|3rd Five Year Plan||
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I. ADMINISTRATIVE TASKS
The Third Five Year Plan envisages a scale of national effort far exceeding that of the preceding decade. A statement of its objectives and targets can scarcely convey the scope and range of the tasks which the nation has undertaken to fulfil during the next five years. In the last analysis the Plan rests on the belief that the requisite effort will be forthcoming and that, at each level in the national life, within the limits of human endeavour, an attempt will be made to implement it with the utmost efficiency. Of the many assumptions on which a Five Year Plan is based, this is not only the most important but also the most difficult. The economic goals of the Plan are vital in themselves and are at the same time a foundation for future growth; yet, they are but one aspect of the challenge implicit in the Plan. There is, for instance, the expectation that, given reasonable conditions, it will be possible to mobilise savings for implementing the entire physical programme accepted for the Third Plan period and more. Against the background of a rate of growth ot population of well over two per cent per annum, to expect to provide work at least to the entire addition to the labour force implies not only efficient implementation of all programmes but also intensive and nation-wide use of the available manpower resources. The realisation of the principal social objectives of the Plan, especially equal opportunity for all citizens, the provision of basic necessities, reduction in disparities of income and wealth and the more even distribution of economic power depends on the execution of a wide range of policies and programmes.
2. The Plan has to be implemented at many levelsnational. State, district, block and village. At each level, in relation to the tasks assigned, there has to be cooperation between different agencies and an understanding of the purposes of the Plan and the means through which they are to be secured. In a vast and varied structure organised on a federal basis, a great deal depends on being able to communicate effectively between different levels, and at the same level between different agencies. In many vital sectors of the Plan^ responsibility for execution lies with authorities in charge of large projects. The role of such projects grows as the economy develops and in consequence many new problems of organisation have to be solved, In a developing economy the functioning, side by side, of an expanding public sector and a private sector, which is in part organised and in large part unorganised, also raises difficult administrative problems.
3. The past decade has been a period of considerable change and adaptation in the field of administration. Innovations have been introduced and new institutions established, although perhaps many of them have yet to be fully integrated with one another and with the structure as a whole. With increase in the range of Government's responsibilities and in the tempo of development, the volume and complexity of administrative work have also grown. The administrative machinery has been strained and, at many points in the structure, the available personnel are not adequate in quality and numbers. The administrative burden of carrying out plans of development, large as it is at present, will increase manifold under the Third Five Year Plan, and doubtless new problems in public relations will also come up. In the recent past. certain aspects of administration have attracted pointed attention. These include the slow pace of execution in many fields, problems involved in the planning, construction and operation of large projects, especially increase in costs and non-adherence to time-schedules, difficulties in training men on a large enough scale and securing personnel with the requisite calibre and experience. achieving coordination in detail in related sectors of the economy and, above all, enlisting widespread support and cooperation from the community as a whole. In the larger setting of the Third Plan, these problems are accentuated and gain greater urgency. It is widely realised that the benefits that may accrue from the Third Plan will depend, in particular in its early stages, upon the manner in which these problems arc resolved. As large burdens are thrown on the administrative structure, it grows in size; as its size increases, it becomes slower in its functioning. Delays occur and affect operations at every stage and the expected outputs are further deferred. New tasks become difficult to accomplish if the management of those in hand is open to just criticism. In these circumstances, there is need for far-reaching changes in procedures and approach and for re-examination of prevalent methods and attitudes.
II. EFFICIENCY AND STANDARDS IN ADMINISTRATION
4. Each area of development administration has its own specific problems. There are, however, some common directions of reform which are applicable to all branches of administration and deserve emphasis in view of the experience gained in the Second Plan. The primary aim must be to ensure high standards of integrity, efficiency and speed in implementation. The process of improving administrative efficiency is a continuous one and progressively, through work studies, and improved systems of office administration and in other ways, better methods have to be devised. Already, both at the Centre and in the States, greater attention is being given to organisation and methods, to increasing incentives, and to the evaluation of performance. To an extent speed in implementation and efficiency in individual processes are interrelated. In the context of development, however, the former presents perhaps the more difficult issues in organisation, especially where the structure becomes large and complex and responsibility is widely shared. There are some common features in the way in which this problem arises at the national and at the State level, but, on account of differences in the relative size of the operations undertaken, there are distinct differences in degree. From such study and thought as has been given to this subject, some of the main directions in which action should be taken to speed up implementation are described below. It is recognised, of course, that while changes in organisation and procedures can go some distance to remove causes of delay and to achieve greater speed, they have to be supported by greater attention to the training of personnel, to supervision and to reporting and evaluation. Nevertheless, without a concerted attempt to make the administration much more action-oriented than at present, these measures may not yield enough results.
5. For the execution of any programme or project, the primary need is to fix specific responsibility on the agency concerned and, within it, on particular individuals. Within defined limits, each individual should be given full responsibility and, with it, the necessary measure of support and trust. If he fails in the discharge of his responsibility, he should be replaced. But so long as he holds the office with which he is entrusted, he should accept all its obligations, and, equally, he should be placed in a position effectively to discharge them. With responsibility thus specified, it should be open to him to seek such advice and consultation as he may require, but these should not become the necessary ingredients of the executive process itself. In the present functioning of the administration, consultation with other authorities is not always confined to broader matters; instead, it is too frequent and too concerned with details and, therefore, impedes effective action. Exercise of financial control is one important aspect of this problem. Obviously, the question here is one of ensuring wide delegation of financial powers to the heads of administrative Departments, with Finance Department undertaking their principal scrutiny prior to the framing of the annual budget.
6. As was pointed out both in the First and in the Second Plan, Central Ministries and perhaps Secretariat Departments in the States have tended to assume responsibility for an increasing amount of original work. This has reduced the initiative of the executive Departments and their ability to function on their own. The main preoccupation of Ministries and Secretariat Departments should be with matters of policy, general supervision and enforcement of standards, and executive tasks should be left to be carried out by Departments and authorities specially designated for the purpose.
7. A necessary condition of placing specific responsibility and providing the means for fulfilling it is that success or failure should be judged by the test of results. This is possible only if in the planning stage care is taken to specify the tasks to be undertaken, the means to be employed, the obligations of the various agencies or individuals concerned, and the time sequence in which different operations must flow and dovetail into one another. These conditions apply to several branches of administration and, more especially, to large projects.
8. By its very nature, a plan of development necessarily involves the setting of targets and subsequent appraisal of fulfilment. Targets may provide useful indicators of progress, and may make for concentrated effort, but equally important are the specific measures and policies needed to realise them and their sustained implementation. There are fields in which targets in the sense of final figures of output or capacity are on the whole better avoided, either because of faulty methods of estimation or because the concepts are defective. However where a target is meaningful, it should be worked out by the agency responsible for it after careful study and should be further broken down into smaller units in terms of time-schedules and responsibility for execution. Five year targets should also be reassessed each year in the light of experience, and a further view taken regarding the likely future trends.
9. Attention has been sometimes drawn to the fact that in the present system of administration, incentives are not given an adequate role. It is obvious that incentives, whether for individuals or for groups, help to build morale. A prerequisite for a scheme of incentives is the ability to work out performance standards in an effective manner. The directions in which, within any specific area, an incentive scheme is likely to prove beneficial would need to be studied. For instance, in industrial undertakings, in the present circumstances, incentive schemes might assist greatly if they were directed to objects such as the following :
Material incentives are of course important; with these there should also be increasing scope for the development of non-material incentives, especially various forms of appreciation and recognition of worth, a sense of partnership in a common endeavour, and human relationships based on mutual respect and friendliness.
Ill. PROJECTS IN THE PUBLIC SECTOR
10. The public sector already includes an extensive range of enterprises such as industrial undertakings, irrigation and power projects, railways, road transport, air transport, shipping and others. Some of the main problems of organisation of industrial enterprises have been reviewed in the preceding Chapter. Experience gained during the Second Plan has suggested certain lines of action which should help increase the speed and efficiency of implementation of projects and secure greater economies in their construction and operation.
11. Large projects take considerable time to yield results, and their plannnig requires careful preparation. They have to be conceived in terms longer than the usual Plan periods. They must, therefore, form part of a scheme of development stretching over a longer period, say, 10 to 15 years. In the course of the preparation of the Third Plan, although to a smaller extent than in the Second, it was observed that many of the projects proposed for inclusion were not worked out fully, nor were they presented adequately. For a considerable number of projects included in the Third Plan, the information available even at this stage leaves much to be desired. This deficiency arises in part from lack of the requisite technical personnel in several fields, but is due also to the absence of adequate arrangements for undertaking detailed studies well in advance of the time for their consideration and approval. It is, threfore, important that both at the Centre and in the States, work on the preparation of projects included in the Third Plan should be completed with the utmost speed. Further, project studies relating to the Fourth Five Year Plan should be taken in hand, so that they are substantially completed in the course of the next three years.
12. In the field of industrial and mineral development, unlike the more familiar fields of irrigation and power and transport, the existing technical organisations are not always adequate. To the extent to which this may be due to lack of experienced personnel, for some years at any rate, there should be readiness to associate selected experts from abroad. It is suggested that the Central Ministries concerned with industrial development should take early steps to organise well-equipped technical planning cells. These should be maintained as permanent nuclei and should be supplemented by additional personnel according to the requirements of projects which are to be studied. The Ministries might also consider maintaining panels of technical advisers for selected industries. In this way the growing technical knowledge and experience of management and planning available within the country itself could be utilised in an organised manner in developing industry and specially the public sector. As suggested in the preceding Chapter, major State undertakings should take steps to strengthen and, where necessary, to set up suitable design and research units. Wherever feasible, the preparation of new projects should be one of their primary responsibilities. This would enable technical planning cells in the Ministries to concentrate on the broader technical and economic aspects of the projects with which they are concerned and on the study of different stages of execution and of the various related steps which require coordination at the level of policy and administration.
13. In connection with large projects, the question of the adequacy of existing arrangements for examination of cost estimates has arisen from time to time. A small beginning has been made with the setting up of a 'projects coordination cell' in the Ministry of Commerce and Industry, but the task has to be conceived on a much larger scale, and the arrangements needed should receive further consideration. Besides scrutiny of cost estimates and examination of economic aspects of projects, it is necessary that each year the Ministry of Finance should be in a position to present a report appraising the financial and economic aspects of all industrial undertakings of the Central Government.
14. Long gestation periods are a feature 'common to large projects. During the Second Plan, the gestation periods have in fact been much longer than had been estimated earlier. fhere are several reasons why continuous efforts should be made to reduce the time lags to the minimum. Large projects make a considerable claim on the available physical resources. It is important that there should be continuous flow of benefits from projects under execution at each stage in the Plan. The problem is essentially one of phasing work on each project with strict regard to the requirements and the provision of materials and of the ancillary services, including power and transport. There lias to be a high degree of coordination between different stages or parts of the same project as well as in related sectors. Coordination is required both at the operational level and in the planning of parallel or complementary investments.
15. Management of projects is a relatively new and important part of administrative practice, of which the special features are that definite targets and time schedules have to be fulfilled, costs have to be reckoned strictly at each stage. a great deal of initiative and resourcefulness in execution are called for, and there must be adequate organisation for technical planning. Without advance planning and accurate estimate of costs, the success of a project cannot be assured. It is also essential that programming techniques should be improved continuously so as to secure at each stage the maximum benefits from the outlays incurred and to achieve the targets within the budgeted time and resources.
16. In large projects under the same overall management, there is need for special units to assist the management in keeping down costs, raising productivity, setting norms and checking performance. This will ensure that the physical assets created and the results achieved are commensurate with the investments made, the original estimates are not exceeded without sufficient reason, time schedules are maintained. and the responsible authorities are in a position to enforce efficiency, economy and integrity. It is suggested, therefore, that the Central Ministries as well as States concerned with large industrial and other projects should review the existing arrangements for achieving the objects mentioned above and should provide for suitable units tor evaluation and review of progress which will function under the control of the top management authorities without, however, being involved in day to day operations.
17. A word may also be added here regarding certain aspects of implementation of Plan projects undertaken through private industry. The private sector has to make a large contribution to the growth of industrial production. Through the work of the National Productivity Council. Management Associations and other organisations greater attention is now being given to measures for increasing efficiency of management, reducing costs and, in general, inculcating in private enterprise the consciousness of responsibility to the community as a whole. In a planned economy in which the public and the private sectors have complementary roles, there must be equal concern in both for securing economies, utilising indigenous material's, saving on foreign exchange, outlays for maintenance of production as well as for development, accelerating exports, expanding employment, and generally improving the quality of service. Development Councils which have been set up for many industries and other organisations representing private industry are useful means for bringing the best leadership in each industry to bear on the solution of common problems and the achievement of high standards of management and welfare. They should be enabled to enlarge their contribution in these directions.
18. Expansion of training facilities in various fields of development has received considerable attention since the beginning of the Second Plan. The training programmes proposed for the Third Plan are described in the Chapter on Technical Education. It may be useful here to draw attention to some aspects of the problem of developing personnel with the necessary outlook and experience which will have particular importance for tne success of the Third Pian. lucre arc certain fields in which, for many years to come, personnel ai me uiguest level will oe inadequate or experience of a specific character will not be sufficiently available. In these fields, in the inieiest of rapid development itself, it would be desirable tor a penoa to arrange to supple-meat the available indigenous personnel.
19. In the past, there has been considerable unuer-esiundtion of tne management implications 01 large piojeccs as well as ot programmes ui development m tulfereat nelus. lo bunt up competent mauageus, wnu know tneir own jou and nave the abiMy to lead, is one of tne key tasKs in every secior or me Thua 1"ive Year flati. i-or tue must part, tnese men musi be tuund trom tiie miooic grades 01 personnel witiun eacn organisation supplemented, to tne extant possible, Irom utner sources. Botn within me Uuvernmeat ana m proJecis, tnere nas been greater pressure ai the mgner levels, and enougn audition nas not been. given to tne development 01 me middle graaes or personnel, 'ihis odjcci can be acmevea 11 persons from tnese giaues are given a greater snare or responsibility in. day 10 day work and have the opportunity of gaming experience in ine higher Jiuncnons ot management. Along wiin Uus, witlinn each project, it is essential to establish tne practice or consultation and excnange 01 views as between different levels within tne organisation as well as at eacn appropriate level.
20. Work m projects as well as in important programmes has frequently suffered because of rapid transfers of ornciais. For tasks of any importance, it is essential that the responsible officiate should not only be selected with care and suitably trained, but should also remain long enougn to grow to the full measure of their responsibility. In any major key assignment a period of less than five to ten years is rarely sufficient for producing large results. Frequently, in service transfers tne factors which are taken into consideration are not of the first importance from the standpoint of public interest or the success of the undertaking. Transfers may sometimes injure both continuity of operations and the morale of organisations whose work at the present stage of development is nearly always of a difficult and poineering character. There should be no hesitation in assuring the reasonable expectations of promotion to persons v/ho are required to continue on the jobs held by them in pursuance of public policy.
21. Large numbers of well-equipped public enterprises in different fields which are being developed throughout the country have facilities for arranging training on an extensive scale. In this respect, there is room for a much n'.ore positive approach than has been adopted hitherto. Wherever possible, each large project in the public sector should have a well-organised training programme for apprentices, etc. supported by institutional training at polytechnics or other appropriate centres.
V. ECONOMY IN CONSTRUCTION
22. In many fields of development, construction costs account for a substantial proportion of the expenditure. There is considerable scope for saving on construction costs if attention is given to certain elementary aspects. While each major construction has its own special features, there are five groups of factors which specially influence costs :
With due care and supervision, it should be possible in most cases to avoid unjustified excesses over estimates of costs as well as delays in keeping to the time-schedule for completing the work.
23. The question of securing economies in construction has been considered in consultation with Central Ministries and State Governments and there is general agreement on the following measures :
(1) Before a project is undertaken, there should be adequate planning of all aspects of the project, specially investigations, including those concerning materials for construction, and a detailed project report giving layout of works, details of equipment, phasing of component units of the project, cost estimates, financial returns, etc,
(2) Simultaneous steps should be taken to arrange for essential preliminaries of construction, namely, land acquisition, housing, communications, recruitment of staff and laying down proedures for procurement of plant and equipment and stores, and materials budgeting should be undertaken in detail;
(3) Adequate workshop facilities should be provided for installing machinery and for repairs and overhaul during construction. The workshop should also provide training facilities for mechanical, electrical and other personnel required for operating construction machinery;
(4) In planning for mechanised construction, the need for largescale employment being an essential objective of the Plan, a careful balance must te struck between use of manual labour and machine; the use of machinery should be restricted to only those works which, if done by manual labour, would be unduly delayed or would become much more expensive, or which are impossible of execution through manual labour;
(5) A careful assessment should be made of the spare parts required for construction machinery and other stores, and provision should be made accordingly so that, on the one hand, the work is not held up for want of essential stores and spares being available when required and, on the other, there is no unnecessary accumulation of inventories ;
(6) A central design organisation should be set up for the project if it is of sufficient magnitude or for a group of projects of smaller magnitude, which will prepare detailed designs, field plans, specifications of machinery and of civil works, including specifications for materials of construction. This organisation should also prepare designs for buildings and lay down norms regarding space utilisation:
(7) Buildings should be planned and designed on the basis of functional needs. Cost reduction can be further secured consistently with these needs by putting up temporary or semi-permanent construction to the extent possible. With optimum space utilisation, standardisation, suitable type designs, prefabrication, adoption of improved techniques and control or elimination of items which are not essential for the functional needs of the building, considerable economies can be effected;
(8) Choice of construction agency, system of contract and contract procedures are the most important factors, besides planning and design, which determine the ultimate cost of the project. The agency of construction can be departmental, or through contractors or voluntary organisations and labour co-operatives. In the case of non-departmental agencies, the work can be awarded on a codal contract or a work order system. A judicious choice between the agency of construction and the system of contract will bring about appreciable cost reduction. Departmental construction and construction through voluntary construction agencies and labour co-operatives will avoid unnecessary dependence on contractors and also divert the profits from the individual to the community. Voluntary organisations and labour co-operatives should be encouraged and work awarded to them on the work order system as far as possible;
(9) Promptness in payment of running as well as final bills is one of the most important factors in cutting down costs. Monthly on-account payments should be a normal feature. Claims for extra items, unless approved in advance, should be definitely rejected;
(10) Training of personnel for purposes of improving skills and productivity should be an integral part of the construction organisation;
(11) In the interest of continuity and building up of expertise, transfers of essential technical personnel from construction should be avoided even though such action may militate against departmental rules or conventions, and the interests of such personnel safeguarded within the construction organisation;
(12) A 'Cost Reduction Unit' should be established in each major constructijon project as a part of the construction organisation under the exclusive control of the Chief Engineer of the project. Its functions will be to carry out work studies, continuously analyse factors affecting costs, recommend suitable adjustments from time to time in materials, techniques, procedures and organisation, evaluate the results of such adjustments and keep a watch on progress in achieving economies in construction costs;
(13) A pool of technical advisers for each type of undertaking should be maintained at the Centre who, with the background of their experience and knowledge and the further pool of knowledge made available to them by the design and construction organisations and the cost reduction unite, will advise on the technical, economic and administration aspects of the project and also serve as a clearing house of information. As far as possible expenditure on this pool should come out of the savings in cost secured through its advice; anc}
(14) For each major project, a comprehensive completion report should be prepared giving the entire history of the project, including mistakes which occurred and risks taken, remedial measures adopted and lessons draw;], so that this report may serve as a reference book and guide to engineers charged with the execution of similar projects in the future. The preparation of the completion report should be begun while the works are in progress, and events fresh in memory and the report completed, as far as possible, simultaneously with or soon after the completion of the project. Technical bulletins dealing with various aspects of design and construction should also be prepared at the same time.
24. It has been suggested to States that they might set up inter-departmental committees to watch progress in achieving economies in construction costs. A number of States have already set up such committees. A committee on these lines is also being constituted at the Centre. Through the establishment of such machinery for following up the various suggestions mentioned above, it should be possible to insist that when a development programme or project comes up for general approval the construction clement is aVso fully considered. This will further secure that construction programmes in each field are phased so as to lead to the largest measure of economy.
VI. IMPLICATIONS FOR PLANNING
25. As the Second Five Year Plan progressed from year to year, it was felt that with greater anticipation and more accurate statistical and economic intelligence some of the problems might have been dealt with differently. In the first phase of the Plan, the decline in foreign exchange reserves might have been spread over a longer period, and the consequent reductions in foreign exchange allocations might have been less drastic in relation to power development and the production of fertilisers. The considerable lags which occurred in the utilisation of irrigation from large and medium irrigation projects could have been reduced. The shortages and imbalances recently reflected in the difficulties of coal transport could have been countered in advance to a greater extent. Finally, the intensity of fluctuations and the rise in prices during the past two years might have been moderated. These are instances of the interdependence between the balance of payments and the internal price levels, of the scheme of investments and the resulting outputs, and of developments in the related sectors of industry, transport and power. They point to the much larger dimensions of the problems of management, planning and implementation which are inherent in the design, structure and phasing of the Third Five Year Plan.
26. These problems arise not only at the national level and in the sectors of modem industry, transport and power, but are also reflected in turn in the greater responsibilities thrown upon the plans of States. In many sectors the role of planning in the States is wholly complementary to that of planning at the national levot, and problems at the State level also become more complex. The line of communication between planning for the country as a whole and for each district, block and village is a long one; to be able to preserve the broad national priorities while seeking to adapt the Plan in its myriad forms to the conditions and needs of each area and each community is no small objective. Against this background, a fresh view has to be taken of the ways in which the machinery and the process of planning at various levels may be improved, evaluation made more incisive, and planning equipped with better statistical and other tools. These are problems to be considered further in consultation with the Ministries at the Centre and the State Governments. Some of the principal directions in which the existing schemes and organisation of planning may be strengthened may be briefly indicated.
27. Unlike the earlier phases of planning, large projects in industry, transport, power and other fields, which involve complex technical and economic problems and vast amounts of expenditure, have now an increasingly important place in national planning. As the body entrusted with responsibility for planning at the national' level, the Planning Commission will endeavour to keep in touch with the working of large industrial and other enterprises and assist Ministries and States with objective analysis and reporting from the wider considerations of the national economy as a whole. From this angle the Planning Commission's own work and that of the Committee on Plan Projects and the Programme Evaluation Organisation are being reviewed. It will be necessary to ensure close collaboration with various statistical agencies and also to enlarge the scope of the economic and social research to be undertaken both directly and through universities and other centres of learning.
28. In collaboration with the Ministries and the States considerable improvement will need to be effected in the present system of reporting upon projects, flow of information at intervals short enough to be meaningful, and assessment sf current trends. Too frequently in the pfcst, reports on progress have lacked focus and hfeve not brought to light current weaknesses or helped to anticipate problems requiring action at different levels.
29. Large burdens are being placed on planning organisations in the States. States arc called upon to interpret national objectives, translate them in terms of the needs, resources and possibilities open to them, carry the Plan to the remotest points, and find ways of mobilising local resources and enthusiasm. Within the limits of its tasks as conceived thus far, the machinery for planning in the States has served well. It has enabled Departments to undertake the responsibilities assigned to them with coordination being provided by the Chief Minister and a Cabinet Committee and, at the official level, by the Planning Department and the State Development Commissioner.
The crucial role of State plans in fulfilling the economic and social objectives of the Third Plan has been described earlier. During the next three years States will also participate in the drawing up of a longterm plan of development for the country on the lines explained in Chapter II. This plan is intended to present the general design of development for the country as a whole over the next 15 years or so. It will be based on a study of the resources and possibilities of different parts of the country and will seek to bring them together into a common frame. This is a task of great complexity, as it is of great promise, and there will be need for close and continuous collaboration between various agencies at the Centre and in the States, especially those responsible for planning, as well as leading institutions in the country engaged in scientific, economic and social research. From this aspect as well as the implementation of the Third Plan and the preparation of the Fourth, it will be necessary for States to consider the lines along which the existing arrangements and machinery for planning at the State level should be further strengthened.
30. The introduction of democratic institutions at the district and block level and the role of Panchayats at the village level are held rightly to offer the means for mobilising the manpower and other resources of the people throughout the country. Yet, this momentous change itself places much ereater responsibility upon Departments at the State level, technical and other officials at the district level and extension workers in the blocks. The success of the Plan, as of Panchayati Ra itself, will depend upon a correct approach to various problems being adopted from the start both by the representatives of the people and the official agencies. The right approach to these problems is vital for fulfilling the targets of the Plan in many key sectors. This aspect is considered further in the Chapter on Community Development.
31. Finally, in the plans hitherto formulated urban areas have not been actively associated. It is envisaged that in the next phase of planning, as many towns and cities as possible and, at any rate those with a population of 100.000 or more, should come into the scheme of planning in an organic way, each city mobilising its own resources and helping to create the conditions for a better life for its citizens. The necessary preparation for this should begin early in the Third Plan.
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