CLASS-2
Process:
- Govt. prepares a document of income and expenditure for nest 5 years.
- Budget of CG & SG divided as PLANED (Spend on 5 year basis based on priority) AND NON PLANNED (spend on routine items).
BENEFITS OF PLANED BUDGET: Govt. can focus on larger picture and make long-term intervention in economy.
Draft then document released in dec. 1951 generated a lot of excitement in academics, journalists, government and private sector employees, industrialists, farmers, politicians etc.
Criticisms emerged both about the process and the priorities of these plans, the foundation of India’s economic development was firmly in place by then
THE FIRST FIVE YEAR PLAN (1951-1956)
Drafted by K.N.Raj & suggested to maintain slow growth rate for the first two decades because fast rate of development might endanger democracy.
Addressed, mainly, the agrarian sector, investment in dams (Bhakhra Nangal) and irrigation.
Identified the pattern of land distribution as principal obstacle in the way of agricultural growth.
Focused on land reforms
Four components of land reforms.
The Abolition of the Intermediaries.
Tenancy Reforms.
Fixing Ceilings on Landholdings.
Consolidation of Landholdings.
THE FIRST FIVE YEAR PLAN (1951-1956)
Drafted by K.N.Raj & suggested to maintain slow growth rate (preached patience) for the firsttwo decades because fast rate of development might endanger democracy.
Addressed, mainly, the agrarian sector, investment in dams (Bhakhra Nangal) and irrigation.
Identified the pattern of land distribution as principal obstacle in the way of agricultural growth.
Focused on land reforms:
Four components of land reforms.
The Abolition of the Intermediaries.
Tenancy Reforms.
Fixing Ceilings on Landholdings.
Consolidation of Landholdings.
Basic aims- NI + , For this assumed that it can possible through saving more.
But already spending capacity was very low. More reduction was not possible.
So the planners sought to push savings up.
Saving increased until 3rd plan but not as was expected at the beginning. Because total capital stock in the country was rather low compared to the total number of employable people.
Later (in 1960s-70), the proportion of savings in the country actually dropped consistently.
SECOND FIVE YEAR PLAN (1956-1961)
Focus- on heavy industries through quick structural transformation.
Drafted by- P. C. Mahalanobis (supporter of rapid industrialisation and active role of the public sector)
Before finalise this plan congress declared its goal as ‘socialist pattern of society’ in Avadi resolution (Madras), & Reflected in 2nd plan.
Govt. imposed tariffs on import to protect domestic industries (Public & Private).
Saving + Investment growing-> Industries like electricity, railways, steel, machineries and communication could be developed in the public sector.
Some Problems:
High expenditure on technology -> need ?
Less expense on Agriculture-> food shortage
THIRD FIVE YEAR PLAN (1961-1966)
- 3rd not significantly different from the 2nd.
- But focus on both.
- Critics –
- plan strategies were “urban bias”.
- industry was wrongly given priority over agriculture
- Some wanted focus on agriculture-related industries rather than heavy ones.
DECENTRALISED PLANNING (DP)
- The ‘Kerala model’ for DP:
- New Democratic Initiative (1987-1991): Govt launched campaigns for development with involvement of people directly through voluntary citizens’.
- Also taken initiative to involve people in making plans at the Panchayat, block and district level.
- Focus in this model on education, health, land reform, effective food distribution, and poverty alleviation.
- Despite low per capita incomes, and a relatively weak industrial base, Kerala achieved nearly total literacy, long life expectancy, low infant and female mortality, low birth rates and high access to medical care.