4th Five Year Plan
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Chapter 1:

Aims and Objectives of Planning

The Constitution of India enunciates Directive Principles of State Policy, which though not enforceable by any Court, are ''nevertheless fundamental in the governance of the country and it shall be the dury of the State to apply these principles in making laws". Two of the Articles in this part. Article 38 and Article 39'(a), (b) and (c) are cited in the resolution of 15th March 1950 by which the Planning Commission was set up. These are :

''The Stale shall strive to promote the welfare of the people by securing and protecting, as effectively as it may, a social order in which justice. social, economic and political, shall inform all the institutions of national life." (Article 58).

"The State shall, in particular, direct its policy towards securing—

  1. that the citizens, men and women, equally, have the right to an adequate means of livelihood;
  2. that the ownership and control of the material resources of the community are so distributed as best to subserve the common good;
  3. that the operation of the economic system does not result in the concentration if wealth and means of production to the common detriment." (Article 39).

1.2. In the context of planning it is useful to draw attention to three other Articles:

"The State shall, within the limits of its economic capacity and development, make effective provision for securing the right to work, to education and to public assistance in cases of unemployment, old age, sickness and disablement, and in other cases of undeserved want." (Article 41).

"The State shall endeavour to provide, within a period of ten years from the commencement of this Constitution, for free and compulsory education for all children until they complete the age of fourteen years." (Article 45).

"The State shall promote with special care the educational and economic interests of the weaker sections of the people, and, in particular, of the Scheduled Castes and the Scheduled Tribes, and 91 L/a(N)230DotTC N. Delhishall protect them from social injustice and all forms of exploitation." (Article 46).

1.3. Planning in India was intended, in the words uf the Government Resolution of March 1950, "to promote a rapid rise in the standard of living of the people by efficient exploitation of the resources of the country, increasing production, and offering opportunities to all for employment in the service ol the community".

1.4. In December 1954, Parliament adopted a resolution which contained the following clauses:

  1. The objective of economic policy should be a Socialistic Pattern of Society; and
  2. Towards this end the tempo of economic activity in general and industrial development in particular should be Stepped up to the maximum possible extent."

1.5. The term 'Socialistic Pattern of Society" was commented upon and elaborated in the Second Five Year Plan document and a long term strategy for economic advance was formulated based on that concept. In the words of the Second Five Year Plan, as quoted in the Third Five Year Plan document:

"The task before an underdeveloped country is not merely to get better icsults within the existing framework of economic and social institutions, but to mould and refashion these s- that they contribute effectively to the realisation of wider and deeper social values.

"These values or basic objectives have recently been summed up in th? -ahrase '•socialist pattern 01 society'. Essentially, ;ģiis means that the basic criterion for determining lines of advance must not be private profit, but social gain, and that the pattern of development and the sturcture of socio-economic relations should be so planned that they result not only in appreciable increases in national income and employment but also in greater equality in incomes and wealth. Major decisions regarding production, distribution, consumption and investment—and in fact all significant socio-economic relationship—must be made by agencies informed by social purpose. The benefits of economic development must accrue more and more to the relatively less privileged class of society, and there should be progressive reduction of the concentration of incomes, wealth and economic power. The problem is to create a milieu in which the small man who has so far had little opportunity of perceiving and participating in the immense possibilities of growth through organised effort is enabled to put in his best in the interests of a higher standard of life for himself and increased prosperity for the country. In the process, he rises in economic and social status. Vertical mobility of labour is thus no less important than horizontal mobility for nothing is more destructive of hope and more inhioii.ive of effort than a feeling that the accident of birth or of a poor start in life is likely to come in the way c/f a capable person rising in like in terms of economic and social status ... "The socialist pattern of society is apt to be regarded as some fixed or rigid pattern. It is not rooted in any doctrine or dogma. Each country has to develop according to its own genius and traditions. Economic and social policy has to be shaped from time to time in the light of historical ciicumstances. It is neither necessary nor desirable that the economic should become a monolithic type of organisation offering little play for experimentation eittier as to forms or as to modes of functioning. Nor should expansion of the public sector mean centralisation of decision-making and of exercise of authority. In fact, the aim should be to secure an appropriate devolution of functions and to ensure to public enterprises the fullest freedom to operate within a framework of broad directives or rules of the game ...............

".......... The accent of the socialist pattern of society is on the attainment of positive goals, the raising of living standards, the enlargement of opportunities for all, the promotion of enterprise among the disadvantaged classes and the creation of a sense of partnership among all sections of the community. These positive goals provide the criteria for basic decisions. The directive principles of State policy in the Constitution have indicated the approach in broad terms: the socialist pattern of society is a more concretised expression of this approach. Economic policy and institutional changes have to be planned in a manner that would secure economic advance along democratic and egalitarian lines. Democracy, it has been said, is a way of life rather than a particular set of institutional arrangements. The same could well be said of the socialist pattern."

1.6. The Third Plan stated that "economic activity must be so organised that the tests of production and growth and those of equitable distribution are equally met. A high rate of economic growth sustained over a long period is the essential condition for achieving a rising level of living for all citizens and specially for those in low income groups or lacking the opportunity to work. ............... A socialist economy must be efficient, progressive in its approach to science and technology and capable of growing steadily to a level at which the well being of the mass of population can be secured." It was clearly envisaged that "with the rapid expansion of the economy wider opportunities of growth arise for both the public and the private sectors and in many ways their activities are complementary ............. The Five Year Plan enlarge the scope for individual initiative, as well as for cooperative and corporate ettort ......... In the context of the planned development the private sector has a large area in which to develop and expand. It has 10 function, of course, within the framework of national planning and in harmony with its overall aims, and there must be continuous stress on undertakings in the private .sector acting with an understanding of obligations towards the community as a wnole. At the same time it is essential to ensure that the opportunities available in the private sector ao not lead to the concentration of economic power in the hands of small numbers of individuals and businesses and that disparities in income and wealth are progressively reduced ............ On behalf of the community as a whole the State has a large responsibility for assessing the wider long-term needs of the nation as against the claims of individuals, sectional or regional interests, and in setting tile goals to be achieved."

1.7. Planning in India has thus to organise the efficient exploitation of the resources of the country, increase production and step up the tempo of economic activity in general and industrial development in particular to the maximum possible extent. The basic goal is a rapid increase in the standard of living of the people, through measures which also promote equality and social justice. Emphasis is placed on the common man, the weaker sections and t'he less privileged. It is laid down that planning sliould result in greater equality in income and wealth, that there should be progressive reduction of concentration of incomes, wealth and economic power and that benefits of development should accrue more and more to the relatively less privileged classes of society, and, in particular, the scheduled castes and the scheduled tribes whose economic and educational interests have to be promoted with special care.

1.8. Rapid economic development which is oriented towards establishing social justice must involve refashioning of socio-economic institutions. In part, tile social objectives will be the end result of economic development, but in a large measure their realisation will depend on how the course of development is charted and to what extent an appropriate structure of socio-economic institutions is evolved and operated. The strengthening of democracy in its social and economic aspect has to be attained

NATIONAL INCOME ——— (1960-61=100)———

1960-61 61-62 62-63 63-64 64-65 65-66 66-67 67-68 68-69


through this refashioning. It means that major economic decisions and decisions regarding socio-economic relationships will be made by agencies informed with social purpose thai there will be a devolution of functions and that there will be scope for experimentation. Democratic values are given eii'ect to by encouraging the growth of a feeling of participation on the part of the small man, the promotion of enterprise among the disadvantaged classes and the creation of a sense of involvement in the transformation of society among all sections of the community. The broad objectives of planning could thus be defined as rapid economic development accompanied by continuous progress towards equality and social justice.

Economic Situation

1.9. It would be useful to review and analyse briefly the developments since the beginning of the Third Five Year Plan and to make an assessment of the existing situation before describing the approach to the Fourth Five Year Plan. During the Third Plan national income (revised series) at 1960-61 prices rose by 20 per cent in the first four years and registered a decline 5.6 per cent in the last year. The movement of national income, and output of agriculture and organised industry during the last eight years is shown in table 1. Per capita real income in 1965-66 was about the same as it was in 1960-61, the result of the meagre growth rate of national income having been almost completely neutralised by the 2.5 per cent rate of growth of population. In 1966-67, following a severe drought, national income registered only a nominal increase of 0.9 p..r cent. However, the record harvest of 1967-68, marking a significant increase in agricultural output, v/ss instrumental in raising national income by 9 per cent that year. The estimated national income in 1968-69 has been put at 1.8 per cent higher than in the previous year.

1.10. Fluctuations in the aggregate income were a '.clleciion of the erratic behaviour of agriculture. The performance of agriculture during the first three years of the Third Plan was not satisfactory. In 1964-65, which was a year of favourable weather conditions, a record harvest was raised. The improvement proved short-lived. Agricultural production fell sharply in the subsequent two years due to widespread drought conditions. In 1967-68, however, a sharp recovery took place as a combined result of the establishment of new varieties of cereal seeds, the incentive of higher prices, increased use of fertilisers, pesticides and water and, not ihe least, favourable weather conditions. On account of a less satisfactory season, the production in 1968-69 was marginally lower than in the previous year, though the availability of inputs has continued to increase. The production of foodgrains in 1969-70, estimated at 100 million tonnes, is higher than the 1968-69 production by about 6 million tonnes.

1.11. The slow rate of growth in agricultural production not only depressed the rate of growth of the economy but also led to an alarming increase in the dependence on imports of foodgrains and other agricultural commodities. During the Third Plan the country imported 25 million lonnes of rood-grains, 3.9 million bales of cotton and 1.5 millioa bales of jute. During the subsequent three years, tile impons continued to be heavy. Despite increased imports of foodgrains, per capita availability was lower than the 1961 level, except in 1965, ard there was severe pressure on prices.

1.12. Production of organised industry increased by 8 to 10 per cent during the first four years of the Third Plan. In 1965-66, with the dislocation caused by the Indo-Pakistan conflict and the consequent disruptiori in the flow of foreign aid, the growih of jndu.sii-ial production slowed down to 5.3 per cent. Over the Third Plan, as a whole, the annual growth rate turned out to be 8.2 per cent compared to the target of 11 per cent. The slewing down of the public investment programme led to a

Table 1 Growth of National Income : 1960-61 to 1968-69

sl. no. 1960-61 — (Rs.) crores it 1960-61 prices) (index 1960-61 ==100)
1961-62 1962.63 1963-64 1964-65 1965-66 1965-66 1967-68 1968-69
(0) (1) (2) (3) (4) (5) (6) (7) (8) (9) (10)
1 tola! national income of which : 13308 103.7 105.7 111.9 119.8 113.1 114.0 124.2 126.5
2 agriculture and allied sectors 6822 101.0 98.3 101.1 110.2 94.1 94.0 110.8 109.6
3 mining and large scale manufacturing 1215 109.5 120.4 132.5 141.8 145.8 147.5 146.3 155.0


further reduction in the rate of growth of industrial production in subsequent years. Tho index of industrial production (base: 1960 =100) increased by only 0.2 per cent in 1966-67 and there was hardly any growth (0.5 per cent) in 1967-68. This sharp deceleration was accompanied by an inrease in unutilised capacity in a number of industries. Many factors contributed to it : decline in purchasing power because of the setback on the agricultural troni: stagnation in investment; shortage of foreign exchange because of the need for abnormally high imports of foodgrain and raw materials and tor completion of a number of projects started earlier. hven then the stagnation was not general. It was most pronounced in certain capital goods industries. In some important industries such as fertilisers, petroleum products, non-ferrous metals, electrical machinery and pumps, a satisfactory rate of growth continued to be maintained. As a result of several measures taken by Government—such as import liberalisation following devaluation, decontrol of certain commodities like steel, coal, paper, fertilisers and commercial vehicles, delicensing of a number of industries, some increase in the public sector's demand for domestic manufactures—and a rise in the exports of engineering goods, an all-round industrial recovery began in January 1968 and resulted in an increase of 6.2 per cent in industrial production in 1968-69.

1.13. Up to 1962-63 the rise in wholesale prices was mild. In subsequent years the rise was sharper. The general index of wholesale prices in 1965-66 was 32 per cent higher than in 1960-61, accounted for largely by the rise in the prices of food articles. During 1966-67, which was a drought year, wholesale prices increased by 16 per cent and prices of food articles by 18 per cent. There was no respite even during the following year when wholesale prices rose further by 11 per cent and food articles by 21 per cent. Prices, however, became relatively stable during 1968-69 due to the substantial increase of foodgrains production in 1967-68 and the continued restraint on expenditure. The general index as on February 8, 1968 was 205.8 as against 208.2 on February 10, 1968. The consumer price index (1949=100) advanced from 124 in 1960-61 to 169 in 1965-66, 191 in 1966-67 and 213 in 1967-68. This increase in the price level necessitated increased grants of dearness allowance to Government employees and industrial workers. The resulting increase in non-Plan expenditure affected adversely Government's capacity to step up investments. At the same time, as a result of many factors, the cost of production in the economy increased and profitability of enterprises was generally reduced.

1.14. On the balance of payments side, strains had begun to develop at the very beginning of the Third Plan. In the face of rising food and other imports and insufficient increase in exports the situation worsened; the country sought larger and larger foreign assistance. Hostilities in 1965 followed by the two bad harvests further aggravated an already difficult situation. In order to meet the increase in defence expenditure and other elements of non-Plan expenditure, a bdd effort at raising taxes was made during some years of the Third Plan and in particular in 1963-64. The larger commitments of non-Plan expenditure and the rising costs of investment could not, however, be fully met by domestic resource mobilisation. This again increased the dependence on foreign aid and led to larger deficit financing. In the event, inflationary pressures were generated affecting domestic savings and eroding resources for financing development.

1.15. A growing trade deficit and mounting debt obligations characterised the situation. Despite larger utilisation of foreign aid there was frequent recourse to borrowing fr and m the International Monetary Fund. The temporary suspension of foreign aid in 1965 put further pressure on the already strained foreign exchange position. This was increased by the need to import large quantities of food that year. The rupee was devalued in June 19'66. This did not immediately improve the balance of payments as in 1966-67 exports registered a decline as well as imports. However, there was some improvement in 1967-68 which has continued.

1.16. While the difficulties of the last few years have unquestionably risen from factors beyond control there are still a number of lacunae which have evoked legitimate criticism. Despite larger outlays, actual development have often fallen short of targets. In many key sectors, delays in construction, escalation of costs and the failure to utilise capacity full have added to the difficulties. Many of the projects undertaken in the public sector represent new and complex ventures and, to an extent, initial difficulties are only to be expected. But even after allowing for this, the fact remains that the concern for speed, economy and efficiency has not been as pervasive as it ought to be. The public sector has the responsibility to set better standards of performance and it has yet to fulfil its role of generating adequate surpluses for investment.

1.17. In order to present a balanced picture it is necessary to draw attention to certain long-term favourable features of the developments during this period. Agriculture has always enjoyed a high priority in Indian planning and emphasis on irrigation, improved practices and community development and cooperation has marked all Plans. However, progress in agricultural production was unsatisfactory during the Third Plan. A number of circumstances have changed the situation during recent years. Successful research in plant breeding using foreign genetic material has resulted in the establishment of highyielding varieties of cereal seeds. With a new awarness of the importance of irrigation, intensive use of subsoil water in many areas has emerged. There has been much greater demand and increasing use of chemical fertilisers, insecticides and other inputs. Higher prices have made farmers in many parts of the country readily receptive to new practices and inputs. The possibility of an upward surge in agricultural production seems tn have been established.

1.18. In industry the notable feature has been frhe continuous increase and diversification of production capacity which has gone on in spite of fluctuations and the near stagnation of recent years. Gains have been registered in many important fields. Increases in capacity have been most notable in production if steel and aluminium, a wide ranse of machine tools, industrial machinery, electrical and transport equipment, fertilisers, drugs and pharma-ceuticals. petroleum products, cement, minerals and a variety of consumer goods. There has also been a large increase in the manufacturing capacity for power generators. All this has contributed to the strengthening of the industrial structure and a valuable potential for sustained industrial progress in (lie future has been created.

1.19. The situation regarding costs and prices is improving. Though the recent rise in prices increased costs generally, the prevailing stagnation induced, at the same time. considerable cost consciousness. Devaluation increased the cost of imports. The existence of unutilised capacity has forced on the attention of industry the need to seek export outlets for goods in a situation of poor demand in the domestic market. The recent increase in "non-traditional" exports indicates that with continued awareness of cost and given some incentives, our industrialists can compete in the international market. If internal prices are stabilised and as a ccn-seouence there is no further increase in the level of dearness allowances, it should be possible to reach, during the Plan period, a balance in relative internal and external costs and prices.

Social Situation

1.20. In the matter of social justice and equality there are two aspects to be considered. Reduction of concentration and a wider diffusion of wealth, income and economic power is one; improvement in the condition of the common man and the weaker sections, especially through provision of employment and education, is the other As resards the former, in the rural sector the land reforms legislation, including the ceiling on land holdinss. iifs been a notable achievement. in the urban, industrial sector the expansion of the public "sector, industrial licensing and taxation measures have been the main instruments used.

1.21. There has been considerable progress in relation to education and public health. It is true that the constitutional direcive regarding free and com-Diilsory educaion up to the age of 14 has yet to be fulfilled and that in some States the gap in this regard is very wide. Also, facilities like those of primary health centres have yet to cover the whole country adequately and the quality of the services thev afford needs urgent improvement. However, by and large, there has been marked progress in the extension of health and educational facilities which is reflected in the striking increase in the expectation of life at birth from 35 vears in 1950-51 to 52 in 1967-68, and the impressive increase in school enrnlnient froro 23.5 million in 1950-51 to 74.3 million in 1968-69. The rapid spread of the facilities for secondary and higher education has been mainly responsible for facilitating vertical mobility of labour. Special programmes have been devised for amelioration of conditions of scheduled castes and tribes and also in relation to some "roups among the weaker sections. Assistance has been given to village a"d small industries in a variety of ways and some relief afforded through activities of the Khadi and Village Industries Commission. Minimum wages have been prescribed for manv categories of labour and considerable progress made in legislation regarding industrial relations and labour welfare.

1.22. In the refashioning of institutions for establishing socio-economic democracy the most stable achievement has been the abolition of intermediaries areas where landlords predominated. The "land tn the tiller" legislation in some ryotwari regions was also radically conceived. Legislation intended to afford security to tenants and the imposition of on landholding have been enacted most States. Community Development Proorammes which were initially considered as main instruments of mral transformation were found to be too official-oriernted and emphasis shifted to the creation of Panchayati Ra'i institutions. A comprehensive programme of rural co-operativisation was also launched with the beginning of the Second Plan.

1.23. In terms of regional development, there has been a natural tendency for new enterprises are investments to gravitate towards the already overcrowded metropolitan areas becauce they are better endowed with economic and social rnfracturc-ture. Not enough has been done to restrain this nmcess. While a certain measure of dispersal has been achieved, a much larger effort is necessary to bring about greater dispersal of industrial activity.

1.24. For Government to take a more dynamic role in Rcceleratin"- the pace of development, spread-iriff ,t<: benefits widely, seeking to mitiaatR {"ecluaties or tp correft retyonal imbalances, it must hive "reater command over the economic resources of the country. While there has been progress in this direction, much remains to be done to strengthen the financial capability "of the Centre and States to discharge these responsibilities of any modern government. However, even in the existing situation it is possible to frame suitable policies which if consistently followed over a series of years, will make K r significant progress in the desired directions.

1.25. In respect of the objectives of equality, sufficient data are not available to base a definite statement about income inequality. Available information does not indicate any trend towards reduction .in the concentration of income and wealth. Nor is there any indication that there has been any lessening of disparity in the standards of living of various classes. There is also the complaint that even in institutions like the cooperatives which were fashioned to promote socio-economic democracy, the propertied classes and the rich dominate. Problems of low income, unemployment and under-employment remain sizeable. Regional imbalances in development. have attracted attention.

1.26. The inability to mitigate in any significant measure the inequalities of income and wealth is a reflection of the dilemma which arises in the present phase of development. It is possible in the short run to increase employment and income opportunities for people employed in traditional industries by restricting the expansion of the modern sectors. However, over the Ions run increases in productivity ami incomes of traditional, industries, which can result from improvements in the economy as a whole, require large capital intensive investments in building overheads and industries producing basic raw materials and capital gnods. More important, the concern for achieving the desired increase in production in the short run, often necessitates the concentration of effort in areas and on classes of people who already have the capability to respond to "rowth opportunities. This consideration shaped the strategy of intensive development of irrigated agriculture. Output increases more rapidly in areas which have the basic infrastructure. The operation of programmes of assistance related to size of production tends to benefit the larger producers in the private sector. A small number of business houses with experience and resources have been able to fake greater advantage of the expansion of opportunities for profitable investment.

1.27. Analysis of the varied experience since the beginning of the Third Five Year Plan appears to lead to some conclusions which are relevant to the framing of a correct approach to the Fourth Plan. In the first instance, the record of past years shows that the basic strategy of Indian planning as denned at the beginning of the Second Plan is not at fault. At 'the same time, the difficulties into which the economy has run emphasise the nbed for firmer policy direction and the use of a number of supplementary msasures and instruments to carry out the necessary adjustments. The most important lesson is the need to adopt measures which will maintain relatively stable conditions while development proceeds. In the Indian situation at present the supplies and prices of agricultural commodities, particularly cf food, play a crucial role in attaining stability. Therefore, continuing increase in available supplies must have a pivotal positicin in Indian Plans. Better agricultural production and food supplies and care-full management of food management alone would, however, not be sufficient. An important relevant factor is also the method of financing the development effort. Recent events have emphasised how the level of prices, the ability of Government to raise resources. Government Plan outlays and the tempo of industrial activity are closely inter-related and how all these depend on a stable supply of food and agricultural commodities.

1.28. Recent experience also underlines the need to take quick strides towards self-reliance. Increase in the total burden of foreign obligations has highlighted the heavy costs of servicing and repayment. it is time to think boldly of progressive reduction of net aid.

1.29. All these factors together point to very careful attention being paid in planning to stepping up domestic savings and resources in the hands of Government, maintainigg an even balance of payments through increasing exports and keeping down imports and above all maintaining flexibility and adjustability in planning operations so that fluctuations are adequately allowed for and unforeseen difficulties met with effort in appropriate directions.

Tempo of Development

1.30. The Fourth Plan has to provide the next step forward in attaining accepted aims and objectives of Indian planning. In formulating it, note has to be taken of the successes and failures so far, the observed continuing trends in the economy and the specific experience of recent years. The most notable lesson is that the current tempo of economic activity is insufficient to provide productive employ-nent to all, extend the base of social services and bring about significant improvement in living standards of the people. The continuity of even this mode'ate rate of growth is likely to be threatened if ins ability emerges because of the weakness on the food front and too great a dependence on foreign aid. The Fourth Plan aims at acceleration the tempo of development in conditions of stability ami reduced uncertainties. It is proposed to introduce safeguards against the fluctuations of agricul-turael .production as well as the uncertainties of foreign aid in the period of the Fourth Plan. Together with programmes of increased agricultural production the Plan provides for the building of sizeable buger stocks to even out of supplies of food-trains and other measures to stabilise foodgrain prices and the price level in general. Further in regard 10 the financing of the Plan emphasis is being placed on additional mobilisation of internal resources in a manner which will not give rise to inflationary pressures. The outlays on the Plan are proposed to be closely related to the possibility of raising resources in a r on-inflationary way. National self-reliance and growth with stability can be attained onlv if additional effort is put forward at every level. Dependence on foreign aid will be greatly reduced in the course of tl"e Fourth Plan. It is plared to do away with co and ces'sional imports of foodgrains under PL 480 by 1971. Foreign aid net of debt charges and interest payments will be reduced to about half by the end of the Fourth Plan compared to the current level. Planned increases in production of foodgrains, raw materials and manufactured goods are calculated to make it possible to limit the growth of other imports to manageable proportions. A sustained increase of exports by about 7 per cent a vear is another essential element of strategy in the Fourth Plan to secure balance on foreign account and approach speedily towards the goal of self-reliance.

1.31. These measures which seek to limit the extent of foreign aid and to woid inflationary financing have influenced the total investment outlays proposed in the Plan. The resource position having improved it is possible to increase investment in public sector industrial activity, although the outlays will still be modest. It is hoped, however, that even with these outlays the tempo' of economic activity will be stepped up significantly in the initial vears of the Plan, If the performance is better, the Plan outlays in later years could be larger than provided for now. Success depends essentially on the extent of internal effort made in saving and investment and on the operational efficiency and economic discipline displayed by official and non-official agencies and establishments. In this context special attention needs to be paid to the public sector where investment is expected to reach 60 per cent of the total. The original expectation of an exparding public sector yielding, in due course, substantial resources for ifs continued development, have not been realised. .

1.32. Social Justice and Equality.—The process of development might lead. in the absence of purposive intervention by the State, to greater concentration of wealth and income, overgrowth of metropolitan centres and uneven regional development. techno1""ica1 unemployment and rural underemployment, Therefore,.;tne attainment of objectives of eaualitv and social justice reauires more comprehensive, planning and greater command of Government over resources than has been attempted so far. Preventing increase in concentration of economic power is a part of this problem. Action under the Monopolies Act. Government's powers of licensing and allocation judiciously used, and purposeful policies of public financial institutions and the nationalised banks are expected to play a significant role in this regard. A dilemma has to be faced. The largest corporate groups are the most advantageously placed to seek and obtain foreign collaboration and to expand or to initiate a number of large and new activities. Therefore, acting through them may appear the easiest and quickest way of industrial development. In the process there is inevitably an increase in concentration of economic power. Government have formulated the new licensing policy to control and regulate the concentration of economic power. While large corporate enterprises would have scope for taking up new ventures in technologically challenging fields, deliberate encouragement will be given to wide dispersal of enterpreneurship.

1.33. Income Disparties.—To some extent income disparities can be reduced through fiscal measures aiming at reduction of income at the top levels; but for us it is important to lay far greater stress on positive steps for ameliorating the conditions of poorer people through planned economic development. In a rich country greater equality could be achieved in part by transfer of income through fiscal, pricing and other policies. No significant results can be achieved through such measures in a poor country, where whatever surpluses can be mobilised from the higher incomes of richer classes are needed for investment in the economy to lay the basis for larger consumption in the future. We have to reach the social and economic objectives through more rapid growth of the economy, greater diffusion of enterprise and of the ownership of the means of production, increasing productivity of the weaker units and widening opportunities of productive work and employment to the common man and particularly the less privileged sections of society. These measures have to be thought out in a number of different contexts and coordinated in to effective, integrated programmes.

1.34. Local Planning.—All suggestions for such diffusion and growth of activity and employment involve detailed, specific as also local planning and implementation. Their acceptance would require not only larger effort but also changes in planning procedures. Some studies have been initiated and some specific provisions made in this regard in the Central sector. In agriculture, schemes for area development planning and for helping small farm economy have been included in the Central sector of the Plan. Special attention is propped to be given to the development of rural industries in the local area plans. The main work has to be done in the States. In some States experimentation in district or regional planning is already under way. With successive Annual Plans, district plannina in the States should become more general and detailed and coordinated programmes in various directions indicated above should be evolved. The Planning Commission has a responsibility in this behalf. It is equipping itself to be in a position to assist the States in the preparation and evaluation of individual projects and programmes and also in dealing with the overall problems of regional and district planning.

The Problems of Weaker Sections

1.35. Weaker Producers.—It is only the adoption of this approach to area and activity development that can enable the common man throughout the country to participate in and benefit from the growth of the economy. This by itself will, however, not suffice to meet the needs of the less privileged or the weaker sections or of those who have an inadequate productive base. These classes are composed of a large variety of categories whose problems and requirements are widely different. In the case of each of these, the handicaps which prevent them from taking advantage of existing, seneral programmes will have to be studied and specific remedial measures adopted. This will have to be done in a number of directions. The objective of the programme for all producer classes will be to make them in the first instance viable, and next to start them on the path of development Schemes of technical and financial assistance, and of cooperative or other organisations for production, credit and marketing will have to be specially adapted to the needs of these classes. Similar, appropriate adjustments in procedures of financial institutions and of administrative departments will have to.be effected. For each traditio-i village industry. a pattern or patterns of development pro-srammes must be evolved which provide for technical progress and economic viability. These must be capable of wide adoption once they have been ex-nerimentally established. A similar apnroach will hive to be adopted for the numerous miscellaneous producer classes as of migratory shepherds or those living on the exploitation of forest produce.

1.36. Scheduled Tribes and Castes.—The problems of fcheduled tribes and the scheduled castes h"w in addHion some special features. The problem of sched"led tribes living in compact areas is es-sen^auv that of economic development of their prptx; and nf inteqratins their economy with that of t^o roc+ of +hp country. The individual welfare approach or that of a schematic block is inappropriate ;n +hi'c /'asc. Development, clans must be formulated +^ fiilt +t'r specific pote^tiallities and levels of deve-1o" merit of separate regions or areas, With the s^prlnip^ cartes the problem is rather of social ^r.+effrition w^bin therural community in which they Hvc. Tn both their cases, the special programmes me'mt.Tor them must operate as additional programmes. Tribal block obtain from the general Plan outlays funds required for the development of basic infrastructure and their other needs and should be able to use the supplementary resources for specific programmes of economic development. Similarly, members of the scheduled castes must be enabled to share in the general programme of economic social and educational development of the rural community; specific programmes meant for them should help in removing their relative backwardness.

1.37. Landless Labour.—The small producer is overwhelmingly numerous in our economy. If he is adequately looked after in development programmes and helped to grow and be economics lly viable, diffusion of the ownership of the means of production and of enterprise could be largely achieved. There remains, however, the very large class of landless labour having no productive base and depending for its livelihood on wage employment. Programmes can be thought of for turning some of them into producers as through animal husbandry enterprise or by distribution of lard. There are obvious limitations to possibilities in these directions. In the main, this class must be looked after by the provision of larger employment opportunities. In the long run this will happen as a result of the process of accelerated development as is taking place in some areas of intensive economic activity within the country. However, in much the larger part of the country there are not enough opportunities of continuous employment. These opportunities must be created to the largest extent possible and in such manner as to advance further the process of development. The approach of area development and of dispersal of industrial and other activity fits this requirement. Programmes of building up the infrastructure and conserving and developing natural resources are usually labour intensive and they contribute towards further growth and diffusion of economic activity: The rural works programme was conceived on these lines. However, it could 'not yield results commensurate with the expenditure because it was not integrated into local development planning. This deficiency is sought to be made good by integrating local programmes with area development plans and non-Plan schemes. It is suggested that local plans, apart from their other objectives, should take into account local needs for creating employment opprotunities and should also evolve appropriate procedures and organisations for absorbing local labour in works created through these plans.

Correction of Regional Imbalances

1.38. The problem of imbalance in development as between States is highly complex. Differences in development between State and State arise out of. variations in activity in the three sectors—cooperative, private and public. Development of the cooperative sector is related to the strength and coverage of cooperatives in the State. The internal resources of the cooperatives depend on this factor; ji is even more important in the cooperatives obtaining financial assistance from national financial institurons such r.s the Reserve Bank. the Agriculture Re-lirarce Corporation or the Life Insurance Corporation. Development of this sector, therefore, will depend on the efforts of Government and the people of each State towards building up cooperative organisations. No specific new programmes or policies of the Central Government could help materially in this regard. Private lector activity depeids on the extent of entrapreneurship within t^e Slate ard the resources commanded by it and on the infrastructure and other developments within the St^ts conducive to development of such activity. Attracting entrepreneurs from outside the State is also dependent mainly on the services and facilities available within the State. To a limited extent this can be stimulated by special concessions. Public sector outlays are provided for programmes of building up the infrastructure or of conservation and development of natural resources and for direct entry of the State in industrial or other productive activity. The first could promote development of activity in all sectors, and the second may partly make up for lack of development in the cooperative and private sectors. Both depend on the extent of financial resources of the State and their proper utilisation by Government. Availability of resources with Governments of States for planned development is the heart of the matter. This in turn depends on the economic strength of the State and the efficiency shown in the management of its affairs, particularly financial. In this "connection, the directions in which the Centre can help are: (1) allocation of Central assistance; (2) location of Central projects; and (3) adjustments in procedures and policies of national financial and other institutions.

1.39. To the extent that the deficiency of resources in a State is not due to defects of management. the allocation of Central assistance to the Stale might help. However, in the existing arrangements such help will not be substantial. The new formula for the allocation of Central assistance to the States sets aside 10 per cent for States with per capita income less than the national average. 10 per cent for continuing major irrigation and power schemes, and 10 per cent for special problems of States. Policy of locating large Central projects in backward States and areas, wherever such deliverate placement is possible, is already accepted. Recent decisions on policies and procedures of financial and other institutions will help in inducing additional public and private sector investment in the backward areas,

1.40. Balanced regional development and dispersal 6f economic activity are closely interrelated^ Growth and diversification of economic activity in an under-developed area can take place only if the infrastructuie required for this is provided in an adequate measure and programmes for conservation and development of natural resources undertaken. Within a State, development planning has to 'atisfy these primary needs of each or area. Proper attention must be paid to development of agricultural production. This will be made possible also by schemes for dry areas. In the development of animal husbandry, attention must be on the broadening and strengthening of the economic base of small farmers and other rural producers. An important aim of industrial development must be to meet local demand through local processing and utilisation of locally available material. Diffusion of industrial activity will be facilitated by the rural electrification programme on which large outlays are proposed.

Social Services

1.41. In education attempt will be made to provide at the first stage free and compulsory education up to the age of 11 and to the extent the resources of the States permit to cover the age group 11—14. Emphasis is being laid on vocationalisation of education at the secondary stage and on the provision of part-time and correspondence courses. In health the plan is to cover all the rural area blocks with an integrated form of medical services with the primary health centre at its base and to strengthen these to the extent possible; it is also proposed to take vigorous steps to control and eradicate major communicable diseases. A very large increase is being provided in the outlay on family planning. All these activities are being planned as an integrated operation around the primary health centre. The greater diffusion of the educational ard health facilities will help to improve conditions of common man. In view of the contraints of public finance, outlays on welfare activity have to be limited. A strict definition of priorities becomes necessary in this sphere and significant outlays are confined to selected categories and requirements. The programme of nutrition of growing children is being extended and integrated in the Fourth Plan.

1.42. For the major part public outlays have to be directed not towards welfare activity but towards strengthening the economic base of the weaker units; and more finance must be made available for this purpose in the Plan. There are two main ways in which this can be done. First, by strictly limiting the scope of free or subsidised services or supplies given by the State. General subsidies in relation to agricultural supplies have been withdrawn to a large extent. It is hoped that expenditure on food subsidies will be eliminated. In a society in which highly unequal distribution of income exists, it is I undesirable to make unnecessarily low charges. Above a basic minimum of free service In, say. education and health, appropriate charges have to the levied; these have to. be fully economic at the average level and could with the possibility of discrimination be much higher for those with the ability to pay them.

1.43. The other way is to encourage all those who are able to do so to invest their own resources in development. This is to be done through appropriate expansion of institutional finance. If loan facilities are offered for undertaking a work of either individual or group development in rural areas, it gets completed and savings are generated through the need to repay. This has been the experience in a number of State sponsored schemes and in many cooperative processing ventures. Earlier an element of subsidy was incorporated as an incentive in a number of these programmes. This can now be withdrawn safely. In all rural areas where development activity is demonstrably sucests-ful], it is now necessary only to formulate worthwhile schemes and make arrangements for institutional finance. It would be appropriate in this case also to expect a proportionately larger initial contribution from the richer individuals. Such an approach would provide for development as also incentives for savings: it could also free a portion of the public outlay for being applied to the development of the weaker units. So that while, say, development of water resources for the substantial farmers would be financed through their own savings and loans, immediate investment for works which benefit the small farmer would be undertaken through public funds.

Employment and National Minimum

1.44. A major objective of the Plan is to create more employment opportunities in the rural and urban sectors on an increasing scale. In the rural areas, this will be through labour intensive schemes such as minor irrigation, soil conservation, ayacut and special area development and private horse building. Extension of irrigation and multiple cropping should result in a considerable increase in the demand for agricultural labour in many areas. An important aspect of the Plan is to give support at a much higher level to institutional finance for rural development. In determining the volume of urban employment recent experience indicates that employment in rhe manufacturing industry plays a crucial role. The growth of employment in the field depends to 'a considerable extent on public sector in vestments in industry and minerals, in transport and communications and in power. Plan investments and the expected increase in national ircome should 'lead to activisarioh of the economy. The greater self-reliance now attained in indigenous manufacture of plant and equipment, coupled with ircrea^ ed investments and resumption of industrial growth should be reflected in fuller employment as well as wider job opportunities throughout the country.of agricultural and industrial activity, Krger employment is expected in the tertiary sector, particularly ;n road transport. In the aggregate, therefore, the effects of the Plan proposals in improving the employment situation may be expected to be significant.

1.45. In planning it is necessary to aim not only at an increase in total income and employment but also at an appropriate distribution of such increase. The distributive aim is particularly relevant to the goal of attaining a national minimum. Calculations indicate that with the expected growth in national income during the next two Pisns a reasonable level of average per capita income may be attained at the end of 10 years. However, the consumption standards of the poor would still remain unduly low unless special efforts are made diirine this period to alter the existing pattern of distribution of incomes. The possibility of progress in the desired direction during the Fourth Plan depends on the success of a number of programmes proposed in the Plan. There are, for example, the special package scheme for small farmers, programmes of animal husbandry to support the economy of small farmers and landless labourers, administration of forestry schemes to benefit contiguous rural areas and forest labourers and wellers, lorg-tenn programmes of rehabilitation and development on a viable basis of individual rural industries, and measures for dispersal of industry and for the protection and continuous technological progress of small scale industries. A pilot project to test the possibility of making a standing offer of employment to local labour in selected areas is under operation. A Working Group has recently reported on measures for encouraging development of industrial activity in identified backward districts. Success in all these directions depends on the organised supply of adequate credit, technical direction and management guidance and supervision. Detailed local and flexible planning ard careful implementation will be necessary.

1.46. The objective of fuller employment and social justice will not be realised without stricter economic discipline and greater readiness on the part of the relatively well-to-do to accept restraints on their rising consumption in order to release resources for the faster development of the economy. needier progress towards social justice also postu-laes more radical policies of income distribution. When incomes are rising the objectives of growth and social justice are easier to reconcile. In conditions of relative stagnation, however, progress towards these objectives is beset with very considerable difficulties particularly in the context of a democratic parliamentary system of government.

Refashioning of Institutions

1.47. The objective of strengthening demr-cracy in its social and economic aspects is closely linked with refashionjng of institutions. Reference has been made to land reforms, specially to these giving security of operations to cultivators. In this context progress has mainly to be in the direction of filling some gaps in legislation and of much more effective implementation. Good progress has been made in some States with consolidation and there is legislation in most Stales preventing further fragmenui-tion. However, for the larger part, prograss of consolidation has been slow and it has not been linked to any effective policy regarding the future pattern of the units of agricultural prod 'Ction. The latter is a particularly difficult problem.

Organisation of Agrlcultural Production

1.48. At existing rates of growth of population and of non-farm employment it appears inevitable that in India the area of land surface per worker in agriculture should continuously diminish for some time in the future. Therefore, the problem of an appropriate unit of organisation for agricultural production has to be tackled under difficult conditions. In areas where intensive irrigated agriculture is possible and other conditions of market economy are favourable, it should be possible to commercialise agricultural production of even small units and make them viable. These conditions will not be available for the major part ard the attempt has to be to increase the supplementary or ancillary activi-vities of the small farmer and provide him fuller employment. The approach does not, however, tackle the problem of full and proper utilisation of his land surface. For this purpose some device has to be evolved by which land surfaces could be brought together for purpose of cultivation. Cooperative farming, on a voluntary basis, has been officially accepted as the way out. However, so far no substantial progress has been made. Problems of motivation and organisation met with in this approach have not yet been successfully solved on any significant scale. Moreover, it has not been sponsored actively enough by any large group or body of opinion within the country. Therefore, except for continuing the present schemes of encouragement of cooperative farming it has not been possible to propose any additional programmes in this Plan. The Gramdan movement could presumably provide another possible approach to problems of land tenure, distribution and farming operations. Unfortunately, not enough evidence of the results of the adoption of this approach is available to judge how far and in what directions it could provide useful answers to any specific problem.

Panchayati Raj and Planning

1.49. The establishment of socio-economic democracy through institutional changes has been associated chiefly with the setting up of Panchayati Raj institutions and cooperatives. The Panchayati Raj institutions are' agencies of Government and administration at the local level. To the extent that they arc- vested with powers which enable them to participate in the formulation of district plans and make them responsible for implementing local programmes and schemes they can play a vital part in planning development. With the shift of emphasis to district and local planning their importance should increase. However, it is difficult to-generalise in this field. The organisation and powers of these institutions vary widely from State to State. Even where they are vested with planning powers their financial and administrative autonomy appears limited.

1.50. It is expected that as planning at the State level becomes more elaborate, the planning apparatus at the State and the d?s[rict level will be strengthened. This can be most appropriately done at the district level through Panchayati Raj organisations. Such a development should lead to plan formulation being closely related to the preferences of the people and to the physical conditions of the area and plan implementation being better coordinated and synchronised. Also, with more active popular participation resource raising for local plans, should prove easier. Attention may be drawn to another possible aspect of this development, namely, inducing a proper appreciation among local communities of national objectives and policies. In the ultimate analysis problems such as those of improving the conditions and status of scheduled castes and tribes or conserving forest wealth or vegetation cover cannot be solved unless local communities understand the significance and importance of national objectives and participate actively in the programmes for their attainment. Such understanding could increase through participation in plan formulation and implementation.

Contribution of Cooperatives

1.51. The cooperatives are. in the main, business organisations. Therefore, their operations are more directly connected with development planning. Growth and strengthening of cooperatives has been consistently pursued in successive Plans and-encouraging results have been obtained in many States. Though their benefits have not yet reached the small man in a large measure, the cooperatives have been successful in many regions in freeing the middle peasant from the money lender trader system and making him development oriented. Cooperative banking and credit already play a significant role in the rural economy of a number of States; cooperative processing has contributed substantially to the growth of agro-industry in some States and the co-operative marketing structure his proved an important agency in implementing Government's food policy in recent years. It remains true that most developments have been partial and'uneven and that Government has found it necessary to take powers to set up new agricultural credit corporations in States in which the programme evolved after the report of the Rural Credit Survey Committee has failed to make a real impression.

1.52. It is important for planned development t"-bring about growth of cooperatives in all parts of the country and to ensure the coordinated operation of various types of cooperative organisations. It is only when cooperative organisations embrace all activities from production, through credit, sale, supply, processing and storage to consumer stores and act as an integrated system that they can fully discharge their social and economic responsibilit'es. This objective can be reached only through careful fillins of gaps and by strengthening the primary ard the district institutions and arranging for interactivity coordination at the State and national levels. The Plan includes a variety of proposals such as strengthening and proper supervision of primaries, assistance to processing activity where it is economic, linking of the credit, marketing and consumer systems. It lays emphasis on better management, and provision of management training and encouraging the autonomous functioning of State and national federations.

1.53. It has to be recognised that with the utmost effort cooperatives may only partially meet requirements in many areas. When this happens alternative institutional arrangements with the help of the public sector or. where appropriate, the private sector organisations have to be devised.

1.54. Cooperatives have been recognised as appropriate agencies of national policy as their operations are expected to be informed with a social purpose. It is important to ensure- that cooperative organisations fully recognise this responsibility. It has at least two important aspects. First is that of functioning as democratic organisations and the second that of specially attending to the needs of the weaker among their members. The first can be and is in part ensured through provisions embodied in the constitution of organisations and through insisting on open membership. The second is a matter of policy and procedures. These are often found inappropriate. It is part of the responsibility of the federal units in the cooperative system to look to these aspects and supply correctives where necessary. If they fail in this. Government may have to intervene.

Nationalisation of Banks

1.55. The nationalisation of banks is expected to helrf progress in the direction of socio-economic democracy. It can do so by ensuring that availability of credit for varipus types of small producers and other-business units is adequate and on reasonable terms. This will reauire not so much the diverting ofsbrc'e resources for the purpose as the creation of appropripite institutions, spreading them through all areas and evolving suitable procedures.

1.56. An important aspect which makes for somewhat larger outlays through public sector agencies emerged after the nationalisation of banks. Revised calculations have indicated that during next four veirs it should be possible to step up mobilisation of savings through credit institutions and that a part of this additional mobilisation could be made available in the form of borrowings by Governments, public corporations and financial institutions. The increase in resources in the public sector has been utilised to rai^e outlays for purposes for which larger allocations were considered necessary in the Plan. Moreover, it is now possible to move in at least a few areas with a comprehensive type of total development oriented to employment. The Sm';ll Farmers' Development Agency will play a pioneering role in this regard. The idea is to deal as comprehensively as possible with all development outlays in one area and to see that through comprehensive coordination of these outlays some kind of assurance of continuous employment is provided for local areas. It will be realised that the problems of the weaker sections and the disadvantaged classes stem out. of their inability to get full advantage of development initiated in other parts of the economy. Detailed and specific planning for helping these particular sections thus becomes urgent, ard local and area planning assumes importance. This general emphasis on making as large a beginning as possible in dealing with problems of disparities ard inequalities and employment orientation is being emphasised in all aspects of planning. In this context g'-eat significance is attached to the reorienta-tion of credit institutions after the nationalisation of banking.

Regulation of the Economic System

1.57. It is an important concern of national policies that all strategic economic decisions are made by agencies informed with a social purpose. Emphasis on dispersal of enterprise and the clear statement that expansion of the public sector should not mean centralisation of decision making is designed to improve efficiency of operation. Decentralised decision making is also a value in itself. In the rural sector the extension of cooperative activity could lead to the desi'-ed combination of social purpose and decentralised decision making. In modern industry the important general allocatory controls that exist today relate to the licensing of imports and to long-frm finance through public financial institutions. The rationalisation of banking should lead to major decisions being informed with social purpose over the whole sphere of organised institutional credit. Outside of credit and productive activity, the mapr sphere is training and storage. The Plan makes substatiil provision for increasing storage capacity in the bards of public agecies. In trade the main areas are those of the allocation of scarce imported commodities, the wholesale trade in agricultural commodities, especially foodgrains, and the distributive system in relation to essential goods of mass consumption. It is proposed to establish substantial control of public agencies over these sensitive are^s during the Plan period. Import ;.nd distribution of the more important imported commodities with demand from many sources will be appropriately entrusted to relevant public agencies, the Food Corporation of India will manage the buffer stock cf toodgrains, have an important share in procurement operations and will undertake inter-Staie movements of foodgrains. The fair price shops system will continue to be connected with food distribution. It is expected that planned growth of the co-operative distributive system linked effectively with the cooperative marketing system will take a larger share not only in distribution of foodgrains but also in distribution of other essential commodities and will reduce the margin between the prices obtained by producers and those paid by consumers, specially for agricultural commodities.

1.58. In the field of agricultural production the ceiling legislation should prevent increase in concentration; in fact that general trend is likely to be towards reduction in the size of the average holding. Apart from this problem of bringing about larger redistribution of land surface, there is the other basic problem of combining land surfaces operated by vast numbers of small holders into units suitable for efficient cultivation. Agricultural production will be guided through extension, assistance and price stabilisation measures and not through control over crop patterns. In the sphere of village and small scale industry also, the programmes of giving protection and assistance and promoting better organisation should lead to developments in desired directions.

1.59. Modern large scale industry is subject to some specific price and allocation controls and to general capital issue and licensing controls. In some measure these derive from an earlier situation of considerable general and specific scarcities. Conditions have recently improved in two important directions. Firstly, the larger and more assured supply of foodgrains and the long-term policy of food management are expected to remove one source of anxiety and with other steps to ensure stability of prices. Secondly, there is now much greater availability within the country of plant, machinery and other equipment needed to establish new industrial enterprises. To these considerations has to be added the experience that the existing industrial structure has led generally to a high level of costs and that the present system does not appear to have prevented concentration. In some cases industry has been inappropriately sited and some desirable adjustments in regional locations have not taken place. Having regard to the fact that the legislation on monopolies and restrictive trade practices and regulation of credit through the nationalised banks will curb tendencies to corner essential supplies, that production in the basic and strategic sectors will bidlly planned and that trading in sensitive areas will be in the hands of public agencies, a relaxation of the existing controls appears desirable and is, therefore, proposed. The main objectives of this revision should be two. It should encourage fully responsible decision milking on the part of entrepreneurs. Fixation of targets, licensing and some price and allocation controls seem to have affected the care with which entrepreneurs should weigh the long-term prospects of their investment decision. Secondly, it should introduce an element of competitiveness in the economy which would keep up cost consciousness. Sheltered corditions created, in part, by the operation of existing controls appear to have reduced cost consciousness among entrepreneurs. Though the low rate of growth of recent years reversed this trend to some extent, it may again become established when industrial activity begins to grow at the higher rate expected in the Plan period.

1.60. There is, however, one direction in which exercise of greater vigilance by Government is imperative. This is in relation to location of industries in metropolitan and large city centres. This should be effected in two ways : firstly by positive assistance and incentives given for dispersal of industry, and secondly, by disincentives imposed in large cities and positive steps taken for decongestion of metropolitan areas.

Public Sector Operation

1.61. Reference may be made to policy in relation to the operation of public sector enterprises. This is linked with action proposed in two separate directions. First is in the direction of much greater coordination and integration. Though investments in the public sector have been large and their composition varied, the different units within the sector d and not act sufficiently in concert. It is suggested that this defect be removed by creating appropriate machinery for effective coordination. When this happens the plans of individual units will become more purposeful and their operations efficient. Secondly, it is proposed that detailed decision making in the individual units should be effectively decentralised. This is a specifically stated objective of Government policy which has yet to be attained.

1.62. A matter of crucial significance will be the emergence of the public sector as a whole as the dominant and effective area of the economy. This will enable it to take charge more and more of the commanding heights in the production and distribution of basic and consumer goods.

1.63. To sum up, the Plan proposes to step up the tempo of activity to the extent compatible with maintaining stability and progress towards self-reiiance. While continuing with effort in intensive irrigated agriculture and basic modern industry it proposes lo pay special attention to certain fields of productive activity particularly in agriculture and related primary production which have been relatively neglected. It proposes to chart the course of industrial development so as to provide for future technological advance and at the same time to bring about dispersal of industrial activity and enterprise. The Plan proposes detailed action through regional and ioc;.ii planning to help the very large numbers of the sma!!cr and weaker producers and increase immedi;itc employment and future employment potential. It suggests steps to even out supplies of foodgrains and to stabilise prices through buffer stocks and through operation by public agencies in certain sensitive trading areas. It looks to the monopoly legislation and appropriate fiscal policy to reduce concentration of economic power. It expects that the nationalisation of banking will help in this and also contribute towa'ds diffusion of enterprise and strengthening of weak producing units. The Plan proposes utilisation of Parchayati Raj institutions in local planning and the gradual building up of an integrated cooperative structure for establishing social and economic democracy particularly in the countryside. It suggests reorganisation of the management of public enterprises to achieve the win aims of a strong well-knit public Sector and the autonomous operation of responsible units. It emphasises the need for encouraging responsible operation and decentralised decision making for the Private Sector-small and large- within this overall frame.

1.64. "The objective of national planning in Ii dia is not only to raise the per capita ir-come but also to ensure that the benefits are evenly distributed, that disparities in income and living are not widened but in fact narrowed, and that the process of economic development does not lead to social tensions endangering the fc'bi'ic of the democ.atjc society. In p-irt these can be achieved by seeing that in die implementation of the programmes, the weakest arc looked after first and the benefits of development are made to flow by planned investment in the underdeveloped regions and among the more backward sections of the community. In part this will be the result of purposeful policy decisions effeciively pursued. Fiscal ar.d other policies should prevent concentration of wealth, check ostentatious cons'Jmption and promote savings. The programmes and policies of public financial ard other institutions should ensure wider dispersal of benefits. Reforms in the educational system should help the growth of initiative and enterprise, make for horizontal and vertical mobility, open up wider opportunities for employment and enable the lowering of caste, class and regional barriers so that a purposeful change towards an egalitarian society can be brought about. In the last analysis, planned economic development should result in a more even distribution of benefits, a fuller life for an increasingly large number of people, and the building up of a strong integrated democratic nation.

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