State the success and failure of planning in india
Answers
1. Achievements of Planning:
(i) Increase in National and Per Capita Incomes:
One of the basic objectives of economic planning in India is to increase national and per capita incomes. As a direct consequence of economic planning, India’s national and per capita income rose, though not as rapidly as the Plans projected. National income at 1999-2000 prices rose from Rs. 224,786 crores in 1950-51 to Rs. 3,114,452 crores in 2006-07, sharing a CARG of 4.8%.
(ii) Progress in Agriculture:
During the 55 years (1950-51 to 2005-06) the Government had spent, on an average, 23 to 24 per cent of the Plan outlay in each of the Five Year Plans on the development of agriculture, allied activities and irrigation. This expenditure was in addition to the private sector investment on agriculture and minor irrigation. As a direct result of this Plan outlay, agricultural production increased steadily, though not to the extent planned by the Government.
(iii) Progress in Industry:
The progress in some basic industries such as coal, iron ore, cement, fertilisers, finished steel, aluminium, petroleum (crude) and electricity, has been really impressive. Equally impressive is the progress in metallurgical industries, chemical and allied industries.
(iv) Per Capita Availability of Consumer Goods:
As a direct consequence of the increase in planned production in agriculture, industry and in all other sectors of the economy, per capita availability and consumption of essential consumer goods had increased steadily.
(v) Increase in Saving and Capital Formation:
In spite of an increase in per capita consumption of operational consumer goods, gross domestic saving as a proportion of GDP had increased from 8.9% in 1950-51 to 32.4% in 2005- 06. Gross domestic capital formation increased from 8.7% to 33.8% during this period.
(vi) Development of Economic Infrastructure:
Another achievement of great significance is the creation of economic infrastructure which lays foundation for industrialisation. The expansion of roads and road transport has led to the widening of the market. Irrigation and rural electrification have given a boost to agriculture.
(vii) Import Substitution and Diversification of Exports:
Due to the adoption of the policy of achieving rapid industrialisation, India’s dependence on foreign countries for capital goods has declined. Similarly, a large number of consumer goods imported earlier are now being domestically produced. This has led to import substitution.
(viii) Development of Science and Technology:
Another achievement of planning is the growth of science and technology and the development of technical and managerial cadres to run the modern industrial economy. This has significantly reduced India’s dependence on foreign experts. Moreover, India has started exporting technical experts to Middle East and African countries.
(ix) Build-Up of a Huge Educational Network:
One of the greatest achievement of Indian planning is the development of a huge educational system—the third largest in the world. Enrolment at primary and middle schools increased from 223 lakhs in 1950-51 to 1,283 lakhs in 2005-06, showing CARG of 3.2%. Moreover, the literacy rate has gone up from 18.3% to 64.8%—showing a CARG of 2.3%.
2. Major Failures of Planning:
Five major areas of failure of planning are:
(i) Failure to Eliminate Poverty:
In spite of 57 years (1951-2007) of planning 26% of total population (260 mn.) still lies below the poverty line. So, the planning process has lost its relevance to the poor people.
(ii) Failure to Provide Employment to the Growing Labour Force:
In spite of planning it has not been possible to provide employment to India’s growing labour force. What is really distressing is that there is more unemployment at the beginning than at the end of each Plan (due to the existence of a huge backlog of unemployed people).
(iii) Failure to Reduce Inequality of Income and Wealth:
Over the entire Plan Period redistribution of income in favour of the less privileged classes has not taken place. Even if the incidence of poverty has gone down to some extent, the incidence of inequality has increased mainly due to undue concentration of income and wealth in few hands.
(iv) Failure to Check the Growth of Black Money:
For various reasons, mainly the fiscal system, the rich people have accumulated huge black money. They have indulged in conspicuous consumption. As a result there has been misallocation of resources. Various measures adopted to unearth black money—such as voluntary disclosure scheme—have largely failed.
(v) Failure to Implement Land Reforms:
The policy decisions to transfer ownership of land to the peasantry was not properly implemented. The progress of land reforms has been rather slow and the State Governments were not eager to implement them with a speed for a quick transition to progressive agriculture and socialism.