Chapter 10 Politics of Planned Development

 Q.No.1:-What were the major differences in the approach towards

development at the time of independence? Has the debate been

resolved?

Ans: - The first decade after independence witnessed a lot of debate

around this question. It was common then as it is even now, for people to

refer to the “west” as the standard for measuring development.

Development was about becoming more “modern” and modern was about

becoming more like the industrialized countries of the west. This is how

common people as well as the experts thought. It was believed that every

country would go through the process of modernization as in the west,

which involved the breakdown of traditional social structures and the rise of

capitalism and liberalism.

On the eve of independence, India had before it, two models

of modern development: the liberal-capitalist model as in much of Europe

and the US and the socialist model as in the USSR. There were many in

India who were deeply impressed by the soviet model of development.

These include not just the leaders of the communist party of India, but also

those of the socialist party and leaders like Nehru within the congress.

There were very few supporters of the American style of capitalist

development.

Q.No.2:- What was the major thrust of the first five year plan? In which

ways did the second plan differ from the first one?

OR

What do you know about 1st and 2nd five year plans?

Ans: - the draft of the first five year plan and then the actual plan

Document, released in December 1951, generated a lot of excitement in

the country.

The first five year plan (1951-1956) sought to get the countrys economy

out of the cycle of poverty. K.N.Raj, a young economist involved in drafting

the plan, argued that India should hasten slowly for the first two decades as

a fast rate of development might endanger democracy. The first five year

plan addressed, mainly, the agrarian sector including investment in dams

and irrigation. Agriculture sector was hit hardest by partition and needed

urgent attention. Huge allocations were made for large scale projects like

the Bhakhra Nangal Dam. The plan identified the countrys irrigation system

as the principal obstacle in the way of agriculture growth. It focused on land

reforms as the key to the countrys development.

But in the second five years plan of (1956-61), top priority was accorded

to the setting up of Socialistic pattern of society on the basis of industrial

policy statement of 1956. In the second plan major thrust was to accelerate

the process of industrialization by laying emphasis on basic and heavy

industries. In the second plan the share of industries in the public sector

outlay increased from 5% to 24% and that of agriculture and irrigation

decreased from 37% to 21%.

Q.No.3:- What was Green Revolution? Mention two positive and two

negative consequences of the Green Revolution?

Ans: - In 1960s India was facing a food crisis due to many reasons. Indian

government decided to make India self-sufficient in food. Hence in mid-

1960s the traditional agriculture practices were gradually replaced by

modern technology. “Use of high-yielding variety (HYV) seeds and the

increased use of fertilizers and irrigation are simply called Green

Revolution”. As a result of Green Revolution, area under improved seeds

has gone up from about 15 million hectares during 1970-71 to nearly 75

million hectares in 1995-96. The major benefits of the Green Revolution

were experienced mainly in northern and north-western India.

Unprecedented enthusiasm has prevailed among Punjab, Haryana, Delhi,

Rajasthan and western U.P for the new wheat variety of seeds and a

situation developed in which the demand for seeds by farmers exceeded

the supply.

Positive Consequences of Green Revolution:-

(1) The Major achievement of the Green Revolution was to boost the

production of major cereals viz. wheat and rice.

(2) As a result of the Green Revolution the crop pattern in India has

undergone significant changes.

Negative Consequences of Green Revolution:-

(1) Green Revolution had led to the concentration of wealth in the hands of

top 10% of the rural population.

(2) Green Revolution had widened the gap between poor and small farmers

and rich landlords. Green Revolution has proved beneficial to the medium

category peasants.

Q.No.4:- State the main arguments in the debate that ensued between

Industrialization and agriculture development at the time of second

Five years plan?

Ans: - The second Five year plan stressed on heavy Industries. Indian

planner, Prof. P.C.Mahalanobis, was the real architect of the second five

year plan. He adopted a strategy which emphasized investment in heavy

industry to achieve industrialization which was assumed to be the basic

condition for rapid economic development. For Jawaharlal Nehru, the first

Prime Minister of India, the development of heavy industry was

synonymous with industrialization.

In fact, there was a big debate whether more importance should be

given to industries or agriculture. Many thought that the second plan lacked

an agrarian strategy for development, and the emphasis on industry

caused agriculture and rural India to suffer. Choudhry Charan Singh a

congress leader who later formed Bhartiya Lok Dal. Forcefully articulated

the case for keeping agriculture at the center of planning for India. He was

of the view that planning has increased the prosperity in urban and

industrial sector at the cost of farmers and rural people.

However, the planners justified their strategy of rapid development through

rapid industrialization.

Q.No.5:- Indian Policy makers made a mistake by emphasizing the

role of state in the economy. India could have developed much better

if private sector was allowed a free play from the beginning.” Give

arguments for or against this proposition?

OR

Explain mixed economy?

Ans: - There are two models of development, capitalist Model or Liberal

model and socialist model. But India did not accept any one of the two

models. India adopted neither capitalistic Model nor socialist model. India

adopted mixed economy. In mixed economy public sector and private

sector go together, liberal rightists and many critics of Indian economy are

of the view that Indian policy makers made a mistake by emphasizing the

better role of state in the economy. They are of the view that India could

have developed much better if private sector was allowed a free play right

from the beginning.

In spite of the fact that India adopted a planned

economy. The speed of economic development was very slow. Rate of

capital formation was 6% where as it should have been 12%. Hence during

the regime of Sh. Rajiv Gandhi, important changes were made in the

economic policy. The policy of liberalization and privatization was adopted.

Efforts were made to remove restrictions on the private sector. All

restrictions were removed on cement industry.

Arguments in favor of private sector

Following are the main arguments in favor of private sector.

1. Full utilization of natural resources:-India is a rich country but Indians

are poor. In India natural resources are not fully utilized due to lake of

technology and scientific means. Liberalization and privatization be helpful

in utilizing the natural resources.

2. Production will increase:-Liberalization and privatization will increase

the production and there will be no shortage of commodities. In India before

liberalization there was a big shortage of Cement, Scooters, and Carts etc.

But now there is no shortage because production has increased to a large

extent.

3. High rate of return: - due to the privatization there is more savings and

hence there is heavy investment in industries.

4. End of the Monopoly of Public sector: - Due to privatization there is

an end of the monopoly of public sector. There will be an overall

improvement in the quality of goods and consumer will be benefited.

5. Increase in prices: - Privatization will increase the prices because

industrialists will fix the prices of their own sweet will.

Arguments against privatization:

Due to privatization Economic inequalities will increase; consumer will

suffer class struggle increases, prices will increase; un-employment will

increase; workers will be exploited.

Q No 6; - Explain the following terms:

(1) Planning.

(2) Planning commission of India.

(3) Functions of planning commission of India.

(4) Major objectives of first five year plan.

(5) Major objectives of 2nd five year plan. (6) Mixed economy.

(7) Market economy.

(8) Indias new economic policy.

(9) Major objectives of 3rd five year plan.

(10) Plan Holiday.

(11) NITI Ayog.

(1) Planning:- the planning commission of India , was set up in march

1950 by a resolution of government of India under the chairmanship of

first P.M J. L. Nehru . Planning commission defined planning as “a way

of organizing & utilizing resources to maximum advantage in terms of

defined social ends.”

(2) Planning commission;-Planning commission of India was established

on 15 march 1950 by an executive resolution of the government of India.

The Prime Minister of India is the ex-officio chairman of the planning

commission & the deputy chairman is the de-facto head (I.e. full time

functional head) of the commission. 10th planning commission comprises of

Chairman Dr. Man Mohan Singh, deputy chairman Shri Montek Singh

Ahluwalia & nine other members.

(3) Functions of planning commission;-

(1) To asses the material, capital & human resources of the country.

(2) To formulate a plan for the most effective & balanced utilization of the

countrys resources.

(3) To define the stages of plan & propose the allocation of resources on

the determination of priorities.

(4) To suggest machinery for securing the successful implementation of the

plan.

(4) Major objectives of first five years plan:-In the first FYP the

priority was given to the development of agriculture . Target of

increased production of food grains, Jute & cotton was mainly achieved by

bringing more land under cultivation.

(5) Objectives of 2nd FYP(1956-61) In the 2nd FYP top priority was

accorded to the setting up of “socialist pattern of society” on the basis

of industrial policy statement of 1956. In the 2nd plan major thrust was

to accelerate the process of industrialization by laying emphasis on basic

& heavy industries.

(6) Mixed economy: - Economy is generally considered of two types one

is capitalist economy (USA) & other is socialist economy (USSR). Mixed

economy is based on the co-existence of these two types of

economies. In India mixed economy prevails. Mixed economy is the

economy where there is public as well as private ownership of means

of production & distribution.

(7) Market economy: Market economy is a feature of globalization. As a

result of globalization markets regarding goods, services, technologies,

finance & labour are integrated. National economics are thrown open to

market forces of the world & the scope of governments national macro-

economic policies is restricted. The private industries want to keep pace

with the changing trends in market so they prefer to follow market

trend more than government planning.

(8) Indias new economic policy :-Indias new economic policy was

launched on July 24, 1991, when central government announced an

open & liberalized industrial policy. Chief architect of new economic policy

was Prime Minister Rajiv Gandhi. The new economic policy announced by

congress government included structural adjustment measures including

the devaluation of Rupee, increase in interest rates, reduction in public

investment & expenditure, reduction in public sector & fertilizer subsidies,

increase in imports & foreign investment in capital intensive & high-tech

activities.

(9) Major objectives of 3rd five year plan: In the 3rd FYP (1961-66) the

priority was given to the development of agriculture by providing

adequate irrigation facilities, use of fertilizers, improved cropping pattern

and soil conservation. The other objectives were the expansion of basic

industries, optimum utilization of countries labour power & reducing the

inequalities of income and wealth. The 3rd FYP completely failed due to

unforeseen misfortunes, viz. Chinese aggression 1962, Indo-Pak war 1965,

severest drought in 100 years 1965-66, prices increased by 36% in five

years which led to the devaluation of Indian rupee.

(10) Plan holiday: Poor performance of 3rd FYP led to the suspension of

the 4th plan, it forced the government to have annual plans for the next

three years (1966-69). The period was called as plan holiday.

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(11) NITI ayog:- the National Institution for Transforming India is a

Government of India policy think-tank established by the Narendra Modi

government to replace the Planning Commission. The stated aim for NITI

Aayog's creation is to foster involvement and participation in the economic

policy-making process by the State Governments of India. The emphasis is

on bottom-up approach and make the country to move towards cooperative

federalism . The Union Government of India announced the formation of

NITI Aayog on 1 January 2015, and the first meeting was held on 8

February 2015. The Prime Minister serves as the Ex-officio chairman. The

NITI Aayog comprises the following:

Prime Minister of India as the Chairperson

A Governing Council composed of Chief Ministers of all the States and

Union territories with Legislatures and lieutenant governors of other Union

Territories.

Regional Councils composed of Chief Ministers of States and Lt.

Governors of Union Territories in the region to address specific issues and

contingencies impacting more than one state or a region.

Full-time organizational framework composed of a Vice-Chairperson, three

full-time members, two part-time members (from leading universities,

research organizations and other relevant institutions in an ex-officio

capacity), four ex-officio members of the Union Council of Ministers, a Chief

Executive Officer (with the rank of Secretary to the Government of India)

who looks after administration, and a secretariat.

Experts and specialists in various fields.

With Prime Minister Narendra Modi as the Chairperson, the committee

consists of

Vice Chairperson: Arvind Panagariya.

Ex-Officio Members: Rajnath Singh, Arun Jaitley, Suresh Prabhu and

Radha Mohan Singh

Special Invitees: Nitin Gadkari, Smriti Zubin Irani and Thawar Chand

Gehlot

Full-time Members: Bibek Debroy (Economist),V. K. Saraswat (former

DRDO Chief) and Ramesh Chand (Agriculture Expert)Chief Executive

Officer:Amitabh Kent.Governing Council: All Chief Ministers and Lieutenant

Governors of States and Union Territories