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P LANNING P ARADIGM Development Planning The outline of pre-1950 India can be summarized as India’s status as a land of riches in the history of its defi ciency. The mixed reputation has changed in recent centuries, and India is seen these days primarily as a land of poverty, famines, diseases, immorality, caste, untouchability, autonomy and pandemonium. The sixty years of sovereignty brought India a good deal of repute worldwide. However reputation was offset by tragic images of human mortifi cation, poverty and miseries until the beginning of the new millennium and in this parlance balanced regional development is a necessary step towards securing economic justice which is one of the fundamental views of the Indian constitution. Further, the 42nd Amendment of the Indian constitution, made an explicit direction towards a socialist state in India which bolstered the need for balanced regional development. Thus one fi nds balanced regional development to be a recurring theme in the designing of India’s economic policy and planning. At the same time, India's effort to gather speed of industrialization & improve international competitiveness received a boost up with the declaration of the New Industrial Policy in July 1991. Following liberalization, the role of the public sector in the Indian economy has somewhat minimized and is dwindling more and public-private partnership is now emerging as the preferred medium for initiatives in development. Given this background there is urgent need to think for the role for planning in India. For a country like India where resources are limited, allocation of the resources must be guided by an elegant indicative plan and the state can play a vital role not only as a facilitator but also as a provider of basic infrastructure and 44 THE IIPM THINK TANK collective physical resources. Thus, planning can be accommodating in a market economy by providing “indication, coordination and recommendation”. However the planning in a largely market-driven economy cannot proceed on the same footing as in an economy that is heavily controlled by the state. In the Indian context, this implies that there has to be a clear swing in the focus of planning now as compared to the past. As noted at the outset planners in India are amply aware of the need for such a change. The economic crisis of 1990, however, has altered India’s approach to economic policy. With resource allocation left to the market, anxieties were raised that the growth pattern in the post-reform phase would be skewed in favour of the already better-off states. However control over investment in the private sector beyond the purview of the planning commission, development planning can at best be indicative which was recognized after globalization even the Eighth Plan too. That planning now has to be mostly indicative and the state can at best be a facilitator for private enterprise was reiterated in the three plans that followed the Ninth, Tenth and Eleventh. At the same time, the foundations that helped in implementation of the plans during the controlled economy era also remained almost intact despite their well known shortcomings and irrelevance in the changed economic surroundings. Given this background, there is a need of justifi cation and modifi cation review for planning process in India as there are several short comings of planning process of India in the present circumstances. Indian planning focused on three particular features of the planning methodology and the planning process. These are one, the lack of sophisticated plan models to ensure inter-sectoral consistency among production targets set by the plan. Even for an indicative plan, some idea is needed of the projections of key macro-variables in the varied time perspectives. Thus a major function of the planning commission must therefore be to prepare a macro-perspective plans which would indicate the growth and major characteristics of the economy with a longer perspective of plans. Planning and Transformation While India adopted planning under a strong interventionist circumstances, its approach to planning differed in several crucial respects from that of the socialist economies. In India, the means of production have been and continue to be privately owned and regardless of the signifi - cant expansion of the public sector, the private sector owns more than half of the resources stockpile and accounts for nearly three-fourths of the annual output. Planning in India has brought about major structural shatters which are viewed as a way of avoiding the unnecessary rigours of an industrial and equally India’s development prospects were rated rattier high, do- mestically as well as internationally. However, in the nineties with the collapse of USSR and many of the East European socialist economies, the centralized
I NTEGRATED PLANNING Table 1: Central Government: Revenue, Expenditure and Fiscal Defi cit (% of GDP at current market prices) Expenditure Heads Source: Planning Commission Total Revenues Tax Revenues Non-tax Revenues planning as a tool of economic development has come under severe attack. There is a move towards decentralized and indicative planning world over. The spec- tacular development experience of the East Asian economies also point to the strong role of indirect state intervention through manipulating market mechanism in the development process. The role of planning is as a result, undergoing changes where the private sector is being encouraged much more to achieve the socially desirable out- Loans Recovery of Disinvestment PSU 1990-91 10.67 7.56 2.11 1.00 0.00 18.52 3.80 2.71 2.12 4.99 4.90 7.85 1991-92 11.50 7.67 2.44 0.92 0.47 17.06 4.10 2.71 1.88 4.74 3.90 5.56 1992-93 11.02 7.22 2.68 0.85 0.47 16.38 4.20 2.35 1.45 4.90 3.50 5.37 1993-94 9.50 7.22 2.56 0.72 -0.01 16.51 4.30 2.54 1.35 5.08 3.30 7.01 1994-1995 10.12 6.66 2.33 0.63 0.50 15.87 4.40 2.30 1.17 4.68 3.30 5.75 1995-96 9.85 6.90 2.37 0.55 0.03 15.01 4.20 2.26 1.07 3.90 3.60 5.16 1996-1997 9.81 6.85 2.38 0.55 0.03 14.69 4.30 2.16 1.13 3.91 3.10 4.88 1997-1998 9.81 6.28 2.51 0.55 0.06 15.24 4.30 2.32 1.22 3.88 3.50 5.84 1998-1999 9.53 6.01 2.58 0.61 0.34 16.04 4.50 2.32 1.36 3.84 4.10 6.51 1999-2000 9.90 6.60 2.70 0.50 0.10 15.30 4.60 2.40 1.30 3.90 3.10 5.40 2000-01 9.90 6.50 2.70 0.60 0.10 15.50 4.70 2.40 1.30 3.90 3.20 5.70 2001-02 9.70 5.90 3.00 0.70 0.20 15.90 4.70 2.40 1.40 4.40 3.00 6.20 2002-03 10.90 6.50 2.90 1.40 0.10 16.80 4.80 2.30 1.80 4.50 3.50 5.90 2003-04 12.60 6.80 2.80 1.40 0.60 17.10 4.50 2.20 1.60 4.40 4.40 4.50 2004-05 11.80 7.10 2.60 2.00 0.10 15.80 4.00 2.40 1.50 4.20 3.70 4.00 2005-06 9.66 7.55 2.15 0.30 0.04 14.13 3.70 2.25 1.33 3.93 2.92 4.09 2006-07 9.66 8.20 1.94 0.14 0.01 13.62 3.51 2.00 1.33 3.97 2.82 3.33 2007-08 10.95 8.88 2.07 0.10 0.78 14.40 3.46 1.85 1.43 4.14 3.52 2.56 2008-09 9.69 7.9 1.74 0.11 0.01 15.86 3.45 2.05 2.33 4.94 3.10 6.05 2009-10 9.37 7.55 1.82 0.11 0.42 15.99 3.56 2.21 2.13 4.94 3.10 6.05 2010-11 9.84 7.70 2.14 0.07 0.58 15.99 3.56 2.12 1.68 5.38 3.22 5.50 Total Expenditure Interest come. The approached paper of the 11 th fi ve year plan also recognised the relative roles of the planning commission in private economy and stated that economic policy is moving in a direction that involves an erosion of the role of the state in the development process. However the objective of accelerating growth cannot be achieved without expanded role for the state in some areas. In fact the role of the government needs to be restructured to reduce direct intervention in, and commitments of scarce Defence Subsidies Plan Expenditure Other Expenditure THE INDIA ECONOMY REVIEW Fiscal Defi cit public resources to, areas where the private sector operating under competitive mar- kets can deliver. Budgeting for Planning Generally the Government has to incur certain portion of funds every year for ful- fi lling planning which is different in year wise phasing. However, the resources generally fall much short in India of what would be indispensable to accomplish the plan targets. The situation is such in certain 45
Page 1 and 2: THE INDIA ECONOMY REVIEW Volume VII
Page 3 and 4: IIPM: THE FUTURE IS HERE Since its
Page 5 and 6: CREDITS Founder Dr. M. K. Chaudhuri
Page 7 and 8: P LANNING P ARADIGM In the State of
Page 9 and 10: P LANNING P ARADIGM Almost all wond
Page 11 and 12: P LANNING P ARADIGM Central Agency
Page 13 and 14: P LANNING P ARADIGM paign in 1992:
Page 15 and 16: P LANNING P ARADIGM The Complexity
Page 17 and 18: P LANNING P ARADIGM future from the
Page 19 and 20: P LANNING P ARADIGM view is the not
Page 21 and 22: crises. This note contends that the
Page 23 and 24: proximately 25% of the then global
Page 25 and 26: process of economic growth. Newly d
Page 27 and 28: Japanese radio with one transistor
Page 29 and 30: I NTEGRATED PLANNING THE INDIA ECON
Page 31 and 32: in such times. The other institutio
Page 33 and 34: nomic planning had entered the lexi
Page 35 and 36: Entire network works out as a singl
Page 37 and 38: nomic order. In his infl uential 19
Page 39 and 40: I NTEGRATED PLANNING The experience
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Page 45 and 46: macroeconomic environment and the p
Page 47 and 48: Prashant Singh Country Head - Direc
Page 49 and 50: But there lied the fault. The fi rs
Page 51 and 52: T RANSFORMATIVE PLANNING THE INDIA
Page 53 and 54: straining rules and institutions we
Page 55 and 56: tion and higher growth requires rap
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Page 59 and 60: Table 1: Plan Outlays and Expenditu
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Page 67 and 68: P LANNING P ARADIGM nomic growth ra
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Page 83 and 84: P LANNING P ARADIGM Don't Throw the
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P LANNING P ARADIGM After the elect
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P LANNING P ARADIGM The Road to Pro
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P LANNING P ARADIGM rather through
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P LANNING P ARADIGM The road to hig
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P LANNING P ARADIGM From State to D
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P LANNING P ARADIGM began by taking
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P LANNING P ARADIGM leadership in B
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P LANNING P ARADIGM Unhealthy Plann
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P LANNING P ARADIGM made for enabli
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P LANNING P ARADIGM too failed. The
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P LANNING P ARADIGM quality of care
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P LANNING P ARADIGM 118 THE IIPM TH
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P LANNING P ARADIGM out of its reve
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P LANNING P ARADIGM Also, a good nu
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P LANNING P ARADIGM 124 THE IIPM TH
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P LANNING P ARADIGM sectors which a
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P LANNING P ARADIGM concurrent resp
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P LANNING P ARADIGM Is Big Dam a Pl
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P LANNING P ARADIGM dams in Arunach
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P LANNING P ARADIGM to enter on the
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P LANNING P ARADIGM Where's Natural
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P LANNING P ARADIGM tions there are
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P LANNING P ARADIGM livelihoods are
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P LANNING P ARADIGM Plundered Histo
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P LANNING P ARADIGM hierarchy of th
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P LANNING P ARADIGM the trend. Faul
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P LANNING P ARADIGM were employed.
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P LANNING P ARADIGM cies the govern
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P LANNING P ARADIGM the electricity
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P LANNING P ARADIGM start when cont
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P LANNING P ARADIGM Durg district.
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P LANNING P ARADIGM major provision
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P LANNING P ARADIGM image of their
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THE HUMAN FACTOR OTHER IIPM JOURNAL
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“Thank you very much for sending
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