Question

Discuss the changing dimensions of economic planning in the last sixty years.

Answer 1

Major Accomplishments of Planning:

(a) Higher Rate of Growth:

Economic plan­ning in India aims at bringing about rapid eco­nomic development in all sectors. In other words, it aims at a higher growth rate.

India’s macroeconomic performance has been only moderately good in terms of GDP growth rates. The compound annual rate of growth stands at 4.4% at 1993-94 prices for the whole planning period (1950-51 to 1999-00). Compared to the pre­-plan period when she was caught in a low level equilibrium trap, growth acceleration during the last 50 years has been impressive indeed. How­ever that it is not yet clear as to how much of this acceleration has been due to the change in the world economic boom since World War II and how much due to India’s own planning efforts.

(b) Growth of Economic Infrastructure:

In­dia’s performance in building up the necessary economic infrastructure is really praiseworthy. It is to be noted that the process of industrialisation of any country largely depends on the develop­ment of economic infrastructure in the form of transport and communications, energy, irrigation facilities, and so on.

At the inception of economic planning road length was 4 lakh kms, but by 1996- 97 it rose to approximately 24.66 lakh kms, rail­way route length increased from 53,596 kms in 1951 to about 62,800 kms in 1999-00. Today, the Indian railway system is the largest in Asia and the fourth largest in the world. Similarly, other modes of transport (such as shipping and civil aviation) have also expanded phenomenally.

The electric power generated jumped from a meager 61.26 million kw in 1970-71 to 526.7 billion kw in 1999- 00. However, as per the needs of the economy, it is still inadequate. The gross irrigated area as a per­centage of gross cropped area increased from 17.4% in 1950-51 to 38.7% in 1996-97.

(c) Development of Basic and Capital Goods Industries:

Another major area of success of In­dian planning is the growth of basic and capital goods industries. With the adoption of the Mahalanobis strategy of development during the Second Plan period, some basic and capital goods industries like iron and steel witnessed spectacu­lar growth.

It is said that the present level of devel­opment in infrastructure as well as basic and capi­tal goods industries is considered enough to put the Indian economy on the path of self-sustaining growth. Yet more is to be done for achieving rapid industrialisation. But whatever growth has been achieved in infrastructure and basic industrialise been due to planning.

(d) Faster Growth of Agriculture:

The most significant aspect of India’s five year plans is that the overall rate of growth of food production has now exceeded the rate of growth of population. No doubt, in the early years of planning, agricul­tural performance was miserable. As a result there had emerged food crisis. But due to the impact of biochemical revolution from the late 1960s, food crisis has become almost a thing of the past. She has attained self-sufficiency in food-grains.

That is why the Indian economy is now stronger and bet­ter equipped to tackle any eventuality (mainly food crisis) than ever before. Despite the worst- ever droughts of 1986 and- 1987, India was re­quired to import a very small quantity of food. This is, no doubt, a notable achievement.

(e) Savings and Investment:

The rise in the domestic savings rate from 8.9% of GDP in 1950- 51 to 22.3% in 1999-00 is definitely impressive. Similarly, India’s gross domestic capital forma­tion increased from 8.7% in 1950-51 to 23.3% of GDP in 1999-00. However, this higher growth rate of capital formation failed to accelerate the rate of economic growth. Hence, a paradox has been en­countered high saving rate and slow growth of per capita income.

(f) Economic Self-Reliance:

Self-reliance refers to the lack of dependence on external assist­ance. In other words, it means zero foreign aid. India all along used to importing huge food-grains, fertilisers, raw materials and industrial machinery and equipment. This resulted in draining of In­dia’s precious .foreign exchange reserves. Hence, the need for achieving economic self-reliance.