Kuldeep Changia | Issues in Indian Industry | March 9, 2015
Kuldeep Changia | Issues in Indian Industry | March 9, 2015
Perspectives on Industrial Stagnation in India (1940-70)
Perspectives on Industrial Stagnation in India (1940-70)

Abstract
The paper seeks to analyse the factors causing the stagnation in the industrial sector in India after having relatively rapid industrialization post-independence period. This debate marked contrast to the relative consensus that prevailed in the professional economic circles in the sixties, attracted a great deal of scholarly attention to India. This paper seeks to analyze that lack of aggregate demand and inequality in income distribution as the possible reasons for the same also mentioning the other possible reasons and their respective criticisms.
Contents
Abstract 1 Introduction 2 Trends in Industrial Stagnation 3 Income Distribution and Demand Factor 5 Alternative views; Critiques and Conclusion 7 References 8

Introduction
Post the independence period, the industrial sector in India saw a quadrupled growth in production and a marked diversification in structure and range of products produced. However, during the period 1950-75, the output saw varied growth levels, with 7.7% output growth in 1951-65 to 3.6% growth during 1965-75 (Nayyar, 1978). India had all the pre-requisite conditions of high growth in industrial sector; a large domestic market and resource base, a well-developed and large cadre of scientific and technical manpower, a substantial entrepreneurial class, a relatively stable political system with experienced bureaucracy, and a considerable involvement of the international aid community in the country. Additionally, the high savings rate (around 9% in early 1950’s to 22% in early 1980’s) and a large inflow of foreign exchange through remittances from Indian migrants abroad (Varshney,