8th Five Year Plan (Vol-1)
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Objectives and Orientation || Development Perspective || Macro Economic Dimensions || Policy Framework || Financing the Plan || Employment Perspective


2.1.1 The objectives of fulfilling the social and human aspirations of the people, meeting the essential requirements of living, raising income levels and improving their quality of life are at the centre of our developmental efforts. While these efforts are translated into an accountable form through Five Year Plans, indications of the long-term needs of the society and the direction in which the economy should move over a longer time horizon are needed for drawing up such plans. It is this long term development perspective which is presented in this chapter.

Factors in Long-Term Growth

2.2.1 The factors which determine the long term conditions of growth are the demographic trends, the basic resource endowments, the en-terpreneurial resources and the technology perspective. The growth and the structure of population and the size and growth of labour force are the elements of demographic trends which determine the long-term social needs on the one hand and influence the growth prospects on the other. Basic resource endowments i.e., the sources of energy, land, water, other essential minerals, environment and ecology are vital elements in the determination of the potential for growth and comparative advantage. However, technology can augment the basic resources by raising their productivity, and conserving their uses. Technology is, thus, emerging as the most important factor which can even change the comparative advantage. Access to the best technology in all spheres of activity and ability to take a lead in building up new technologies (i.e., making innovations) even in a small sphere of activity are going to become the most crucial factors in determining our development pace viz-a-viz other countries.

2.2.2 Some of the major concerns to be taken care of by the pattern and the pace of growth in the long run are:

  1. Need for expanding employment in the face of ever-diminishing elasticity of employment to output growth, particularly in the processing and manufacturing actvities;
  2. Need for maintaining "food security";
  3. Ensuring that the vast differential between average agricultural incomes (and productivity) and non-agricultural incomes (and productivity) narrows down;
  4. Need for meeting the social needs and minimum requirements of the population within the ambits of a prudent fiscal system;
  5. A realisation that in the past mere investment in quantitative terms did not necessarily mean the economic and social benefits trickling down to the poor masses leading to visible improvements in terms of standard of living and incomes for which social measures are necessary.

2.2.3 An important imperative of growth in the face of basic resource constraints is that the best of the technology is used in every economic activity and more particularly in those activities which are related to the processing of basic raw materials, manufacture and conversion of fuel into energy. This is cost-saving and also resource-saving in the ultimate analysis. However, the technology mostly comes embodied in machines, i.e., capital equipment and makes the production processes capital-intensive as well as labour-replacing. The process which economises most on the use ofenergy, avoids wastages of raw materials and reduce the time span of processing, also tends to involve more automation and thus saves on labour use. The higher the pace of growth we desire, the more advanced is the technology we need to adopt, and consequently the lower is the elasticity of labour absorption to growth. This trend has been observed in the development history of most of the countries. Recent experience of trends in labour absorption in manufacturing in India also conforms to this. In the perspective of the next 15 years or so, population will still be rising at a significant rate and there will be substantial additions to the labour force. While the per capita income and productivity will definitely increase, it does not follow as a matter of course that all those seeking jobs will get jobs. Special care will have to be taken and policies devised for making jobs available to all, which is a national goal. This would be possible by broadly following two strategies in the long run.

2.2.4 The first strategy is related to using the foreign trade, i.e., imports and exports for balancing the internal production and demands in such a way that we tilt our structure of production more in favour of employment intensive industries and exchange its products with the imported products which are less employment intensive.

2.2.5 The second strategy would be to facilitate and encourage the creation of services which are productivity-raising for the economic system as a whole. Transport, trade, and a variety of professional services are examples of such services. Services by their very nature are more labour absorbing. This has been the historical experience of many countries.

2.2.6 The development of under developed agriculture in large parts of the country will create demand for additional labour during the period in which agriculture gets transformed from a less developed to a highly developed stage. Depending on the intensity of our efforts and investments, this transformation may take anywhere around 10 years. And hence, during this period agriculture does offer additional opportunities for labour absorption. Beyond that period, agriculture may also start showing similar trends in labour absorption as the industry has shown in recent periods. In fact, at present the agriculture in North-West India is already showing such tendencies.

2.2.7 Maintaining food security and relative self- sufficiency in food production is a strategi-cally desirable long-term goal for the country. A reasonable degree of food self-sufficiency or supply of "wage goods" is seen to have a very positive influence on stability and growth even in our limited experience of development. It may be largely due to the factor of relative food self-sufficiency,among others, that India achieved a higher rate of growth and better economic stability and resilience during the Eighties. This was the only decade as a whole when we felt somewhat comfortable on the food front. Hence, it seems appropriate that food self-sufficiency remains an important element of the strategy of development even in the perspective of a period of next fifteen years or so.

2.2.8 Food security implies not only sufficient supplies but also supplies at prices affordable by the poorer sections of the society. Appropriate institutional mechanisms, such as a public distribution system, sharply focused on the poorer sections should be put in place to protect the poor from rise in food prices. However, this task would be rendered difficult if food prices in general rise very sharply.

2.2.9 A moderate increase in food prices consistent with remunerative returns to the farmers should be the desired objective. In order to enable farmers to earn higher incomes a combination of processing and business activity with the farming activity is necessary. In other words, farming must be encouraged to grow into "agri-business". In order to bring this about, efforts will be required in building the infra-structure and creating conditions for the growth of agri-business. Innovative organisational methods and forms in which large number of small farmers could come together to take advantage of the economies of scale which are important for agro-processing and agri-business are needed. This direction has to be kept clearly in view while evolving the pattern of long term growth. The Eighth Plan will take some major steps in this direction.

2.2.10 The existing differentials between rural and urban infra-structure facilities, the prevailing average income levels for the bottom deciles of the population and significant regional differences in development make it necessary for the State to take care of the important social needs of the population like health, education, cultural needs as well as minimum requirements of the living environment like drinking water, rural roads, information and communication. This will be over and above what the State will have to do by way of investment in the physical infrastructure like energy, transport and communication. In performing such functions in the past the Government has come under severe fiscal strains. Much of this expenditure has come out of borrowing whose cost is also increasing. There is need for maintaining the fiscal health in the long run. Otherwise a point is reached when under heavy pressure of debt servicing the Government becomes incapable of performing even the minimum of its essential functions. Some new approaches to financing investments in the area of human development are called for. Rationalisation of the element of subsidy in the provision of these services is required. Sharp focussing on the target groups is required where the provision of services is free or heavily subsidised. Participation of private entrepreneurs, and local communities in the provision and running of institutions which take care of social needs will have to be encouraged.

2.2.11 In the past there has often been an obsession with the plan size and with acceptance of projects as plan schemes with a token outlay. This does not necessarily bring about growth in real terms. On the other hand this shifts emphasis from the real productive growth and identification and formulation of proper growth oriented schemes and their timely completion according to schedule. Many of the public sector enterprises have not only failed to generate any surplus on the massive investments made on them, but continue to demand huge budgetary support from the government every year.

Nature and Implications of Population Growth

2.3.1 The growth in Indian population gathered momentum in the last few decades. It can be seen from table 2.1 that the natural growth rate during the decade 1941-51 was only 1.25 per cent per annum, and had remained at much lower levels during the earlier decades of this century. The growth rate started increasing rather fast after 1951 and reached a peak of 2.22 per cent during the decade 1971-81. It is tempting to think that if only India had succeeded in

Table 2.1 Dynamics of Population Growth : 1901 -1991

Period Population at the end of the Period (as on 1st March) Growth Rate % Vital Rates per 1000 Population
  Total (millions) Urban (%) Decadal Annual (Exponential) Birth Rate Death Rate Natural Growth Rate
1 2 3 4 5 6 7 8
1901-11 252.09 10.29 5.75 0.56 49.20 42.60 6.60
1911-21 251.32 11.18 -0.31 -0.03 48.10 48.60 -0.50
1921-31 278.98 11.99 - 11.00 1.04 46.40 36.30 10.10
1931-41 318.66 13.86 14.22 1.33 45.20 31.20 14.00
1941-51 361.09 17.29 13.31 1.25 39.90 27.40 12.50
1951-61 439.23 17.97 21.51 1.96 41.70 22.80 18.90
1961-71 548.16 19.91 24.80 2.20 41.20 19.00 22.20
1971-81 683.33 23.34 24.66 2.22 37.20 15.00 22.20
1981-91 844.32 25.72 23.56 2.12 32.50 11.40 21.10


  1. The 1981 Census Population total has been revised in the light of the 1991 Census results.
  2. The 1991 Census figure includes projected population ofJammu and Kashmir.
  3. The Vital Rates except for 1981-91 have been calculated from the Census of India data by Reverse Survival Method.
  4. Vital Rates for 1981-91 have been calculated using Sample Registration System data.

containing her population growth rate after 1951 to around one per cent per annum i.e. the rate China has achieved, how much difference this factor alone would have meant in terms of per capita income, consumption and levels of living. The Seventh Plan document assessed the growth rate during 1981-86 as 2.1 per cent and projected the growth rate for the period 1986-91 at 1.9 per cent. According to Census 1991, the growth for the entire decade of eighties was 2.1 per cent. Thus both the Sixth and the Seventh plans have fallen short of achieving the targets set for reducing population growth.

2.3.2 On the assumption that the family planning efforts will be turned into an effective people's movement during the Eighth and the Ninth Plan, the Standing Committee of Experts on Population Projection has estimated that the annual growth rate of population during the period 1991-96 would be 1.81 per cent which will further come down to 1.65 per cent during 1996-01. The Eighth Plan (1992-97) envisages a population growth rate of 1.78 per cent per annum. As per these projections the Indian population will grow from 844 million in 1991 to 925 million in 1996, 1006 million in the year 2001 and 1102 million in 2007. (Table 2.2). The Net Reproduction Rate (NRR) will equal unity only during 2011 to 2016, that is 5 years later than was expected at the time of presenting the Seventh Plan. The goal of stabilising population (zero population growth, ZPG ) has thus shifted further in time. India's fertility and mortality levels and the age distribution of the population are such that even after attaining NRR= 1 by the year 2011-2016, the population would stabilise (i.e., achieve ZPG) only towards the end of the 21st century.

2.3.3 The socio-economic variables that could be considered to be inter-related are death rate,infant mortality rate, female expectation of life at birth, female literacy, female mean age at marriage and percentage of women employed. The latest available statewise data on these variables are presented in table 2.3.

Table 2.2 Population Projections

Period Population at the end of the
period (as on 1st March)
Average Expectation of life at birth Birth
General Marital
Fertility Rate
(Per 1000
Married Women)
Urban popln.
as % of total popln.
Male Female (per 1000 persons)
1 2 3 4 5 6 7 8 9 10
1991-96 925.13 257.36 27.82 60.60 61.70 27.50 9.40 18.10 160.80
1992-97 941.37 266.57 28.32 61.05 62.20 27.00 9.20 17.80 157.50)
1996-2001 1006.20 306.87 30.50 62.80 64.20 24.90 8.40 16.50 144.50
2001-2006 1085.98 363.64 33.48 64.80 65.80 23.00 7.80 15.20 132.30
2006-2011 1164.25 425.73 36.57 67.05 68.30 20.90 7.10 13.80 120.90

Source - Report of the Standing Committee of Experts on Population Projections (1989).

  1. The projections have been adjusted in the light of the 1991 Census results, particularly in case of Urban Population.
  2. For 1992-97, 2006-2011 : projections are based on similar assumptions as adopted by Standing Committee of Experts on Population Projections (1989).

 2.3.4 There is considerable variation in respect of socio- demographic variables across the States. One of the most important variable, i.e, Infant Mortality Rate (IMR), for example, varies from 17 in Kerala to 123 in Orissa. Study of the relationship among demographic and socio- economic variables shows that female literacy and age at marriage are highly correlated with fertility decline. Increase in age at marriage affects fertility decline as it shortens the reproduction period and produces larger intervals between generations. Lower infant mortality rate also helps in having lesser number of children as the acceptors of family planning methods become more confident about survival of children. Fertility rates have started declining in many parts of the country where, apart from family planning programmes, substantial progress has been made towards female education and improved health status for women and children and where job opportunities for women have increased.

2.3.5 Though India was the first country to acknowledge the need for controlling population growth, our achievements have fallen considerably short of the targets in this direction. After a little initial decline during the decade of sixties an'd in the early seventies, the birth rate has remained stagnant at 33/34 per thousand for almost a decade till 1985. This has happened in spite of the fact that the Couple Protection Rate (CP-R) has been going up significantly during the same period. The CPR increased from 22.5 per cent in 1977 to nearly 35 per cent in 1985, and furtherto44.1 per cent in 1991. Though thebirth rate (BR) has shown a declining tendency, (from 33.7 in 1980 to 32.6 in 1986 and 29.9 in 1990) the fall is not commensurate with the increase in CPR. One explanation for this appears to be that the acceptance of family regulation methods has largely been confined to older age groups. An analysis of demographic data for l961 and 1981, in fact, reveaL that fertility decline has been most marked in the older age-group of 30-44 and much less in the age-group of 15-29. Whatever fertility decline was observed in the younger age-group was more due to rise in age at marriage than to the use of family regulation methods. However, the second half of the eighties is witnessing the beginning of a new phase of fertility decline. There has been a small but perceptible and continuous decline in fertility and population growth as indicated by the Sample Registration System (SRS) estimates.

2.3.6 Roughly 60 per cent of the total female population in the reproductive ages is below the age of 30. It is typical for all countries during their initial stage of fertility decline that the acceptors of family regulation methods tend to be in the low fertility range or in the older age group. However, after achieving a CPR of 44 and a birth rate of 30 further significant improvement in CPR can only come from acceptance of family regulation methods by the younger age-group. Further increases in CPR would then be more effective in reducing birth rates. This will require more efforts to motivate the younger people. It is in this context that reduction in infant mortality rates, increase in female literacy, and increase in job opportunities for women will become much more important variables in influencing birth rates.

2.3.7 As per the 42nd Round of the National Sample Survey (NSS) (1986-87) reports on utilisation of Family Planning Services, the percentage of eligible couples effectively protected during 1986-87 was 28.6, (Table 2.4), as against a couple protection rate of 37.5 as reported through administrative statistics. Apart from statistical discrepancy due to different sources and methods of collection of data, one reason for this discrepancy could be that the administrative statistics might have included large number of casual users of Family Regulation Methods (FRM), while NSS reveals more sustained acceptors. The NSS report further reveals higher level of effective protection in urban as compared to that in rural areas, and higher level of effective protection among the population group above poverty as compared to that among the group below poverty. This is as to be expected. But what is more revealing is that even among the rural below poverty group, effective protection rate was nearly 22.65 per cent as compared to the overall all- India rate of 28.60 per cent. This is a very hopeful sign. Terminal methods are more dominant among rural and poor'groups while non-terminal methods seem to be pre-

Table 2.3 Important Socio-Economic Indicators - Major States

States Birth
Rate (CPR)
Total Fertility]
Rate (TFR)



age at

of Women
in Organised
0 1 2 3 4 5 6 7 8 9
Andhra Pradesh 25.60 8.70 70 44.30 3.70 62.23 33.70 17.26 12.47
Bihar 32.90 10.60 75 26.00 5.40 57.00 23.10 16.55 6.73
Gujarat 29.50 8.90 72 57.80 3.90 61.49 48.50 19.52 12.44
Haryana 31.80 8.50 69 56.60 4.60 61.97 40.94 17.84 11.39
Kamataka 27.80 8.10 7] 46.90 3.60 63.31 44.30 19.21 17.06
Kerala 19.00 5.90 17 55.60 2.40 73.80 86.90 21.82 38.97
Madhya Pradesh 36.90 12.50 111 40.30 4.60 54.71 28.40 16.56 10.24
Maharashtra 27.50 7.30 58 56.20 3.50 64.30 50.50 18.77 13.24
Orissa 29.90 11.60 123 41.00 3.80 55.15 34.40 19.08 8.80
Punjab 27.60 7.80 55 75.80 3.50 65.30 49.70 21.07 13.56
Rajasthan 33.10 9.40 83 29.00 5.50 58.69 20.80 16.10 11.67
Tamil Nadu 22.40 8.70 67 57.30 2.80 60.80 52.30 20.25 22.00
Uttar Pradesh 35.70 12.00 98 35.50 5.60 49.64 26.00 16.71 7.92
West Bengal 27.30 8.10 63 33.70 3.70 59.53 47.10 19.23 9.82
India 29.90 9.60 80 44.10 4.30 59.10 39.40 18.33 14.22

Source :- Column I, 2, 3 and 5 - SRS Estimates, Registrar General, India.
Column 4 - Department of Family Welfare.
Column 6 - Report of Standing Committee of Experts on Population Projections.
Column 7 - Census 1991 (Provisional Totals).
Column 8 -Census 1981.
Column 9 - Directorate General of Employment and Training, Ministry of Labour.ferred with rising incomes and urbanisation. Similarly, with rising income levels and urbanisation, dependence on Government services is falling. Government still accounts for overwhelmingly large proportion of family planning services provided.

2.3.8 Nearly 40 per cent of the Indian population was below 15 years of age in 1980 whereas only 6 per cent of the population was over 60 years of age. With the recent changes in vital-rates and expectation of life at birth, the age structure of population has changed and in future it is likely to change even more significantly. The projected changes in age structure are shown in Table 2.5.

2.3.9 The proportion of persons below 15 years of age would come down from 40 per cent in 1980 to 35.5 per cent in 1992, and 29.5 per cent in the year 2007. Correspondingly the proportion of the group 15+ will increase from 60 per cent in 1980 to 70.5 per cent in 2007. Thus, the proportion of those needing work will rise significantly. The population of age 60 plus has risen to a level of 6.65 per cent in !992 anJ will rise to a level of 8.3 per cent by 2007.

Table 2.5 Projected Age Structure (Percent)

Year 1990 1992 1995 1997 2000 2005 2007
1 2 3 4 5 6 7 8
0-4 133.30 12.77 12.13 11.71 11.14 10.30 9.96
5-14 23.22 22.89 22.49 22.09 21.58 20.08 19.48
15-59 57.07 57.69 58.43 59.06 59.78 61.55 62.26
60- 6.41 6.65 6.95 7.14 7.50 8.07 8.30

Source: Report of the Standing Committee of Experts on Population Projeetions(1989).
Note :Pro[ect]Oiis tor 2007 are based on similar assumptions :is adopted by the Standing Committee (1989).

Table 2.4 Percentage of Eligible Couples Effectively protected


Rural (2)

Urban (3) Combined (4)
Below Poverty 22.65 28.73 23.51
Above Poverty 26.74 39.72 29,93
ALL 25.40 37.58 28.60

Note: Estimated froin data on tractile groups reported in NSS report. (42nd Round. 19S6-87)

Table 2.6 Women in (he Reproductive Aye Group

Year (1)

No. of Female Aged 15-44 (Millions)

Ratio of No. of Females Aged 15-44 to total Females(%)

1990 183.00 45.75
1992 191.89 46.02
1995 205.00 46.49
1997 214.31 46.95
2000 226.00 47.08
2005 252.00 48.55
2007 262.40 48.84

Source: Report uf (lie Standing Committee of Experts on Population Projections (!989).
Note: Estimates tor 2007 are based on similar assumptions as adopted by the Standing Commiltee (1989).

2.3.10 The number and the proportion of females in the reproduclive age group 15 to 44 will keep on rising over the next 15 years. (Table 2.6) Increase in the proportion and the number of females in the reproductive age group will leud to higher fertility rates anil hence it will require a mucli higher degree of effort to achieve a certain reduction in 1-iirtli rates corresponding to the effort/success ratio in llie p.ist.

2.3.11 The problems of the aged has not been felt much so far since the society lias been overwhelmed with ttie problem ofllie children. The proportion of older people h;is been small and the traditional family structure lias been able to accommodate the needs ofllie aged well. This is changing now. The proportion of the aged in the society will be growing. In the wake of modernisation and urbanisation more and more families are shifting away from land as the main source of livelihood tlius weakening further the main basis of joint family system. Families are becoming nuclear. Taking care of the aged will need more attention in the coming decades.

2.3.12 Urban population is expected to be 224 millions, i.e., 26.04 per cent of the total population in 1992. Urban population for the next decade is projected on the basis of average annual rate of growth observed during the twenty year period i.e., 1971-91, rather than the decelerated rate of growth during 1981-91 as this may not represent the long-term trend of urbanisation. In the post 2001, period the rate of growth of urban population is assumed to be gradually declining in line with the assumed reduction in the rate of natural increase, hut the share of urban population is expected to increase continuously. As per the projections,India will enter the 21st century with an urban population of 307 million (30.50 per cent of the total) which is likely to reach a level of 376 million (34.2 per cent of the total) by 2007. It is also estimated that the number of cities with a population of more than one million will grow up from 12 in 1981 to around 40 in 2001. In 1981, 218 class I cities accounted for more than 60 per cent of the total urban population of the country. In 1991, class 1 cities contained 139.7 million people (excluding J and K), accounting for 65.2 per cent of total urban population and the metropolitan cities alone had 70.76 million of them. These cities are the main hubs of economic activity. Among them are also some of the cities which are already under strain because the infrastructure is over-stretched and inadequate. Vast areas of these cities have degenerated into slums. Housing is in a critical short supply. In 1981, out of a total urban population of nearly 160 million, 32 to 40 million were estimated to be in slums .•lion'--. Thus. 20 to 25 per cent of the urban population live with multiple deprivation. This is liic result of the gap 1-ietween the demand and the k';:;il/'1ormal supply of houses.

2.3.13 Viewed in a longer time perspective, a fast pace of urbaiii.s;flio!i is inevitable. In fact the growth in urban population during the eighties has been less than expected. The only question to he asked is: "how to make the process more compatible with the overall economic development pattern and environmentally less damaging"? A widely dispersed urban growth will prevent i.lie push of lars'e numbers towards metropolitan cities and will also he beneficial to rural development. This implies vastly dispersed infrastrucure, reaching out even to smaller urban and rural areas. A push to such a strategy needs to he given through creation of communication, transport, health and educational infrastructure in large number of small towns and in rural areas.

2.3.14 Tile successive quinquennial rounds of the National Sample Survey Organisation (NSSO) indic;ile trends in Labour Force Participation Rates (LFPR) and enable projections of labour force being made for the coining years. Table 2.7 on the Usual Principal Status LFPR shows that LFPR's have declined over the years. However, as the growth in labour force has been mainlv intluenced by the rate of growth of population, the labour force has continued to grow despite the declining trend in the participation rates. Usual Principal Status Labour Force Projections for the period 1992-2007 are given in Table 2.8.

Table 2.7 Overali Labour Force Participation Rates (1977-78 to 1987-88)

Labour Force Participation
Rural Urban
Male Female Male Female
(1) (2) (3) (4) (5)
32nd Round (1977-78) 54.9 26.2 53.2 15.0
38lh Round91983) 54.0 25.2 53.1 13.0
43rd Round(1987-88) 53.2 25.4 52.8 12.9

•'- Usual Princpal Status.

Table 2.8 Labour Force* Projections by Age - Group (Millions)
Addition to Labour Force

Age-Groups 1992 1997 2002 2007 1992-97 1997-02 2002-07
(1) (2) (3) (4) (5) (6) (7) (8)
5+ 328.94 364.31 400.75 440.74 35.37 36.44 39.99
15+ 316.65 351.61 387.92 427.87 34.96 36.31 39.95
15-59 294.60 325.87 357.82 393.02 31.27 31.95 35.20

* Usual Principal Status.

The Social Development Perspective

2.4.1 There has been a significant improvement in the living conditions of the people on an average. In certain states of the country,the life expectancy, infant mortality, literacy, consumption of food and cloth and availability of basic services such as drinking water and domestic electricity have reached satisfactory levels. But there are considerable disparities across States, between the urban and the rural areas, between males and females, and between those who work in organised sector and those who are in the unorganised sector. In the perspective of the next 10 to 15 years, we have to concentrate on reducing these disparities and to improve the quality of life of an average Indian citizen. The development perspective emphasises improvement in the income opportunities of the less privileged sections and in the pockets of gross underdevelopment. An improvement in basic social services and reduction in infant mortality is a pre-condition for realising the desired restraint on population growth. The long term targets in terms of important social indicators are set in Table 2.9. These are average indicators for the population as a whole, and the averages hide the disparities. But, further significant improvements in the averages cannot be brought about without reducing the disparities.

2.4.2 The census of India 1981 reported an overall literacy rate of 36.2 per cent. This was a considerable improvement over literacy rate of 16.7 per cent in 1951 .though, this is still a poor showing for 30 years of planning. Census 1991 reports literacy rate for population aged 7 years and above as 52 per cent. The regional disparities are wide and female literacy is still at a very low level. As per 1991 Census, the female literacy was only 39.4 per cent and male literacy was 63.9 per cent. Data on literacy are also available from various rounds of the National Sample Survey. Even though the definitions followed are the same, there are differences between the results obtained from Census and the NSS rounds. NSS rounds give somewhat higher rates of literacy. The NSS estimates may be more indicative of the real situation .These data are presented in table 2.10. It is significant that during less than five years, i.e., from 1983 to 1987-88, literacy rates increased by 4 percentage points. It appears that the literacy drive will pick up momentum now. Since literacy is high among the younger age-group and is very low among the older age-group, with the cohort movement, more literates will be replacing illiterates. The adult literacy programmes and efforts at universalisation of elementary education will add further to the improvement in literacy rates.

2.4.3 It is more important, in this context, to concentrate on those regions/districts where literacy rates are abysmally low. Of the 412 districts, 243 had a literacy rate below the national average and 193 had female literacy rate below 20 per cent in 1981 (as per the conventional measure based on census date). The 1981 census recorded a work participation

Table 2.9 Some Indicators of Social Development (1992-2007)

(1) (2) 1991-92 (3) 1996-97 (4) 2006-2007 (5)
1. Life Expectancy (years) Male 57.7 60.10 66.10
Female 58.7 61.10 67.10
2. Infant Mortality Rate (per 1000 births) 78(a) 68(b) 48
3. Death Rate (b) (per thousand) 10.0 8.7 7.4
4. Birth Rate (b) (per thousand) 28.9 25.72 21.7
5. Fertility Rate (per thousand) 130.3 113.0 91.4
6. Literacy Rate (%) 15-35 years 56.0* 90.0 100.0
7 years and above 52.0 75.0 90.0
7..Per Capita Consumption offoodgrains (kg) 182.0 193.6 225.0
8.(a)Villages without drinking water (thousands) 3.0 0 0
(b)Villages partially covered (less than 40 Ipcd) 150.0 negligible 0
9.Electricity as a source of Lighting (Per Cent of Dwellings) - Rural 27.0 50 80
-Urban 75(c) 80 95

Notes: (a) Estimate based on SRS Data
(b) Based on assumptions implicit in the population projections made by the Standing Committee of Experts on Population Projection (1989).
(c) Estimate for 1988-89 based on NSS 44th Round.
@ The figure indicates the number of villages not having any source of drinking water by end of March 1992 (Source : Ministry of Rural Development) Ipcd Litres per capita per day
* Estimates for 1986-87 based on NSS 42nd Round.

rate of 4.3 per cent for children aged 0-14. Also the NSSO (1983) had revealed that there were 17.36 million working children below 15 years of age. The task before the country is to bring these children back to the classrooms. At least 3-4 years of schooling is necessary for literacy to be permanent. The focus now should be in getting the community actively involved in achieving cent per cent enrolment and in retaining all the children in the school atleast through the primary stages.

2.4.4 Significant improvement in the health status of people is visible from the fact that the expectation of life at birth has increased from 32 to 58 years since independence. It is predicted that it would reach a level of 65 years during 2001-2006, the female expectancy being still higher. Already during 1986-91, Kerala had a female life expectancy at birth of 74 years, which is comparable to most developed countries. The Death Rate in India has also declined. A number of public health and medical care programmes like, national small pox eradication, malaria control, tuberculosis control, cholera control and immunisation of children aga^t diphtheria, tetanus, whooping cough etc. launched by the Government have helped to improve health and longevity of the people.

2.4.5 While efforts at dealing with the epidemics have been successful, meeting the health needs of the population has been far from satisfactory. One crucial indication of population's health status is infant mortality rate. Its contribution to total death rate is high and it has great psychological impact on motivation to limit the family. Contribution of infant deaths to total deaths is about 28 per cent, being 20 per cent in the urban areas and 29 per cent in the rural areas. Infant mortality rate has come down to 78,per thousand, out of which about 60 per cent 'are

Table 2.10 Number of Literates per Thousand Persons

Year/Sourc Rural Urban 

All Areas Persons

Excl. Popln. in Age Groups    


Female 3 Male 4

Female 5




1977-78 @ 415 184 688 500 377 467 440 404
1981 ff 408 180 658 478 362 447 414 408
1983$ 449 219 693 515 405 500 470 440
1987-88 * 484 260 719 556 444 540 509 486
1991 (Census)  



Note:-l. Figures in Col 7 and 8 exclude persons in the respective age groups from the denominator only.
2. Figures in Col.9 excludes persons in the age-group (0-14) from both the numerator and denominator.
3. @,$ and * for NSS 32nd, 38th and 43rd Rounds respectively.
4. #census .

neo-natal deaths. It is estimated that 30 to 40 per cent of infants are born with low birth weights and about 45 per cent of infant deaths are due to low birth weights. Immunisation status is far from satisfactory. The NSS data also show that the mothers registered for pre-na-tal care were 21 per cent in rural and 47 per cent in urban areas, and those registered for post-natal care were 12.6 per cent in rural and 23.8 per cent in urban areas.

2.4.6 The National Health Policy has accepted the responsibility to ensure "Health for All by the Year 2000". An infant mortaility rate of 60 per cent and 100 per cent immunization of pregnant mothers and school children are aimed at, apart from a number of other health related targets. This calls for substantial improvement in the medical and public health facilities, particularly in the rural areas.

2.4.7 The sources for the availability of drinking water and light, as revealed by National Sample Survey data for the years 1973-74 and 1988-89, are presented in table 2.11. There has been considerable improvement over this period. However, in 1988-89 tap water was available to 15.5% of rural and 72% of urban housholds. The Technology Mission on Drinking Water in Villages and Related Water Management has an objective to cover all "problem villages". Ofthe5.75 lakh villages in thecountry 1.62 lakh villages were identified as "problem villages" at the beginning of the Seventh Plan. By the end of March 1992, about 3000 villages remain without any source of safe drinking water. There are however, still about 1.5 lakh villages/habitations where per capita supply of water is very meagre(Iess than 40 litres per day) or part of population remains unserved or the water sources are polluted. Population covered by these potable water has increased from 56.3 per cent in rural and 72.9 per cent in urban areas in March 1985 to 78.4 per cent and 84.9 per cent in March 1992 respectively. The problems of supplying clean drinking water is so varied and diverse that innovative area specific cost effective technologies are to be evolved.

2.4.8 Population covered with sanitation facilities is very low-as low as 2.7 per cent having individual sanitary latrines in rural areas. An integrated approach to rural and urban sanitation linked to programmes in health and education is called for.

2.4.9 It can be seen from table 2.11 that as recently as in 1988-89, only 27 per cent of rural households and 75 per cent of urban households had electricity available for lighting purposes. the situation improved considerably since 1973-74. The State level data shows greater dispari-

Table 2.11 Percentage Distribution of Households by Source-wise Availability of Drinking Water and Lighting

(0) 28th Round (1973-74) 44th Round(1988-89)
Rural Urban Rural Urban
(1) (2) (3) (4)
Sources of Drinking Water
l.Tap 4.69 66.97 15.47 72.11
2.Well 65.84 18.05 39.12 9.12
3.Tube-well and Hand pump 15.59 12.69 39.10 17.20
4. Others 13.88 2.29 6.31 1.57
Total 100.00 100.00 100.00 100.00
Sources of Lighting
1. Electricity 6.55 53.48 26.92 75.12
2. Others 93.45 46.52 73.08 24.88
Total 100.00 100.00 100.00 100.00

Source - National Sample Survey Organisation. ties as fewer people of eastern States live in electrified dwellings as compared to their northern counterparts. The aim should be to cover 100 per cent households both in rural and urban areas with availability of electricity for lighting purpose.

2.4.10 Poverty still remains a problem of considerable magnitude. Estimates of poverty are conventionally based on a concept of poverty line in terms of monthly per capita expenditure and consumption distribution as available from National Sample Survey. Views vary on the concept of poverty line and the method of estimating poverty. However, irrespective of the concept and measurement, there is evidence that poverty is on decline since the middle of the seventies. In 1987-88, as per the official methodology, around 30 per cent of the population was poor. Assuming that by 1991 poverty proportion declined to 27 per cent, even then about 230 million people were poor and not capable of providing bare essentials of existence.

2.4.11 Incidence of poverty varies very much across the States. The States with high per capita income and highly developed agriculture ( Haryana and Punjab) have been virtually able to eliminate poverty. The same cannot be said about states where industry is highly developed (Gujarat, Maharashtra). Thus development of agriculture and production and supply of food grains seem to be highly favourable factors in eliminating poverty. The target is to eliminate poverty by the turn of the century.

Food Requirements

2.5.1 India will have an estimated 941 million people by the year 1997 A.D. This will increase to 1102 million by 2007. With this population and given improvements in consumption levels associated with growth in incomes, the estimated foodgrain requirement for 1997 and 2007 will be around 208 million tonnes and 283 million tonnes respectively. The foodgrain production has to match this level of demand. The required production levels of foodgrains by 1997 and 2007 are 210 million tonnes and 285 million tonnes respectively. Main projections are given in table 2.12.

2.5.2 The required development in agriculture can, in the long run, be achieved only through a regionally more broad- based pattern of growth by devoting greater attention and resources to the development ofrainfed tracts, utilising efficiently the created facilities of irrigation and maintaining a continuous flow of econemically viable improved techniques, both for rainfed as well as irrigated areas. The concept of planning for agriculture in terms of homogeneous agro-climatic areas needs to be intensified and institutionalised.

2.5.3 Growth of animal husbandry sub-sector will help in increasing employment and bring about income redistribution in favour of small and marginal farmers and landless labourers. The production of milk and milk products is targetted to grow at about 4 per cent per annum from the present level( 1991-92) of 57.5 million tonnes. By 2007, the total supply of milk will be of the order of 105 million tonnes. The supply of egg is targetted to grow at about 6 per cent per annum. A quantum jump in fish production is envisaged through creation of appropriate infrastructure. These measures will contribute to an estimated growth rate of about 6.6 percent in fishery sub-sector. As a result, the fish production is expected to increase to 5.5 million tonnes by 1997 and to 10.5 million tonnes by 2007 A.D.

2.5.4 Energy intensity of agriculture has been rising through direct uses of energy as well

Table 2.12 Agricultural Perspective

VARIABLE 1984-1985 1991-92* 1996-97 2001-02 2006-07
(1) (2) (3) (4) (5) (6)
Land (Mill.Ha)






N.S.A. 140.9 140.0 141.0 141.0 141.0
G.C.A. 176.4 182.2 190.6 197.2 203.4
G.C.A.(FG) 126.7 127.0 130.0 132.6 135.0
Irrigation(Mill.Ha) F.G. 44.2 53.8 62.3 70.2 77.7
N.F.G. 16.3 21.9 27.0 31.8 36.3
TOTAL 60.5 75.7 89.3 102.0 114.0
Fertiliser(Mill. tonnes) F.G. 6.2 9.4 12.8 16.6 21.0
N.F.G. 2.1 4.1 5.5 7.1 9.0
TOTAL 8.2 13.5 18.3 23.7 30.0
Cotton(Mill. bales) 8.5 10.5 14.0 18.0 a 23.0 a
Sugarcane(Mill.tonnes) 170.3 235.0 275.0 335.0 b 408.0 b
Foodgrains(Mill.tonnes) 145.5 172.5 210.0 245.0 285.0
Oilseeds(MilI.tonnes) 13.0 17.5 23.0 29.0 c 37.0 c

N.S.A. = Net Sown Area GCA = Gross Cropped Area FG = Food Grains; NFG = Other than Food Grains; a = 5 % P.A.;
b= 4 % P.A.; c = 5 % P.A.; * = Likely.;
N.S.A. = Net Sown Area; GCA = Gross Cropped Area; FG = Food Grains; NFG = Other than Food Grains ;
a = 5 % P.A.; b= 4 % P.A.; c = 5 % P.A.; * = Likely.

as through its indirect use via fertiliser. The imperatives of raising productivity in view of the constraints on land and rising demand for food, fibre and other agricultural products, implies that energy intensity will further rise. However, massive efforts need to be mounted now to make improvements in the efficiency with which energy is used. Efficient use of water and efficient use of fertilisers are the two areas which need to bs paid special attention. More investment needs to be made on research in the area of biotechnology to make possible integrated nutrient and pest-management through cultural, genetic and biological methods.

Natural Resource Constraints

2.6.1 The total geographical area of the country is 329 million hectares, of which the arable land is 166 million hectares. At present 141 million hectares are used for cultivation purposes. Between 1970-71 and 1987-88, the average net sown area (NSA) has been 140.4 million hectares with a maximum of 143.21 million hectares in 1983-84 and a minimum of 136.18 million hectares in 1987-88. The need for production of food, fodder, fibre, fuel and urbanisation will put severe competing claims on the land. Moreover, water logging, salinity, alkalinity of soils on account of inadequate planning and inefficient management of water resource projects in conjunction with other adverse physical factors, will severely constrain the growth of net sown area in the future.

2.6.2 The per-capita availability of land is already declining at a very high rate. With the assumed rate of population growth it will decline to 0.30 hectares by the year 2007 AD as against 0.89 hectares in 1950. Similarly, estimated per capita land availability for animal population will go down from 1.1 hectares in 1950 to 0.6 hectares by 2007 AD. Presently, rural and urban settlements, roads, railways, waterbod-ies, mines, defence and industrial installations use about an estimated area of 21 million hectare. An additional area of 4 to 5 million hectares will be required for these diverse purposes by 2007 AD. Although forest statistics indicate that there has been an increase of 26 million hectares under forests between 1950-51 to 1986-87, the remote sensing data indicate depletion of the forest cover. In the past, increase in net sown area came about by converting forest area into cultivable area. There is no such scope at present or in near future. The only alternative available is to reclaim the waste land and the land suffering from salinity, alkalinity and water logging. With such efforts, the upper limit of net sown area will be 141 million hectares. In reclaiming wasteland available private sector initiative and expertise should be tapped wherever necessary without diluting the thrust in the land reforms performance. In many parts of the country the process of land reforms still remains incomplete. This should be completed on a priority basis and it should be ensured that those who till the soil have by and large an ownership stake in it.

2.6.3 Land degradation in India is alarm-ingly high. An estimated 174 million hectares was being affected by various problems of soil erosion and land degradation in 1984-85. Of this degraded land 8.53 million hectares was water logged, 3.97 million hectares was ravine and gutted land, 3.58 million hectares was affected by alkalinity and 5.50 million hectares belong to saline and sandy areas. However, since 1984-85 about 40 million hectares are reported to have been recovered. Still the magnitude of the problem remains large.

2.6.4 Floods and droughts are recurrent phenomena in India, severely constraining agriculture. On an average, an area of about 8 million hectares is affected by floods annually. Of this, nearly 40 per cent is cropped area. The total net cropped area prone to water stress (moisture scarcity) and drought is about 64 million hectares. The problem of land degradation gets exacerbated due to large scale land erosion in which fertile top soil is lost. As per the Indian Council of Agricultural Research estimates, the present soil loss is about 16.35 tonnes per hectare per year.

2.6.5 Forests are a very valuable renewable resource providing the vital life support system. With the fast growing population the demand on forest has progressively increased. Interpretation of the Landsat imagery indicates that out of 75 million hectares of area recorded as forest, only 64 million hectares sustains actual forest cover, and out of this only 35 million ha. has adequate cover, which account, for only about 11 per cent of the geographical area of the country at present. National Forest Policy (1988) stipulates that the country as a'whole should aim at keeping about one ihiru ot the geographical area under forest cover. With all its biological and genetic diversity, forest is a natural gift to humanity. The forests, degraded by the ever increasing hiotic influence, need to be rehabilitated by afforestation, not only for environmental considerations, but also for meeting the local demand for firewood, small timber, fodder and for defence and industry.

2.6.6 With an average annual rainfall of 119.4 cm, and surface flow of about 188 million hectare metres, India is endowed with vast water resources. However, total utilisahle water is 114 million hectare metres comprising 69 million hectare metres as surface water and 45 million hectare metres as ground water. Due to severe limitations imposed by physiography, topography, and the present state of technology to harness water resources economically, only a limited part is developed for irrigation and other essential uses. The ultimate irrigation potential of the country was estimated by National Commission on Agriculture (1976), to be 113.5 million hectares of which 55.0 million hectares would come from minor irrigation. But this estimate has undergone a change. The national perspective on water resources envisaged an additional benefit of 25 million hectares through surface storage and inter-hasin transfers of river water. Further, the Central Ground Water Board provisionally puts the revised estimate of ground water at 80 million hectares, as against the previous estimate of 40 million hectares. Pending firming up of these estimates the ultimate irrigation potential is taken as 113.5 million hectares.

2.6.7 The incremental costs of using water has been rising steadily. Many potential projects from which water can be utilised when developed, though economically viable are too capital intensive compared to other sectors of development like crop husbandry etc. It is essential to increase the productivity of water harnessed through irrigation by improving efficiency of water management and by conjuctive use of surface and ground water with adequate sustain-able maintenance and with farmers involvement.

2.6.8 Mineral resources are non renewable and therefore call for more vigorous and sustained efforts for the discovery and exploration of mineral deposits and scientifically planned demand management and replacement by substi tutes. The estimated known reserves of copper, gold, iron ore, lead, zinc, chromite, rock phosphate, manganese ore, kyanite and sillimanite of high grade quality are the main cause of concern as the balance life of their reserves is less than 50 years. Hence it is essential to consider the mineral inventory position while trading minerals in future. Considerable efforts need to be directed towards exploration of minerals of rare occurance, like nickel, molybdenum, tin, tungsten etc. Table 2.13 shows the life indices of some important minerals.

Energy Perspective

2.7.1 It will be a challenging task to meet the growing demand for energy from households, industry, transport, agriculture and business. Pattern of demand for energy is also changing overtime. Analysis of total commercial energy consumption shows that there is increasing trend in consumption of petroleum products, natural gas and electricity.

2.7.2 Measures will have to be initiated for reducing the energy intensity in different sectors through changes in technology and processes. Interfile! and intrafuel substitution will have to be optimised. The main emphasis will have to be towards maximising the use of renewable sources of energy with affordable cost to low income groups in rural and urban areas. A major stress on efficiency, conservation and demand management should be laid to bring down the energy elasticity to output.

2.7.3 The consumption requirement of electricity at the consumers' end will be around 622 Billion Kwh by the end of the next fifteen years. With various technical measures adopted and system improvement schemes undertaken in various States, the system losses are expected to go down by atleast seven per cent. Taking this into account, the total generation requirement would be 798 Bkwh. Non utilities are expected to contribute about 45 Bkwh. The generation requirement from utilities will be to the tune of 749 Billion kwh besides import of 4 Bkwh.

2.7.4 From supply side, emphasis should be laid on increased hydel generation which is necessary for affording more power availability especially for meeting system peak and improving the overall Plant Load Factor (PLF). .Posi-

Table 2.13 Lite Indices Of Some Important Minerals

Mineral / Ore / Metal Recoverable
reserves as on
Depletion during
reserves as on
during 1996-97
Balance life at
1996-97 level of
  (m.tonnes)* (m.tonnes) (m.tonnes) (m.tonnes) (Years) + +
1 2 3 4 5 6
1. Crude oil + 1-1-91 993.00 230.00 (1991-97) 763.00 50.00 15.26
2. Natural gas $ (B.Cu.m) As on 1-4-1990 858.00 161.00 (1990-97) 697.00 30.00 23.00
3. Coal(ason 1.1.91)
i) Coking 8507.00 201.00 (1991-97) 8306.00 39.00 213.00
ii)Non-Coking 60346.00 1397.00 (1991-97) 58949.00 269.00 219.00
4. Bauxite 2333.00 80.00 2253.00 8.00 281.00
5. Copper metal ff (as on 31.3.88) 3.95 0.431 3.52 0.055 64.00
6. Lead metal ff (as on 1.1.89) 1.93 0.56 1.36 0.096 14.00
7. Zinc metal ff (as on 1.1.89) 7.00 1.10 5.89 0.154 38.00
8. Gold (as on 1.1.88) 103000 kg. (Extractable) 16727.00 86273.00 1850.00 46.00
9. Iron ore 10440.00 686.00 9754.00 72.00 135.00
lO.Chromite Ore 139.00 15.00 124.00 2.40 51.00
11. Magnesite 222.00 6.70 215.00 0.73 294.00
12.Manganese ore 83.17 17.65 65.52 1.80 36.00
13. Limestone 69353.00 876.00 68477.00 101.00 Adequate Reserves
14. Rock Phosphate High grade 14.78 8.79 5.99 0.72 8.00
15. Sillimanitei) Massive 0.50 0.35 54.25 0.017 Beach Sand+1000
ii) Beach sand 54.10        
16. Kyanite 1.55 0.51 1.04 0.056 18.00
17. Dolomite(useable grade) 4608.00 32.00 4576.00 3.20 Adequate Reserves

+ - Background note of Eighth Plan (1992-97)
+ + - Life of mineral deposits would change on revision of recoverable reserves
* - Based on Eighth Plan Working Group report on mineral Exploration, Aug. 1989
$ - Figures are tentative as natural gas reserves depend upon reservoir characteristics
ff - Producing and developing mines

live steps will have to be taken to shorten the gestation period of the construction of power plants. About 40 per cent of total 84000 MW at 60% load factor hydel potential lies in North-Eastern region which needs to be exploited fully. Gas based stations can be supplemented for peaking purposes. Reliable gas supply has to be ensured alongwith indigenization of higher capacity gas turbines. Availability of adequate supplies of heavy water should be ensured for achieving nuclear generating capacity targets.

2.7.5 Power sector is capital intensive and its demand is bound to increase in tune with economic development. But in view of the supply constraints arising from resource crunch, the approach should be towards improving efficiency in the generation and distribution of power supply. The time and cost over-runs of projects need to be checked. Domestic, industry and agriculture are the sectors where there is wide scope in the efficient use and conservation of energy. Better ways of Grid integration and demand management have to be evolved. Wind energy has a potential of 20,000 MW and mini/micro hydels have potential of 5000 MW which needs to be tapped. Other non-conventional sources like solar photovoltaics, ocean energy, MHD, geo-thermal energy etc., can become economically feasible with indigenisa-tion of technology.

2.7.6 Consumption of coal has increased at the rate of 5.5 per cent per annum during the Sixth Plan and 7.44 per cent per annum during the Seventh Plan period. The production of coal will have to reach a level of 308 million tonnes by 1996-97 in order to achieve the plan targets for coal-based thermal power generation, and the output of iron and steel and other industries. Power sector consumes more than half of the total coal requirement. There is an increasing trend in the consumption of specific coal in the power sector due to drop in calorific value. The quality of coal may not improve much as the share of undergound mining is not likely to improve during the next decade. In the steel sector, in view of the inadequate supply of indigenous coking coal both quality-wise and quantity-wise, import of coking coal would continue. Import of 3 million tonnes of coking coal during 1996-97 has been envisaged. In the domestic production, washery yield of clean coal during 1996-97 is expected to be around 55 percent only. There is need for renovation/modernisation of Indian washeries and avoiding time overrun in setting up of new washeries. The demand for coal is expected to reach a level of 460 million tonnes by 2006-07.

2.7.7 Crude oil production increased nearly three-fold in the Sixth Plan whereas in the Seventh Plan the increase, mainly accounted by Bombay high, was marginal (3.33 per cent per annum). During the Eighth Plan the increased crude production would come mainly from Bombay Off-shore, Cambay basin and Upper Assam. Marginal increase in production in Krishna-Go-davary-Cauvery basin is also expected. The demand for petroleum products is outstripping the indigenous production. Domestic demand during i996-97 and 2006-07 is anticipated to he 81 million tonnes and 125 million tonnes respectively. Besides the expansion of the existing refining capacity, it is necessary to adopt conservation measures, pay attention to demand management and take steps tc develop substitutes. The Natural gas which is emerging as an important substitute for petroleum products could be used in fertilisers, petro-chemicals, power generation and for extraction of LPG for use as domestic fuel. With this, it would be possible to save Naphtha in fertilisers and petrochemical sectors, Furnace oil in the power sector and Kerosene in the domestic sector. Utilisation of compressed natural gas could substitute diesel and petrol in transport sector and save foreign exchange substantially. However, given the balance life of oil and gas reserve at less than 25 years even with the present lov/ consumption levels on one hand and the need for massive investments to develop the reserves on the other, an uncontrolled growth in consumption will make our balance of payment position unmanageable. A strict monitoring of the demand for petroleum products in the Eighth Plan and beyond is therefore an imperative need for managing the nation's fiscal health.

Long-Term Growth Perspective

2.8.1 A visualisation of the pattern of long-term growth and options on growth strategy are necessary so that the medium term investments and policies may be directed towards some of the better options in the long-run. Keeping in view the long term goals of the society and taking into account the terminal conditions of thp Eighth Plan, i.e., the conditions created by the

Table 2.14 Some Macro Parameters of Growth (1992-93 to 2006-07)

Period GDP Growth
Rate (AV)
Rate (AV)
Rate (AV.)
Growth Rate of
Total Consumption
Growth Rate of Per
cap. pvt. conssumption
(1) (2) (3) (4) (5) (6)
1992-93 to 1996-97 5.60 21.60 23.17 5.60 3.49
1997-98 to 2001-02 6.05 23.2 24.20 5.62 3.89
2002-03 to 2006-07 6.51 24.40 25.40 6.18 4.59

programmes and tha policies within the Eighth Plan, a path of growth tor the future can be charted out. In doing this, the rates of savings and investments as also the incremental capital output ratio are the factors which one has to project exogenously, while the rest of the parameters like growth rate, of GDP and rate of growth of consumption are worked out by the model itself.

2.8.2 Saving rate is treated as exogenous. The Seventh Five Year Plan achieved an average saving rate of about 20.4 per cent of GDP. An average saving rate of 21.6 per cent as observed towards the end of the Seventh Plan has been considered to be feasible for the Eighth Plan. An increase of the same magnitude (in terms of percentage points) in each of the next five year periods may be considered to be a modest expectation. Thus, the saving rate may be taken as 23.2 percent during the period 1997-02 and a saving rate of 24.4 per cent may be taken for the period 2002-07. The saving rates are achievable given the past behaviour of our savings and the savings record of many Asian countries. Assuming that the current account deficit is maintained at the level of 1.6 per cent of GDP in the first five years and at 1 per cent thereafter for 10 years the investment rate would be 23 per cent in the Eighth Plan, 24.2 per cent in the next five year period and 25.4 per cent in the subsequent five years. An ICOR of 4.1 has been assumed for the Eighth Plan. The ICOR was 4.1 in the Sixth Plan and it turns out to he 3.9 for the Seventh Plan but 4.3 on an average for the 7 year period upto 1991-92. Low growth performance of the last two years has raised the ICOR. However, an ICOR of 4.1 would be a reasonable assumption for the Eighth Plan and 4.0 and 3.9 respectively for the subsequent two five year periods. On this basis, while the Eighth Plan growth rate would be 5.6 per cent per annum, a growth rate of 6 per cent is indicated for the next five years and a growth rate of 6.5 per cent for the period 2002-07. These calculations and their implications in terms of growth of consumption are presented in table 2.14. There will have to be a shift of emphasis in our planning process from the allocation of an outlay and its spending to its productive utilisation leading to a return on the investment even if it is an indirect return.

2.8.3 It can he seen that even modest improvement in the growth performance of the economy would give tremendous advantage in terms of growth in per capita consumption. The growth rate in the per capita private consumption throughout the period 1950 to 1980 remained at a low level of 1.05 per cent per annum. There was a significant improvement in this during the decade of the eighties when the growth rate increased to 3.08 per cent per annum. A growth rate of 3.90 per cent in the five year period next to Eighth Plan, and 4.6 per cent per annum subsequently will again be a good jump. This will amount to an increase of 80 per cent in absolute per capita consumption levels over the next 15 years. This will have considerable impact on eliminating poverty and on generating demand for the type of goods usually associated with higher income levels, production of which is also more labour absorbing. When the growth in consumption crosses a threshhold it starts having a multiplier effect on the economy through demand generation which further strengthens the stimulants to growth. The Indian economy may look forward to these advantages in the next phase of its development.

2.8.4 The processes of deregulation and structural adjustment recently initiated are bound to bring in a qualitative change in the outlook of the manufacturing sector during the next phase of development. A shift from the Public Sector to the Private Sector is anticipated in almost all the sectors of the industry especially in engineering industry. Larger foreign investments and entry of multinationals are anticipated in electronics, telecommunications, consumer durables. The liberalised industrial policy would offer substantial scope for the private sector for investment in gas based power generation and oil exploration. The next phase of development should see a vigorous push in the process of industrialisation and modernisation. Some indication of the possible options for a push in this direction are presented here.

2.8.5 The fertiliser industry has registered an impressive growth ever since the advent of the green revolution in the country. There has, however, been a slowdown in capacity additions accompanied by increasing demand in recent years. With an estimated foodgrain production target of 285 million tonnes by 2006-07, the evergrowing demand for fertilizer and the hazards of depending on imports for large quantities must be kept in view while planning for this industry in the future. It is assessed that the fertiliser consumption during the terminal year of the Eighth Plan will be around 18.3 million tonnes in terms of nutrients. This would leave a gap of 5.5 million tonnes of nutrients to be imported. Priority should be accorded to new gas based plants particularly in certain specific areas to remove regional imbalance in demand-supply position. Expansion and doubling of gas based fertiliser plants should also be taken up on a priority basis in order to reduce the capital investment and outgo of foreign exchange. Efforts also need to be enhanced to induce private investment in this industry.

2.8.6 The Seventh Plan saw a phenomena] growth in textiles exports. Textiles constitute the single biggest commodity of export. Ready-made garments and cotton textiles put together account for more than 80 per cent of the textiles exports. It is necessry to press on these trends. The textile industry needs modernisation and technology upgradation. We have to regain our comparative advantage in this sector.

2.8.7 The demand for finished steel is likely to grow at an average growth of 6.7 per cent per annum and is estimated to be 21 million tonnes in 1996-97 and the industry would be fully geared to meet the demand indigenously and there may be a net exportable surplus of 1.8 million tonnes of steel. It is expected that about 13.8 million tonnes would come from main producers and the balance 9 million tonnes from secondary producers. It is envisaged that at the end of the next 15 years or so, the steel industry would produce a surplus of 4-5 million tonnes of steel for export after meeting an estimated domestic demand of 35 million tonnes. The prospect of steel export would be even brighter as the advanced countries like Japan are moving into high-tech areas and vacating steel. Decontrol on the home front, would pave the way for larger private sector participation in this industry.

2.8.8 Consequent on complete decontrol of cement in March, 1989 and subsequent delicenc-ing of the industry in July 1991, the industry has made big strides both in production as well as capacity addition. The new industrial policy is likely to stimulate increased private participation. Though, the demand for cement grew by more than 8 per cent during the Seventh Plan period, the consumption of cement is estimated to grow at a moderate rate owing to the likely subdued construction activities during the present phase. A greater emphasis would be laid on exports of cement in the ensuing plan period by fully exploiting industry's potential to export taking advantage of liberalised policies and the neighbouring countries-being net importers of cement.

2.8.9 The electronic industry had a remarkable growth rate during the past decade. The output growth rate was 25 per cent during the Sixth Plan and 34 per cent during the Seventh Plan. Due to foreign exchange crunch and import restrictions, the growth rate during 1990-91 has comet down. The prospect of this industry needs to be viewed in the light of the new industrial and trade policies. Since this industry is largely based on imported technology, which is changing fast, the prospect of electronics industry in the country will depend upon foreign investment and international competitiveness of the domestic products. Complementary to the growth of the electronics and more particularly computer industry will be the expansion in the software development particularly for export.

2.8.10 A well-integrated, multi-modal system, relying on application of the state of the art technology will be an essential element in the transport scenario. Mechanised transport is the largest consumer of energy, particularly the petroleum products, and hence, energy constraint would be a dominant element influencing strategic choice in respect of transport modes. Railways and road transport will continue to remain the dominant modes of transport. The Inland Water Transport, Coastal Shipping, Pipelines should increasingly play an important role in the country's transport system in the future. In view of the huge investments required for developing the transport infrastructure, private sector will have to be encouraged to play a more significant role essentially aimed at improving the operational systems such as in the areas of frieght forwarding transport, express ways, creation of dedicated berthing facilities at ports, cargo handling equipments etc.

2.8.11 Inadequacy of road links is a constraint on growth of rural agriculture and rural industry. The Seventh Plan had set a target of providing road linkage to the villages with population of 1500 and above and to 50% of villages with population 1000-1500. It is estimated that 87 per cent villages with population above 1500 and 70 per cent of villages with population from 1000 - 1500 were connected by the end of Seventh Plan. It is anticipated that most of the villages with a population of 500 and above would he connected by all weather roads by the turn of the century. This, however, will be possible only if adequate resources are made available for this purpose. In view of the huge investments required for developing the transport infrastructure, active cooperation of the private sector will be encourged in most of the transport sector.

2.8.12 Demand for communication and information services will grow at a fast rate in future. Modernisation and upgradation of technology must be given due attention to make the system adequately available and more reliable. The ultimate aim will be to improve the availability of telephone from the present level of 0.5 telephone for every 100 persons to 6-7 telephones for every 100 persons over a period of time. Extension of these services to rural areas is a must for creating environment for the growth of commercial agriculture, agri-business and rural industry.

2.8.13 Our areas of strength which can be developed further are :

(i) Ability to perfect production techniques if an adequate scale of demand (offtake) is assured (e.g., powder equipment and the conventional machine tools and bulk commodities such as sugar and cement);

(ii) A stock of skilled manpower that can sustain a high growth in manufacturing and in the services sectors;

(iii) A reserve ofunexploited natural resources in hydel power, natural gas, atomic minerals;

(iv) An expanding consumer market for goods and services which afford scale advantages in consumer durables, telecommunication, transport and certain commercial services;

(v) Existence of a base of a diversified modern infrastructure, like electricity, transport, repair services, communication, education, banking and a variety of professional and technical services. This base can gain strength and grow, given the right type of environment.

vi) A well developed capital market from which massive resources can be raised on the strength of attractive projects.

2.8.14 These advantages can be used in manufacturing the bulk commodities such as sugar, cement and petrochemicals duly supported by import of technology (and capital). These advantages can also be used to integrate befter with the more open developing economies (Far East and Latin America) and expand the output of simpler ancillary equipment and components for the capital goods and consumer durables supplied by them to the Japanese, American and European market. We could establish linkages with the leading marketing chains for clothing and other consumer items and manufacture according to the designs specified by them. We can also plan for economic benefits from the availability of skilled manpower in "information technology" and "computer software" by organising the availability and utilisation of such manpower more effectively.

2.8.15 Since resources are limited, we should avoid channelising our resources to the activities where the nation cannot in the long run have a comparative advantage. Examples of areas that we can progressively vacate and utilise the imports option are ship building, atomic power equipment, technology intensive electronic components, i.e., chips and metallurgical industries except in the context of specific markets abroad.

2.8.16 In building strengths in areas in which we have comparative advantage, we need to pay particular attention to technology. The long term objective is to evolve a technology mix in production which conforms to our resources and needs. The experience in the past shows that wherever our thrust was purposive with clear perspective of economic options and goals, we achieved results. Notable successes have been in agriculture and to an extent in the application of medical research. In these areas, we set about the task with the establishment of purpose-oriented research network and institutions, put in necessary investments with a certain degree of liberalism in imports of essential equipment etc. The research done in the laboratories was in accordance with our needs which could be successfully translated into economic benefits. Similar approach is required in the fields of industry and energy. These areas did not benefit to the same extent from research in the past, since technological excellence was, in general, pursued in isolation from the economic needs. The result was that scarce resources got tied up for a longer period due to the gap between research effort and a reasonable scale of economic benefits. Institutional reform has to be brought about in technology development. A variety of institutional set-ups (models) have been tried in the past. The successful ones need to be emulated. The role of the public sector in technology development should be confined to areas of high strategic significance on considerations of national and long-term economic security.

2.8.17 Identification of areas in which we have comparative advantage and channeling the resources to those areas are an integral part of planning. This is an ongoing process. Positive efforts will, however, be needed to convert potential areas of strength into reality. In an increasingly deregulated environment, while individual economic agents will make their own decisions where to expand, it should be possible through a mix of policies to steer the economy along desired direction. This, indeed, is the positive role of planning.

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