4 Significant Changes made in the Economic Structure of India Since Independence
Change in composition of domestic product or change in national income by industry of origin refers to change in relative significance (share) of different sectors of the economy. Generally, an economy is divided into three major sectors viz. primary, secondary and tertiary sectors.
Primary sector includes agricultural and allied activities, secondary sector includes manufacturing industries and tertiary sector includes services. With the development process, significance of primary sector declines while that of secondary and tertiary sectors increases. After independence, Indian economy has also experienced such changes.
The share of primary sector in GDP at factor cost (at 1999-2000 prices) which was 56.5 per cent in 1950-51 declined to 34.6 per cent in 1990 91 and then to 19.7 per cent in 2007-08.
The secondary sector’s share in GDP was 13.6 per cent in 1950-51 increased to 23.2 per cent in 1990-91 and further to 24.7 per cent in 2007-08. Tertiary sector’s share in GDP increased from 29.9 per cent in 1950-51 to 55.6 per cent in 2007-08, and in 2009-10 it was over 7 per cent.
2. Growth of Basic Capital Goods Industries:
When country attained independence, the share of basic and capital goods industries in the total industrial production was roughly one-fourth.
Under the second plan, a high priority was accorded to capital goods industries, as their development was considered a pre-requisite to the overall growth of the economy. Consequently, a large number of basic industries which produce capital equipment and useful raw materials have been set up making the country’s industrial structure pretty strong.
3. Expansion in Social Overhead Capital:
Social overhead capital broadly includes transport facilities, irrigation systems, energy production, educational system and organisation and health facilities. Their development creates favourable conditions for growth and also for better human living. The transport system in India has grown both in terms of capacity and modernisation.
The railways route length increased by more than 9 thousand kms and the operation fleet practically doubled. The Indian road network is now one of the largest in the world as a result of spectacular development of roads under various plans. India has also seen growth in Life- lixpectancy and Literacy Rate but education has not expanded at a desired rate.
4. Progress in the Banking and Financial Sector:
Since independence, significant progressive changes have taken place in the banking and financial structure of India. The growth of commercial banks and cooperative credit societies has been really spectacular and as a result of it the importance of indigenous bankers and money-lenders has declined.
Since nationalisation, these banks have radically changed their credit policy. Now more funds are made available to priority sectors such as agriculture, small-scale industries, transportation, etc.
Indian economy has progressed structurally when we consider the growth of capital goods industries, expansion of the infrastructure, performance of the public sector, etc.
These factors over the years are believed to have created an element of dynamism in the country’s economy and one can now hopefully say that it would sustain development in the future.