Discuss two major reasons why India's industrial sector was underdeveloped on the eve of Independence and suggest two policy measures that could have addressed each reason.
Answer
Low capital formation and inadequate infrastructure; policies: promote indigenous capital through financial institutions and invest in power and transport infrastructure.
Step-by-step solution
- Identify the two dominant constraints on industrial growth in pre‑1947 India: (i) scarcity of domestic capital and (ii) poor physical infrastructure (power, railways, roads).
- Explain why low capital formation limited the setting up of factories, import of machinery, and technology adoption.
- Explain how inadequate infrastructure raised production costs, reduced market access, and discouraged private investment.
- For the first constraint, propose policy measures such as establishing development banks, encouraging savings, and providing credit to Indian entrepreneurs.
- For the second constraint, propose building power plants, expanding the railway network, and improving road connectivity under state‑led plans.
- Summarise that addressing both capital scarcity and infrastructure deficits would have stimulated industrialisation.
Common mistake: Mentioning only one cause or giving generic policies without linking to the specific reason
Concept tested: Industrial underdevelopment causes
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