Handbook on the South Asian Economies
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Handbook on the South Asian Economies

Edited by Anis Chowdhury and Wahiduddin Mahmud

This Handbook on the South Asian Economies (a companion to the Handbook on the Northeast and Southeast Asian Economies) is a comprehensive and unique collection of original studies on the economic and social development of countries in South Asia. The analytical narratives draw upon a wide range of extant literature in an easily accessible way, whilst highlighting the impact of socio-political factors on economic outcomes. The introductory chapter by the editors provides a comprehensive survey of the main features of South Asian economic development, especially in respect of the policy reforms since the late 1970s.
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Chapter 1: India

S. Mahendra Dev


S. Mahendra Dev Political and economic history – the legacy of colonial rule India inherited a stagnant economy at the time of independence in August 1947. The economy was predominantly agrarian with little industrial development. Before independence, the aggregate real output increased at the rate of less than 2 per cent per annum; in per capita terms, it was less than 0.5 per cent. Agriculture was almost stagnant, with a growth rate of around 0.3 per cent per annum in the first half of the 20th century. The condition of the social sector was equally poor. Poverty was very high and concentrated in rural areas. Illiteracy was as high as 88 per cent and public health facilities, water supply and sanitation were very poor. On the eve of independence, Jawaharlal Nehru declared: ‘Long years ago we made a tryst with destiny, and now the time comes when we shall redeem our pledge.’ The pledge included ‘the ending of poverty and ignorance and disease and inequality of opportunity’.1 An important historical characteristic that deeply influenced the development path of India was its British colonial legacy. The intellectual and political leaders of the independence movement developed a deep distrust of market forces and international trade, the cornerstones of colonial economic policies. These policies were thought to serve mainly imperial economic interests.2 Two other factors – the success of the newly established Soviet Union in achieving state-led rapid industrialization, and the powerful Latin American argument for import-substituting industrialization – also influenced the development thoughts...

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