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Economic Ideas of D.R. Gadgil


In this article we will discuss about the economic ideas of D.R. Gadgil.

According to D.R. Gadgil the most important event in the economic transition of the country was the decline of handicrafts on account of railway policy, free trade policy and lack of technical education in India. The commercialisation of agriculture and increasing population were responsible for starting industries in India.

During the early part of the British rule, cotton textile and jute industries made commendable progress. Regarding future trend he observed, “No big industries requiring complicated machinery of a thorough use of by-products are likely to spring up. The chief direction of progress will be that of the accessory industries and industries chiefly connected with agricultural operations or with the further working up of raw agricultural produce grown in the country”.


During 1914-28, the notable feature in the industrial scene of India was the establishment of the iron and steel industries. The war made the Government realise the importance of an all-round industrial development. As a consequence, the Industrial Commission was set up in 1916 and the Tariff Board in 1923 on the recommendations of the Fiscal Commission, to afford discriminating protection to industries.

According to Professor Gadgil, these events had far-reaching significance which dominated the economic history of India. Further the world-wide trade depression and the emergence of provincial autonomy in 1929-30 had another profound impact on the economic scene of India.

The trade depression heavily brought down agricultural prices and the State did nothing to help agriculturists. When popular ministers began to function in 1937-38 under the scheme of Provincial Autonomy, they did not visualize the problems facing the country in right perspective. They could not solve the agrarian problems.

Though factory production had increased under protection, the purchasing power of the farming community was very low. According to Gadgil “while in all countries of the world, old prejudices were rapidly thrown over, and an enormous amount of experimentation in the direction and control of economic life was undertaken, India alone marked time”.


Prof. Gadgil’s ideas about industrial labour can be understood in his publications of Regulation of Wages and other problems of Industrial Labour in India in which topics related to wages, employment, standard of living of workers, industrial relations effects of rationalisation of industries are covered.

Gadgil points out the great evils in the existing wage rate system:

(i) Low level of wage of industrial workers, and

(ii) Disparities between the wages paid for similar work. Of course the latter continues even today.


In order to remove disparity in payment and improve the lot of workers, Gadgil suggested that wages should be regulated at a higher level. It would decidedly improve their efficiency. Further, Gadgil sympathized with industrial workers and suggested besides higher wages, several welfare programmes, such as industrial housing, unemployment insurance, holidays with pay, sickness insurance etc.

While examining the scheme of rationalisation of industries, he felt that though in the long run it would increase national income and employment in other industries, in the short run, it would create the embarrassment of unemployment. It was the State to decide how far rationalisation would help the Indian industries.

Gadgil’s book War and Indian Economic Policy throws light on the inflation created during the war period 1939-43 due to expansion of currency. This had created enormous sufferings to the poor wage earners. For checking inflation, Gadgil suggested several fiscal measures such as increasing the direct taxes, public borrowing, full utilisation of productive resources, economy in administrative expenditure, control over profits and investments; price control and rationing, transport regulation with a priority to the movement of essential commodities and co-ordination of all these activities.

Regarding price policy Gadgil maintained that stabilisation of agricultural prices and holding the price line are closely related; and he further suggested regulation of prices of commodities like food grains, cloth, sugar, gur, edible oil, soap, tea, tobacco and kerosene oil which are essentially needed for the rural population. Regarding distribution, Gadgil laid emphasis on co-operative consumer societies.

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