In the 1930s there was also a significant shift of capital from Usury, trade and landlords to industry. Small scale sector and also banking developed. Reversing the 19th century trend, small scale and handicraft industries and capitalist enterprise had emerged. Interestingly these small capitalist entrepreneurs often emerged from old craftsmen, merchants, rich peasants and even landlords and zamindars. The process of capitalist development from below was on.
Furthermore, in contrast to the 19th century industrial development in the post 1918 period increasingly became oriented towards the internal or home-market and this too on the basis of indigenous raw materials. Thus the link between indigenous industry and agriculture became stronger and an increase in internal trade began to show up after 1914 as the volume of international trade began to show a decline.
These trends in spite of the basic of dependence created by colonialism were the crux of the development strategy followed after 1947. After 1947 there emerged a basic consensus among different political parties on the following agenda: a multipronged strategy of economic development based on self-reliance; rapid industrialisation based on import substitution including of capital goods industries, prevention of imperialist or foreign domination; land reforms involving abolition of zamindari, tenancy reforms, introduction of cooperatives especially service cooperatives for marketing of credit etc.; growth to be attempted along with equity; growth model being reformist with a welfare pro-poor orientation; positive discrimination or reservation, for a period in favour of the most oppressed in Indian society, i.e. the scheduled castes or tribes; the state to play a direct central role in promoting economic development including through direct state participation in the production process i.e. through public sector and so on.
Most important there was consensus that India was to make this unique attempt at rapid planned self sustaining industrialisation within a democratic and civil libertarian framework. Secondly, the vision of this planned development saw the main cause of India’s dependence on the advanced countries to be the absence of an indigenous capital goods industry.
It was felt that in the development of capital goods industries and other basic and heavy industries, which required huge finances and had a long time lag for returns, the public sector would have to play a key role.
Dependence on external resources, foreign and/or foreign private investment was kept quite low. Net aid utilised by India was only 0.4 per cent of the Net National Product during the first plan, using 2.27 to 3.17 per cent during the second and third plan and again falling drastically at the end of 1960s.
Also external resources came mainly as official aid, and according to one estimate net aid and net foreign investment came in the ratio of 6:1 between 1948-61. More than 71 % of the foreign aid in the first plan was used for wheat loans, whereas in the second and third plans foreign aid was used overwhelmingly nearly 98% to fund iron and steel projects and general industrial development, transport, communication and power.
The weight of public sector in the overall economy increased rapidly further marginalising the presence of an already small foreign sector. Emphasis was on infrastructure including education and health areas greatly neglected as we saw in the colonial past.
The average plan expenditure during each of the first three plans on transport and communication was about Rs. 13 million a country for an average of about 26% of the total plan expenditure in each plan. The corresponding figures for social and community service and power were 19.9% to 10.6% respectively.
Thus there occurred a substantial attempt to rid India of the structural dependence it was trapped in till 1947. There were debates within Indian political spectrum about this attempt. The communists initially refused to recognise that India had become politically independent and was taking vital decisions on its own.
After a decade or so of independence, they did take cognisance of this but still argued that there was a tendency to compromise with imperialism. Another strand of thought saw neo-colonial tendencies emerging.
With Britain now in the cold war period being reduced to a smaller power, threat to national independence was seen from countries converging along the U.S. block. This was taken note in different United Nations conferences on trade and development. Arguments were put across for emphasising equality in international trade and tariff agreements.
The colonial state was a semi hegemonic state. That is it used liberal ideas and rule of law along with naked repression to keep the subject population in check. The administration was normally carried out in obedience to laws interpreted by courts. This acted as a partial check on the autocratic and arbitrary administration and to a certain extent protected the rights and liberty of a citizen against the arbitrary actions of bureaucracy.
The laws were however often repressive. Not being framed by Indians they left a great deal of power in the hands of the bureaucracy and police. There was also no separation of powers between administrative and judicial functions. The same civil servant administered a district as a collector and dispensed justice as a magistrate.
Even though the colonial legal system was based on the concept of equality of all but here too biases were evident: if an Englishman was brought for a trial the courts were invariably lenient. Colonial rules also extended certain civil liberties in the form of freedom of press, speech and association in normal times.
But as soon as mass movements arose these liberties were curtailed. Gradually civil liberties were curtailed even during the normal times. Another paradox of the colonial state was that after 1858, it regularly offered constitutional concessions even while retaining state power. Initially arguing for a benevolent despotism for India they bowed under Indian pressure and elections to legislatures were introduced both at the centre and provinces.
The right to vote however was so extremely narrow with only about 15% Indians voting by 1935. The government by introducing these reforms had hoped to weaken the thrust of the national movement.
On the other hand, participating in electoral processes was an extremely useful experience for the Indians after 1947. A sense of continuity was given to Indians who shored up by the experience of national movement were now building up for a universal adult franchise and a genuinely representative government.
The British also intervened in creating an educational system for the country. English was the medium for higher education. This system was designed to create a cadre of lower bureaucracy for the colonial rules.
However, paradoxically this education gave impetus to the process of forming an all India intelligentsia, which tended to have a similar approach to society and which gave it a base to evolve a critique of colonialism.
But this system of education had two extremely negative consequences. One, it created a wide gulf between the educated and the masses. Though this gulf was bridged to a certain extent by the national movement, it still persisted to haunt independent India. Secondly, the emphasis on English prevented fuller development of Indian languages as also spread of education to “the masses.
The colonial system of education also suffered from many weaknesses which still affect our schools and colleges. It mainly encouraged learning by memorisation. Very little attention was given to the development of rational critical faculty of the students.
The legacy of this education still continues to haunt the institutions of learning in post colonial India.