The Indian economy was a backward economy At the country's the eve of independence over 75% of the population was engaged in agriculture sector. There were not many industries and capital was mostly invested by foreigners. There was a complete absence of any infrastructure for imparting knowledge on technical skills to the labourers.
The following statistics reveal the extent of backwardness in the economy :
(i) Per capita income was low. It was ? 1,274 in 1950-51 at 1980-81 prices.
(ii) Large scale unemployment and under employment existed.
(iii) Mass illiteracy with literates forming only 17% of the total population excluding children
below 10 years. For rural areas, this percentage was even lower.
(iv) The birth rate and death rate were both high. With the decline of the death rate after 1920s-30s, the growth rate of population increased.