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AUSTAUSCHVERHÄLTNIS ZWISCHEN INDUSTRIE UND LANDWIRTSCHAFT UND INDUSTRIELLE STAGNATION IN INDIEN

Hans-Bernd Schäfer
Verfassung und Recht in Übersee / Law and Politics in Africa, Asia and Latin America
Vol. 14, No. 2 (2. Quartal 1981), pp. 139-156
Stable URL: http://www.jstor.org/stable/43111092
Page Count: 18
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Since scans are not currently available to screen readers, please contact JSTOR User Support for access. We'll provide a PDF copy for your screen reader.
AUSTAUSCHVERHÄLTNIS ZWISCHEN INDUSTRIE UND LANDWIRTSCHAFT UND INDUSTRIELLE STAGNATION IN INDIEN
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Abstract

The article deals with the causes of the declining of the industrial growth rate in India. After the granting of independence in 1947, India followed a development strategy of rapid industrialization, with the bulk of investment going into heavy industry. This policy was – in terms of growth rates – very successful in the fifties and early sixties. However in the mid sixties, the growth rate declined sharply, and since then has never recovered. The main thesis of this article is that the most important reason for this industrial depression was a rapid increase in the agricultural – versus industrial – prices. In the mid sixties, these prices rose by almost 50 percent. In a country in which a wage earner spends most of his near subsistance income on agricultural products, this led to wage increases. These wage increases further delayed the possibilities for industrial profits and investment. The price rise for agricultural products indicated that neither by deliveries of the Indian farmers nor by commercial or concessional import could the growing non-agricultural labour force be maintained. Indian industry became locked in an internal terms-of-trade trap. On the other hand, high prices contributed to the remarkable performance of the Indian agricultural sector after 1967, making India self-sufficient in food. However high agricultural prices also raised the agricultural profit rate above the industrial profit rate. The consequence was a net transfer of savings into the agricultural sector. This is contradictory to standard development economies, and again decreased the funds for industrial development.

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