OBJECTIVES OF ECONOMIC ACTIVITY

The problem of elucidating the process of economic development runs as a major thread through the history of Classical political economy. Even when individual economists from Adam Smith to John Stuart Mill structured specific policies such as taxation to given objectives, their main concern had been the nature and causes of the wealth of nations. Seen in this light, the various specific economic policies adopted by the Indian government which emanated from the Classical economists could be said to have aimed at the larger objective of Indian economic development. However, from time to time Indian administrators thought of economic progress itself as an objective and sought guidance from received doctrine for framing appropriate policies. In this chapter we shall examine the nature of those policies and the part played by economic thinking in their formation.

Even before the publication of Adam Smith's Wealth of Nations, prevailing economic opinion had swung against the notion that a mere accumulation of precious metals was tantamount to increasing national prosperity. The aim of all activity, according to both the Physiocrats and the English Classical economists, was the net increase of consumable goods.