The Indian economy was a backward economy on the eve of independence as over 85% of the population was engaged in agriculture. 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 ? 1274 in 1950-51.
(ii) Large scale unemployment and under employment existed.
(iii) Agricultural sector and industrial sector both were in a dismal condition.