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Indian Economy Since Independence:Persisting Colonical Disruption

South Asian Dialogues on Ecological Democracy (SADED)-Lecture Series

Date: 16th May 2013

Time: 10.00 am

Place: Gandhi Peace Foundation (GPF), Delhi.


                                                                                                                                             Jyoti Katiyar | 8th june 2013                                                                                                                                                             


Contemporary India is full of contradictions with continuing mass poverty, illiteracy and growing social strife. The average growth rate has risen far from that prior to independence but sustainability is missing. The growth is guided by the corporate sector, which is unsustainable due to environmental consequences, growing inequality and the related social impact. The development path chosen after independence is based on a short-term solution and focus needs to be shifted to the long term. Colonial disruption is still persisting, which is not to say that all the blame has to be apportioned to the British but that Indians need to share the blame for what happened to them. (Tolstoy in his `Letters’ and Gandhi in `Hind Swaraj’).

Need for a historical View

Our present conditions are different from those in the West when it was at this stage of development hence we cannot follow their current policies and expect to solve the problems we face. Time and space specificity are important – if not included in policy making then they become ahistorical. In physics, we analyze the world as it is but in economics, analysts create their own universe with assumptions suitable to them so that their understanding is often not applicable to the real life situation of a society. For example neo classicals have their assumptions and the classicals theirs so that there is no possibility of any consensus amongst them.

Disruption of Indian Society

Globally, colonial rule resulted in disrupted societies. The internal dynamics of the latter got adversely affected and their social relationships were mediated through the interest of an outside power. Post- independence, Indian society continued to remain disrupted and its reconstruction took place under adverse conditions. In India there was already a `loss of value of ideas’ in society even before the British colonizers came and they aggravated this through their education policy. This became an important source of continuing disruption in post-independence India.

The dominant idea amongst the Indian elite has been that West is modern and therefore superior and needed to be copied while the indigenous is backward and needed to be discarded. Colonial rule broke the interconnection between the Indian elite and the common people by making the former answerable to them and not to the people. The police and the bureaucracy were instruments of control instead of providers of public service like in the West. Post-independence, we characterized them as the steel frame of India and strengthened them thereby undermining democracy and accountability of the rulers to the common people.

Development has been skewed since we chose not to develop ourselves from the grassroots. Surplus generated in agriculture was siphoned out by the British. To control the population, the colonial masters strengthened landlordism. Nationalist leadership later on emerged from amongst the elite class created by the British – from rural elite, professionals, business class, etc. This leadership tended to reinforce feudal elements in society, education, etc. and left their imprint on important aspects of post- independence India’s social, political and economic life.

From the start, India copied the West and went for top-down development based on Lewis model. It is based on a dual sector model with the advanced sector expanding and absorbing the workers in the backward sector. This provided a justification to the idea of trickle down. While this may have been true for the West during its development this could not be true in the Indian conditions in the 1950s. While technology developed organically in the West, here it was imported for the advanced sector and produced a large gap between the two sectors. Technology is a moving frontier so that for a country lacking in R&D, it is not easy to catch up with the advanced nations. Our elite enamoured of Western modernity has been copying from the West disregarding its long-term consequences. The dilemma facing the Indian elite has been that while for strategic reasons, it has depended on the Soviet Union but philosophically and culturally it has been subservient to the Western bloc.

During the period after the1950’s, India has faced repeated crisis of food security, inflation, continuing poverty, illiteracy, ill health, and so on. These have led to political and social crisis.  However, we have failed to learn from our mistakes. By the late 1960s the Planning Commission’s importance started declining and that of the World Bank started growing. This marked a shift in policy focus from internal to external. The World Bank has repeatedly changed its line in the interest of international finance capital. Finally, the economic crisis of late 1980s led Indian elite to completely cave into the interest of international finance capital and in 1991, the New Economic Policies (NEP) were implemented in India. NEP changed the policy paradigm completely and introduced marketization in a big way. This has led to the marginalization of the marginal and (for instance) eliminated the difference between necessities and luxuries.

Initially in 1947 all problems were seen to have a social basis and needed to be solved collectively so that the government was given a dominant position. In 1991, this was turned on its head and the individual was responsible for her/ his problems and focus was directed towards the market. None of the two paradigm changes in policy making during the last century were able to tackle the basic problems faced by the nation. However, with the actions of state the marginals were less marginalized. Both strategies of development belong to Western modernity where the elite have increasingly demanded more and more concessions for themselves since they are the drivers of growth and this has marginalized the poor by making them the residual. Agriculture and the unorganized sector, the biggest employers in the nation have been overlooked as marginal. The problem we are facing today is not of growth but of lack of adequate employment generation since there has largely been jobless growth.


The colonial disruption led to a backward structure of India’s education structure and its economy. Inadequacy of knowledge generation and borrowed knowledge has led Indian intellectuals to become `derived intellectuals’. Inadequacy in relevant knowledge generation has resulted in continuing lack of dynamism in society as a whole. A long term and historical perspective is essential in understanding the nation’s dynamics or for judging the successes or failures of its development strategy. Temporary good growth, as in the previous decade, cannot be the yardstick of success for the nation.



Dr. Arun Kumar is Sukhamoy Chakravarty Chair Professor and ex-chairperson of Centre of Economic Studies and Planning, in Jawaharlal Nehru University, New Delhi. He is also the author of very famous book “Black economy in India”. His recently published book “Indian Economy Since Independence: Persisting Colonial Disruption” was presented at the lecture series hosted by South Asian Dialogues on Ecological Democracy (SADED) at Gandhi Peace Foundation (GPF) on May 15th, 2013.