4 min read.Updated: 20 Sep 2016, 11:58 PM ISTAjit Ranade
India, with its vast continental size, will have to forge a new path in achieving the rural-urban, industry-agriculture balance
India’s early development strategy was based on rapid industrialization through import substitution. For rapid growth of industry, it was important to ensure that wages were kept low, and hence the price of “wage goods", i.e. food, had to be controlled. Foodgrain prices were kept low through a combination of public procurement and distribution through fair price shops. But low food prices were unfair to the farmer. To compensate for this, input costs were highly subsidized. Fertilizer, credit, electricity, water and seeds were sold much below cost. The subsidy burden was borne by the general taxpayer, in the hope that high industrial and economic growth would justify this subsidy system. In addition there were severe restrictions on the export of food and agriculture products.
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