2nd Five Year Plan
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Chapter 3:

The broad objectives and rationale of the second five year plan have been set forth in the preceding chapter. The plan is intended to carry forward and accelerate the process of development initiated in the first plan period. The principal task is to secure an increase in national income by about 25 per cent over the five years, to enlarge employment opportunities at a rate sufficient to absorb the increase in 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 periods to come. The second five year plan is in one sense a continuation of the developmental effort commmenced in the first plan; but there is inevitably a shift in priorities with a larger accent on industrialisation, especially the development of he^vy industry, and the necessary ancillaries like transport. The acceptance of the goal of a socialist pattern of society reflects itself not only in the relative proportions of investment porposed in the public and private sectors but also in the approaches to institutional change both in the rural and in the urban sector. The fulfilment of the tasks outlined in the plan requires coordinated effort in both the public and private sectors, but the role of the public sector, as mentioned earlier, is the crucial one.

Plan Outlay And Allocations

2. The total developmental outlay of the Central and State Governments over the period of the plan works out at Rs. 4,800 crores. The distribution of this outlay by major heads of development is as under:—

Distribution of plan outlay by major heads a development

  (D) First Five Year Plan Second Five Year Plan
Total provision (Rs. crores)

Per cent

( (3)
Total provision (Rs. crores)
Per cent

(v) Agriculture 241 10.2 341 7.1
  Agricultural Programmes 197 8.3 no 3.5
  Animal Husbandry 22 1.0 56 1.1
  Foretts 10 0.4 47 1.0
  Fisheries 4 0.2 12 0.3
  Cooperation 7 0.3 47 1.0
  Miscellaneous 1   9 0.2
(b) National Extension and Community Projects 90 3.8 200 4.1
(c) Other Programmes 26 1.1 27 0.6
  Villflor PflTiphnviits 11 0.5 12 0.3
  Local Development Works 15 0.6 15 0.3
n. IRRIGATION AND POWER 661 38.1 913 19.0
  Irrigation 384 16.3. 381 7.9
    260 11.1 427 8.9
  Flood control and other projects, investigations, etc. 17 0.7 105 2.2
m. INDUSTRY and MINING 179 7.6 890 18.5
  Large and Medium Industries 148 6.3 617 12.9
  Mineral development 1   73 1.5
  Village and Small industries 3* 1.3 200 4.1


  1 2 3 4 5
  Railways 268 114 900 18.8
  Roads 130 5.5 246 5.1
  Road Transport 12 0.5 17 0.4
  Ports and Harbours 34 1.4 45 0.9
  Shipping 26 1.1 48 1.0
  Inland Water Transport     3 0.1
  Civil Air Transport 24 1.0 43 0.9
  Other Transport 3 0.1 7 0.1
  Posts and Telegraphs 50 2.2 63 1.3
  Other Communications 5 0.2 4 0.1
  Broadcasting 5 0.2 9 0.2
V. SOCIAL SERVICES 533 ~ 22.6 "945 W
  Education 164 7.0 307 6.4
  Health 140 5.9 274 5.7
  Housing 49 2.1 120 2.5
  Welfare of backward classes 32 1.3 91 1.9
  Social welfare 5 0.2 29 0.6
  Labour and labour welfare 7 0.3 29 0.6
  Rehabilitation 136 5.8 90 1.9
  Special schemes relating to educated unemployment     5 0.1
VI. MISCELLANEOUS 69 3.0 99 2.1
  Total 2,356 100.0 4,800 100.0

The total outlay mentioned above does not include all expenditures by local bodies on development schemes; only such expenditure on these schemes as is financed by State Governments is included in the allocations shown in the plan. The total outlay as presented here also does not include the contributions in cash or in kind which are made by the local population participating in developmental work within their localities. These contibutions are^ikely to be of considerable significance in terms of investment in the areas concerned even though they might not make a marked difference to the national totals.

3. The allocations under major heads of development shown above indicate the relative shift in priorities as between the first plan and the second plan. Industries and mining claim about 19 per cent of the total public sector outlay in the second plan as compared to 8 per cent in the first plan. In absolute terms, the step up in the outlay on industries and mining is very large—nearly 400 per cent. The actual outlay under this head in the first plan was less than 50 per cent of the allocation. Judged in this light the increase in the provision for industries and mining in the second plan is even larger than a comparison of the initial allocations would suggest. It will be observed that of the total outlay of Rs. 890 crores on industries and mining, Rs. 690 crores is for large scale industries including mining, while Rs. 200 crores is for promotion of village and small scale industries. The allotment of Rs. 73 crores under mineral development shown in the table is mainly for coal, coal washeries, oil prospecting and the expansion of the Geological Survey and the Bureau of Mines. The expenditure on iron ore mining is included in the allocations for the iron and steel projects.

4. Transport and communications account for 29 per cent of the total outlay in the plan period. While the development programme of the railways absorbs 19 per cent of the total outlay as compared to about 11 per cent in the first plan period, the allocations for other transport and communications form in the aggregate a somewhat smaller proportion of the total than in the first plan. In absolute terms, of course, the outlay on these latter is being stepped up significantly.

5. Some 19 per cent of the total outlay of the Central and State Governments is to be devoted to irrigation and power and another 12 per cent to agriculture and community development. The aggregate expenditure under these two heads works out at Rs. 1,481 crores. Although there is a relative shift in priorities as between agriculture and industry, increased production of food and raw materials must remain not only for the second plan period but for several years to come a major desideratum. The demand for food and raw materials is bound to increase rapidly as industrialisation proceeds and incomes increase. There cannot, therefore, be any relaxation of efforts to increase agricultural productivity. Of the total provision of Rs. 486 crores for irrigation and flood control Rs. 209 crores is on schemes which continue from the last plan, the balance ofRs. 277 crores being in respect of new schemes. The development of power is vital both for agriculture and for industry. The provision of Rs. 427 crores in the plan for power development includes roughly Rs. 160 crores on schemes continuing from the first plan and Rs. 267 crores on new schemes. The programmes for irrigation and power have been conceived as part of a wider programme of increasing the area under irrigation from Government works twofold and of increasing the supply of power sixfold over a period of about 15 years.

6. Social services take up about 20 per cent of the total outlay in the second plan as compared to 23 per cent in the first plan. In terms of percentages to total outlay under social services and related items, the allocations to education, health and housing are practically the same as in the first plan; in absolute terms they are significantly larger. Thus the provision of Rs. 307 crores for education in the second plan is a lit-de less than twice as large as that made in the first plan. The same is true of health. It must also be remembered that the plan includes only that part of the outlay on social services which is required for increasing the level of development reached at the end of the first plan. If allowance is made for the committed portion of the expenditure on social services which is not included in the plan, the share of social services in developmental outlay would be considerably larger.

7. Of the total development outlay of Rs. 4,800 crores, Rs. 2,559 crores represents expenditure to be incurred by the Centre and Rs. 2,241 crores is the total of plan expenditures by all the State Governments taken together. The break-up of the outlay by States separately together with comparable break-up for the first plan is shown in the Appendix to this Chapter, a detailed break-up by States and by heads of development being furnished at the end of this Report. The classification of outlay between the Centre and the States in the second five year plan is a little different from that followed in the first five year plan. In the first plan, in addition to the schemes to be implemented by the Central Ministries, a number of programmes which were sponsored and assisted b,y the Central Government through various Ministries were shown at the Centre. Expenditure found on a matching basis by the States for these schemes was, however, intended to form part of State plans. This led to certain difficulties in the presentation of plans. In the second five year plan, the general principle followed is that plans of States should include to the maximum'extent possible all programmes to be implemented by them or by public authorities cr local boards or special boards set up by them. The fact that for any particular programme carried out in the States either the whole or part of the resources comes from the Central Government or from agencies set up by it does riot, as a rule, affect the principle that the programme should be included within the State plan. While this principle has been generally applied, at this stage there are a few items which belong to State plans but some part of the expenditure is still shown at the Centre. For instance, in housing, welfare of backward classes and village and small scale industries part of the amounts shown at the Centre is likely to be allocated between States when certain proposals or other details which are under consideration have been agreed upon.

8. The distribution of the outlay of the Centre and of the States separately under major heads of development is shown in the table below;—

(Rs. crores)


Centre Part 'A' Part 'B' Part C'+ Total
    2 3 4 5 6
I. Agricultural and Communit) Development 65 359 112 31 568*
II. Irrigation and Power 105 567t 217 24 913
III. Industry and Mining 747 99 37 7 890
IV. Transport and Communications 1203 120 41 21 1385
V. Social Services 396 393 117 39 945
VI. Miscellaneous 43 42 11 3 99
  Total 2559 1580 535 125 4800*

•Includes the unallocated portion of Rs. I crore for N.E.S. and Community Project in the States.
includes Andaman and Nicobar Islands NEFA and Pondicherry. ^Includes Centre's share of expenditure on D. V. C.

9. The Central Ministries as well as the State governments have worked out a phasing of their plans year by year. An examination of this phasing showed a somewhat excessive concentration of expenditure in the first two or three years of the plan. A part of this concentration was accounted for by the increasing momentum of expenditure on projects carried over from the first plan and are already in an advanced stage of execution, and it is necessary that such projects should be completed as early as possible so that they yield the benefits expected. This means correspondingly that the outlay on the new projects should be so phased that the total expenditure on the plan, both by the Centre and by the States, shows a steadily rising trend over the plan period. This is necessary as much from the point of view of matching expenditures and resources as for ensuring that employment is stepped up steadily as the plan proceeds. As has been mentioned earlier, the second plan is to be regarded as a framework within which detailed annual plans are worked out in the light of an examination of the financial and real resources available. The phasing of the plan has necessarily to be flexible. It is, however, necessary to have in readiness a well-worked out annual phasing of outlays from the start, as in many cases orders have to be placed in advanced for machinery and equipment and preliminary work commenced by way of setting up the necessary administrative and field staff.-y

Investment In The Second Plan

10. Of the total expenditure of Rs. 4,800 crores, roughly Rs. 3,800 crores represents investment, i.e., expenditure on building up of productive assets, and Rs. 1,000 crores is what may broadly be called current developmental expenditure. A rough break-up of the two types of expenditure under major heads is shown in the following table:—


    Investment outlay Current outlay Total outlay
  0) (2) (3) (4)
I. Agriculture and Community Development. 338 230 568
  ii) Agriculture 181 160 341
  iii) National Extension and Community Development@. 157 70 227
n. Irrigation and Power 863 50 913
  (i) Irrigation and Flood Control. 456 30 486
  (ii) Power 407 20 427
m. Industries and Mining 790 100 890
  (i) Large and Medium Industries and Mining. 670 20 690
  (ii) Village and Small-scale Industries 120 80 200
IV. Transport and Communications. 1.335 50 1,385
V. Social Services 455 490 945
VI. Miscellaneous 19 80 99
  Total 3,800 1,000 4,800

investment programmes envisaged for the private sector. The targets of production and development represent the combined result of investment in both the sectors, and it is evident that the development programmes in the two sectors have to proceed at a pace and in a manner that ensure a balanced growth in outputs. Dependable estimates of total investment in the private sector are not available, and it is not possible to present anything more than a broad guess of the likely trends over the next five years. Judging from rough calculations regarding the trends of investment over the last five years and taking into account the known investment programmes in certain fields, the likely level of investment in the private sector over the second plan period might be put at Rs. 2,400 crores, broken down as follows:—

(Rs. crores)

l Organised industry and mining 575
2 Plantations, electricity undertakings and transport other than railways 125
3 Construction 1,000
4 Agiiculturei and village and small-scale industries 300
5 Stocks .


  Total 2,400

12. In the first plan period, total investment in the economy appears—very roughly—to have been around Rs. 3,100 crores, the investment in the private sector being a little more than half the total. The target for the second plan period works out at Rs. 6,200 crores, and for reasons stated earlier, the share of the public sector in the total investment records a substantial rise. The ratio of public to private investment in the second plan is 61:39 as compared to 50:50 envisaged in the first plan. Investment through the public sector is scheduled to go up 2Vi times, and the increase in investment in the private sector is expected to be of the order of 50 per cent.

Targets of Production And Development

13. The size and pattern of plan outlay as indicated in the earlier section give a measure of the over-all effort and the priorities envisaged in the plan. Within this broad framework, the plan must outline the concrete programmes of development to be taken in.hand and make an assessment of the results to be achieved. The programmes of development in different spheres are reviewed in detail in later chapters of this report. A brief account of these programmes is, however, given here in the paragraphs that follow. The principal targets of production anddevelopment to be achieved over the second plan the public and private sectors are set forth period as a result of the investments proposed both in below:—

Main targets at production and development

  Sector and Item
Percent-age increase in 60-61 over 55-56
I.Agriculture end Community Development
1. Foodgrains (million tons) 54.0* 65.0 75.0 15
1 Cotton ( " bales) 2.9 4-2 5.5 31
3. Sugarcane-raw gar ( " tons) 5.6 5.8 7.1 22
4. Oilseeds (million tons) 5.1 5.5 7.0 27
5. Jute ( " bales) 3.3 4.0 5.0 25
6. Tea ( "pounds) 613 644 700 9
7. National Extension Blocks ( Nos. ) Nil 500 3,800 660
8. Community Development Blocks ( Nos. ) Nil 622 1,120 80
9. Population served by National Extension and Community Development Programme (million persons) Nil 80 325 306
10 Village Panchayats (Thousand Nos.) 83 118 200 70
  (*) Relate* to the year 1949-50.          
n. Irrigation Power
1. Area irrigated (million acres) 51 67 88 31
2. Electricity (installed capacity) (million kw)


3.4 6.9 103
m Minerals
1. Iron Ore (million tons) 3.0 4.3** 12.5 191
2. Coal (million tons) 32.3+ 38.0+ 60.0+ 58
IV Large-Scale Industries
1 Finished steel (million tons) 1.1 1.3 4.3 231
2 Pig iron (for sale to foundries) (million tons)   0.38 0.75 97
I. Aluminium (000 tons) 3,7 7.5 25.0 233
4 Heavy steel forgings for sale (000 tons) Nil Nil 12  
5. Heavy steel castings for sale (000 tons) Nil Nil 15  
6 Steel structural fabrications (000 tons) N.A 180 500 178
7 Machine Tools (graded) (value in Rs. lakhs) 31.8 75 300 300
8 Cement Machinery (Do. ) N.A 56** 200 257
9 Sugar Machinery (Do. ) N.A 28** 2fip 779
10 Textile Machinery (Cotton and Jute) (Do. ) N.A 412 1950 373
11 Paper Machinery (Do. ) Neg. Neg. 400  
12 Power Driven Pumps—Centrifugal (000 Nos.) 34 40 86 115
11 Diesel Engines (000 H.P.) N.A 100 205 105
14 Automobiles (Nos.) 16,500 25,000 57,000 128
15 Railway Locomotives (Nos.) 3 175 400 129
16 Tractors (20-30 DBHP) (Nos.)     3,000  
17 Cement (million tons) 2.7 4.3 13 202
18 Fertilisers:
  (a) Nitrogenous (in terms of Ammn. Sulphate) (000 tons) 46 380 1,450 282
  (b) Phosphatic (in terms of Superphosphate) (000 tons) 55 120 720 500
19 1. Sulphuric Acid (000 tons) 99 170 470 176
20 l Soda Ash (000 tons) 45 80 230 188
21 Caustic Soda (000 tons) 11 36 135 275
22 Petroleum Refinery—(crude processed) (million tons)   3.6 4.3 19
23 Electric Transformers 33 K. V. and below (000 KVA) 179 540 1.360 151
24. Electric Cables (ACSR Conductors) (tons) 1,420 9,000 18,000 100
25 Electric Motors' (000 H.P.) 99 240 600 150
26. Cotton Textiles (million yards) 4,618 6,850 8,500 24
27. Sugar (million tons) 1.1 1.7 2.3 35
28. Paper and Paper Board (000 tons) 114 200 350 75
29. Bicycles (organised sector only) (000 Nos.) 101 550 1,000 82
30. Sewing Machines (Organised sector only) (000 Nos.) 33 110 220 100
31. Electric Fans (000 Nos.) 194 275 600 118
V. Transport and Communications
(a) Railways:
(1) Passenger train miles (millions) 95 108 124 15
(2) Freight (million tons) 91 120 181 51
(b) Roads:
(1) National Highways (000 miles) 12.3 12.9 13.8 7
(2) Surfaced Roads (000 miles). 97.0 107.0 125.0 17
(c) Shipping:
(1) Coastal and Adjacent* (lakh GRT) 2.2 3.2 4.3 34
(2) Overseas** (lakh GRT) 1.7 2.8 4.7 68
(d) Ports:
Handling capacity (million tons) 20 25 32.5 30
(e) Posts and Telegraph*:
(1) Post Offices (000 Nos.) 36 55 75 36
(2) Telegraph Offices (000 Nos.) 3.6 4.9 6.3 28
(3) Number of telephones (000 Nos.) 168 270 450 67
VI. Education
1. School-going children as percent of children in the respective age groups:
(a) Primary Stage (6—11 age group) 42.0 51.0 63.0  
(b) Middle Stage (11—14 age group) 14.0 19.0 22.5  
(c) Higher Secondary Stage (14—17 age group) 6.4 9.4 12.0  
2. Elementary/Basic Schools (lakhs) 2.23 2.93 3.50 19
3. Teachers in Primary/Middle Secondary Schools (lakhs) 7.4 10.3 13.4 30
4. Teachers Training Institutions (Nos.) 835 1,136 1,412 24
5. Enrolement in Teachers Training Institutions (000 Nos.) 75.6 103.5 134.2 30
W. Health
1. Medical Institutions (000 n( is.) 8.6 10 12.6 26
2. Hospital beds. (000 N as.) 113 125 155 24
3. Doctors . (000 Ni as.) 59 70 82.5 18
4. Nurses . (000 Ni as.) 17 22 31 41
5. Midwives .. (000 Ni as.) 18 26 32 23
6. Nurse-Dais and Dais (000 Ni as.) 4 6 41 583
7. Health Assistants and Sanitary Inspectors (000 Ni OS.) 3.5 4 7 75

(••) Relate* to the calendar year 1954. (t) Flourag relates to calendar years.
(*) Inclusive of tankers.
(*•) Inclusive of tramp tonnage.

Agriculture And Community Development

14. The first five year plan has already initiated the process of increasing productivity in agriculture. Foodgrains production increased by 11 million tons, Le., by 20 per cent, over the last five years and the increase in agricultural production as a whole has been of the order of 15 percent. Over the second plan period, agricultural production is estimated to increase by 18 per cent. The lines on which efforts have to be made for increasing the productivity of land are already familiar. The provision of irrigation facilities, better seeds, fertilizers and the spread of improved techniques of cultivation will offer scope for expansion for many years to come. In addition to carrying forward these programmes, the second five year plan is designed to bring about greater diversification in agricultural production. As levels of living in the country improve and the industrial structure gets more broad-based it becomes necessary to devote increasing attention to cash crops and to the production of subsidiary foods such as vegetables, fruits, dairy products, fish, meat and eggs. Another aspect of agricultural development which will receive greater attention in the second plan relates to the institutional arrangements for promoting land use and land management on more efficient lines and for ensuring a greater degree of social justice among the classes dependent on land.

15. The target for additional production of foodgrains in the second plan is placed at 10 million tons, i.e., an increase of 15 per cent. from 65 million tons in 1955-56 to 75 million tons in 1960-61. As a result, the consumption of foodgrains in the country would increase from the present level of 17.2 oz. to 18.3 oz. per adult per day. Larger increases in production are envisaged for cotton (31 per cent), sugarcane (22 per cent), oilseeds (27 per cent) and jute (25 per cent). About a million more acres are expected to be brought under cultivation for sugar-cane as a result of additional irrigation facilities. If the target for sugarcane is realised, it will be possible to increase the consumption of sugar in the country from 1.4 to 1.7 oz. per adult per day. Apart from the increase in production that is proposed, special efforts will be necessary to improve the quality of domestically produced jute and to increase the proportion of long staple varieties in the outturn of cotton.

16. The targets for agricultural production set out above embody the results of discussions that have taken place with State Governments and the Central Ministry concerned. We feel, however, that these targets are modest in relation to the scope that exists for raising productivity and the demands that will be made by the large investments envisaged in the plan. The provision for agriculture and community development is being increased from Rs. 357 crores in the first plan to Rs. 568 crores in the second plan. This allocation is exclusive of increased facilities for short-term credit which will be afforded by the Reserve Bank, the State Bank and the cooperative movement. Early in 1955 the Planning Commission suggested to State Governments that in framing programmes for agricultural production, it was necessary from the national point of view to place before villages a goal which they should strive to attain over a period of years: viz., a doubling within a period of about 10 years of agricultural production, including food crops, oilseeds, fibres, plantation crops, animal husbandry products, etc. It was emphasised that this goal involved on the part of State Governments an obligation to provide the supplies, services and finance needed, plans for which would have to be worked out The targets set out at present in the plan are in the nature of working estimates indicating the increases in production potential arising from various development programmes. It is hoped that through better integration of the agricultural and the national extention programmes, it will be possible to fix appreciably higher targets for agricultural production. This problem is at present under duscussion between the Planning Commission and the authorities concerned. Considering the need for economising foreign exchange, it is important that a coordinated effort is made to step up the domestic production of foodgrains. In fact all crop yields in India are exceedingly low and they have to be raised rapidly if the programmes of industrial development are to proceed at the rates required. To this end, the national extension agency should concentrate more and more on getting every village and every family to work out and implement a plan for improvement of agricultural productivity through the adoption of improved practices and by investment of their own labour and resources. We suggest also in this connection that systematic sample surveys be undertaken to measure the increases in agricultural production secured in various national extension and community development areas, so that necessary adjustments can be made in the programmes of development in this field froni time to time.

17. Among the programmes to be taken in hand for increasing agricultural production, precedence will continue to be given to the provision of irrigation facilities, the target of additional area to be brought under irrigation being 21 million acres. The consumption of nitrogenous fertilizers is expected to increase from 610,000 tons in 1955 to 1.8 million tons in 1960. Some 3,000 seed multiplication farms covering a total area of about 93,000 acres will be established and land reclamation and improvement programmes extending over 3Vi million acres of land will be undertaken.

18. The plan provides for considerable increases in the supply of protective foods like fruits and vegetables; a sum of Rs. 8 crores has been provided for promoting fruit and vegetable cultivation. The production in the allied occupations of fisheries, forestry and dairying is also expected to register substantial increases. The provision for animal husbandry and fisheries in the second plan amounts to Rs. 68 crores as against Rs. 26 crores in the first plan. During the first plan 600 key villages and 150 artificial insemination centres were established; these are to be increased by 1258 and 245 respectively. \feterinary dispensaries which increased from 2,000 to 2,650 in the first plan are expected to increase by another 1,900 during the second plan. The plan also contemplates the establishment of 36 urban milk supply unions, 12 cooperative creameries and 7 milk drying plants. Off-shore and deep sea fishing is to be expanded and for this purpose additional exploratory off-shore fishing stations will be established on the western and eastern coast and in the Andaman Islands.

19. The second plan makes a provision of Rs. 47 crores for cooperation, marketing and warehouses. The integrated scheme of credit, marketing and production recommended by the Rural Credit Survey Committee is to be jointly implemented by the State . Bank, the Reserve Bank and the Government and work has already been taken in hand in pursuance of the Committee's recommendations. In particular, the programme of building a network of warehouses all over the country will be carried through with expedition. It is estimated that cooperative agencies will be able to handle about 10 per cent. of the marketable surplus by the end of the second plan. In th.e meanwhile, greater emphasis is being placed on the extension of regulated markets in the country. The total number of such markets is expected to be doubled by the end of the plan. Over a period, the object of institutional reforms in the field of agriculture is to apply the cooperative principle to a steadily increasing range of activities. It has been found by experience that the growth of the cooperative movement in the sense of a spontaneous coming together of small and needy persons in the interests of larger production or more equitable distribution cannot be rapid enough. It becomes incumbent on the State, therefore, to sponsor and assist actively in the reorganisation and development of the cooperative movement. A comprehensive programme is being formulated to this end.

20. Perhaps the most significant feature of the First Five Year Plan was the emphasis it placed on the community development and national extension programme. The basic aim of this programme is to improve the economic condition of the people by spreading the knowledge of better techniques and to instil in them a desire for higher standards of living and a spirit of self-help and cooperation. Extension services and community organisations are one of the principal sources of vitality in democratic planning. Nearly one-fourth of the country has already been covered by this programme and the response of the people has been encouraging as seen from the fact that the voluntary contributions by the people in community project areas have amounted to about 60 per cent. of the expenditure incurred by Government It is proposed to carry forward the programmes of community development and national extension so as to cover the entire country by the end of the second plan. Aprovi-sion of Rs. 200 crores is made in the plan for this purpose. As indicated earlier, these programmes, suitably orientated from time to time, can, we feel, be relied upon to secure increases in agricultural production even beyond the targets envisaged in the plan.

21. The development of village panchayats is an important constituent of the programme of fostering corporate life in the rural areas and of promoting among the rural community active interest in the development programmes of the village. In the first plan period the number of village panchayats increased from 83,000 to 117,000 and the aim in the second plan is to increase it further to 245,000. The plan makes a provision ofRs. 12 crores for promoting the development of village panchayats. There is also a provision of Rs. 15 crores for local development works. The object of this programme, which operates in areas not yet reached by the national extension service, is to enable village communities to undertake works of local benefit mainly with their own labour.

Irrigation And Power

22. The total area under irrigation in the country has increased from 51 million acres to 67 million acres over the first plan period. An additional area of 21 million acres is expected to come under irrigation by the end of the second plan with the result that the irrigated area in the country will increase by almost 75 per cent in ten years. Of the 21 million acres to be brought under irrigation in the second plan period, some 12 million acres will benefit from large and medium projects and 9 million acres from minor irrigation works.

23. The bulk of the additional irrigation from large and medium projects is expected as a result of the completion of the programmes continuing from the first plan (some 9 million acres) whereas new projects included in the second plan will account for additional irrigation of some 3 million acres. On completion, the irrigation potential of the major and medium projects started in the second plan would be of the order of 15 million acres. The benefit from major and medium irrigation projects is expected to flow more or less evenly over the second plan period—at the rate ol 2 million acres per year over the first three years and some 3 million acres per year over the last two years.

24. In view of the need for a steady increase in agricultural output, it is proposed to devote increasing attention to medium-sized projects. The First Five Year Plan provided for 7 irrigation projects costing more than Rs. 30 crores, 6 costing between Rs. 10 and 30 crores, 54 costing between Rs. 1 and 10 crores and about 200 costing less than Rs. 1 crore each. In the second plan, of the 1S8 new irrigation projects to be taken 11 hand, there is none which is expected to cost more than Rs. 30 crores, some ten will cost between Rs. 10 and 30 crores, 42 between pa 1 and 10 crores and die remaining 136 wili cost less than Rs. 1 crore each. Apart from their quick yielding nature, medium-sized projects offer particular scope for spreading the benefits of irrigation more evenly among different regions.

25. Among programmes of minor irrigation, mention may be made of the proposed ouday of pa 20 crores for the construction of 3,581 tubewells with a view to providing irrigration facilities for 916,000 acres. In addition, the exploratory programme of the drilling of deep tubewells which was begun in the first pSaa for assessing the possibilities of exploiting ground xter resources for irrigation will be continued in the tcond plan.

26. At the beginning of the First Five Year Plan, the total installed capacity for the generation of electricity m the country was 2.3 million kW. The first plan report envisaged an increase in power capacity of some 7 million kW. ia 15 years. The installed capacity for power generation has already increased by 1.1 million LW. over thi first plan period and an increase of another 3.5 million kW. over the second plan period is envisaged. A substantial increase—of over 100 per cent—in the capacity for power generation in the next five years is essential m view of the considerable emphasis on industriaiisation in the second plan, Since this emphasis has to be continued in subsequent plan periods, the original target, of an increase of 7 million fcW. in power capacity by 1965-66 has to be raised to about 13 millioci S.W.

27. The coasumption of electricity in the country is expected to increase from 14 units per capita ia 1950-51 to 25 units in 1955-56 and 50 unite in 1960-61. By the L;;, i of the first pian, about 95 per cent of the towns with of 20,000 or more and some 40 per cent p.c the towns wth a population between 10,000 and 20,900 would ba s-ssured of electricity. The aim in the second plan is pror 1 Ac Eridty to all tovms with a populatior. of caw and

28. The bulk of the additional capacity for power generation in the country will be in the public sector with the result that the State wilLsoon have a dominant position in this field. The total installed capacity in the public sector is expected to increase from 0.6 million kW. in 1950-51 to 4.3 million kW. in 1960-61. The shareofthe public sector in the total capacity for power generation in the country will increase from 26 to 67 per cent. over the ten years. The significance of this can also be seen from the fact that the total investment of the public sector in electricity undertakings has increased from Rs. 40 crores in 1950-51 to some Rs. 270 crores in 1955-56 and is expected further to increase to about Rs. 680 crores by 1960-61.

Industriai And Mineral Development

29. The Major point of departure in the second plan is the precedence that is accorded to the public sector in industrial and mineral development Governmental initiative in the development of agriculture, power, transport and social services is already an established feature of economic planning in India. But projects of industrial and mineral development have hitherto not figured prominently in the investment plans of the public sector. Thus in the first plan a total provision of Rs. 94 crores was made for the establishment of large-scale industries in the public sector as against an estimated programme of new investment in the private sector of Rs. 233 crores. In the second plan, the provision of Rs. 690 crores for large-scale industries and mining (including scientific research) in the public sector compares favourably with the estimated new investment of Rs. 575 crores for industries and mining in the private sector. While the private sector is expected to play an important part in the process of industrialisation, there is a pronounced shift in emphasis in favour of the projects in the public sector.

30. Practically the whole of the proposed outlay of Rs. 690 crores for large-scale industry and mining is for development of basic industries such as iron and steel, coal, fertilizers, heavy engineering and heavy electrical equipment. During the second pian three steel plants of one million tons ingot capacity each will be established in the public sector at Rourkela, Bhilai and Durgapur. In addition, at one of these plants, 350,000 tons of pig iron will be produced for sale. Steel production at the Mysore Iron and Steel Works is to be expanded to 100,000 tons. The combined output of finishedsteel from all the projects in the public sector is expected to be of the order of 2 million tons by the end of the second plan.

31. The programme for the establishment of heavy engineering industries includes a heavy steel foundry at the Chittaranjan Locomotive factory for meeting the requirements of railways for heavy castings and the establishment of heavy foundries, forge shops and structural shops, under the auspices of the N.I.D.C. Arrangements are being made for the manufacture of heavy electrical equipment in the public sector. The Chittaranjan Locomotive factory is to be expanded so as to increase its output of locomotives to 300 per annum as against 125 per year at present. The Integral Coach Factory which went into production in 1955 will produce 350 coaches per annum by 1959. Provision has also been made for a new metre gauge coach factory.

32. The output of minerals in the country is expected to increase by 58 per cent over the second plan period. Mention may be made particularly of coal in view of the large increase in requirements that is implied in the programmes of industrial and transport development The present production of coal in the country is of the order of 38 million tons. The bulk of this production is in the private sector, the share of the public sector being only 4.5 million tons. It is proposed to increase She production of coal by some 22 million tons in the next five years, some 12 million tons in the public sector and the remaining 10 million tons in the private sector.

33. In view of the paucity of coal deposits in Southern India high priority has been given to the multi-purpose Lignite Project at Neiveli in South Areot district. Under this project 3.5 million tons of lignite aie to be produced and used for (1) generation of power in a station of 211,000 kW capacity, (2) production of carbonised briquettes in a carbonisation plant of about 700,000 tons annual capacity, and (3) production of 70,000 tons of fixed nitrogen in the form of urea and sulphate/nitrate. In addition, two mor" fertilizer factories are to be set up. One of these, to be located at Nangal, will produce nitro-limestone cones-ponding to 70,000 tons of Fixed nitrogen per annum. The other fertilizer factory is to be established at Rourkela. It wili produce nitro-limestone equivalent to 80,000 tons of fixed nitrogen per annum. Further, the Sindri Fertiliyer Factory will be expanded so as to increase its outpus from 66,000 tons of nitrogen to 117,000 tons.

34. Several of the projects completed during the first plan such as die D.D.T. plant, Hindustan Cables, Hindustan Antibiotics and the Indian Telephone Industries will be expanded. It is also proposed to establish a second D.D.T. plant in Travancore-Cochin. Among the projects included in the plans of States, mention may be made of the Durgapur coke-oven plant in West Bengal and the manufacture of electric porcelain insulators and transformers in Mysore.

35. The bulk of the investment in the private sector is also for the development of basic industries. Substantial programmes of expansion are envisaged for the iron and steel industry in the private sector and the capacity of the industry is expected to increase from the present level of 1.25 million tons of finished steel to 2.3 million tons by 1958. It is proposed to increase the production of cement from 4.3 million tons to 13 million tons—the capacity of the industry being raised to 16 million tons—by the end of the plan. Similarly, capacity for aluminium, ferro-manganese and refractories will be substantially stepped up.

36. The programmes of development in the private sector provide for a substantial increase in the production of machinery in the country, including machinery for cotton textiles, jute, sugar, paper, cement, agriculture and road making. The chemical industry which has already registered a sizeable advance in the first plan period will achieve significant diversification and growth in output The production of soda ash, for example, is to be increased to three times and of caustic soda to four times of the present level. The third oil refinery at Visakhapatnam will be completed by 1957 and an increase in the production capacity for power and industrial alcohol from 27 to 36 million gallons is envisaged.

37. Among consumer goods industries the output of cotton texiilef is to be increased by 24 per cent—from 6850 million yards to 8500 million yards. The breakup of this target as between mills, poweriooms and handloorns has not yet been determined. This, together with the allocation of the required yam output as between. mills and the cottage sector, wili be decided upoa in the light of a closer assessment of the possibilities of expanding handloom production and of the technical potentialities of ihe Ambar Charkha. The overall target of production envisaged here will provide for per capita consumption of cloth at about 18 yards and for exports of the order of 1,000 HiUSion yards a year. Judging from recent trends in ths demand for cloth, a larger increase in production may in fact become necessary. As regards other consumer goods the plan envisages an increase of about 35 per cent in the ;'reduction of sugar; for a doubling of the output of paper and paperboard; the production o! vegetable oils is expected to increase from 16 to 2.1million tons; and, there are also in the plan programmes for development of rayon, drugs and pharma-ceuticals.

38. The net output of factory establishments is expected to increase by 64 per cent in response to the programmes of development in the public and private sectors. The emphasis on capital goods industries can be seen from the fact that the net output of these industries is expected to increase by some 150 per cent India is still in the early stages of the development of basic industries. The next few steps in industrial development are fairly clear in view of the large and growing requirements which are at present met to a significant extent by imports. As these pressing needs are satisfied and the superstructure of basic industries grows, it will be necessary to visualise an integrated programme of development for basic capital goods industries', for organised consumer goods industries and small scale industries.

39. The second five year plan provides for a sum of Rs. 200 crores for the development of village and small-scale industries. Of this, Rs. 59.5 crores is earmarked for the handloom industry, Rs. 55 crores for small-scale industries, Rs. 55.5 crores for Khadi and other village industries, and the rest for other industries. Considerable technical examination with reference to the potentialities of each industry and of various areas will be necessary before targets of production in this field can be presented in concrete terms.

Transport And Communications

40. Of the total amount of Rs. 1385 crores set apart for transport and communications in the public sector plan, Rs. 900 crores are provided for railways. In addition, the railways will spend some Rs. 225 crores for normal replacement The backlog of replacement accumulated during the war and the early post-war years has not been made good so far and a sizeable increase in traffic is expected over the second plan period mainly in response to the programmes of industrial and mineral development. The volume of goods traffic is expected to increase from 120 million tons in 1955-56 to about 181 million tons in 1960-61, i.e. by 50 per cenf and it is felt that even the large outlay of Rs. 900 crores may not suffice to enable the railways to lift all the additional goods traffic that is offered. It is in view of this that the plan provides for an increase of only 3 per cent per annum in passenger traffic. This order of increase in passenger services will not help much in relieving present over-crowding. The plan outlay of Rs. 900 crores also includes ho provision for the construction of new lines to open up parts of the country not served by railways at present. The provision in the plan for new lines is confined to those required for operational purposes and for the new industrial project^. Special attention will be paid during the second plan period to improvements in operational efficiency of the railways. The programme for the development of railways and other means of transport will be reviewed from year to year so as to ensure that the progress of the plan is not impeded by inadequacy of transport facilities.

41. The railway plan provides for doubling of 1607 miles of track, conversion of 265 miles of metre gauge lines into broad gauge, electrification over sections totalling 826 miles and dieselisation over 1293 miles. Provision is also made for the construction of 842 miles of new lines and for the renewal of 8000 miles of obsolete track.

42. With a total capital investment of about Rs. 974 crores at present the railways are the largest single national undertaking. Apart from providing the bulk of transport facilities, the railways run a large number of industrial enterprises for meeting their requirements. These enterprises are to be greatly expanded during the second plan period. The significance of the programmes of industrial development in relation to railway requirements can be seen from the fact that as against the total purchase of '2258 locomotives, 107,247 wagons and 11,364 coaches in the second plan period, the output of locomotives, wagons and coaches at the end of. the second plan is expected to reach the level of 400, 25,000 and 1800 per annum respectively. In the second plan period, the railways will need to import materials and equipment worth Rs. 425 crores—Rs. 137 crores for steel, Rs. 81 crores for locomotives and the rest for rolling stock including wagons. In view of the proposed increases in industrial production over the next five years, the dependence of railways on imports will diminish considerably in subsequent plan periods.

43. The second plan makes a provision of Rs. 263 crores for roads and road transport, Rs. 96 crores for shipping, ports and harbours and inland water transport, Rs. 43 crores for civil air transport and Rs. 76 crores for broadcasting, posts and telegraphs and other communications. The Nagpur Plan (1943) outlined a long-term programme for road development over a period of twenty years. With the investment proposed in the second plan the target for road mileage envisaged in the Nagpur Plan will be practically reached by 1960-61. Road transport nationalisation programme is to be suitably phased and the State Governments are expected to add to their existing fleet about 5,000 vehicles. The capacity of the major ports is to be increased by 30 per cent and minor ports in the maritime States are to be further developed. The plan also provides for an extensive programme for the development of lighthouses. The total tonnage of ships is expected to be increased from 6,00,000 GRT at the end of the first plan to 9,00000 GRT at the end of the second plan after allowing for the obsolescence of 90,000 GRT. The allotment for shipping, it is recognised, may prove less than adequate, and it may be necessary to increase it, especially in view of the rise in the price of ships. The Hindustan Shipyard is to be expanded and a dry dock is to be constructed at Visakhapatnam. The question of construction of a second ship-building yard may be examined later. The Indian Airlines Corporation and the Air India International have sizeable programmes for purchase of additional aircraft and .for improving their operational facilities. The number of post offices which increased from 36,000 to 55,000 in the first plan is to be increased further to 75,000 in the second plan. The demand for telephones is increasing rapidly and the plan provides for a 67 per cent increase in the number of telephones in the country—fro'm 270,000 to 450,000. As a minimum, the extension of telephone facilities in the country must match the present tempo of production of telephones, and the programmes for manufacture of telephones and for extension of telephone facilities have to dovetail. In view of this consideration the provision made in the plan under this head may have to be reviewed. As regards broadcasting, a 100 KW short-wave transmitter as well as a 100 KW medium-wave transmitter will be set up at Delhi and 50 KW short-wave transmitters are to be provided at Calcutta, Bombay and Madras. It is proposed to instal about 72,000 community receivets in rural areas.

Social Services

44. The total outlay on social services in the plan is placed at Rs. 945 crores or about twice the provision made in the first plan. The continuing emphasis on the development of educational and medical facilities as well as on the advancement of industrial labour, displace persons and other under-privileged classes is an integral part of the socialistic pattern of society which seeks to achieve a greater degree of equality of opportunities in the country.

45. One of the Directive Principles in the Constitution is that within a period of 10 years as from 1950-51, free and compulsory primary education for all children until the age of 14 should be provided. On the basis of the targets proposed in the plan, by 1960-61, only 63 per cent of the children in the age-group 6 to 11 and 22.5 per cent. of the children in the age-group 11 to 14 would be provided for. The number of pupils will increase by 7.7 millions at the primary stage and I. 3 million at the middle stage. These targets will require the establishment of 53,000 new primary schools and 3,500 middle schools. At the secondary stage it is proposed to provide increasing diversification of courses. The number of multipurpose schools is to be increased from 250 at the end of the first plan to about 1200 by'the end of the second plan. In each sector of development, technical personnel will be needed in rapidly increasing numbers. It is, therefore, proposed to establish three higher technological institutes, one each in the Northern, Western and Southern regions and to develop further the Delhi Polytechnic and the Kharagpur Institute of Technology. The Indian School of Mines and Applied Geology at Dhanbad will also be expanded. The total number of engineering institutions will be increased from 45 to 54 for graduate and post-graduate studies and from 83 to 104 for diploma courses. The out-turn of graduates in engineering is expected to increase from 3,000 in 1955 to 5,480 in 1960 and of engineering diploma holders from 3,560 to about 8,000.

46. The basic difficulty in extending health services in the country lies in the lack of trained personnel in sufficient numbers. Consequently, it is proposed to increase the supply of doctors, nurses, and health assistants by 18, 41 and 75 per cent respectively in the second plan. An increase of 24 per cent in the number of hospital beds is also envisaged. A sum of Rs. 4 crores is set apart for family planning arid it is expected that about 300 urban and 2000 rural clinics will be set up during the plan period.

47. The proposed outlay of Rs. 120 crores on housing relates to the schemes sponsored by the Works, Housing and Supply Ministry. In addition, provisions for housing have also been made in the plans of a number of Central Ministries including Railways, Iron and Steel, Production, Rehabilitation, Defence and others, and in the plans of States. The total number of dwelling units to be constructed by public authorities in the second plan period comes to 1. 3 million. The plan provides for an outlay of Rs. 29 crores for implementing schemes relating to labour. Apart from the provision for welfare centres and of training facilities on an extended scale, it is proposed to increase the number of employment exchanges in the country from 136 to 256 and also to expand their activities. The various activities initiated in the first plan for the welfare of the backward classes will be continued on an expanded scale. Greater assistance will be given to the various voluntary agencies for social welfare. Programmes for rehabilitation of displaced persons will have to be continued in the second plan. A sum of Rs. 90 crores has been provided for this purpose.

National Income, Consumption And Employment

48. The targets of achievement and the programmes of development to be taken in hand in different sectors have been outlined in the earlier sections. The sum total of developments in various fields is reflected in the growth of national income. The expected increase in national income during the first and second plan periods is given in the table below:

National Product by Industrial Origin

(Rs. crores at 1952-53 prices) Percentage
  increase during
    1950-51 1955-56 1960-61 1951-56 1956-61
I. Agriculture and allied pursuits 4,450 5,230 6,170 18 18
2. Mining 80 95 150 19 58
3. Factory establishments 590 840 1,380 43 64
4. Small enterprises 740 840 1,085 14 30
5. Construction 180 220 295 22 34
6. Commerce, transport and communications 1,650 1,875 2,300 14 23
7. Professions and services including Government Administration 1,420 1,700 2,100 20 23
8. total national product 9,110 10,800 13,480 18 25
9. Per capita income (Rs.) 253 281 331 11 18

49. For the major sectors of agriculture, mining and factory establishments the estimates of net output are based largely on the detailed targets of production set out earlier. But in the case of other sectors such as commerce, professions and other services which are largely outside the purview of the plan, only an indirect estimate is possible. Nonetheless, it would appear that national income wiil increase from Rs. 10,800 crores in 1955-56 to about Rs. 13.480 crores in 1960-61 (at constant prices) i.e. by about 25 per cent. This will mean an increase of about 18 per cent in per capita income (from Rs. 281 in 1955-56 to Rs. 331 in 1960-61) as against an increase of 11 per cent over the first plan period (from Rs. 253 to Rs. 281). It will be seen that despite the substantial increase in the net output of mining and factory establishments that is envisaged, the structure of the economy will change only marginally over the plan period. Thus the share of agriculture and allied pursuits in total national income will decline from 48 per cent in 1955-56 to 46 per cent in 1960-61, and that of mining and factory establishments will increase correspondingly from 9 to 11 per cent It is this fact which underlines the need for a continuing emphasis on industrialisation during subsequent plan periods.

50. The average level of consumption in the economy will not increase as fast as national income, inasmuch as a larger proportion of domestic output will have to be saved and invested. The programme of investment envisaged for the second plan period— Rs. 6,200 crores—requires, broadly speaking, a set-up in the rate of domestic saving from the present level of some 7 per cent of national income to about 10 per cent of national income in 1960-61. This is on the assumption that external resources of the order of Rs. 1100 croreswill become available, as postulated in the plan, for supplementing domestic savings. Total consumption expenditure in the country may, on this assumption, be expected to increase by some 21 per cent as against the increase in national income of 25 per cent The corresponding increase in total consumption over the first plan period amounts to some 16 per cent The following table indicates the broad position in regard to national income, investment, domestic savings and consumption expenditure at the end of the second plan period as compared to the position in 1950-51 and in 1955-56:

National Income, Investment, Savings and Consumption (Rs. crores at 1952-53 prices)

    1950-51 1955-56 1960-61
1. National income 9,110 10,800 13,480
2. Net investment 4.48 790 1,440
3. Net inflow of foreign resources . (-)7 34 130
4. Net domestic savings (2—3) 455 756 1,310
5. Consumption Expenditure (1—4) 8,655 10,044 12,170
6. Investment as per cent of national income (2 as % of 1) 4.94 7.31 10.68
7. Domestic savings as per cent of national income (4 as % ofl) . 4.98 7.03 97

51. It maybe emphasised that if foreign resources of the order required are not forthcoming, it would be necessary to restrict the growth in consumption to a correspondingly greater extent Indeed, the postulated increase in consumption itself rests on the assumption that national income would increase by 25 per cent in response to an investment programme of Rs. 6,200 crores and that the necessary rate of saving for achieving this order of investment will materialise. The problem of mobilizing resources as required is discussed in the next chapter. But it is noteworthy that the essence of economic development lies precisely in this that unless increases in consumption are held in check to the extent required for realising the rate of investment, the expected increase in national income and standards of consumption cannot materialise. It is also clear that an investment of Rs. 6,200 crores will result in an increase of 25 per cent in national income only if a number of assumptions are satisfied—assumptions about coordination in planning, the avoidance of waste, the requisite effort at organisation and leadership for enlisting the support and cooperation of the people in taking to improved methods of production and for creating a climate favourable for development. The achievements of a plan cannot be read simply from a list of programmes. They depend primarily on the energy and organisational ability brought to bear on the implementation of programmes and policy measures at all levels.

52. Problems relating to employment pattern and policies and the employment potential of the plan are discussed in Chapter V. Additional employment likely to be generated over the second plan period in sectors other than agriculture is estimated at 8 million. In this estimate only full-time employment has been taken into account There are in the plan programmes of development such as irrigation and land reclamation which will reduce under employment to some extent and may also absorb new persons. In the present socio-economic structure in the rural areas the distribution of a given quantum of work or income cannot be split up as between employment for the underemployed and fulltime employment as such. With the increase in agricultural production envisaged in the plan and the substantial increase in employment opportunities outside agriculture, there will be a significant increase in incomes and a reduction in underemployment in the primary sector- The promotion and reorganisation of village and small-scale industries along the lines suggested in the plan will provide fuller employment to large numbers of persons engaged in these industries. Altogether, in aggregative terms, the plan envisages a sufficient increase in the demand for labour to match the increase in the labour force amounting to 10 million.

(Rs. crores)

First Plan Second Plan
1 2
Andhra 75.9 119.0
Assam 28.1 57.9
Bihar 104.4 194-2
Bombay 1813 266.2
Madhya Pradesh 57.5 123.7
Madras 97-0 173.1
Orissa 852 100.0
Punjab 124.0 1263
Uttar Pradesh 165.9 253.1
West Bengal 151.9 153-7
total 'A' states 1071.2 1567.2
Hyderabad 57.0 100
Madhya Bharat Mysore 36.1 53.2 67- 80
Pepsu 392 36.3
Kajasthan 62-8 97'
Saurashtra 29.8 47.7
Travancore-Cochin 35.4 72.0
Jainmu and Kashmir 132 33.9
total 'B' states . 326.7 535.4
Ajmer 3.6 7.9
Bhopal 9.3 14.3
Coorg 2.0 3.8
Delhi 10.5 17.0
Himadial Pradesh 7.5 14.7
Kuteh 4.8 7.9
Manipur 22 62
Tripura 3.0 8.5
Vindhya Pradesh 93 24.9
total 'C' states . 52.2 105.2
Andaman and Nicobar Islands 15 5.9
North East Frontier Agency 4.4 95
Pondicheny 0.8 4.8
total 6.7 102
Centre's share of expenditure on D.V.C . 12-2
National Extension Service and Community Projects 0.7*
Grand Total 1456.8 2240.9

*This is in addition to V.s. 187 crores included in the Plan allotments for individual Stales- For national extension and community projects the Plan provides Rs 200 cmres, of which about Rs. 12 crores are shown at the Centre. Provisional allotments under this head were made to individual Stales when State Plans were formulated; these are to be reviewed when certain details of the pnogrammer have been determined.

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