Let us make an in-depth study of Indian Economy under Five Year Plan Period:- 1. Achievements of Planning 2. Failure of Planning.
Achievements of Planning:
1. A Higher Growth Rate:
Economic planning in India aims at bringing about a rapid economic development in all sectors.
That is to say, it aims at a higher growth rate. India’s macroeconomic performance has been only moderately good in terms of GDP growth rates.
The overall rate of growth stands at 4.8 per cent for the whole planning period (1950-2007) Compared with India’s own past (1900- 1920) when she was caught in a low level equilibrium trap, growth acceleration during the last 60 years has been impressive indeed.
2. Growth of Economic Infrastructure:
India’s performance in building up the necessary economic infrastructure is really praiseworthy. At the inception of economic planning, road kilometer was 4 lakh kms. India has now more than 3 million km of road network, making it one of the largest in the world.
Railway route length increased from 53,596 kms in 1951 to nearly 63,500 kms in 2005- 06. Today, the Indian railway system is the largest in Asia and the fourth largest in the world. Similarly, other modes of transport like shipping, civil aviation, etc., have also expanded phenomenally.
3. Development of Basic and Capital Goods Industries:
Another major area of success of Indian planning is the growth of basic and capital goods industries. With the adoption of the Mahalanobis Strategy of development during the Second Plan period, some basic and capital goods industries like iron and steel witnessed spectacular growth.
4. Higher Growth of Agriculture:
The most significant aspect of India’s Five Year Plans is that the overall rate of growth of food production has now exceeded the rate of growth of population. Though in the early years of planning, agricultural performance was miserable resulting in the emergence of food crisis.
But now, due to the impact of bio-chemical revolution in Indian agriculture, food crisis seems to be a thing of the past. She has attained self-sufficiency in food grains.
5. Savings and Investment:
The rise in the domestic savings rate from 10 p.c. of GDP at the initial stages of planning to around 19 p.c. in 1980-81 is definitely impressive. However, this rate increased to 34.8 p.c. by the end of March 2007. Similarly, India’s record in gross domestic capital formation rose from 20.3 p.c. in 1980-81 to 22.8 p.c. of GDP in 2001- 02. But it rose to 36 p.c. in 2006-07.
Major Failures of Planning:
Indian planning is yet to score good marks.
The major areas of failure of planning in India are:
1. Inadequate Growth Rate:
In quantitative terms, the growth rate of the Indian economy may be good but not satisfactory by any standards. Except the First and Sixth Five Year Plans, the actual growth rate remained below the targeted growth rates of GNP and per capita income.
Only in recent plans (both Ninth and Tenth plan), actual growth rate has exceeded the plan targets. In terms of per capita income, India is one of the poorest nations of the world even after more than 58 years of democratic planning.
2. Whither India’s Socialistic Society:
Indian planning aims at building up a ‘socialistic pattern of society’, in an otherwise capitalistic framework, through various socialistic measures. We have not yet made any significant progress towards the goal of attaining a socialistic pattern of society even after nearly 58 years of planning.
The concept of socialistic pattern of building a society has been altogether discarded when we introduced new economic policy measures in mid-1991. Instead, Indian economy very much moves on the capitalistic path.
3. Economic Inequality and Social Injustice:
The twin aspects of social justice involves on the one hand, the reduction in economic inequalities, and, on the other, the reduction of poverty. A rise in national income with concentration of economic power in the hands of a few people is not desirable.
In an otherwise capitalist framework, inequality in the distribution of income and wealth is inevitable. In India’s socio-political set-up, vast inequalities exist. Indian plans aim at reducing such inequalities, so that the benefits of economic development percolate down to the lower group of the society.
The objective of removal of poverty got its clear-cut enunciation only in the Fifth Plan for the first time. Due to the defective planning approach, income inequality widened and poverty became rampant. The incidence of poverty was on the rise. It is now nearly 28 p.c. (2004-05).
Removal of unemployment is considered to be another important objective of India’s Five Year Plans. But, unfortunately, it never received the priority it deserved. In the Sixth Plan (1978-83) of the Janata Government, employment was accorded a pride of place for the first time.
However, the Seventh Plan treated employment as a direct focal point or policy. As a result, the employment generation programme in India has received a rude shock and the problem of unemployment is mounting up plan after plan. The number of job-seekers increased from 363 lakh as on December 1991 to 406 lakhs as on June 2006. In the recent years, the trend is on the rise.
In view of this, it is jokingly said that “how many plans the country needs to make the whole country unemployed?” In view of these failures, Sukhamoy Chakraborty remarks that Indian plans may be good on paper, but are rarely good in implementation. So, the need of the hour is to formulate a correct economic policy as well as its implementation.