift in Favour of Registered Manufacturing , Decline in Employment Growth in Organised Manufacturing The Stagnant Share of Manufacturing Sector in GDP The Manufacturing Slowdown (1996-2002) • Factors Causing the Industrial Slowdown: Some Hypotheses Infrastructure Constraints in the Industrial Sector • Productivity Trends in the Manufacturing Sector • Recovery in Industrial Growth since 2002-03 • Industrial Policy Eleventh Plan • Industrial Growth since 2007-08 • Challenges and Outlook • Micro and Small Enterprises (MSEs) Role of MSEs in Indian Economy Globalisation and Small Industry Performance Future Prospects of Small Industry • Public Sector The Rationale Performance of Central Public Sector Undertakings Central PSE's Profitability • Reasons and Implications Policies toward CPSEs and their Implementation • Privatisation
15
623 626 627 629 629 630 630 631 638 639 639 639 640 641 642 645 646 6~50 6~5i 653 656 659 661 667 670 670 673 676 678 6 75 680
16
India's Economic Development Since 1947
•
Indian Experience since 1991
680
Labour Policy Reforms
683
20. Removing Infrastructure Bottlenecks
688
OECD • • •
•
•
Infrastructure is a Major Constraint on Growth The Private Sector has a Crucial Role to Play in Narrowing Infrastructure Gaps Private Secto/ Involvement is Transforming Certain Sectors Civil Aviation Wireless Telecoms * A More Limited Start has been made in other Sectors Fixed Line Telecommunication Electricity Roads • Ports Airport In Other Sectors, the Framework is not conducive to competition Coal Railways
688 690 695 695 696 698 698 700 709 711 713 714 714 7.76"
2 1 . Services in the Indian Growth Process (Ed. Notes) • • • • •
Growth and Sectoral Shares, Cross Country Evidence and Indian Experience Which Services Have Grown Rapidly? Factors Underlying the Services Growth India's Share in World Exports World Trade in Services Sector Summing Up
725 727 732 736" 740 744 753
22. Reforming India's Product and Service Markets
758
OECD Despite Extensive Liberalisation in Some Areas Regulations are on Average Rather Restrictive
758
Policies to Improve Product Market Regulations
764
Contents...
17
23. Foreign Trade: Issues and Policies (Ed. Notes) • • • • • • • • • • •
• • • • • •
Constraints Arising from Foreign Trade and Import Substitution-based Policies 798 Inward Looking Strategy 799 Foreign Trade Performance 805 Structural Changes in India's Foreign Trade 809 Global Recession and India's Merchandise Trade:... 817 Direction and Composition of Trade 825 World Merchandise Trade: Global Recession 827 India's'Services Imports '. 835 Special Economic Zones 836 Bilateral and Regional Cooperation 838 Regional Trade Agreements 839 Challenges and Outlook 839 India's Balance of Payment Trends 1950-2008-09 841 A Decade of Comfort 842 The Period of Difficulties 842 Easing of Pressure 843 The Build-up to the Crisis 843 The Crisis: 1990-1992 844 Balance of Payments during 1993-94 to 2005-06 845 Balance of Payment during 2006-07 to 2008-09 847 Current Account 849 Sustainability of Current Account 851 Capital Account 853 External Debt 856 Capital Account, External Debt and Exchange Rate 860 Roadmap Towards Fuller Capital Account Convertibility 861 Managing Capital Flows 863 Foreign Exchange Reserves: Approach, Developments and Issues 864
798
18
India's Economic Development Since 1947
• • •
• •
Foreign Exchange Rate Policy
869
Exchange Rate Management
870
World Trade Organization
873
India and the WTO
875
India's Participation in WTO Meetings
576"
WTO Negotiations and India
880
Global Crisis
884
Explaining the Origins of the Current Crisis
884
Decoupling Theory
885
Regulatory Failure
888
•
Impact on the Real Economy
•
Concluding Remarks
..888 889
•
Annual Supplement to Foreign Trade Policy 27th August 2009 to 31st March 2014 (w.e.f. 23.08.2010)
892
24. India's Development Prospects: Looking Ahead (Ed. Notes) •
899
Some Aspects of India's Recent Growth Dynamics
901
Growth Drivers
901
Aggregate Demand and Supply
901
Sectoral Composition
903
Growth Prospects
906
•
International Comparisons
908
•
Sustaining High Growth
910
•
Sustaining the Growth Momentum— Some Aspects of the Policy Agenda
• •
Tasks Ahead
:
.f
917 920
Launching the Second Generation of Reforms
920
The Political Economy of Reform
921
Contents...
25.
19
India's Key Challenges to Sustaining High Growth
932
OECD
• Economic Reforms have Transformed the Indian Economy 932 • The Economy has responded Positively to the Reforms 938 • Looking into the Future 958 • Easing Regulation in Goods and Service Markets 962 • Removing Barriers to Employment in the Formal Sector 965 • Improving the Efficiency of the Financial System....969 • Orienting Public Finances to Achieve more Rapid Growth 970 • Improving Infrastructure 979 • Improving Education 989 • Conclusions 992
26.
India Amidst the Global Crisis Mihir Rakshit • Introduction • Pre-crisis Developments • Global Crisis: Domestic Consequences • Policy Omissions and Commissions
27.
997 997 998 1020 1030
Lessons from the 2008 World Food Crisis
1037
Jomo Kwame Sundaram • • • • '• •
Longer-term Problems Trade Liberalisation Other Longer-Term Trends Proximate Causes of Food Price Hikes U-Turn in Washington? Prospects
1038 1040 1042 1044 1045 1049
Statistical Appendix •
Selected Economic and Social Indicators 1950-51 to 1008-2009
1053 1054
