Effect on Indian Economy at the time of Partition

The two self-governing countries of India and Pakistan came into existence at the midnight of 15 August 1947. The British system of political control hinged on identifying groups willing to collaborate, a governing style described as "Divide and Rule". The prospect of losing this protection as independence drew closer worried at around 25% of population (Muslims), first in parts of northern India and then, after World War II, in the Muslim majority provinces of Punjab and Bengal. In 1945-46, All India Muslim League led by Muhammad Ali Jinnah won majority of Muslim votes in provincial elections. This strengthen the party's claim to speak for a substantial portion of, but never all, the subcontinent's Muslims.  

The biggest problem after partition was the division of a rupees 55 crores payable as the latter's share of assets. The second was Refugee problem. India was hopelessly poor as a result of steady de-industrialization by Britain. The abject poverty and sharp social differences had cast doubts on India's survival as a nation. 

During the decades of British rule in India, no efforts were made to calculate India's per capita income and GDP. Our economy had been a victim of enormous exploitation. Although India was a very pool  independent economy before the British rule, towards the end, it was exhausted. We were mere raw materials suppliers to the British. They made use of our labor without treating them well.  The end of the colonial rule left the nation in bits. We picked it up and placed it in order. This bad condition of the country was the outcome of every policy of the British. Since every policy that they were framing was regularly focusing on their nation, we were left little at the end.

The Indian economy on the eve of independence suffered and continues to suffer the effects of Zamindari system. Lack of resources, be it financial or otherwise, was a critical factor leading to a stagnant agricultural sector. Decay of the handicrafts sector, slow growth of modern industry was also the condition of the economy at the time of partition. Same was the condition of foreign trade was very poor. At the time of independence, India's currency was pegged to pound sterling and the exchange rate was a shilling and six pence for a rupee - which worked out to Rs.13.33 to the pound.    

In the post independence era, the economic growth management was inspired from the Soviet conceived 'Five Year Plan' scheme. Domestic policy tended towards protectionism, with a strong emphasis on import substitution industrialization, economic interventionism, a large Govt.-run Public sector, business regulation and central planning, while trade and foreign investment policies were liberal. Steel, Mining, Machine tools, insurance, telecommunications and power plants, among other industries, were nationalized in mid-1950s.  

To conclude, the independence day of 15th August, 1947 didn't mark the end of a struggle but the beginning of a mammoth task of rebuilding an entire country and its economy with the memories of partition.  

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