new economic policy

After independence, the country’s slogan of ‘self reliance’ proved to be ostentatious in no time. The evolution of post-Independence economic policy had three basic features: autarchic trade policy, extension of public sector, and direct, discretionary and quantitative controls on the private sector. These features interacted in the institutional environment of functioning markets and private ownership of means of production to generate perverse incentives that constricted the operation of the market forces and private economic agents and resulted in a low rate of economic growth of 3.5 per cent per annum despite the doubling of the rates of domestic savings and investment over the thirty year period 1950-80.
Public sector units were expected to operate efficiently and generate resources for further investment. Instead, they were saddled with multiplicity of often-conflicting objectives; they had to accept politically driven inappropriate administered prices for their products a...