ABSTRACT
India had a predominantly agricultural economy till independence in 1947. Even after independence, the first Five-Year Plan (1951–56) laid emphasis on agriculture. During the second Five-Year Plan (1956–61) there was a shift in emphasis towards heavy industrialization that has characterized economic policy ever since. At this early stage of development, India chose the path of central planning which led to a heavy emphasis on the development of public sector at the ‘commanding heights of the economy’. The resultant structural change in the Indian economy can be seen in Table 8.1. The share of agriculture in Gross Domestic Product declined from about 56 per cent in 1950–51 to less than 33 per cent in 1990–91 while the shares of industry (15.2–27.5 per cent) and services (29–40 per cent) sectors improved during the corresponding period. Table 8.2 provides a glimpse into the labour situation in India in 1961–91. It must be said to India's credit that it produces a wide variety of industrial and consumer goods, and over the years the dependence of the industrial sector on the vagaries of agricultural sector performance was reduced. Nor did India feel the crunch of recession or the wrath of business cycles. Its middle class has grown to a size of over 250 million to create a large consumer market while over 220 million continue to live below the poverty line.
