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Plan and Policies:
Unsolved Riddle
Planning even in much smaller role today is important to
address concerns of average Indian but it certainly calls for a
reorientation and repositioning of the goals and objective and
need to rethink the mode of devolution of funds
Ajitava Raychaudhuri
Professor, Department of Economics,
Jadavpur University,
Kolkata
Indian planning is an exercise
which was known for its enormity
and fanfare next only to planning
in the erstwhile socialist coun-
tries. In its early days, Planning Commission
invited noted scholars from around
the world to streamline Indian planning
exercise. They included such well known
economists like Oscar Lange, Ragnar
Frisch, Nicolas Kaldor, Alan Manne, to
name a few. Perhaps this was due to the
charisma of Prasanta Chandra Mahalanobis
who directed planning in the early
years and specially remembered for the
second fi ve year plan model. Nobody
could deny the importance of planning in
India’s socio-economic development in
the years following the independence in
1947. The economy, which was a mixture
of public sector and private sector from
the very beginning, needed development
in all spheres for economic growth. The
tilt towards heavy industries, which
started from the second fi ve year plan,
had mixed blessings for the economy. The
infrastructure (or core) industries like
steel, coal and power, all developed under
almost absolute control of the state. This
certainly provided a good basis in the sixties
and seventies for the development of
other sectors like Railways, Heavy Machinery,
Machine tools etc. At the same
time such a strategy appeared to be heading
for a time inconsistency problem since
the late seventies and early eighties, with
the fi rm but unholy grip of license-permit
Raj in the economy.
What exactly do we mean by the time
inconsistency problem here? In the fi rst
few years after independence, rightly or
D EVELOPMENTAL PLANNING
wrongly, the planners looked more towards
the socialist patterns of comprehensive
planning instead of indicative
planning of French variety. The production
of coal and steel under the state sector
might have produced mafi as who extracted
rent out of the system, but this
system coupled with the freight equalization
policy provided the much needed
core sector products at a distorted but
cheap price even to the private sector. In
fact, whatever major infrastructural development
we had in the Railways, Roads,
Ports and Major Irrigation in the last
century, the lion’s share belonged to the
fi rst thirty years of planning which started
in 1951. From the mid-eighties, it was increasingly
realized that the so-called vision
of self-suffi ciency created more dependence
on foreigners in some crucial
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