PLANNING FOR DEVELOPMENT To attain the above mentioned goals of

development India adopted a mixed

economy model of development and planning as a strategy. Mixed economy in a way was a new method used by Indian planners. Prevailing models were capitalist and socialist models.

The capitalist model means private ownership of means of production and economic processes to be determined by market forces. Socialist model means public or state ownership of means of production and economic activities to be guided by State in accordance with social needs. Both these models have positive and negative points of their own. Indian planners wanted to take good points from both the systems. Therefore, emerged the model of mixed economy which means prevalence of public, private and joint sectors side by side with in one system.

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In the mixed economy system, State owned means of production were to be used to promote social welfare. Private owned means of production were to serve private interests but within the norms laid down by the State. The underlying purpose of mixed economy was to attain rapid economic development and ensure that no exploitative and restrictive tendencies emerge in the economy. This was clearly mentioned in the cabinet resolution of 15 March, 1950 which established the Planning Commission in India. The principles were mentioned as: (i) that the citizens men and women, equally have the right to an adequate means of

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104 DEMOCRACY IN INDIA : ISSUES AND CHALLENGES

livelihood; (ii) that the ownership and control of the material resources of the country are so distributed as best to subserve the common good; and (iii) that the operation of the economic system does not result in the concentration of wealth and means of production to the common detriment.

As a whole it can be said that India adopted a mixed economy model with a major role for the State for protection of the weaker sections of the society, control of distribution of essential commodities, promotion of infrastructural facilities, prevention of private monopolies, creation of egalitarian and just society, reduction of inequality of income and reduction of imbalances between regions. The methods and instruments to implement this process of development in mixed economy model were:

(i) Political democracy;

(ii) Planning and governmental regulation and control of economy;

(iii) Significant place and role for public sector;

(iv) Licensing, subsidies, progressive taxing, assistance to private sector, labour welfare, price control, land reforms, etc.

In general, it was to be a planned economic development to be implemented through the institution of Planning Commission. Let us have a look what is meant by planning so that we will be better able to understand the nature, role, success and failures of planning and Planning Commission.

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Planning means formulation of a strategy for the future. In other words, it is programming for action for a particular period for achieving certain specific goals. In economic terms it implies the assessment of one’s resources at present and their allocation among different uses to meet some specific targets in the future. In very simple terms planning is a process of devising a course of action — what is to be done, when to be done and how to be done?

In India significance of planning was recognised even before Independence.

Indian leaders were very much influenced by the planning experiment started in Soviet Union since 1928.

Various individuals and groups brought to the fore the importance of planning and made concrete proposals for that. In 1938 Indian National Congress established a National Planning Committee under the chairmanship of Jawaharlal Nehru.

Even the government established a Planning and Development Board in 1944. As alternatives, various groups formulated and presented plans for the consideration of nation. These included the Bombay Plan formulated by a group of industrialists, Gandhian Plan drafted by one of Mahtama Gandhi’s disciples Shriman Narayana, People’s Plan produced by M.N. Roy, etc.

After independence, to achieve the goals of development as discussed above, planning was considered the

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most effective way. For this was established a Planning Commission on 15 March, 1950.

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OMMISSION

Planning Commission was established as a multi member body with Prime Minister as its chairman and a full time Vice-Chairman. The Vice-Chairman is given the status of a Cabinet Minister.

There is no fixed number of members.

In general, Planning Commission consists of eight to ten members. These members are given the status equal to that of minister of State. In addition, Planning Commission also has an elaborate organisational structure consisting of advisors, and support staff. The order establishing the Planning Commission has defined its specific functions as follows:

(i) Assessment of Resources: The Commission makes an assessment of all material, capital and human resources of the country including technical personnel, and investigate the possibilities of augmenting such of those resources as are found to be deficient in relation to the nation’s requirements.

(ii) Plan Formulation: The Commi-ssion is expected to formulate plans for the most effective and balanced utilisation of the country’s resources.

(iii) Defining Stages of Imple-mentation: The Planning Commission has to define, on determination of priorities, the stages in which the plan

should be carried out and propose the allocation of resources for due completion of each stage.

(iv) Indication of Requisites:

Another function of the Commission is to indicate the factors which are tending to retard economic development, and determine the conditions which, in view of the current social and political situation, should be established for the successful execution of the plan.

(v) Determination of Machinery for Execution: The Commission has to determine the nature of the machinery which will be necessary for securing successful implementation of each stage of the plan in all its aspects.

(vi) Plan Appraisal: An important function of the Commission is to appraise, from time to time, the progress achieved in the execution of each of the Plan and recommend the adjustment of the policy and measures that such appraisal may show to be necessary.

(vii) To Render Advice: Finally the Planning Commission has been asked to make such interim or ancillary recommendations as appear to be appropriate either for facilitating the discharge of duties assigned to it; or in consideration or the prevailing economic conditions, current policies, measures and development programmes or on examination of such specific problems as may be referred to it by Central and State governments.

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In view of the prescribed goals of development the Planning Commission in India began with formulating Five-Year Plans. The plans are formulated on the basis of guidelines provided by the National Development Council. A draft of the final plan is considered by the Union Cabinet and then submitted for the approval of the National Development Council. After the approval of NDC and the cabinet it is presented before Parliament. After the plan is formulated, it is divided into annual plans for convenient implementation and allocation of resources. The plan is implemented by the State and Union governments.

Planning Commission itself is not involved in implementation. It however, monitors and evaluates the progress of implementation. The First Five-Year Plan formulated by the commission commenced on 1 April, 1951. Since then Ninth Five-Year Plans and six annual plans have been formulated and completed:

(i) First Five-Year Plan (1951-56) ; (ii) Second Five -Year Plan (1956-61) ; (iii) Third Five-Year Plan (1961-66) ; (iv) Annual Plans (1966-69) ;

(v) Fourth Five-Year Plan (1969-74) ; (vi) Fifth Five-Year Plan (1974-79) ; (vii) Annual Plan (1979-80) ;

(viii) Sixth Five-Year Plan (1980-85) ; (ix) Seventh Five-Year Plan (1985-90) ;

(x) Annual Plans (1990-92);

(xi) Eighth Five-Year Plan (1992-97);

(xii) Ninth Five-Year Plan (1997-2002);

From the above it emerges that during the years 1966-69, 1979-80, and 1990-92 there were no Five-Year Plans. Though, it is said that there were annual plans but the fact is that there were only stop-gap arrangements.

These are the years that represent changes of government, instability or lack of clarity about developmental goals and strategies. Therefore, either the five year plans were not formulated or were subject to review and changes by the succeeding governments. Many observers call these years as years of plan holidays.

During the Ninth Five-Year Plan, within the broader objective of raising the standard of living of the people and to open out to them opportunities for a richer and more varied life, there have been continuities and shifts in goals, priorities, strategies and perceptions. Successive plans consistently placed emphasis on the attainment of the objectives of self-reliance, social justice, industrialisation, modernisation and economic growth. But all plans did not place equal emphasis on the same objectives. However, till the time of Seventh Five - Year Plan (1985-90), planners had been caught in the dilemma and choice between rapid economic growth and distributive justice. Also in the situation of a democratic order of gaining votes and support of various sections of the society there was absence of political will to attack vested interests when required. In addition, the bureaucracy not only was not oriented and trained

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for development administration, but itself belonged to the propertied class and those sections of the society which was not in favour of change. As a result, the primary concern of development in India became economic growth. Even the public sector became an instrument to serve the interests of middle class and upper-middle class consumers.

State, under pressure from vested and powerful interests kept on providing subsidies for richer sections of the society instead of collecting taxes from them for social transformation. Unable to mobilise resources the State became dependent on aid and loans both from within the and outside the country.

Consequences of all these were:

(i) A large fiscal deficit because of government expenditure outpacing income and revenues.

(ii) A huge foreign debt, with a high debt-service ratio bringing country under debt-trap causing serious repayment problems and undermining the country’s credit rating.

(iii) An inefficient economy in which on the one hand processes of controls and licenses which had been introduced to guide economic development into desired directions had become means of corruption and hindrance in the growth; and on the other hand the public sector, established to create infrastructure, labour welfare and provision of essential goods for masses, had become huge loss making inefficient and bureaucratic controlled units in

the service of politicians, private sector and civil servants.

Thus, by the middle of 1980s India, like many other developing countries was in a serious economic situation.

At this very time, the Western developed world once again was working to establish its control over the world economy by integrating the whole world into a global capitalist economic order. Collapse of Soviet Union and other East European socialist countries helped in paving the way for this.

Developed world thus, started making use of international economic institutions like International Monetary Fund and World Bank to pressurise the under -debt, and slowly developing countries for changing their economies in line with the process of what came to be known as globalisation.

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Having failed to achieve the goals either of a rapid rate of growth or satisfactory redistributive justice the government from the beginning of 1980s started tilting towards giving preference to growth. It was felt that state controls, public sector and restrictions on private sector introduced in the name of planned development and social justice have prove a hindrance in the path of growth. Thus, there began the process of liberalisation of economy.

By middle of 1980s the strategy for development had become two-fold.

First was to de-emphasise the role of the government in economic

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development by ruthlessly slashing the public sector outlays and opening up the economy for private enterprise.

Second was to tighten the control of the planners over what was left of the government rule, particularly in areas of taxation and credit related policies.

The changes in the policy packages towards New Economic policy started from early 1980s remained limited and unsystematic. It was from 1991 onwards that a clear well defined new economic and development policy was set in. All governments since then have been carrying the economic reform process forward. The new economic policy is based on the ideals of liberalisation, privatisation and globalisation.

In this context there came removal of industrial licensing on most products, disinvestments of govern-ment holding in public sector, reduction in the number of products reserved for small sectors, liberal-isation and reduction of tariffs on imports, and removal of restrictions and encouragement to foreign private capital. All this mean freedom to private sector to produce whatever it wants, decline in the status and role of public sector, arrival of foreign goods and investment in Indian markets and withdrawal of state or reduction in its role in various social service sectors including housing, health and education.

The new economic policy has both positive and negative points. No doubt it has given impetus to production and growth by giving initiative to private sector. There is competition in the

market and consumers have a wide range of choice. Country’s balance of payment situation seems to have stabilised. Benefits of technological developments and information technology revolution are reaching India fast. Critics, however, point that these gains are very limited and benefit only a small section of the society.

Related to this is criticism of consumerism. The multinational companies to sell their goods, with vast resources in their hands are using media and advertisements to create demands for goods and products which are non-essential. Another consequence of this is change in value systems. Everything Western, including values, are considered superior.

It is also pointed out that economic reform have neglected the agriculture sector as also generation of employment which are very essential in a country like India. On the other hand it has failed to reduce the revenue deficit.

Similarly, foreign borrowing is increasing and will show its impact in due course of time. There is a redistribution of income in favour of the better of classes and deterioration in living standards of masses. Asset owners stand to gain, wage and salaried workers to lose. The process of development and planning itself therefore has become different.

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New Economic Policy means change in the perspective of role of State in

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economy and development. It, however, does not mean rejection of the need for determination of goals of development and providing necessary path and guidance for that. Also in a democracy State remains under tremendous pressure of voters and therefore, cannot completely neglect their demands and aspirations. Hence, even in the new economic environment, economic planning continues to be an important factor determining the strategies for public investment, besides providing guidelines for channelising private sector investment in desired directions.

In this context process of long-term planning continues in India. However, from Eighth Plan onwards, there is change in the concept of economic planning. Now onwards, it is stated that, “ the role of planning will largely be indicative.” In other words, plan will not be used to direct investable resources according to the priorities fixed by the government, irrespective of the signals given by market forces. The Preamble to the Plan Document on the Ninth Five -Year Plan (1997-2002) states that the objective of the plan is to focus on growth with social justice and equity. The participation of public and private sectors and all tiers of government in this process is, therefore, vital. The Approach paper to Tenth Plan (2002-2007) approved by National Development Council in September 2001 indicates that in future the role of government and the public sector will be confined to social sector while infrastructure development and industrial development will be left to the

private sector. The Planning would seek to better the quality of life on all fronts by the end of Eleventh Five -Year Plan.

This, of course will need serious efforts and renewed energies. Unfortunately, the experience so far has not been that much encouraging.

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From the above discussion it brings out that Planning was adopted to transfer the poor, backward and under developed social order into a prosperous independent developed modern society based on the ideas of balanced growth, justice, equity and equality. For that purpose, so far we had completed Nine Five Year Plans. All of them have consistently placed emphasis on the attainment of the objectives of self-reliance, social justice, industrialisation, modernisation and economic growth. Further in the age of globalisation and liberalisation emphasis has shifted in favour of providing incentives and facilities to the private sector and attracting foreign investment within the framework of achieving growth with social justice.

Once we review the results of last over 50 years of planned development we can on the positive side say that India has many achievements to its credit. The overall volume of industrial production had increased more than four fold by the mid seventies. New branches of the mining and processing industries, including metallurgy and heavy engineering have been created in

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110 DEMOCRACY IN INDIA : ISSUES AND CHALLENGES

the state and private sectors. A stagnant and dependent economy has been modernised and made more self-reliant.

There has been a steady increase in agricultural output, particularly of food-grains, making us virtually self-sufficient. There has been a good measure of growth in the field of banking, insurance, commerce and transport. Judging by the enrolment of students at the elementary and secondary levels, one may conclude that opportunities for education have also expanded in a significant degree.

It is also important to note that the average life expectancy in India rose from 32 years in the forties to above 60 years in nineties. India is the most technically advanced country in the Third World. It had put satellites in the space, exploded nuclear devices and mined the sea-bed. Indian defence has also made significant progress. A wide variety of technical, managerial and operative skills have been developed. In agriculture and rural development a large number of new programmes have been started.

Inspite of all these achievements, basic problems of India — namely poverty, unemployment, distributive justice and self-reliance remains unsolved. The successive five-year plans have failed to bring about a thorough transformation of the economic structure of the country.

Infact the inequalities of wealth and income distribution are increasing. A large section of population still lives below the line of poverty in a state of hunger and inhuman conditions of life.

It is, therefore, important to understand that a model of development without taking into account the basic needs of millions of our countrymen cannot be conducive for survival of democracy. Mere growth rate measured in conventional terms is not and must not be confused

It is, therefore, important to understand that a model of development without taking into account the basic needs of millions of our countrymen cannot be conducive for survival of democracy. Mere growth rate measured in conventional terms is not and must not be confused

In document Ncert XII Political Science Democracy India Old Syllabus (Page 101-110)