1.1 Introduction: Indian Gross Domestic Product Prior to 1947
Will Durant and Friedrich Hagel , two of the finest intellectuals of the West, had very different views of Indian history. Hagel (1821–1831, reprinted in 1975) stated that anyone with even a rudimentary knowledge of the treasures of Indian literature and spiritual achievements would conclude that India had no history, whereas Durant (1930) wrote that Indian civilization went back to 3500 bc, and that at no time in history was the country without a civilization. These contrasting statements reveal the drastic change in European views of India over a century. In particular, Durant meticulously recorded some of the attainments of Indian civilization, beginning with the observations of Megasthenes ( Alexander’s historian who went with him to India in 326 bc). Megasthenes expressed amazement at the cultural achievements of the people living on the banks of the Indus, considering their achievements to be comparable in every way to the civilizational and artistic attainments of the Greeks.
Yet it is true that during the tumultuous years of foreign occupation of India there was little recorded history that was intelligible to Europeans. Of course, this changed somewhat in the later years of British occupation and after independence. Now there is a substantial literature on Indian history with several, competing, visions of India’s past. Indeed, some would argue that the country’s history is still viewed through imperialistic or left-wing prisms, as if one of the world’s oldest civilizations did not have the capacity to tell its own history.
This is a book about India’s economy and society, however, which means it must concern itself (at least) with recent economic and social history. The novelty in this approach is that it takes as axiomatic that any meaningful study of India’s economic history cannot be divested from the prevailing social conditions or India’s deep-rooted spiritual heritage. Indeed, to most Indians India is more than a tract of land. It represents an unbroken culture that is at least 7000 years old and encompasses the entire land mass of India, influencing people in other parts of the world as well.1 As distinct from the political or linguistic unity espoused by Western countries, India has always presented a deep concept of cultural unity , which is capable of absorbing immense diversities and indeed is strengthened by such diversity. Over several millennia India has had trade, investment and migration relations with various parts of the world, and thus its economy and society have been affected by the rest of the world. I recognize that covering all these issues in one volume is a daunting task, so will concentrate on selected facets of India’s economy and society and their relations with the world; hence the title of this book.
This chapter begins with a discussion of the most important indicator of economic performance—gross domestic product (GDP) . In Chap. 2 I explore key issues of population, land and labor. In Chap. 3 I discuss broader aspects of human development beyond GDP. Some aspects of the impact of Muslim rule in India are considered in the next chapter, after which the state of the Indian economy under British rule is discussed. The shape of Indian economy and society was deeply affected by India’s struggle for freedom, so one chapter is devoted to providing an account of India’s struggle for freedom. The next two chapters deal with India’s recent political economy, the first with the Indian Constitution and basic structure of governance and the second with major economic and political developments in independent India.
This chapter is organized as follows. In Sect. 1.2 I examine historical data on India’s share of world trade and the rate of growth of real GDP. In Sect. 1.3 I explore the performanc...