Need for Rapid Industrialisation

It is important for you to understand that the planners validated their strategy of rapid economic development through rapid industrialisation.

(a) At the time of Independence, India was considerably agrarian, though the nation with its vast natural and human resources was preferably suited for industries. The planners felt that divergence of the use of resources would be in the interest of the nation from the perspective of employment, production and defence. Resources should, thus, be applied more towards the development of industry instead to agriculture.

(b) You may already be aware that Indian agriculture was already undergoing from heavy population pressure on land and productivity of labour on land was quite low–it was even believed that marginal productivity of labour on land might be zero and even be negative. One technique of decreasing this burden of population on land and to raise agricultural productivity was to decrease the percentage of people living on land, and to shift the surplus population to industries. The setting up and expansion of the industrial sector was therefore, an essential condition for raising the national product in general and for agricultural development in specific.

(c) Rapid industrialisation was a critical condition for the development of not only agriculture but also for all other sectors in the nation. Simultaneously, increased production and supply of fertilisers, agricultural machinery, pesticides, etc. would assist in the expansion of agricultural production. With rapid industrialisation, and with rapid expansion of markets, there would be expansion in transportation, in trade and commerce, in banking and finance, etc.

(d) Productivity of labour is much higher in manufacturing as compared to agriculture. The growth rates are much higher in industry than in agriculture. Rapid increase in national and per capita income would be possible only through rapid industrialisation.

(e) The income elasticity of demand for industrial goods was much higher and export opportunities for manufactured goods were also high.

You must note that it was for all these reasons that industrialisation was highlighted by the Indian planners.

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