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Success and Failures of Economic Planning in India
Success and Failures of Economic Planning in India
1. Achievements of Planning:
(i) Increase in National and Per Capita Incomes:
One of the basic objectives of economic planning in India is to increase
national and per capita incomes. As a direct consequence of economic
planning, India’s national and per capita income rose, though not as
rapidly as the Plans projected. National income at 1999-2000 prices
rose from Rs. 224,786 crores in 1950-51 to Rs. 3,114,452 crores in
2006-07, sharing a CARG of 4.8%.
On the other hand, the per capita income in real terms had increased
at a much lower rate indicating that part of the increase in real
national income had been eaten up by the growing population. During
the same period PCI increased from Rs. 5,752 to Rs. 22,239, showing a
CARG of 2.5%. There was quite some fluctuation in the growth rates
over the entire Plan Period. This means that India did not achieve
steady growth.
Diversification:
A major achievement in the industrial sector has been the
diversification of industrial structure. This has been made possible by
huge investment made by Government on input supplying industries
(i.e., industries having strong backward and forward linkages with the
rest of the industrial sector). Examples of such industries are iron and
steel, petrochemicals, transport and communication and generation
and distribution of electricity.
More than half of all planned outlay of the Government in the last ten
plans (1951 to 2007) was on these industries. Consequently
considerable progress has been achieved in such industries as steel,
aluminium, engineering goods, chemicals, fertilisers and petroleum
products.
Industrial Growth:
The index of industrial production (1993-94 = 100) increased from
18.3 in 1950-51 to 221.5 in 2005-06, showing a CARG of 4.6%.
This has happened here—every Plan has laid stress on growth rather
than on employment and the adoption of capital-intensive techniques
of production. In other words, the Government did not adopt an
employment-oriented strategy of development which aims at 3 to 4%
annual increase of employment at higher levels of productivity.
Conclusion:
Prof. S. Chakraborty has identified four major weaknesses
of Indian planning:
(a) First, there is gross inefficiency of production in many of the public
sector enterprises. There are many areas of production where
inefficiency is fairly widespread as income generation of power,
transport, steel, fertilisers and high cost consumer durables.
(b) India has not been able to employ its growing labour force.