During the pre-British period, Indian economy reflected a picture of fine balance between agriculture and industry. Agriculture was primitive and undeveloped, but it offered a reasonably good living for the rural population. An organized industrial structure supplemented the agrarian sector of the economy. The industries were not large scale industries, but small crafts practiced by village craftsmen and artisans.

During this period, the villages were self-sufficient and self-reliant and able to supply most of the consumable items that the people required. The people living in the coastal belts were engaged in foreign trade, and-India was famous for its small industries and trade throughout the world. In fact, some foreign merchants became jealous of its prosperity and tried to establish their foothold in India. Among them, the Britishers came out victorious and gained political supremacy over India.

The British rule in India aimed at a systematic exploitation and colonization of the Indian economy. Their objective was two-fold:

(i) To secure large amount of raw material to feed their growing industry, and


(ii) To secure a market for their finished products.

Thus, the British rule engaged itself in fulfilling the needs of industrial revolution that had started in England in the mid-nineteenth century. In order to achieve these objectives, the Britishers forced the Indian farmers to switch over from food crops to commercial crops like cotton and to release adequate surplus of cash crops to England for export.

Further, they pursued a policy of systematic destruction of Indian handicrafts which posed a challenge to the British industry. In a nutshell, the Britishers sought to establish a new economic order in India. Due to destruction of Indian handicrafts, there was a compulsory back-to-the land movement which resulted in overcrowding in Indian agriculture.

This process ultimately resulted in a progressive realization or deindustrialization of India. Thus, on the eve of independence in 1947, the Indian economy was dislocated and dependent, stagnant and backward. Agriculture was overcrowded with perhaps the lowest productivity in the world. There was no industrial structure worth the name.


The foreign trade was oriented to feed the industrial revolution in Great Britain. Further, the partition of the country during the time of independence brought a severe blow to the Indian economic structure. The launching of the First Five Year Plan on the first April, 1951 brought the beginning of the serious movement towards a self-sustained growth. The basic objective of our planning is to attain a non-inflationary self-sustained growth with social justice.