CHAPTER 111

DEVELOPMENT POLICIES OF INDIA SINCE 1NDEPENDE:NCE: AN ANALYTICAL SURVEY

Introduction

The British handed over to free India, an economy full of distortions

and imbalances. reeling under the burden of stagnation, in consequence of

the perpetuation of larg,ely pre-capitalist modes of production both in

industry and agriculture and the colonial pattern of foreign trade.

Independent India, was, thus faced with proble~ns which were fonnidable

in nature and gigantic in magnitude. The country was almost in the grip of

econo~nic stagnation, widespread poverty, unemployment and the

consequent human misery. The stagnating agricultural sector had to be

transformed to usher in an era of rural prosperity. The backward industrial

sector had to refortned for building up a strong and self reliant economy.

The partition of the country had further aggravated the econo~nic crisis.

The econolng was almost a century behind the advanced industrial nations

of the wol.ld. So i t beca~ne imperative that steps be taken to cure the ills of

the econonl! and efl'i~rts rnadc to put it on the right '- path of sustained

economic growth had to achieve within a very short span of time, the

degree of economic pwgress which the then developed countries of the

world took a century or nnore to achieve under Inore favourable conditions.

It was under these co~npelling forces that India formulated a number of

policies for quick economic development and econoinic growth.

At the timc of the transfer of power foreign capital had substantial

control over India's rejources and markets. I'he extractive and plantation

industries, proccssing for export. intcmational trade and ancillary serviccs

were allnost fully controlled by the foreign 'Managing Agents' brought up

by the British capital t ro~n the nineteenth century onwards. For the Nehru

government it was nolt a priority to evolve and strengthen an indigenous

technological and industrial base for India. No wonder, even in 1954-55,

on the eve of the s e c o ~ ~ d five year plan, two-fifths of the major companies

with a paid-up capital of Rs. 50 lakhs and above were directly controlled

by the 17 top ~nanagi~lg agencies. The foreign managing agencies could

receive a percentage of profits. as commission. in addition to the interest

that they received on loans advanced to the Indian companies. Managing

agents who wcre to hi; represented on the board of directors of a company

were the rcal decision makers. In the fifiies, while the Indian National

Congress adoptcd 'soc,ialism' and sclf-reliance as its econoinic programme,

according to an esti111at.e. 55 top directors tiom the managing agencies

shared 809 directorships in foreign-controlled companies in India. At the

apex there were 10 men with 300 directorship between them. Thus foreign

capital could control a large number of seemingly independent Indian

companies through a s).stem of interlocking and widespread interpenetration

of personnel. Michael Kidron has given an approximate idea regarding the

extent of tbreign capital in India in the years immediately following

independence.' According to him, in 1949-50, 85 per cent of the area of

tea plantations and more than half of the paid-up capital in plantation

industries were controlled by foreign companies. Foreign capital

controlled 70 to 95 per cent of jute production, 70 per cent of coal mining

and 73 per cent of all mining including gold and magnesium. The service

industries here also tightly held by the British capital. On the eve of

transfer-power 85 per cent of inland steamer services and the whole of

overseas shipping remained under the tight control of the British

companies. As late as 195 1-52, almost 40 per cent of imports, and 45 per

cent of the entire rxpoi-ts and more than two thirds of trade financing by the

exchange banks were handled by foreign companies. As a whole nearly

one-half ot the net assets of the organised sectors of mining, trade and

banking were controllt:d by foreigners in 1953".'

In course of time, i.e.. in consonance with the neocolonisation

process gathering momentum. the nature and scopc of foreign capital

investment (such as in plantations) and control by managing agencies

slowly declined in importance. Most of the fresh investment by foreign

capital went into inanufacturing and petroleum; technologically intensive

branches such as chemicals or electrical goods received more attention.

The prelude to this new type of investments could also be seen in the 50's.

The MNCs from USA who were actively looking for outlets for capital

export had started penetrating India. It was this trend that got strengthened

under the Nehruvian strategy of development.

Beginning of Planning in India

The Nehru government began its economic policies with the

announcement of its IB~nous 'status quo policy' towards foreign capital

providing the latter all hcilities to carry on its business uninterruptedly.

This was followed by the Industrial Policy Resolution of 1948 which

conceded that "participation of foreign capital and enterprise ... will be of

value to rapid industrialisation of the country" In the context of the arrival

of the first World Bank Mission (at the request of the government of India)

in early 1040. the Nehru Government came forward with its positive

approach to foreign capital, in the forin of Prime Minister's Special

Statement' to Parliament on April 6, 1949. In addition to this, amidst

widespread criticism iorn patriotic sections in India. as part of the US

enforced devaluation of the currencies of 30 countries including the other

capitalist powers, the Nehru government devalued the Indian rupee by

33.5% per dollar. The First Five Year Plan prepared under these

circu~nstances clarified in its draft outline that foreign capital would act as

a "catalytic agent" Sor domestic resource mobilization and investments and

that it would he made in essential sectors of the economy. Out of the total

outlay of Rs. 1960 cro8res of the First Plan which was a modest one, the

'foreign assistance' incorporated was Rs. 200 crores (almost 10% of the

plan outlay). Of this 70 per cent was from USA and 17 per cent from

world Bank However, the entire US 'aid' (Rs. 135 crores) was not as such

available to the Indian government since lion's share of this amount was

spent in the exploration of minerals and water resources of India by

American geologists in paying salaries to US experts in India and in the

purchase of 'scientific' books from USA. On the whole, the entire foreign

'aid' available from capitalist's sources including the World Bank was used in

accordance with the capitalist's prescription on India's development.

The pressures arising from the then international and internal

developments had ht:er~ the main factor that prompted the Nehru

government to pursut: what is generally called an import-substitution

industrialization (l.S.1.) :strategy along with the Second Five Year Plan.

The second plan kame. popularly known as Nehru-Mahalanobis Model

was prepared inline with the ideas of some 30 economists from different

capitalist countries including thc USA and experts from soviet Union. The

decision to launch key arid basic industries as well as infrastructure in the

public sector had taken the interests of domestic capital also into

consideration. Thus infrastructure-development which naturally yields very

little profit in the public sector provided the private sector, both foreign and

native, necessary anti favourable condition for participating in the

economic develop~nent pl:ogramme.

As l'ar as the Nehru-Mahalanobis strategy of heavy industrialisation

was concerned, it ignored the required healthy relationship between

industry and agriculture. If the import-substitution industrialization was to

result in an all-round increase in domestic production and reduction in

imports, a corresponding developlnent of the home market was inevitable.

In a country where more than 70 per cent of the population depend on

agriculture, expansion of the home market and increase in the purchasing

power of the masses were imperative. And this was directly related to a

basic restructuring in land relations. That did not happen. More over the

key and basic industries as well as infra structural facilities built up by the

public sector with capit.al:ist 'aid' and foreign technology were used for the

manufacture of consumer durables and luxury items catering to the

consumerist longings of the upper strata of society. In India, the upper

strata of the population which was much larger than the total population of

several countries put together really provided an expanding market for

these durables. After a serious study of the IS1 strategy in several Afro-

Asian-Latin American countries including India, Joan Robinson said, "The

process of import-substitution naturally begins with commodities that offer

the best prospects of profit. that is those which are brought by the wealthiest

consumers.".' The World Bank in a publication has characterized those

industries that were built up as part of IS1 during the fifties and sixties as

tariff fa~tories".~

Concentrated in already existing urban centres and based on foreign

capital and technology, industries were in practice, never meant for the

broad masses of people in the country-side. Thus IS1 which was suggested

by capitalist experts as a substituie for lack of foreign exchange became the

cause for dependence on foreign exchange in the form of profits, royalties,

dividends, technical fees etc. arising from imports of capital and

technology. and in thr: form of out payments resulting from heavy food-

imports. In brief. the Nchruvian strategy of IS1 was leading the country to

unprecedcntcd misery for the majority of the people, growing regional

inequalities, worsening balance of payments deficits, and deepening

dependence on foreigners.

Aid India Consortium: a Milestone in the Westernisation Process

As a manikstation of India's extreme dependence on foreign

capital, within two years of the inauguration of the ambitious Second Five

Years Plan (1956-61), the country was plunged into an acute foreign

exchange crisis. The lieserve Bank's revelation in 1958 that its foreign

exchange reserve had dropped to a meager Rs. 200 crores was immediately

followed by the sending of a delegation to Washington by the Nehru

government. 'l'he delegation's deliberations with the US officials and Fund-

Bank experts culminated in the creation of Aid India Consortium in 1958

with World Bank (WEi) as Chairman, IMF and other funding agencies

specializing in aid. trade and finance as members. In course of time, Aid

India Consortium became the apex capitalist monitoring institution

entrusted with the task of supervising the entire capitalist 'aid' and

investment started flowing into ~ n d i a . ~

There are economists and political thinkers who argue that, the

establishment of Aid India Consortium has been a milestone in the neo-

colonialisation process of India. Since it tied India to the world capitalist

system as a whole, minimizing the maneuvering capability of Indian State

among the capitalists. The Consortium began its operations by scrutinizing

India's econo~nic policies and directing its priorities. It could penetrate

into the core of Indian planning machinery and succeeded in placing

experts trained in capitalist headquarters in strategic positions such as the

Economic Ministries of Government of India (GOI), Planning

Commission, RBI, etc. This enablcd the World Bank and other neocolonial

institutions to elicit the relevant information from lndia needed for their

policy formulation."

In fact, ever since the transfer of power in 1947, the Government of

lndia (G01) led by Nehl-u sought the assistance of WI3 and other US-led

institutions to dole out lheir so called "expert" opinion on matters

concerning India's future clevelopment. As a result, periodic inspections

by WB officials to India hecame a regular feature during these years.

Nehru was committed to socialisin and 'self-reliance'. On the eve

of the creation of the Aid lndia Consortiurn, the WB succeeded in

establishing it5 permanent Resident Mission in New Delhi in 1957 which

could undermine Nehruvian self-rel~ance. Following this, in the First Five

Year Plan I0 percent of the plan outlay. came froin foreign aid; during the

second plan this component rose to more than 30 per cent of the total plan

outlay. Naturally. 1JS capitalism stood as the major donor contributing

almost 55 per cent of the total external 'assistance'. Ilowever, the total

Soviet aid during the second plan was only 5.4 per cent of the total aid.

This was devoted to the sphere of hcavy machinery. All of India's public

sector steel plants and several industries were set up with foreign capital

and technology. It is estimated that more than 90 per cent of the aggregate

foreign 'aid' used up by hehru's so called 'socialist plan' was from US-led

capitalist sources including the WB. The net result was that from a

position of zero external debt in 1951 when planning began, the

accumulated foreign debt of the country rose to Rs, 1073 crores in 1961.'

The foreign exchange reserve depleted at a faster rate on acqount of the

accelerated imports of food grains, (mainly P.L.480 imports), technology

and capital. Further. to take advantage of tariff protection granted to

industrial enterprises, IMNCs penetrated into India in the form of 'joint

ventures' with foreign majority and minority participation. The consequent

outflows of foreign exchange in the form of dividend, royalty, technical

and management fees, profit, etc. as well as in the form of under invoicing

of exports and over invoicing of imports worsened the balance of payments

problem further. For instance, an estimate by Kidron showed that during

1948 foreign companies as a whole had taken out of India's general

currency reserve three times as much as they had directly c~n t r ibu ted .~ A

recent writer said: "Twenty family groups controlled 20% of total private

capital in 1951. This has increased to 33% by 1958. In 1965, the

Monopolies (:ommission found out that 75 leading business groups owned

47% of assets of all non-government companies. The groups are the big

capitalists In India. Their investments span trade, finance and commerce.

In 1958 thc t\co largest family groups the Tata and the Birla. owned 20%

of private capital stock in Indian cotnpanies. Their ownership of banks ...

gave these dynasties substantial control over s~~lal ler and regional

institutions set up by the government to provide industrial capital and by

the publicly owned Life Insurance Corporation, both of which regularly

invest in the companies of these groups. Of course, this trend went on

strengthening as the planning process proceeded further".'

By the beginning, of the 1960s, when Second Five Year Plan was

coming to a closc and the third plan was to begin the counter confronted by

acute problems such as food scarcity, balance of payments crisis, etc., the

Nehru government which could not solve these issues, was forced to

approach Western funding agencies again. Consequently, at the request of

GOI, the WB in 1960 sent another "high-level mission" to India. This

~nission consisting of Oliver Franks from Britain. Hermann Abs from

Germany and Allan Sproul from the USA" wrote a report on the Indian

economy. It was described by some as "one of the most heart-warming

documents in the annals of international relations"." It is argued that this

document was in effect laying down the conditions of mortgaging the

entire economy to international capital.I2 For the immediate follow-up of

the 'Mission's report on India was the opening of various Indian

investment Centres at the leading finance capitalist centres of the world

like New Yorh. 1 ondon. 1)usseldorf and Tokyo in 1961 itself as part of the

neocolonial strategy of integrating Indian economy with global capitalism.

These investment centers; acted as liaison offices between MNCs and

Indian capital.

Bureaucrats like I.G. Patel have been the staunchest protagonists of

the new path of development launched in India. Experts trained in capitalist

Economics rcsearch institutions were in the forefront of justifying the

import of capital to India. Today it could be indisputably said that the

investment centres acted as liaison offices between MNCs and Indian

Government. I he actib ities of the various centres were co-ordinated by the

monitoring centre at Dtlhi. This was followed by a sudden spurt in foreign

collaborations and so foreign control over Indian assets reached

unprecedented levels. For instance, during 1960-64 over half the number

of MNCs operating in IIndia had 100 per cent ownership in their sphere of

activities. Meanwhile. during the third plan (1961-66) almost one-third of

the total plan expend~ture was composed of foreign aid. This was a

manifestation of Nehruvian strategy's increasing dependence on capitalist

powers. I'he flaws of Wehruvian self-reliance could be seen from the

doubling of the external debt within a span of five years. Thus external debt

which stood at Rs. 1073 crores in 1961 rose to Rs. 2341 crores in 1965 '~ .

Devaluation of Rupee

Despite the huge foreign aid, while the third plan was dragging on

account of acute resource crunch, as a testimony to India's growing

dependence on "aid-givers" and the latter's increasing capacity to influence

India's policy-making, in 1965 the WB sent another large economic

mission headed by Bernard Bell. The mission produced a comprehensive

report, known as the Bell ]Mission Report, which proclaimed the end of IS1

and heralded the so called export-orientation industrialisation (EOI)

strategy in India. Through the Bell Report, the WB and other consortium

members became Inore critical of the direction of Indian economic policy.

For instance. among orher things, the Bell Report opined. "There is no

particular evidence that the licensing system has in fact served any positive

economic purpose. There is little doubt, however, that it has prevented

efficient enterprises from expanding, that it has imposed restraints upon the

achievement of econson~ies of scale, and it delayed and hampered

investment and production activity. It has, like the irnport control system,

protected and preserve'd inefficiency by, in effect, allocating market shares

and restraining the g~:owth of more efficient enterprises".'4 The Bell

Report was a concrcte evidence to the growing disenchantment with

international Keynesiar1isl:n which was losing its initial impetus in the global

econonly. Also the Bell Report was more explicit in its recommendations. It

asked the GO1 to immediately carry out a package of policies comprising

of comprehensive import liberalization including devaluation of the rupee,

the new strategy in agriculture which later became known as the Green

Revolution and the so called export-oriented strategy of development.

Since hilure on the part of GO1 to implement the priorities laid

down by the WB as Chairman of Aid India Consortium would have

resulted in the cancellation of all aid programmes in the forthcoming fourth

five year plan (which was to begin in 1966) a GO1 delegation went to

Washington in September 1965 to discuss with WB the modalities of

implementing the package of recom~nendatio~ls put forward in the Bell

Report. The immediate result was the devaluation of the Indian rupee by

57.5 per cent (rupee value of the dollar rose from $1 =: Rs. 4.75 to $1 =

Rs. 7.50 as a result of this act) in June 1966. Frequent devaluation of the

rupee, both oflicially declared and undeclared, has beer1 one of the most

effective methods adopted by capitalists to increase their profits. The crisis

in the ruling party and the consequent package of policies did not fulfil the

WB specifications. Infuriated by this, the US temporarily suspended the

entire package including 1'L 480 imports into India. Under American

pressure the GO1 was forced to declare a plan holiday for three years from

1966 to 1969. This abrupt halt of the entire planning process exposed once

again the limitation ol'the Indian development path. The government led

by Indira Gandhi could revive the five year planning process only in 1969

after getting the green signal from the WB and other consortium members.

To appease the donors the GO1 had to carry out a series of measures as

recommended by the Bell Report including the establishment of the

Foreign Investment Board in 1968 to expedite the close integration of

Indian economy with foreign capital.

Since 1951 India had completed nine Five Year Plans. And is

currently implcmcnting the loLh plan. The guiding principles of India's Five

Year Plans are provided by the basic objectives of growth. employment, self-

reliance and social justice. Apart from these basic objectives, each five year

plan takes into account the new constraints and possibilities faced during

the period and attempts to make the necessary directional changes and

emphasis.

The Approach to Each Plan

At the time of the first five year plan (1951-56) India was faced with

three problems-influx of refugees, severe food shortage and mounting

inflation. India had al:jo to correct the disequilibrium in the economy

caused by the Secontl World War and the partition of the country.

Accordingly the First Plan emphasised as its immediate objectives the

rehabilitation of refugees. rapid agricultural development so as to achieve

food sell-sufficiency in the shortest possible time and control of inflation.

Simultaneously. the First Plan attempted a process of all-round balanced

development which could ensure a rising national income and the steady

improvement in the living standards of the people over a period of time.

The second plan 1956-61 was conceived in an atmosphere of

economic stability. Agricultural targets fixed in the plan had been achieved,

price level had registered a fall and consequently, it was felt that Indian

economy had reached 21, slage were agriculture could be assigned a lower

priority and a forward thrust be made in the development of heavy and

basic industries of the economy for a more rapid advance in future. The

basic philosophy of the Second Plan was, there fore to give a big push to

the economy so that it can enter the take-off stage.

Besides. the Ciov'ernment announced its industrial policy in 1956

accepting the establishrllent of a socialistic pattern of' society as the goal of

economic policy. Thi:; necessitated the orientation of economic policy to

conform thc national goal of socialistic economy. Accordingly the Second

Plan aimed at rapid. industrilisation with particular emphasis on the

development of basic: and heavy industries such as iron and steel, heavy

chemicals including r~itrogenous fertilisers, heavy engineering and machine

building industry.

By the beginning of the third plan (1961-66) The Indian planners

felt that the Indian economy had entered the take-off stage and that the first

two plans had generated an institutional structure needed for rapid

economic developtnenl. Consequently, the Third Plan set as its goal the

establishment of a self-reliant and self generating economy. But the

working of the second plan had also shown that the rate of growth of

agriculture production was the main limiting factor in India's economic

development. The e:uperience of the first two plans suggested that

agriculture should be assigned top priority. Third plan accordingly gave top

priority to agriculturt:. But it also laid adequate emphasis on the

development of basic industries, which were vitally necessary for rapid

economic developrnent of the country. However, because of India's war with

China in 1962 and with Pakistan in 1965, the emphasis of the Third Plan was

later shiHed tio~n econo~nic development to defence development.

The original draft outline of the fourth plan prepared in 1966 under

the stewardship of' Ashok Mehta had to be abandoned on account of the

pressure exerted on tht: economy by two years of drought, devaluation of

the Rupec and intlationar:~ recession. Instead three Annual Plans (1966-69)

euphemistically described as "plan holiday" were implemented. India

learned a hitter lesson during lndo-Pakistan war when its so-called allies

refused t o supply esse~ltial equipment and raw materials for its economic

development. The Fourth plan set before itself the two principal objectives,

growth with stability ;and progressive achievement of self reliance. The

fourth plan aimed at an average 5.5% rate of growth in the national income

and the provision of national minimum for the weaker sections of the

con~munity- came to bt: known as the objectives of growth with justice and

'garibi-hatao' (removal of- poverty).

l'hc Fifth Plan (1974-79) was introduced at the time when the

country was reeling under a veritable economic crisis arising out of a run-

away inflation, fuelled by the hike in oil prices since September 1973 and

failure of the Government's take over of the wholesale trade in wheat. But the

Indian planners were concerned with the problem of garibi-hatao (removal of

poverty) and growth with social justice. The original approach paper of the

fifth plan preparcd under. C. Subrarnaniam in 1972 emphasised that "the main

causes of abject poverty were open unemployment, under-employment and

low resource base of very large number of producers in agriculture and service

sectors". Thc elimination of poverty could not be attained simply by

acceleration i n the rate of' growth of the economy alone. But the strategy

should be to launch a dil-ec:t attack on the problems of unemployment, under

e~nployrnent and massive level of poverty. But this approach was eventually

abandoned ar~d the final draft of the fifth plan prepared and launched by

D.P. Dhar proposed to achieve the two main objectives viz.. removal of

poverty and attainment of self reliance, through promotion of high rate of

growth better distribution of income and a very significant step up in the

domestic rate ofsaving. The Fifth Plan was terminated by the Janata Party by

the end of the tburth year of'the plan in March 1978.

There were two sixth plans. The Janata Party's sixth plan (1978-83)

openly praised the achievement of planning in India but held the Nehru

model of growth respon:;ible for growing unemployment, the concentration

of economic power in the hands of a few powerful business and industrial

families, the widening of inequalities in income and wealth and for

mounting poverty. 'The Jiiniita Government's sixth plan sought to reconcile the

objectives of higher production with those of greater employment so that

millions of people living below the poverty line could benefit therefrom. The

focus of the Janata (jovernments sixth plan was enlargement of the

employment opportunities, protection to agriculture and allied activities

encouragement of household and small industries producing consumer

goods for mass consumplion and raised the incomes of the lowest income

classes through a minimum needs programme. When the new Sixth Plan

(1980-85) was introduced b) the Congress Government, the planners

rejected the Janata approach and brought back the Nehru model of

growth by making at a direct attack on the problems of poverty by creating

conditions o f an expanding economy. I 5

The Secenth Five year plan (1985-90) was introduced in April 1985,

after the co~lntry had enjoyed a reasonable rate of economic growth during

the sixth plan. The Seventh Plan sought to emphasise policies and

programmes which would accelerate the growth in food grains production,

increase employment cbpportunities and raise productivity- all these three

immediate objectives were regarded central to the achievement of long

term goals determined as far back as the first plan itself.

The approach p a p a of the Eighth Five Year Plan was approved in

September 1989 and was to be introduced in April 1990. However there

were a series of changes in the Government at the centre, necessitating

constant reconstitution of the Planning Commission and preparation of a

series of versions of the approach to the eighth plan. Finally, the fourth

version of the eighth plan 1992-97 was approved at a time the country was

going through a severe economic crisis caused by the balance of payment

crisis, rising debt burden. ever -widening budget deficits, ~nounting inflation

and recession in industry. The Narasimha Rao Government initiated the

process of fiscal refonns a!; also of economic reforms with a view to provide a

new dynamism to the economy. The Eighth Plan (1992-97) reflected these

changes in its attempt to accelerate economic growth and improve the

quality of life of the comrnon man.

Plan Outlaysllnvestments

For each plan, the Planning Co~nrnission fixed an overall total

outlay for economic growth, part of which was to be contributed by the

private sector and the remaining by the public sector. Initially, the Planning

Commission \tarted with modest outlays. But, with experience, the planned

outlays on development programmes were raised substantially. Table

below gives the proposed planned outlays, the share of private and public

sector outlays and the actual public outlays in the different plans

Table 3.1 Plan Outlays of the Public and Private Sector

~ ~~ ~ ~-

-- ~

Total Private Sector Outlay

2 1,800 (46.5) 3,100 (39.2) 4,100 (35.3) 8,980 (36.1) 16.160 (80.3) 61,210 (38.6)

1,68,150 (48.3)

4,37,000 (50.2)

Total Proposed

Plan Outlay .

Total Proposed

Public sector outlay

3 2,070 (53.5) 4,800 (60.8) 7,500 (64.7) 15,900 (63.9) 37.250 (69.7) 97,500 (6 1.4)

1,80,000 (5 1.7)

4,34,100 (49.8)

1- (2+3)

(Rs. Crores)

Actual Public sector outlay

4 1,960

4,600

8,500

15,900

39,430

1,09,290

2,18,730

4,95,670

I - ~~~

First Plan(195 1-56)

--- ~ -~

3,870 (1 00.0)

Second Plan(1956-6 I )

~ h i r d Plan( 196 1-66)

7,900 (100.0) 1 1,600 (100.0)

Fourth Plan ( 196'1-14)

Fifth Plan(1971-79)

24,880 (1 00.0) 53,410 ( 1 00.0)

Sixth Plan(1980-85)

-~

1,58,710 (100.0)

- Seventh Plan(1 985-90)

Eighth Plan(1992-97)

:3,48,150 (100.0)

8,71,000 (100.0)

Source: VLII.IOII.\ /.lve Year I'lan Docu~~?i,~lr.v

The total oi~tlay i n the First Plan was quite modest and it was more

than doubled during the Second Plan reflecting the tremendous sense of

confidence which the planners acquired afier the success of the First Plan. But

because of resource constraints and specially due to severe foreign exchange

shortage, the Third Plan outlay was only about 5 per cent more than that of

the Second Plan. From the Third Plan onwards, however, the increase in the

total outlay was over 100 per cent compared to the previous plans and the Sixth

Plan outlay in money terms was indeed Inore than 200 per cent of the outlay

of the Fifth Plan. This was true for the Seventh and Eighth Plans. The Plan

outlays are obviously expressed in money terms at different price levels

and, therefore, they reflect partly the inflationary rise in prices and partly

the increased effort in enhancing development programmes. Even if we

deflate the monetary in'velstment to allow for rise in prices, the real outlay

during the last three plans was really huge.

This huge increa:se in total outlay (or investment) was the result o f

the confidence of thc Planning Co~nrnission that the country could absorb

increasingly larger doses of investment and that the tempo of econornic

growth in the country warranted such a huge escalation of investment.

The Govemmcnt has also been successful in raising the rate of domestic

savings and mobilise additional resources from foreign countries and

institutions. To supplement these two sources, the Government regularly

resorted to deficit tinancing. (I)ccasionally, there have been serious

constraints of resources as during the Second Plan when the Government

could not raise the Planned resources and was, therefore, forced to "prune"

the plan.

The total outlay planned is divided in to public sector outlay and

private sector outlay. The Government is directly responsible for raising

the public sector outlay. As regards the private sector outlay, it is only an

estimate, an anticipat~or~ and the Planning Co~n~nission does not have

accurate figures to show whether the planned outlay fixed for the private

sector has been forthcoming or not.

Table 3.1 clearly points out that the share of the public sector outlay

showed a steady increase from about 54% in the First Plan to about 70% in

the Fifth Plan. There after it indicated a steady decline and was about 52%

in Seventh Plan and fell further to reach 50% in the Eighth Plan. The

dominance of the public sector was gradually declining and this was being

replaced by the growing emphasis on the private sector (Refer table 3.1).

Priorities and Pattern of Investment in the Plans

During the first six plans, the Planning Commission distinguished

between five sectors c~f development, viz., agriculture and irrigation, power

and industrq. transport and communication and social services. From the

Seventh Plan there was great refinement of the sectors of development. The

distribution of public sector outlay on major heads clearly reflects the

Commission's priorities of development in the different Plans.

Table 3.2 Sectoral Outlays during the Plans

In 'l'able 3.2 we observe that the Government outlay on each sector

(Rs. Crores)

has continuously increased with every plan. For instance, the actual

allocation on agriculture and irrigation was of the order of Rs. 600 crores

Communi

-~

Agriculture Power

irrigation --

600 260

in the First Plan, this had increased to Rs. 26,130 crores by the Sixth Plan

Fifth Plan 8,640 7,400 9,580 (1 974-79) (22) (26) Actuals

26,130 16,950 Sixth Plan (24)

Seventh Plan (22.0) ((28.2) (13.4)

Eighth Plan (9.7)

Source: Vurious Five Yrur Plan docu~nents

Industry

120 First Plan

1 4 : 1 3 ) ! (6) (31) Second Plan (10) Third 1,250 plan Fourth 3.810 2,450 Plan (15)

1,080 (24) 1,970 (23)

3,630 (23)

anti Rs. 102.730 crores by the k;ighth Plan. Likewise, allocation on power,

industries, transport and communications had increased considerably but

the most significant increase was on industries-from Rs. 102 crores to over

Rs. 5 1,100 crores.

Agriculture and Irrigation

Except during the First Plan; when agriculture and irrigation was

allotted 3 1 per cent of the total outlay, all other Plans allocated between 20

to 24 per cent of the total outlay on agriculture and irrigation. The

relatively lower percentage of funds allocated to agriculture and irrigation

from the Second Plan onwards, has come in for serious criticism at the

hands of the (iandhian economists who argued that the Indian strategy of

development had ignormed agriculture.

Power Programmes

The allocation on power development was unfortunately low during

the First Four Plans- between 10 to 15 percent of the total outlay. The low

priority given to power development was sought to be justified at that time,

on the ground that the industries had not come up so fast and that progress

in rural clectrification and in the use of electric power in the railway

transport system was inadequate and did not need much investment. This

proved to be a wrong judgment on the part of the planners. With rapid

industrialisation and extensive demand for power both in rural and urban

areas, the country reeling under severe power shortages and the country's

production ef't'ort has been severel? curtailed by load shedding almost in all

parts of the country. It vvari only in the Seventh Plan that the allocation on

power was raised rather steeply to 28.2 percent of the total outlay.

Industries and Minerals

The high priority given to agriculture and irrigation in public sector

programs in the First Plan was at the cost of low priority given to

industries. On account of limitation posed by scarce capital resources, the

development of large-scale consumer goods industries was left entirely to

the private sector. But from, the Second Plan onwards, the relative share of

industries and minerals was raised sharply- from 6 percent in the First Plan

to 24 percent in the Second Plan. The allocation on industries has generally

been around 24 percent of the total public outlay till the Sixth Plan. In the

next two plans. outlays or1 industries declined steeply.

An important point to note here is that the public sector outlay on

industries was tnostly on the large- scale industries and that too on heavy

and basic sectors. Only a small token allocation was made for the

development o f village and small-scale industries. This was also a standing

complaint on the part of Gandhian econoinists who criticised that only lip

service was paid Lo the sl-nall and cottage industries from the point of

employment. clccentralisation of income and favourable effect on

production and the prict: level. In practice, however nothing special was

done to the tiny and the small sector.

Assessment of the Five Year Plans

The First Plan was a great success, as the production targets especially

in the agricultural sector were more than hlfilled and the three short-term

objectives, viz.. rehabilitation of the refuges, food self-sufficiency and

control of prices were more or less realised.

Though more ambitious, the Second Plan could not be implemented

fully because of the acute shortage of foreign exchange and the Planning

Comn~ission had to prune the development targets. Besides the country had

started experiencing rise i.n prices. 'l'he Second Plan was a thorough failure

because the targets could not be realised. The country suffered one of the

severest fanines in a hundred years during the last year of the Plan (1965-66)

besides, India had to go through two major conflicts with China and Pakistan

and during the lndo-Pakistan contlict, India was let down badly by the

major aid-giving countries. The tailure of the Third Plan forced the

planners to the suspension and postponement of the Fourth Plan by three

years -- sarcastically called the "Plan holiday".

The 1:ourth Plan, when it was introduced after a gap of three years,

was an ambitious plan as it aimed at an annual growth rate of 5.5 per cent

(as against an average of 3.5 per cent during the previous plans) to attain

self-reliance and the provision of a national minimum. The first two years

of the Fourth Plan were q ~ ~ i t e promising, with record hodgrains production

and equally rising indu'strial production. But next three years of the Plan

proved a great disappointment with successive failure of monsoons, decline

in foodgrains production, failure on the industrial front due to power

breakdowns and load shedding, transport bottlenecks, industrial unrest, etc.

Above all, the price situation deteriorated to crisis proportions and the

whole of 1970 was indeed, a difficult year. The rapid rise in prices from the

middle of 1972 completel:y upset the cost calculations of the Fourth Plan

development projects. Above all. the country had to cope up with huge

influx of refugees from Bangladesh and the Indo-Pakistan war of 1971.

The I:ourth Plan. in other words, failed after the mid-term.

The Fifth Plari was in the throes of a serious econornic crisis in the

fonn of a run-away inflation. Thc Fifth Plan cost calculations based on

1971-72 prices proved to bc co~nplctely wrong and the original public sector

outlay of [is. 37.500 crores had to be revised upwards to a little over Rs. 39,

430 crores. Moreover. atier the promulgation of internal emergency in 1975,

the emphasis shifted to the implementation of the Prime Minister's 20- point

Programme and the Firth Plan was relegated to the background. When the

Janata Party came to power. in 1977 it tenninated the Fifth Plan in 1978.

This was an unwise step since it made the constitution and working

of the Planning Commission as well as the Plan formulation change with

the assumption of every Government at the Centre. So much so, with the

coalition governments csonling to power at the Centre, the formulation of

five year plans has become difficult and often a cruel joke. No body seems

to be seriously concerned with the formulation of the Five Year Plans.

The Sixth Plan, for instance, was originally introduced by the Janata

Party for the period 1978-.83 but later it was replaced by a new Sixth Plan

for the period 1980-85 following the assumption to power of a new

government. During this period the Indian economy made an all-round

progress and most of the targets fixed by the Planning Commission were

realised, though during the last year of the Plan (1984-85) many parts of

the country faced severe famine conditions and the agricultural output was

less than the record clutput of the previous year. Broadly, however, the

Sixth Plan could be taken as a success.

The Scvcnth Five: Year Plan (1985-90) attempted to accelerate the

growth in foodgrains production increase in employment opportunities and

raise productivity. In other words, the focus of the Seventh Plan was on

food, work and prodluctivity. The Seventh Plan was heralded as a great

success since thc Indian economy recorded 6% per cent rate of economic

growth during this plan against the targeted 5 per cent. The decade of the

Eighties (the Sixth and Seventh Plan) witnessed a creditable average

annual rate of growth of 5.8 per cent as against the average of 3.5 per cent

in the previous five plans. The Indian economy. finally, crossed the barrier

of what Professor Raj Krishna called "the Hindu rate of growth"

The introduction of the Eighth Plan was postponed by two years

because of polltical changes at the Centre, but once it was implemented

(1992-97) and the country witnessed a new take-off of high GDP growth

and industrial resurgence. During the Eighth Plan. India registered the

highest annual rate of growth of 6.8 per cent and the interesting point was

that this order of growth rate could be achieved even though the share of

the public sector in total investment had declined considerably to about 34

per cent. With the adoption of economic refonns and liberalisation, the

importance of the private sector and movement towards market based

economic system were both responsible for the higher rate of economic

growth during the Eighth Plan.

Pattern of Financing the Five Year Plans in India

The [nost tiiSficult part of planning in India and for the matter, in

any country ot' the wo~rld, is the mobilisation of financial resources. It is

easy to plan and fix targets for various priority sectors of the economy but

it is difficult to find the necessary finances to implement the planned

prqiects. 'l'he (iovernmenl of India taxes the public and uses the proceeds

for econornlc developmenl; it collects the savings of the public in various

ways; it float loans within the country and also raises funds from foreign

sources. If all these sources are found inadequate, the Government resorts to

deficit financ~ng to finance its projects. The sources of finance available to the

government may broadly be divided into three categories:

(a) domestic budgetary sources,

(b) foreign assistance, and

(c) deficit financing

Domestic budgetary resources are the funds raised by the

Government within the country and they consist o f :

(a) surplus from current revenues that is, funds of current revenues over

current expenditure,

(b) contribution of public enterprises,

(c) mobilisation of internal private savings, though market borrowings,

small savings, provident funds, etc; and

(d) additional resource mobilisation in the form of additional taxes and

additional revenue fiom public enterprises.

External assistansce consists of loans and grants from foreign

countries, loans from international institutions such as the IMF, the World

Bank and the IDA, etc.

If the domestic budgetary resources and external assistance are

found inadequate to finance all the development projects, the Government

will still decide to continue to implement all its cleveloprnent projects

through deficit financing. This gap in expenditure over revenues is

respectively called deticit financing and the excess of expenditure over

income is financed through borrowing from the Reserve Bank of India or

by using accumulated cash balances.

So far we saw the sources of finance available to the public sector

prqjects. We may mention the sources of finance available to the private

sector also. Firstly, the savings of the individuals households firms and of

the companies are available to the private sector either directly or through

the banking system. Secondly, the private sector gets funds from public

sector financial institutions such as IFCI, SFCs, ICICII, IDBI, etc. Thirdly,

the private sector may raise funds from the market through floating shares

and debentures. Finally, it may get foreign funds in the from of equity

capital or foreign collaboration. subscription to equities from non-resident

Indian (NKls). from the: International Financial Corporation (an affiliate of

the World Bank), loans from the World Bank, and so on.

In the analysis of "financing of Five Year Plans", the study proposes

to concentrate only on the financing of the public sector only.

Table 3.3 Sources of Plan Finance: First Eight Plans

Table 3.3 indicates the share of the three sources of plan finance in

-

First Plan 100

Second Plan 100

Third Plan 100

Plan 100

Fifth plan 100

-

Sixth Plan 100

Seventh plan 1 0

Eighth Plan 100

Source:

all the five year plans. The figures mentioned under each Plan are actual

and not the originally intended or planned amounts. Table 3 shows clearly

that of the three sources of Plan finance, the most important were the

--

Budgetary

domestic budgetarj resources. For instance, they accounted for 73 percent

Resources - Amount % (Rs. Crores)

1.440

- -

2,560

5,090

. -~ --

12,010

--

32.1 20

-~

86,610

External Assistance

of the total funds raised during the First Plan. How ever, they came down

%

73

56

59

74

--- -.

82

78 -

1,34, i 90

Amount % (Rs. Crores)

____1_~

%

16,120

-

3.32.100 19,230 -- - -. -.

190 1 I 0 I 7-

1,090 24 . I

9

5

2,390

2,090

5,830

8,530

Various Five Yrur Plan Docurnent,~

' 28

-

13

15

8

to 56 and 59 per cent during Second and Third Plans respectively. This

reduction was due to the Government's attempt to rely increasingly on the

other two sources of finance. From the Fourth Plan onwards, how ever,

budgetary resources have again become the dominant source of Plan

finance- as much as 86 per cent in the Eighth plan.

Shift in Favour of Foreign Aid and Deficit Financing

Our planners were carried away by the success of the First Plan and

the presence of such favourable factors at the end of the First Plan as the

relative self - sufficiency in food grains, stability of prices in general and of

foodgrains prices in particular, despite a high dose of deficit financing

during the First Plan period and the enthusiasm and willing co-operation of

foreign governments anti international institutions (IMF and the World

Bank to assist India in her planned economic development). Accordingly,

our planners planned for (a) massive increase in the six of our plans,

(b) proposed to raise large financial resources by way of foreign aid and

(c) leave large uncoveretl gap (deficit financing) during the Second and

Third Plans. For instance. as against 10 per cent of external assistance in

the First Plan. the Second and Third Plans had raised 24 and 28 per cent

respectively of the needed funds by way of foreign assistance. Deficit

financing during the Second Plan was brought down during the Third Plan

to 13 per cent of the aggregate resources because of the emergence of

inflationary pressures during the latter part of the Second Plan.

A careful consideration of data in table 3.3 reveals a clear shift in

resource mobili~ation kern the Fourth Plan onwards. Long before the

fourth Plan was introduced in April 1969. the Government of India had

already experienced the adverse effects of dependence on foreign

~ovemments '" and the undue pressure of international financial

institutions. As a result, the Fourth Plan included self-reliance as a major

objective of planning. External assistance was reduced from 28 per cent to

13 per cent during the Third Plan. Extemal assistance was gradually

reduced to 5 percent during the Eighth Plan.

At the same time, the Government was fully alive to the adverse

consequence of deficit financing in the form of pressure on prices. Even

though deficit financing vuat; kept at 13 per cent during Third and Fourth

Plans, it was reduced to 3 per cent in the fifth Plan, but rose sharply to 14

per cent in the Sixth plan (as against the original estimate of 5 per cent) and

16 per cent during the seventh plan.

Reduced dependence on foreign aid and less recourse to deficit

financing naturall? forced the Government to rely increasingly on

domestic budge ta~ resources. Accordingly, from 59 per cent in the Third

Plan, domestic budgetary resources contributed 74 per cent of the

aggregate finances during the Fourth Plan and 82 per cent during the Fifth

q Plan and 86 per cent during the Eighth Plan.

Domestic Budgetary Resources

Let us now consrder the domestic budgetary resources in some

detail. As already indicated, domestic budgetary resources comprise of

surplus from current revenues, contribution from public enterprises, market

borrowings, small savings, provident fund contribution, term loans from

financial institutions, miscellaneous capital assets and finally, additional

resource mobilisation (in the form of taxes or in the f o n of resources from

the p~lblic sector enterprises). The relative importance of these components

of domestic budgetary resources in the different plans is given in Table 4.

Balance from Current Revenues

The traditional view has always been that current revenue should be

used for meeting current expenditure. However, as far back as 1950-51, the

Planning Commission accepted the recommendation of the Taxation

Enquiry Commission Chaired by V.T. Krishnamachari that the current

revenue of the Government could and should be used partly to finance

economic development. The idea was to restrict current expenditure, create

a surplus from current rt:venue and use the same for financing economic

development. In theory this was a wise step and the planning Commission

dutifully provided for a cerlain amount of revenues as surplus from current

revenues. In fact the First Plan raised as much as 25 per cent of the total

financial resources fiom this source. But for the next three plans (Second,

Third and the t:ourth), the surplus from current revenues was negative.

Indicating that. instead orf restricting current expenditure and accumulating

a surplus in the current account, the Government was having net deficits. In

spite of its best intentions to restrict its current expenditure, both the

Central and State Goveniments were not able to do so, partly because of

multiplication of ministries and depxtments and mindless expansion in the

number of Government servants and partly because of rise in salaries and

dearness allowances. In the case of the Central Government, another

important cause of rise in current expenditure was the rapid growth in

subsidies, defense expenditure and interest payments. Even the surplus

shown in the Fifth Plan was not really a surplus but only an anticipated

surplus. The sixth Plan provided for a surplus in current revenues

amounting to Ks. 14.480 CI-ores or 14.9 per cent, could actually generate

very small surplus of Ks. 1,890 crores, accounting for only 1.7 per cent of

the aggregate resources. 'The Seventh and Eighth plans have shown huge

negative balances from current revenues.

Table 3.4

Contribution from Public Enterprises

Relative Significance of the Components of Domestic Budgetary Resources in Various Plans % of Total plan Resources

The contribution from public enterprises was not much but as Table

--

Fourth Plan

--

Domestic 59 I 74 Budgetary Resources of

1 I

which

current revenues I

9 from public enterprises

(c) Domestic 25 40 private savings -

(d ) Additional 13 34 27 resource mobilisation (ARM) ~

3.4 show, it has been rising steadily over the years: from about 3 per cent

in the Second Plan, profits of public enterprises had risen to 9 per cent in

Sources:. Various Five Year Plrrn Docummts

Fifth Plan

82

13

4

28

37

-

the Forth Plan and nearly .5 per cent in the Sixth Plan. As a matter of fact,

Sixth Plan

78

2

5

41

30

the contribution from public enterprises has always been much less than

what was originally planned for. Many of the Central Government

enterprises have been running at losses and even the contributions of such

department undertakings as the railways and posts and telegraphs have

been minimal. I he bright stops have been the Reserve Bank of India and

other banking and financial institutions and some commercial enterprises

like Indian Oil Corporation, which have been yielding regular profits to the

Government. As far as State enterprises were concerned, the less said the

better. The State Electricity Boards (SEBs) and the State Road Transport

Corporations (SKTCs) which are the two major state enterprises have been

running at loss throughout the planning period. The loss of SEBs are

around Rs. 1,5000 crores per year and the loss of SRTCs are around Rs.200

crores per year. Further, states incurred an annual loss of Rs.700-1000

crores on commercial irrigation. In spite of their poor record, the planners

vainly expect increasingly larger contributions from the public sector

enterprises in every Plan.

Domestic Private Savings

Our experience from market borrowings and small savings- the two

components of domestic private savings in the country, in the last six plans

has been good. In fact these two sources have come to play an important

role in raising finances for development. During the First Plan, domestic

private savings contributed more than one-third of the aggregate resources,

but in the next two plans, lheir importance was reduced marginally, as the

Planners put more faith in external aid and deficit financing. In the Forth Plan,

the Government was so concerned about self-reliance and the need to reduce

dependence on foreign aid that it went in for a massive effort to raise financial

resources within the country. It may be observed that during the Fourth Plan,

domestic private savings accounted for 40 per cent of the total financial

requirements. In the Sixth I'lan, the original estimate was that the domestic

private savings should contribute Rs. 36,400 crores or 37 per cent of the

aggregate planned investment. However, the Government succeeded in

raising. Rs. 45.930 crores or 41 per cent of the total investment. In the

Seventh and Eighth Plans the importance of this source of plan finance

continued to rise due to two reasons.

(a) The Government ha:j a good and extensive captive market in the

form of nationalised banks. public sector financial institutions,

public provident funds, etc. which are able to supply almost any

amount of funds needed by the Government.

(b) With rise in national and per capita incomes, the ability and

willingness to save among all sections of the people particularly the

middle classes has been increasing and the Government has also

been encouraging this tendency to save through appropriate tax

incentives (as tor example, interest income and dividend income is

exempted from income -tax up to the value of Rs. 15,000).

Accordinglj. domestic private savings contributed 58 per cent and

62 per cent respectively during Seventh and eighth Plans.

Additional Resource Mobilisation

Under this head, vie bring in two sources of raising funds for

development. The first is additional taxation which has been an important

source in all the plans. l 'he second is the additional resource mobilisation

through public sector enterprises by raising their prices (or what is now

called, through raising the administered prices of goods). That additional

taxation has become an important source of development finance would be

clear from the fact that its contribution was 13 per cent in the First Plan, 23

per cent in the Fourth Plan and 30 per cent in the Sixth Plan (as against the

original estimate of 22 per cent). While the tax burden on the urban

consumers seems to have reached the maximum, there is considerable

scope for additional taxation on rural incomes. There is high degree of

prosperity among the fanr~ers due to the green revolution and part of the

additional income of the i'iirrning community could be easily collected for

development purposes.

The Govern~nent has found it easy to raise the administered prices

of goods and services produced and sold by the public sector enterprises,

such as petrol. Steel. Coal. etc. But the public opposition to the price hike

in essential commodities in the beginning of 1986 was an eye-opener to the

Government and it was hoped that public opposition would restrain the

Government from raising additional resources by this method in the future.

However the Government has continued to use this method till now.

As dependence on foreign assistance and deficit financing have

serious adverse conseqilerlces for the country, the Government has been

relying increasingly on domestic budgetary resources. All the different

constituents of domestic resources. particularly additional taxation, market

borrowings and small savings and contribution from public enterprises

have their o w importance. To the extent the domestic resources are used

to meet Plan requirements, our dependence on deficit financing and foreign

assistance will be reduced.

Review of 50 Years of Planning in India

From what we have described above, it may be inferred that most of

India's Five Year Plans dld not succeed in producing the anticipated

results. When we say that a particular plan did not succeed, it only means

that the targets fixed during a given Plan were not achieved fully. But we

should remember that with every five year Plan, India could start at a higher

level of growth and development. We shall now take a birds eye view of the

concrete achievements of the development plans between 195 1 and 1997.

Achievements of Planning in India

1. Increase in national and per capita income

One of the basic objectives of economic planning in our country is

to increase national and per capita incomes. As a direct consequence of

economic planning. India's national income and per capita income rose,

though not as rapidly as the planners planned and anticipated. Table 3.5

brings out clearly the rise in national income (i.e., net national product at

factor cost) and per capita income. since 1950-51 at 1980-81 prices.

Table 3.5

Growth of National Income and Per Capita Income

(at 1980-81 prices)

Net National product I Index 1 Per capita NNP Year j (Rs. Crores) (Rs.) I Index

1970-7 1 ~ ~ ~~ --

1980-8 1 1,10,690

1990-9 1 1,86,450 465 2,220 ~p

197

1996-97 639 2,760 ~p

245

Average Annual Rates

1980-8 1

1980-81 to 1996-97

I

Source: Gor<,rnmml ol'lndia, E~,or~omie Survey, 1998-99

From table 3.5, we find that national income rose iLom Rs. 40,450

crores at the beginning of the First Plan to Rs. 2,58,470 crores at constant

prices at the end of the Eighth Plan. The index of NNP at constant prices

had risen from 1 00 to 639, i.e., by nearly 6.4 times.

On the other hand:, the per capita income in real terms had, however,

increased at much lower rate indicating that part of the increase in real

national income had been eaten up by the increase in population. Table 5

shows that per capita income at 1980-81 prices had risen from Rs.1,130 to

Rs. 2, 760 between 1951 and 1997. While national income had risen from

100 to 639 between 1951 and 1997 per capita income had risen from 100 to

245 only during the same period.

Between 1950-51 and 1996-97, the growth process of the Indian

economy can be divided into two broad periods: (a) 1950-51 to 1980-81,

and (b) 1980-81 to 1956-97. During the first period, Indian economy

increased at an annual average growth rate of 3.4 per cent in NNP and 1.2

per cent in per capita NNP (contemptuously called the Hindu rate of

growth by Prof. Kaj Krishria) Horn ever, during the second period, (i.e.,

1981 and 1997) the Indian economy crossed the barrier of the Hindu rate of

growth and showed an average rate of growth rate of 5.3 per cent in NNP

and 3.2 per cent in per capita income.

101

Table 3.6 shows the growth performance of the Indian e m o m y

under each plan.

Table 3.6

Growth Performance in the Five Year Plans

I. First Plan (195 1-56) C -

2. Second Plan (1956-861)

3. Third Plan (1 96 1-66) I-- --

1 4. Ponh Plan (1 969-74)

F h Pan 1 9 7 - 7 ) ';I :;" .. -

Sixth Plan (1980- 85)

1 7. Seventh Plan (1985 -90) 1 5.0 1 6.0 1 Eighth Plan (1992-97)

-- --

Ninth Plan ( 1997-2002)

Note: The growth of the lirst three Plans were set with respect to national income. In the Fourth Plan, it was with the NDP. In all the subsequent plans. the GDP has been used.

Source: Plunnmng :(hmmi>:sion, Ninth Five Year Plan (1997-ZOOZ), V o l l

From 'Table 3.6, it i s clear that the actual growth rates have been

fluctuating up to the Fourth Plan between 2.8 to 4.3 per cent. Besides, the

actual growth rate was les:j than the target fiom the Second Plan onwards

and particularly during the h i r d and Fourth Plans. But from the Fifth Plan

onwards, there has been a steady iinprove~nent in GDP growth from 4.8 per

cent per annum during the Fifth Plan to 6.8 per cent during the Eighth Plan.

This was indeed a healthy development.

2. Progress in Agriculture

During the last 50 years, 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 and 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 considerably though not to the extent planned by the

Government. In the initial years of planning, additions to agricultural

output were secured more fiom extension of the area under cultivation than

from increases in production per hectare. Since 1960-61, the dominant trend

was that of higher yields h o r n the land cultivated. To increase agricultural

productivity, efforts were made to enlarge the supply of water, fertilisers,

pesticides, improved seeds, etc, in selected areas. This strategy was called by

various names, buch as the new Agricultural Strategy, Intensive Agricultural

District Programme (IADP). High Yielding Varieties Programme ( H W P ) ,

or the Green Revolution. Table 3.7 outlines the progress of selected

physical agricultural development programmes since 195 1.

Table 3.7

Progress in the Use of Agricultural Inputs Since 1950-51

Table 3.7 clearly demonstrates the progress in the use of agricultural

~

Programme

Consumption of chernical -

Fertilisers (m. tonnes)

High yielding varietit:~ ~

Programme(m.hectares) -

of which.

Paddy (rn.hectares) .-- -~ -

Wheat (m.hectares) -

Irrigated area (mhectares) ~ - - - .- -

inputs. In the beginning of the First Plan, consumption of chemical

fertilisers (consisting of nitrogenous, phosphatic and potassic fertilisers)

Source: Government o f l n , d i ~ . Economic Survey, 1998-99

1950-51

0.7

Nil

Nil

Nil

22.6

was less than a million tonnes; this had increased to over 14 million tonnes

by the end of the Eighth Plan. The high yielding varieties programme

1970-71 -.

2.2

15.4

5.0

6.5 -

38.0

(HYVP) was started during the Third Plan (1961-66) but by the end of the

1996-97

14.3

76.4

33.4

23.7

80.7

Eighth Plan over 76 million hectares of land had come under this

programme-nearlj 75 per ct:nt of this area was under improved varieties of

rice and wheat. Area under irrigation had gone up from nearly 23 million

hectares to nearly 8 1 million hectares

The progress in the use of agricultural inputs has been specially

spectacular in the production of rice, wheat, potatoes, etc. An idea of the

progress in agriculture under the Five Year Plan can be had from Table 3.8.

Table 3.8

Agricultural Production under Five Year Plans (1951 to 1997)

'Table 3.8 shows clearly the spectacular agricultural progress India

7 - - --

~-

Foodgrains (m.tonnes)

~-

Rice(m.tonnes) . -

Wheat(m.tonnes)

has made since 1950-5 1 . Foodgrains production had gone up from 51

million tonnes at the beginning of the First Plan to 199 million tonnes by

7-

1950-51

.-

5 1

2 1 -

7 .-

the end of the Eighth Plan-increase by more than five times. Likewise,

I

1970-71

108

42

24

Oil seeds (m. tonnes)

--

Source: Govrvntnent oflndiu, Economic ,Turvey, 1998-99

10

-. 2

126

6

6

5

5

-.

I

1996-97

199

82

69

I Increase(%)

between 1951and 1997 -

290

290

886 -

24

278

14

11 --

24

Sugarcane 57 (m. tonnes of gur)

380

388

367

-

267

1,100

~- ~- Cotton (m. bales)

-~

Jute & mesta -~

(m.bales) -~

Potatoes (m.tonnes) --

-- .)

--

?

3 -

2 -.---

every crop. production had increased by three or four times. Of course, the

most spectacular increase was in wheat and potatoes. All this has been

made possible because of the success in planning. Of course, there have

been many shortcomings, :such as failure to fulfil the targets of production

in many crops. shortfalls in the production of pulses and oilseeds in the

face of continuous rise in demand for them and year --to-year fluctuations

in the production of commercial crops such as sugarcane cotton and jute.

3. Progress in lndustrj

Table 3.9 gives the progress in some basic industries only which is

quite impressive. Equally impressive is the progress in metallurgical

industries, chemical and allied industries, etc. A major achievement in the

industrial sector has been the diversification of Indian industries.

During the lirst Eight Five Year Plans (1951 to 1997), the Government

had invested heavily on the development of industries, on the expansion of

transport and communications, generation and distribution of electricity, etc.

Between 53 to 55 per cent of all planned outlay of the Government in each

Five Year Plan was on these sectors. As a result, there has been considerable

progress in such industr~ies as steel, aluminium, engineering goods,

chemicals, fertilissrs and petroleum products.

Table 3.9

Progress of industrial Production (Selected industries) .

1950-51 1970-71 1996-97 -

1 .Coal (m.tonnes) 32 76 308 -~

2.Iron ore (rn.tonnes) 3 32 66 -

3.Fertilisei-s (m.tonnes) 0.02 1 12 . -

4.Cement (m.tonnes) 3 14 74

5. Finished steel(m.tonr~es) 1 5 23 -

6. Aluminium (000 tonnes) 4 169 524 . -

7.Petroleurn 0.3 7 33 . . -- -

8. Electricity(billion kwh) 5 56 395 --- .. --

Source: Government of India, Economic Survey, 1998-99

Appreciating the process and rapid development of industrialisation,

the Janata Governments Sixth Plan states: "A major achievement has been

the diversification and expansion of India's industrial capacity with the

public sector playing a leading role. The country is self sufficient in

consumer goods and in basic commodities like steel and cement, while the

capacity of other industries like fertilisers is rapidly expanding. The growth

of capital goods production has been particularly impressive., and India can

now sustain the likely growth of most of her industries, whether textiles,

food processing or cement or chemicals. metallurgical industries, power or

transport by thc domestic production of capital goods needed with only

marginal imports".

As a direct ccmsequence of the increase in planned production in

agriculture, industry and in all other sectors of the economy, per capita

availability and consumption of essential commodities had increased in

India. Table 3.10 shows how the net availability of foodgrains, sugar and

other basic necessities had increased since the beginning of the First Plan.

Table 3.10

Net Per Capita Availability of Some Essential Consumer Goods in India . - -

Items 1950-51 1970-71 1996-97 -

144 167 ~.

187

2. Sugar (kgs) 5.0 7.4 14.6 -~

3. Edible oils and vanasp,ati (kgs) 3.2 4.5 9.2 ~

3 62 40 1 657 -- - -

47 40 72 ~ ---- ~

6. Eggs (number) 5 I I 29 --

7. Cloth (metres) 14 16 29 - --- . -

5 56 395 -- These figures in column- I relate to the year 1955-56, that is, the last year of the First Plan.

Source: Governmrt~~ ~~firrc/ru, l<c(,'nomic Survey, 1998.99.

Table 3.10 shows that, between 1951 and 1997 per capita consumption

of foodgrains (i.c.. cereals ant1 pulse) had increased considerably-between a

modest 30 per cent in the case of cereals and pluses to nearly 200 per cent in

the case of sugar. 500 per cent increase in the case of eggs and 2300 per cent

increase in the consumption of domestic electric power. The increase in per

capita consunlption of essential consumer goods would have been much

greater if population had not risen from 361 million to an estimated 948

million between 195 1 and 1997 or if population growth had been

effectively controlled. It is also interesting to observe that despite increase

in per capita consumption of essential consumer goods, savings as a

proportion of GLIP had increased from 10.4 per cent in 1950-5 1 to 26.1 per

cent in 1996-97.

4. Development of economic infrastructure

Another achievement of great significance is the creation of

econo~nic infrastructure which provides the base of the programme of

industrialisation. The expansion of roads and road transport has led to the

enlargement of the market.. Irrigation and hydroelectric projects have given

a big boost to agriculture and also provided energy for installing factories

and other modern establishments in small towns and cities. The

infrastructure has opened the possibilities of modernising semi-urban and

rural areas. The Janata Sixth Plan rightly mentions: "A large infrastructure

has been built to sustain this sub-continental economy: the network of

irrigation storage works and canals, hydro and thermal power generation,

regional power grids. a largely electrified and dieselised railway system,

national and state highways on which a rapidly growing road transport fleet

can operate and telecommunication system covering the most urban

centers and linking India with the world.

5. Diversification of exports and import substitution

As a consequence of the policy of rapid industrialisation, India's

dependence on foreign countries for the import of capital goods had declined.

Similarly, quite a good number of consumer goods imported earlier are being

produced indigenously. This has led to import substitution. Consequently, the

commodity composition of India's exports has changed in favour of

manufactures, mineral ores and engineering goods.

6. Development of science and technology

Another achievement of s~gnificance is the growth of science and

technology and the development of technical and managerial cadres to run the

modem industrial structure. This has significantly reduced our dependence

on foreign experts. Being relatively more advanced than some of the other

underdeveloped and developing countries, India has started exporting

technical experts to middle East and African countries. This is a matter of

legitimate pride for the country.

7. Development of educational system

One of the great ;achievements of Indian planning is the development of

a huge educational system.-the third largest in the world. As against a total

enrolment of 239 lakhs nn 1950-51. enrolment at the end of the Eighth Plan

(1996-97) was of the order of 1,827 lakhs. The enrolment of pupils at the

primary level increased from 192 lakhs to 1,118 lakhs during this period.

As a percentage of pop~~lation in the age group 6 to 1 I , it improved from

3 1 per cent to 84 per cent between 195 1 and in proved from 31 lakhs to

4 10 lakhs between i 95 1 artd 1997 and as a proportion of the population in

the relevant age-group ( 1 1 to 14). it improved from 13 to 68 per cent.

Similarly, at the secondary level, total enrolment improved from 12 lakhs

to 249 lakhs between 1951 and 1997 and as a proportion of the population

in the age group (14 to 17) it improved from 5.3 per cent to 32.4 per cent.

Total number of students enrolled in colleges and Universities increased

from 3.6 lakhs to 43 lakhs between 1951 and 1997. Such a huge expansion

of the educational system is a major achievement of the planing era.I7

Reviewing the overall achievements of planning in India, Sixth Plan

(1978-83) stated: "it is a cause of legitimate national pride that over this

period a stagnant and dependent economy has been modemised and made

more self-reliant. Moderate rate of growth of per capita income has been

maintained despite the growth of population". A sinlilar opinion was

expressed by Professor D.T. 1,akdwala who, while reviewing national

achievements after 40 years of planning wrote: "There has been some

satisfaction with the ect~nomic progress made by India on several fronts-the

rate and diversity of econornic growth, the increase in savings and investment,

the almost entire self-rt:liance realised in foodgrains production, the high

transformation in the s0uc:ture of industry, the capacity in training highly

skilled manpower so as to lead to an exportable surplus in certain lines, the

extension of normal and special banking facilities to hitherto unbanked

areas and sectors, the unprecedented expansion of state, quasi-state and

cooperative institutions i n marketing and technical aid and guidance, etc.

Some indicators of the quality of life like expectation of life at birth, death

rate, infant mortality rate have also recorded a welcome changev.'*

From the credit sicle of the account, let us now turn to the debit side

and focus attention on the fundamental failures of planning in India.

Failure of Planning in lntlia

In his book "Development Planing -the Indian Experience:

Professor Sukhamoy Chakravarty points out three major weaknesses and

failures of Indian planning. The first. major defect is the gross inefficiency

of production in many areas. in the public sector enterprises. There are

many areas of production where inefficiency is fairly widespread, as in the

generation of po\\er. transport, steel, fertilisers, let alone high cost

consumer durables. There is no inherent reason why plant load factors in

thermal power stations hiwe to be around 50 per cent. There is much

greater scope for improving the efficiency of the integrated steel plants.

In the second place, India has not been able to enlploy proportionately

larger population in industry. The occupational structure has remained more

or less unchanged.

In the third place, the planners did not comprehend the full set of

logical implications of the Mahalanobis strategy of accelerated growth in

the context of a mixed economy. To quote Professor Chakravarty here:

"This showed that the process of industrialisation had ignored certain

important issues relating to the phasing of investment outlay. But probably

and more importantly, the ~nability to carry out effective land reform in the

early fifties when conditiclns had been reasonably opportune, along with

the maintenance of largely unchanged input base of traditional agriculture

was left largely in complete".

For nearly five decades, the Congress Government at the Centre-and

even the coalition Governments which came to power for brief periods in

between - have been constantly impressing upon the people of India that

development planning in India aims to build a socialistic pattern of society.

The (3overnments have been proclaiming measures to achieve growth with

justice, abolition of poverty (Garibi hatao), removal of exploitation and

inequality of incomes, etc. But then, it is not a slogans or political catch

phrases that matter. The crucial question, therefore, is: whether the lot of

the underdog. the weak and the under-privileged has improved? In other

words, have tht: benefiits of development percolated down to the lower

layers of Indian society or have they been appropriated by a small group of

the rich and the higher middle classes? It is the contention of many

economists and non-political observes that the poor in India have not really

benefited from economic planning and that, to a large extent, the rich have

become richer while the vast majority of the poor-particularly the Dalits

and the tribals-have remained hopelessly poor. Let us now spell out some

of the basic failures of planning in India.

i. Failure to eliminate poverty

The basic objective of planning is the provision of a national

minimum standard of living. Removal of poverty was a major objective of

planning. It was felt th;at growth rate per se would not be sufficient to

remove poverty and, instead, it would be more desirable to undertake

specific measures to remove poverty. Thus, poverty removal programmes

were made an integral part of the Fifth Plan and subsequent plans. Prof.

D.T. Lakdawala's Expert Group estimated that in 1973-74, about 55 per

cent of the population was living below the poverty line and in 1987-88,

this proportion had corne down to 39 per cent. Using a slightly modified

methodology. the Planning Commission estimated that in 1993-94, only

36 per cent ot the population lived below the poverty line. In absolute

terms, between 1973-74 and 1993-94, the total number of the poor remained

around 320 million. In this connection, Professor P.R. Hrahmananda writes:

"Instead of attacking the problem of poverty directly through wage -goods

model, the authorities preferred to initiate a number of anti poverty and

public distribution measures, which were simply in the nature of fire-

fighting exercise with large ~eakage's". '~

In other words, all throughout, India had followed a blood

transfusion approach which provided only temporary relief. It would have

been much better if India had followed a blood generation approach by

emphasising suitable employment creation.

ii. Failure to provide employment to all able bodied persons

Another basic failure of planning in India was the emphasis on

growth rather than on employment generation and the adoption of capital-

intensive production methods instead of labour intensive methods. Despite

the implementation of eight five year plans, unemployment has been on

the increase. According to the Planning Commission, the backlog of the

unemployed pcrsons was 5.3 million at the end of the First Plan and 7.5

million at the end of the Eighth Plan. The combined incidence of

unemployment and undcremployrnent was about 10.5 per cent of the

labour force at the end of 1996-97. It is the considered opinion of experts

that unless India adopts an employment-oriented strategy and aims at 3 to

4 per cent annual increase of employment with higher levels of

productivity, the chances, of reaching the goal of full employment and

alleviating under-employment would defy solution.

iii. Failure to reduce inequalities of income and wealth

It is rather doubtful that during the last five decades of planned

economic development, redistribution of income in favour of the less

privileged classes has taken place. Between 1950-51 and 1973-74, per

capita income rose by 1.5 per cent per annum. But even this small increase

was unequallq distributed. Prof. V.M. Dandekar and Neelkantha Rath

concluded, from their study in 1971 that the condition of the bottom 20 per

cent of the population had definitely deteriorated and for the next higher

20 per cent of the population had remained more or less stagnant. There

was thus evidence of increased concentration of income and wealth in the

hands of the propertied class. The Fourth Plan admitted this fact: "Another

area where our ct'forts so far has been feeble and halting is in narrowing the

disparities in incomes and property ownership".

Another method ofjudging social justice relates to the rise in prices

and changes in price structure. Prices of foodstuffs and essential consumer

goods rose at a much greater rate than the prices of luxuries and semi-

luxuries. Between 1990-91 and 1996-97, the general price index (1980-

81+100) moved up by '72 per cent but the index of foodgrains prices and

like general consumer goods matches, kerosene, cloth, vegetables etc., also

moved at a faster rate vis-a-vis articles consumed by the upper classes. In

a socialist economy, fiiilure to control the prices of food and essential

consumer goods is tht: denial of economic justice to the masses. The

situation has been worsening over the years.

iv. Failure of fiscal measures to correct inequalities and control unaccounted money

There is no doubl: that speculative gains, illegitimate incomes of

various forms through illicit gains of contractors, windfall profits from

protected markets, se:mi- monopolistic conditions created by import

restrictions and capital issues and corruption generated by licences and

quota system in various fields of economic activiQ have all resulted in

illicit income shifts in favour of the upper income classes. Inflation,

controls and the vast expansion of the public sector have breed corruption,

tax evasion and illicit speculative gains. Thus, the fruits of economic

progress instead of being shared by the masses flow in to the pockets of the

traders, businessmen anti industrialists. Even highly placed civil sewants

and the active politicians are said to be making huge accumulation of

money, financial assets and real assets.

Fiscal measures to unearth unaccounted money have failed, and

have actually buried the unaccounted money still deeper. Whereas the

Government tries to unearth black money, the capitalists, the businessmen

and speculators are keen to devise ways and means to convert black money

into private capital formation. So far in this tug-of-war, it is the capitalist

class which has been successful in dodging the State. But unaccounted

money has resulted in stimulating demand for prestige goods like scooters,

cars, washing machines. television sets, air conditioners, etc. In other

words, a part of the gains of illicit incomes is spent on conspicuous

consumption. 'l'hc Sixth Plan also reaches the same conclusion. "An unduly

large share of resources is thus absorbed in production which relates

directly or indirectly to maintaining or improving living standards of higher

income groups. Thc demand of this relatively small class, not only for a

few visible items of con:jpicuous consumption but for the outlay on high

quality housing and urban amenities, aviation and sustains a large part of

the existing industrial structure.

v. Failure to reduce concentration of economic power.

One of thc main tenets of socialism as accepted by our planners is

the reduction o f concentration of economic power. But actually, monopoly

has increased in India during the last 50 years, even though Jawaharlal

Nehru had stated categorically: -'Monopoly is the enemy of socialism". To

reduce concentration of economic power and wealth in the hands of a few,

the Government adopted fiscal measures like taxation, of wealth and

property, articles of luxurious consumption and prov~sion of subsidies on

necessaries. Although tiscal measures had a positive role to play, proper

tax rate structure remained only on paper and became the source of black

money. Similarly, a system of heavy taxation on articles of luxurious

consumption and provision of subsidies on necessaries was tried for many

years as a part of a programme of social justice but without any result.

iv. Failure to implement land reforms

One of the basic policy decisions to transfer ownership of land to

the peasantry. for which efforts were made for five decades, was not

properly implemented. I[t has been now admitted by the Government that

progress of land refoms had been rather low and that the State

governments were not eager to implement them with a speed sufficient for

a quick transition to progressive agriculture and socialism. We, have

already quoted Professor Sukhmoy Chakravarty on this point: "But

probably more importantly, the inability to carry out effective land reform

in the early fifties when conditions had been reasonably opportune, along

with the maintenance of largely unchanged input base of traditional

agriculture, meant that the agrarian transition was left largely incomplete."

Summing up

To sum up, the philosophical foundations of the planning policies

and strategy mere sound but there was crisis of irnplernentation due to the

existence of a gap between the theory and practice of socialist planning.

The planning process has been able to create social and economic

infrastructure. provide an industrial base by fostering the development of

heavy and basic industries and enlarge educational opportunities, it failed

to provide employment to every able-bodied person, eliminate poverty and

bring about institutional reforms leading to reduction in concentration of

income and wealth. Moreover. the benefits from the economic

infrastructure have accrued largely to the relatively affluent and those in

urban areas. According to the Sixth Plan, these fundamental failures of

planning emphasi~e the need for a re-appraisal of the development strategy.

It mentions. "We must face the fact that the most important objectives of

planning have not been achieved. the most cherished goals seem to be

almost as distant today as when we set out on the road to planned

development. l hese aims-implicit in all our plans more explicitly stated in

the formulation of our development strategy-are universally accepted by

the Indian people: they are the achievement of full employment, the

eradication of poverty and the creation of more equal society."

References and Notes

I See world Hank. "External Deht of Developing Countries, 1990-PI" Washington D.C., p.46

See Nrhru fo Kuo- Nee- coJonisationprocrss in India P.J. James Chapter 2, p.29 ' See Nehru to Rao, Neo-colonisation process in India, P.J. James Chapter 2, p.33 4 As a matter of fact, by this attack on l~nport Substitution Industrialisation (ISI), the

experts themselves wen: contradicting the position taken by them at the time of decolonisation. ie, when they were wholeheartedly supporting the ECLA thesis based on keynesian prescriptions which gave primacy to employment generation and growth rather than balance of payments adjustment. At a global level, the IS1 strategy was first advocated by the economists associated with the Economic commission for Latin America (ECLA) appointed by UN in 1948. On the basis of the statistical findings based on the international trade data pertaining to Latin American countries, these economists came to the conclusion that there was a secular deterioration of tr:mls of trade ofthese countries.

Aid lndia Consortium (PLIC) is one among the 18 consortias established under the chairmanship of World Bank to monitor the economies of 18 newly independent third world countries. The members of AIC were the following chairman. World Bsnk, members, IMF, IJNDP (United Nations development programme), IFAD (International Fund for Aj:ricultural Development) ADB (Asian 1)evelopment Bank), CEC (Commission for European Communities) NIB (Nordic Investment Bank) USA, Britain. Germany, Japan, France, Netherlands, Sweden, AIC has been reincarnated as IDF (India Development Forum) in which representatives from MNCs, international financial speculators and capitalist sections in lndia are included.

6 The Nehru and others did not take note of this remains an enigma even to day. That Nehru did not what to compromise as the political sovereigrity of liidia is beyond question; but he failed to see through the capitalist strategy was tragic to Indian Democracy.

7 External Assistance Dur,ing the Plans-complied from economic survey-various years.

See Michael Kidron. fik~reign Invrsiments in India, p.6 9 '2.1'. Kurian. t;lohrrl ('upitalism andihe Indian Econorny, p.34

In All of them being representatives of multinational banks I I Economist like I.(;. Patel and Ashok Metha had that view '' Leftist Economists like Sarnir Amin and Prabat Padnaik had that view

I3 External Assistance During the Plans-complied from economic survey-various years.

14 Quoted from World Bank op. cit. I S Planning Commission, Dral't Five Year Plan, (1978-83), p.9 16 (American and British pressure against lndia during Indo-Pakistan conflict in 1965)

and the undue pressure of international financial institutions (the pressure of IMF to devalue the rupee in 1966).

17 Government of lndia Econornic Survcq (1996) 18 Government of lndia Economic Survey (1996) I9 Brahmananda P.R 50 Years of Free Indian Planning (1997), p13

Other References

I. Five Year Plan Documents 1-8, Planning Commission, Government of lndia, New Delhi

2. Robert E. L-l l.ucas and Gustav F Papanek (1988), The Indian Economy Recent Developnrent and Future .Prospects, Oxford University Press.

3. Lewis John P. Indian Polific,d Economy, Delhi, Oxford Universitj Press (1997)

4. Uppal J.S.. 11idrun Ec<~nonzic Plunning, Macmillan India Limited, Delhi (1984)

5. Bardhan Pranab, The Poiiti~:al Economy of Development in India, Delhi, Oxford University Press (1998)

6 . Lucas E. Robert and Papanek F. Gustav, The Indian Economy-Recent Development and Future Prospecu, Madras, Oxford University Press ( 1 988)

7. Ruddar Datt and K.P.M. Sundharam. Indian Economy, ed. 44