Dr. Ambedkar believed that the state had a crucial role to play in restruc- turing society under democratic polity and the foundations of democracy would be feeble and shaky if there is no social and economic democracy consistent with political democracy. Dr. Ambedkar opined that existing social and economic institutions, particularly the caste and land tenure sys- tem in India, were not conducive for accelerating economic development with social justice and emphasised the need for removing social and eco- nomic inequalities as a precondition for a stable democracy and rapid eco- nomic development with justice.
After the attainment of Independence, India adopted its national eco- nomic policy, with the primary objective of growth with Justice. Self-re- liance was one of the important objectives of planning, in addition to the expansion of employment and the removal of poverty. India, like other developing countries, had given priority to import substitution as an effec- tive means of industrialisation. The state was expected to steer the engine of growth and public sector was assigned a crucial role in the process of industrial development. All basic and heavy industries were supposed to be under the control of the public sector. The emphasis was more on aid than on exports. But by the mid-1960s, the problem of foreign exchange became very acute due to drought and the war with Pakistan. The policy was changed to export promotion while continuing import substitution, which has been viewed synonymously as self-reliance. Then several meas- ures to boost exports had been initiated by the Government of India in the form of subsidies to exports and the rupee was devalued by about 57.5% in June 1966. Despite various incentives given to the exporting industry and protection to the import-competing industry in the form of tariffs and other controls on imports during the period 1961–1991, there was a negative trade gap which constituted about 3% of GDP on average.