Chapter

The Development Strategy after Independence

Suresh D. Tendulkar and T.A. Bhavani

in Understanding Reforms

Published in print August 2012 | ISBN: 9780198085584
Published online September 2012 | e-ISBN: 9780199082087 | DOI: http://dx.doi.org/10.1093/acprof:oso/9780198085584.003.0003
The Development Strategy after Independence

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This chapter describes the development strategy in the post-Independence era, and the ideology guiding it. . Idealistic political leadership of post-Independence India started a unique and historically untried and untested experiment of democratic socialism in a low-income economy. This new institutional matrix consisted of a regulatory regime comprising three elements: public sector expansion, discretionary controls over markets and private economic activities, and stringent foreign exchange and import controls. The tightening of the regulatory regime on ideological grounds without regard to its effectiveness in obtaining the socialist goals provoked the basic incompatibility of the three elements of the new institutional matrix with the mixed economy institutional environment. Self-reliance under the influence of the ideology of economic nationalism was wrongly equated with self-sufficiency. This institutional matrix throws into sharp relief the remarkable institutional transformation in reverse that began with the post-1991 reforms.

Keywords: private sector; political leadership; Congress Party; Mahalanobis model; public sector; Nehru; democratic socialism; economic nationalism; balance of payments; foreign exchange

Chapter.  7901 words.  Illustrated.

Subjects: Economic Development and Growth

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