MAINS : Sample Notes For General Studies

PLANNING

WHY THIS SHIFT IN STRATEGY IN 1990/REORIENTATION

The shift in strategy was the manifestation of a decade long process of opening up of the economy. The crises of 1991 provided the required spark for this paradigm shift. The main reasons for this re-orientation were:

• In order to direct development and operation of economy in accordance with "accepted social priorities" and to make planning effective, it was necessary to control and regulate the key points of the economy. This resulted in undesirable distortion in the economy, unduly restricted the initiative and enterprise of the people, and led to widespread corruption, delays and inefficiency.
• Policy to keep the economy independent enough of the world economy to protect it from ups and downs there, and to shelter it from unequal competition from highly indsutrialised and advanced countries, resulted in slowing down of economic progress and created high cost and uncompetitive economy.
• Growing realization that though labour welfare is important, but it being at the cost of public welfare with public money is questionable.
• The public sector eaten up the major budgetary allocations which were expected to contribute resources for social development. Opportunity cost could have been higher if scare resources were invested elsewhere.
• The doubts about the efficacy of centralized planning due to the failure of erstwhile USSR, and undergoing worldwide movement for liberalisation, besides the immediate crises of gulf war, political instability and BOP crises in India provided the required impetus for taking drastic steps for re-orientation of development planning. State was seen now more as a promoter and facilitator rather than provider of goods.

WHY NOT THE LIBERALIZATION (PRIVATE SECTOR) IN THE BEGINNING ITSELF (AT THE TIME OF INDEPENDENCE)

• Industrial development at the time of independence was slow and stunted marred by an over-dependence on the foreign capital with complete absence of heavy capital goods industries and technological research. This encouraged the public sector to play a key role in economy.
• The colonial experience and consequent suspicion against foreign investment further restricted an important role of private sector.
• The philosophy of socialism and a planned development to bring about Balanced Regional Development through optimum utilization of scare resources could only be possible though state instrument.
• Education, health and housing for the low income masses may not be adequately developed as it is unprofitable to invest in these areas.
• State was expected to play the role of a model employer through generating gainful employ opportunities and better conditions for employees, thus needing concentrated efforts by public sector.
• In a poor country like India where the vast majority have low incomes, left to themselves, most people may like to spend whole or greater part of their incomes on consumption rather than save an adequate proportion for investment. This may result in a very inadequate growth rate of economy that may condemn the country to continued poverty and backwardness.
• Markets might neglect basic long term development like multipurpose hydel projects etc. which involve huge investments with long gestation periods and hence a risky affair to undertake. This could severely affect the sustainability economic development.

WHAT IS THE NEED FOR PUBLIC SECTOR NOW

• The goals of socialism and establishment of a welfare state are still to be achieved totally. Public sector has still to play a vital role if not the commanding role in their achievement.
• Markets are not well-developed, regulated and promoted in developing countries due to slow pace of reforms and volatile political scenarios.
• Market failures in the fragile economic environments of developing countries may cause severe consequences as experienced in South East Asian countries.
• The dependence over market could lop side the production of goods and services in favour of inessential needs of rich while depriving even the very essential needs of the poor.
• Protection of environment is the most important ecological concern of humanity today. This may be neglected on part of market for economic gains.

CONCLUSION

The new strategy must ensure social justice which equity ingrained in the principles of efficiency and effectiveness of government policies. What is needed is the synergy of public and private sectors to promote balanced regional development. The higher pedestal role of public sector needs to be strengthened through economic, managerial and institutional reforms; while the private sector needs regulation, monitoring and facilitation.

A LOOK AT THE PLANS IN INDIA
PLAN	PERIOD	MODEL	OBJECTIVES	GROWTH RATE (%)		SPECIAL FEATURES
				Target	Actual
I	1951-56	Harrod Domar	Development of agriculture	2.1	3.6	Community Development Programme
II	1956-61	Mahalanobis	Rapid industrialization	4.5	4.6
III	1961-66	John Sandy & Chakravarty	Self reliance & self sustained economy	5.6	2.7
	1966-69	Plan Holiday				Green Revolution
IV	1969-74	Allen Manne & Ashok Rudra	Self reliance & growth stability	5.7	3.3	1971 war, shooting oil prices
V	1974-79	Planning Commission	Stress was laid on employment, poverty removal, and justice	4.4	4.8	20-point programme
	1979-80	Plan Holiday
VI	1981-85	Planning Commission	Stress on village and cottage industries and natural mobilization of resources to increase employment	5.2	5.5	Economy started opening up
VII	1985-90	Planning Commission	Liberalization, modernization	5	6
	1990-92	Plan Holiday				1991 policy
VIII	1992-97	John Miller- liberalized economy	Human Resource Development	5.6	6.7
IX	1997-2002	Planning Commission	Growth with social equity	6.5	5.4	Pokhran, Kargil war, South-East Asia crisis
X	2002-07	Planning Commission	Quality of life, reduce imbalances , employment generation	8
XI	2007-12	Planning Commission		10