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CHAPTER 3 POLITICS OF PLANNED DEVELOPMENT Orissa-protest against POSCO Plant(POHANG STEEL COMPANY)The state govt.

Signed MoU with the company with the hope that it would bring in necessary capital investment and provide a lot of employment opportunities. But the tribal population feared-it would result in large scale displacement of the inhabitants and therby loss of their home and livelihood-also it would pollute the environment-they staged a demonstration outside the Korean company's office demanding cancellation of othe project-but police prevented.It became a question of development-what kind of develop. Orissa need? Whose need can be called as Orissa's need?-such questions can not be answered by the authorities alone-such major decisions should be taken by peoples themselves in a democracy-after independence India had to take such decisions-all decisions were bound together by a shared vision or model of eco. Development-evryone agreed-thedevelopment should mean both eco. Growth and social and eco. justicethis matter should not be left to the business men,industrailists and farmers themselves-the govt. Should play a key role-but differece over kind of the role of govt.wether to have a centralised institution?or gov. Should run a key industries?or etc..-each of these decisions need political intererene and it has pol. Consequences-involved pol.judgements and pol.consultations and approval of the public-so we need to study it as a part of politics IDEAS OF DEVELOPMENT The term develop. Has diff.meaning to diff. Groups-to an industrialist-creating huge factories or mines etc....thus this term creates conflict,contradictionsand debates. During the first decade after independence-west as the stanard for measuring develop.-it means becoming more modern-modern means industrilisation-both common man and experts had this idea-it was widely believed -every nation should go through the process of modernisation as in hte west by breaking down the traditionalsocial structures and the rise of capitalism and liberalism-modernisation is also associated with ideas of growth,material progress and scientific rationality-this led to the categorisation o nations as developed,developng and underdeveloped-thus on the eve of independence India had two models-the liberal-capitalist as in Europe and the US and social model asin USSR-this reflected in the consensus developed during nation.move.-the leaders were clear that eco. Concerns should be different from that of British-prime respo.of the govt.-to alleviate poverty and the social and eco.redistribution-for some,industrialisation is to be the prefferred path-whereas for others,develop.of agri.and alleviation of rural poverty were pref. Path Planning:there was a consensus on one point-develop. Could not be left to pvt. Sectors-need of the govt. To plan or design develp. Constitution of Planning Comm.-it was common that pvt. Investors are averse to planning-wanted an open economy without any state control-but in India the reverse happened-a section of the big industrialists gathered and drafted a joint proposal for planned economy in

1944-Bombay Plan-it wanted the state to take major initiatives in industrial and eco. Investments-then after independence -plan comm formed-PM as chairman -now it became most influential and central machinery for deciding what path and strategy India would adopt for its development The early Initiatives Plan.Comm opted for FYP-accordingly,Budget of the Central and state govts. Is divided into non-plan budet that is spent on routine items on a yearly basis-plan budget -spent on a five year basis First Five Year Plan(1951-56) the draft of the Ist plan released in Dec. 1951-K.N.Raj -the man behind it-main aim-to get out of the cycle of poverty-he argued-India should hasten slowly for the first 2 decades as fast rate might endager democracy This Plan addressed mainly-agr.sector-investment in dams and irrigation-agr. Sector wa hit hardest by partition need urgent attention-huge allocations -eg; Bhakranangal Dam -the plan identified-the pattern of land distribution was the main obstacle-so it focussed on land reforms -basic aim-to raise the level of national income-possible only by saving more money than the people spent-so pushed up savings-very difficult as the total capital stock was very low compared to the emplyable people-neverthless savings rose until the third plan-but later dropped. The Second FYP(1957-61) The Second Five-Year Plan was launched on 1 April 1956. It was a much bigger and bolder plan than the first involving a total outlay of Rs.4, 800 crores in the public sector. It was observed by the planning Commission that, 'the Second Five -year Plan has to carry forward the process initiated in the First Plan period. It must provide for a larger increase in production, in investment and in employment. The principal task was to secure an increase in national income by about 25 per cent over the five years, to increase employment opportunities at a rate sufficient to absorb the increase in the labour force, consequent on the increase in population and to take a major stride forward in the direction of industrialisation so as to prepare the ground for more rapid advance in the plan period to come. Objectives and Priorities: The main objectives of the Second Five year Plan were (1) a sizeable increase in national income so as to raise the level of living in the country; (2) rapid industrialisation with particular emphasis on the development of basic and heavy industries; (3) a large expansion of inequalities in income and wealth and a more even distribution of economic power. Thus the second plan tried to achieve a process of rapid industrial development within a 'socialistic pattern society.' The basic strategy of the second plan was an emphasis on the development of basic and heavy industries. Although this plan was a continuation of the first plan, yet the priority shifted from agriculture and rural development to

industry, especially heavy industries. Transport was also given importance. The first plan laid the main emphasis on agriculture, irrigation and power and it allocated nearly 43 percent of the total outlay to these three items. In sharp contrast to this, the emphasis in the second plan was on the development of industry which accounted for 18.2 percent of the total outlay. The distribution of total outlay of Rs. 4,800 crores on different development items was as follows: It is clear that agriculture and community development was allocated 15.1 percent of total outlay in the First Plan while only 11.8 percent was allotted to it during the Second Plan. The percentage share of irrigation and power also declined from 28.1 percent to 19 percent; outlay on industry and mining was raised from 7.6 percent; in the First Plan to 18.5 percent in the Second Plan. The total provision for industry and mining during the second plan was that of Rs. 820 crores as compared with a very modest figure of Rs. 170 crores in the first plan. Outlay on transport and communication was also increased from 557 crores in the first plan to Rs. 1385 crores during the second plan. Thus it can safely be concluded that second plan was industry and transport oriented plan. Third FYP(1961-66):The main objectives set out in the Third Five-year Plan were: Expansion of the agricultural production through intensive methods of cultivation, use of high yielding varieties of seeds, improved irrigation facilities etc. (ii) Setting up Co-operative Marketing Societies to eliminate middlemen and ensure fair prices to the farmers for their produce. (iii) Co-ordinated and concerted development of selected areas so that people feel the necessary impact of planning and development and thereby also rectifying existing regional imbalances to the highest extent possible. (iv) To improve and upgrade the local livestock by distributing good breeds of cattle, pigs, birds etc. and to extend veterinary facilities all over the country. (v) Continued development of the infrastructure facilities like construction of roads, bridges, power supply etc., for a rapid economic growth. (vi)Acceleration of the pace of industrial development through setting up of small-scale industries, medium industries, industrial estates and also providing incentive to private parties for establishing demand/resource based industries. (vii) Improvement of education facilities with emphasis on quality rather than on quantity. (viii) Provision of medical and health services with a view to extending them to more people, especially those living in interior regions. (ix) Providing special amenities in the Capital Town of Thimphu and develop it in a planned integrated manner. (x) Protection and preservation of ancient monuments. Key Controversies:two controversies. Agri.vs Industry: those who favoured agriculture thought that the second plan lacked an agrarian strategy for development and the emphasis on industry caused agriculture and rural India to suffer. J.C. Kumarappa proposed an alternative blueprint that put greater emphasis

on rural industrialisation. Chaudhary Charan Singh forcefully articulated the case of keeping agriculture at the centre of planning for India. He said that the planning was leading to creation of prosperity in urban and industrial section at the expense of the farmers and rural population. The people who favoured industry thought that withouta drastic increase in the industrial production, there could be no escape from the cycle of poverty. They argued that Indian planning did have an agrarian strategy to boost the production of food grains. The state made laws for land reforms and distribution of resources among the poor in the villages. It also proposed programmes of community development and spent large sums on irrigation projects. The failure was not that of policy but its non-implementation. Public versus private sector _ India adopted the element of both capitalist model of development in which development was left entirely to the private sector and socialist model in which private property was abolished and all the production was controlled by the state elements from both these models were taken and mixed together. That is why it was described as mixed economy. Much of the agriculture, trade and industry were left in private hands. The state controlled key heavy industries, provided industrial infrastructure, regulated trade and made some crucial interventions in agriculture. Critics argued that the planners refused to provide the private sector with enough space and the stimulus to grow. The enlarged public sector produced powerful vested interests that created enough hurdles for private capital, especially by way of installing systems of licenses and permits for investment. Moreover, the states policy to restrict import of goods that could be produced in the domestic market with little or no competition left the private sector with no incentive to improve their products and make them cheaper. The state controlled more things than were necessary and this led to inefficiency and corruption. Then there were critics who thought that the state did not do enough. They pointed out that the state did not spend any significant amount for public education and healthcare. The state intervened only in those areas where the private sector was not prepared to go. Thus the state helped the private sector to make profit. Also, instead of helping the poor, the states intervention ended up in creating a new middle class that enjoyed the privileges of high salaries without much accountability. Poverty did not decline substantially during this period; even when the proportion of the poor reduced, their numbers kept going up. Major Outcomes:-Foundations of India's future economic growth were laid-largest devlop. Plans were undertaken-mega dams-Bhakra-Nangal and Hirakud for irrigation and power generation-some heavy industries-steel plants,oil refineries, manufact. Units were started-infrastructure for transport and communication-improved substantially Land reforms:most significant of these -1)the abolition of the colonial system of zamindari. This act released land from the clutches of a class that had little interest in agriculture-also reduced the capacity of landlords to

domonate in politics.2)consolidation of and-bringing small pieces of land together in one place so that farm size could become viable for agriculture.3)Laws were made to put an upper limit or ceiling to how much agricultural land one person could own-but people with excess land managed to evade the law.4) The tenants who worked on someone elses land were given greater legal security against eviction but this provision was rarely implemented-so the last two components were not successful-to be succesful the rural landless poor might be mobilised-but land owners were very powerful and had considerable pol.influence-so many land laws were remained on paper. Food Crisis: the agri. Situatuion changed from bad to worse in 1960s-1965-67-severe droughts occurred-resulted in severe food shortage-in Bihar crisis was very acute-in almost all districts the crisis was felt-this led to malnutrition-so death rate increased-food prices wre high-because of govt's zoning policy,trade of food across states were prohibited-this reduced the availability of food in Bihar-thus the poores t sections suffered the most-then the govt.had to import wheat from US. Green Revolution The food crisis made India vulnerable to ext.prussures and dependent on food aid mainly from US-in turn US pushed India to change the eco.policies-the the govt.adopted a new method to ensure food sfficiency by promoting those areas which already had irrigation and well-off farmers instead of supporting backward areas-it was argued that already well-off areas could rapidly increase production in the short run-thus the govt.offered high yielding variety seeds,fertilizers,pesticides and better irrigation at law prices-the govt.also gave guarantee to buy the produce at a given price-this was the beginning of green revolution in 1967 -The Green Revolution was launched in 1967 to improve agricultural productivity whereby (a) Cultivation area was extended. (b)New and hybrid varieties of seeds were introduced. (c) Use of fertilizers was increased. (d) Soil conversation scheme and new agronomic practices were encouraged. The first green revolution was launched in 1967-68 and was mainly combined to the progressive, wheat producing states of Punjab, Haryana and Western Uttar Pradesh by introduction of high yielding varieties of Mexican wheat and dwarf rice varieties. The second green revolution in 1983-84 was extended to eastern and central states including west Bengal, Bihar, Orissa, Madhya Pradesh and Uttar Pradesh through expansion in supplies of inputs and services to farmers and better farm management techniques. As a result of the green revolution, wheat production increased to more than double and rice production increased by 53%. Consequences of Green Revolution Two positive consequences of green revolution: 1. Increased yields: Green Revolution techniques have increased the production per unit area of wheat and other food crops in some major development countries like India. The Green Revolution resulted in a record grain output of 131 million tons in 1978- 79. This established India as one of the world's biggest agricultural producers. No other

country in the world, which attempted the Green Revolution, recorded such level of success. India also became an exporter of food grains around that time. 2. Labour saving: The high level of mechanisation associated with Green Revolution techniques led to a reduced dependence on low-skilled human labour. As a result, farmer and agricultural worker incomes rose substantially and production costs plummeted. The influx of labour, however, brought problems at its own, like the increased migration to the cities and creation of massive slums. Two negative consequences of green revolution: 1. only the rich peasants&the large landholders were the major beneficiaries 2. Loss of biodiversity the spread of Green Revolution hybrids and the associated techniques have resulted in the cultivation of many fewer varieties of crops. Some crops have seen90% reduction in crop varieties. 3.it delivered only a moderate agri.growth-mainly rise in wheat production 4.though it raised the availability of food in the country,it increased polarisation between classes nad regions-some regions like Panjab and western UP became prosperous,while others remained backward 5. created a stark contrast between the poor peasantry and the landlords-this led to the leftwing org.to organize poor peasants 6. it also resulted in the rise of middle peasants sections-they became pol.infuential in many parts of India. The White Revolution The White Revolution in Gujrat was started by Verghese Kurien known as the "milkman of India". He launched the Gujrat Cooperative Milk and Marketing Federation Ltd". This federation further launched Amul. The Amul pattern became a uniquely appropriate model for rural development and poverty allevation, what has come to be known as the White Revolution. Operation Flood: Operation Flood has helped dairy farmers direct their own development, placing control of the resources they create in their own hands. A National Milk Grid links milk producers throughout India with consumers in over 700 towns and cities, reducing seasonal and regional price variations while ensuring that the producer gets a major share of the price consumers pay. The bedrock of Operation Flood has been village milk producers' cooperatives, which procure milk and provide inputs and services, making modern management and technology available to members. Operation Flood's objectives included: From the outset, Operation Flood was conceived and implemented as much more than a dairy programme. Rather, dairying was seen as an instrument of development, generating employment and regular incomes for millions of rural people. Later Developments:The develpment in India took a significant turn in 1960s-Indira Gandhi strengthened the role o the State in controlling and directing economy-many new restrictions on pvt.industries from 1967 onwards-14 Banks were nationalised-the

govt.announced many pro-poor programmes-also an ideological tilt towards socialist policies Plan Holiday: Plan holiday is the gap between the two five years plan. During some years e.g. 1979-80, 1990-92 there were no five year plans but stop gap arrangements by way of annual plans. This was due to change in government, due to their lack of clarity about development goals strategies etc. Decentralised Planning: It is not necessary that all planning anways has to be centralised-it need not be about big industries and large projects-the Kerala Model is the name given to the path of planning and develop.charted by the govt.of Kerala The kerala Model-The important landmarks in Keralas
decentralization, inter alia, include the transfer of powers, functions, institutions and staff to local self governments (LSGIs), adoption of separate budget documents for LSGIs, decision to devolve 35 to 40% of the Annual Plan funds to LSGIs, launching of Peoples Campaign in August 1996, institution building at different tiers and levels, restructuring of the relevant state level Acts and Rules and submission of State Finance Commission Report. In 2002-03, the peoples Campaign Programme was renamed Kerala Development Plan. The important features of Kerala development Plan are:1) Institutionalization and building sustainable capacity in LSGIs 2) Catalyzing economic development through these institutions and 3)Improving the quality of Services (Q.)The story of development in India took a significant turn from the end of 1960s. Explain. (Ans)The story of development in India took a significant turn from the end of 1960s. Indira Gandhi emerged as a popular leader. She decided to further strengthen the role of the state in controlling and directing the economy. The period from 1967 onwards witnessed many new restrictions on private industry. Fourteen private banks were nationalized. The government announced many pro-poor programmes. These changes were accompanied by an ideological tilt towards socialist policies. This emphasis generated heated debates within the country among political parties and also among experts. However, the consensus for a state-led economic development did not last forever. Planning did continue, but its salience was significantly reduced. Between 1950 and 1980 the Indian economy grew at a sluggish per annum rate of 3 to 3.5%. In view of the prevailing inefficiency and corruption in some public sector enterprises and the not-so-positive role of the bureaucracy in economic development, the public opinion in the country lost the faith it initially placed in many of these institutions.This lack of public faith led the policy makers to reduce the importance of the state in Indias economy from1980 onwards. (Q.)Write a note on the budget of India. Budget generally refers to a list of all planned expenses

and revenues. A budget is an important concept in microeconomics, which uses a budget line to illustrate the trade-offs between two or more goods. In other terms, a budget is an organisational plan stated in monetary terms. India's Budget - India's public finance system follows the British pattern. The Indian constitution establishes the supremacy of the bicameral Parliament- specifically the Lok Sabha (House of the People)--in financial matters. No central government taxes are levied and no government expenditure from public funds disbursed without an act of Parliament, which also scrutinises and audits all government accounts to ensure that expenditures are legally authorised and properly spent. Specifically the Finance Minister, however, may initiate only within the Council of Ministers--proposals for taxation or expenditures. The Minister of Finance is required to submit to the Parliament, usually on the last day of February, a financial statement detailing the estimated receipts and expenditures of the central government for the forthcoming fiscal year and a financial review of the current fiscal year. The Lok Sabha takes one month to review and modify the government's budget proposals. If by April 1, the beginning of the fiscal year, the parliamentary discussion of the budget has not been completed, the budget as proposed by the minister of finance goes into effect, subject to retroactive modifications after the parliamentary review. On completion of its budget discussions, the Lok Sabha passes the annual appropriations act, authorising the executive to spend money, and the finance act, authorising the executive to impose and collect taxes. Supplemental requests for funds are presented during the course of the fiscal year to cover emergencies, such as war or other catastrophes. The bills are forwarded to the Rajya Sabha (Council of States--the upper house of Parliament) for comment. The Lok Sabha, however, is not bound by the comments, and the Rajya Sabha cannot delay passage of money bills. When signed by the president, the bills become law. The Lok Sabha cannot increase the request for funds submitted by the executive, nor can it authorise new expenditures. Taxes passed by Parliament may be retroactive. (Q.)What is the role of National Development Council of India?

(Ans)The National Development Council is one of the


key organizations to denote the federal approach to planning in India. The Planning commission suggested the requirement for a body comprising the central and state governments to facilitate the plans to have a national spirit. National Development Council was founded in 1952, with following functions:(i) To set down principles for the formulation of the national plan. (ii) To think about the national plan as prepared by

the Planning Commission. (iii) To evaluate resources needed for executing the plan and to advise ways and means for raising them. (iv) To consider important social and economic matters, disturbing the progress. (v) To revise the working of the plan time to time and suggest such measures as are necessary for realizing the objectives and targets expressed in the national plan. Therefore National Development Council have very vital role in the proper planning for countrys development process and to run country according to its needs.

prevent them from shutting down Third Five Year Plan(1961-1966) OBJECTIVES ACHIEVEMENTS More stress to agriculture Decentralization subsidies Organizations formed Sufficient help Panchayat Effective use of country's Zila Parishads resources Laid emphasis on To increase the national oil conservation income by 5% per year irrigation To increase the production Afforestation of agriculture so that the dry farming First Five Year Plan (1951-55) nation is self sufficient in Many fertilizer and cement Total budget: 206.8 billion (INR) or USD$23.6 billion. food grains plants were built OBJECTIVES ACHIEVEMENTS To provide employment Green Revolution the standard of living GDP 3.6% per year opportunities for every PMs Community and agriculture Evolution of good irrigation citizen of the country Jawaharlal Nehru development system To establish equality among Gulzarilal Nanda Energy and irrigation improvement in roads all the people of the country Lal Bahadur Shastri Communications and civil aviation railways transport Telegraphs posts Problems faced: Sino Indian War, India witnessed Industry manufacture of fertilizers increase in price of products. The resulting inflation Land rehabilitation electrical equipment 4th Five Year Plan(1969 to 1974) Social services OBJECTIVES ACHIEVEMENTS Target of GDP growth 2.1 to reform and restructure Great advancement has per year govts expenditure been made with regard to Achieved had been 3.6% per agenda( defense became India's national income year one major expense) considered as one of the To facilitated growth in emerging powers Disadvantages:development of only a few industries and exports served as a stepping stone private industry had not developed to alter the socio economic for the economic growth Second Five Year Plan (1956-1961) structure of the society Food grains production OBJECTIVES ACHIEVEMENTS increased To increase by 25% the 5 steel plants national a hydro-electric power Problems: a gap was created between the people of the income project rural areas and those of the urban areas. To make the country more production of coal Due to recession, famine and drought, India did industrialized increased not pay much heed to long term goals To increase employment more railway lines Fifth Five Year Plan (1974 to1979) opportunities so that every Land reform measures OBJECTIVES PROBLEMS citizen improved the living To reduce social, regional, The international economy gets a job standards of the people and economic disparities was in a trouble Development of The large enterprises in To enhance agricultural Food, oil, and fertilizers Mining and industry seventeen industries were productivity where prices sky-rocketed Community and agriculture nationalized To check rural and urban Several inflationary development unemployment pressures Power and irrigation To encourage ACHIEVEMENTS Social services self-employment Food grain production was Communications and Production support policies above 118 million tons due transport in the cottage industry to the improvement of Miscellaneous sector infrastructural facilities To develop labor intensive Bombay High had shot up Disadvantages technological the commercial production eliminate the importation of consumer goods improvements of oil in India high tariffs Problems faced: The world economy was in a Low quotas or banning some items altogether troublesome state.This had a negative impact on the License were required for starting new companies Indian economy.Prices in the energy and food sector This is when India got its License Raj, the bureaucratic skyrocketed and as a consequence inflation became control over the economy When a business was losing money the Government would inevitable

Sixth Five Year Plan(1980 to1985) OBJECTIVES ACHIEVEMENTS To improve productivity Speedy industrial level development To initiate modernization for Emphasis on the achieving economic and information technology technological self-reliance sector To control poverty and self sufficiency in food unemployment science and technology also To develop indigenous made a significant advance energy sources and efficient several successful programs energy usage on improvement of public To promote improved health quality of life of the citizens government in the Indian To introduce Minimum healthcare sector Needs Program for the poor Government investments in To initiate Family Planning the Indian healthcare sector Problems faced: During this time the Prime Minister was Rajiv Gandhi and hence industrial development was the emphasis of this plan ,some opposed it specially the communist groups, this slowed down the pace of progress. Seventh Five Year Plan(1985 to 1989) OBJECTIVES ACHIEVEMENTS Anti-poverty program Social Justice Improved facilities for Removal of oppression of education to girls the week The government undertook Using modern technology to increase productivity of Agricultural development Oilseeds,Fruits,Vegetables Anti-poverty programs Pulses,cereals,Fish Full supply of food,clothing, Egg,Meat,milk. and shelter Communications Increasing productivity of Emergence of informatics, small and large scale and hooking up of farmers telecommunications with Making India an computers Independent Economy Transport inland waterways, product pipelines, civil aviation, coastal shipping Problems :1989-91 was a period of political instability in India and hence no five year plan was implemented In 1991, India faced a crisis in foreign exchange(Forex) reserves Eighth Five Year Plan(1992 to1997) OBJECTIVES ACHIEVEMENTS Prioritize the specific Rise in the employment sectors which requires level immediate investment Poverty reduction To generate full scale Self-reliance on domestic employment resources Promote social welfare Self-sufficiency in measures like improved agricultural production healthcare, sanitation, GDP Growth Per Annum communication and 5.6 provision for extensive education facilities at all levels

To check the increasing population growth by creating mass awareness programs To encourage growth and diversification of agriculture To strengthen the infrastructural facilities To place greater emphasis on role of private initiative in the development of the industrial sector Ninth Five Year Plan(1997 to 2002) OBJECTIVES ACHIEVEMENTS to prioritize rural A combined effort of development public, private, and all to generate adequate levels of employment opportunities government to stabilize the prices ensured the growth of to ensure food and India's economy. nutritional security Service sector showed fast to provide for the basic growth rate infrastructural facilities like education for all, safe drinking water, primary health care, transport, energy to check the growing population increase to encourage social issues like women empowerment to create a liberal market for increase in private investments Tenth Five Year Plan(2002-2007) OBJECTIVES :To transform the country into the fastest growing economy of the world targets an annual economic growth of 10% Human and social development The social net Industry and services: Industry,Minerals,Energy,Information technology,Tourism,Real estate,Construction,Internal trade-Forests and environment-Science and technology Special area programs-schooling to be compulsory for children Eleventh five year plan(2007-2012) OBJECTIVES Income & Poverty Education Health Women and Children Infrastructure Environment