Download - The India Economy Review

P LANNING P ARADIGM
Table 2: Formulae for Plan Assistance
Sanjivi Guhan an economist with experi-
ences both in the centre and states ob-
served that “the weakness has been that
in the actual working of the two commissions,
there has been a lack of both clarity
and coordination in regard to ways in
which each Commission could address
itself to upgrading ability while responding
to needs and concurrently and conversely
compensate for backwardness
while upgrading ability”
Needs of Mixed Economy
It must also be mentioned that apart from
federal structure of the nation, the Planning
Commission had to take into account
the fact Indian Economy continued as a
mixed economy with role for the public
sector in retaining “commanding heights
of the economy” with a signifi cant role in
the build up of economic infrastructure
and planning for socio economic transformation
and a less signifi cant role for the
private sector catering mainly to the consumer
needs with profi tability of operations
as the main criteria with a functional
framework established through
Industrial Policy Resolutions of 1948 and
1956 and later modifi ed in 1981 and 1991.
62 THE IIPM THINK TANK
Gadgil Formula First Revision Second Revision Third Revision
1969 1980 1990 1991
Special Category States 30 30 30 30
General Category
1. Population 60 60 35 60
2. On going Irrigation Power Projects 10 0 0 0
3. Per capita Income 10 20 25* 25
4.Performance 10 10 5 7.5**
5.Special Problems 10 10 15 7.5***
*20% As per deviation method covering only states below national average and 5% as per distance method covering all the states.
** Further divided into 2.5% for tax effort, 2.5% for fi scal management and 2.5% for national objectives.(population control, Female literacy, on time completion of externally aided projects and successes in land reform
*** Special problems of border, desert, fl ood prone, drought prone, and metropolitan areas , refugees settlements and high unemployment
The economic scenario has changed, in
the last few decades, with liberalization of
Governmental regulations and assignment
of an increasingly larger role for the
private sector in not only production of
goods but also provision of services which
were hitherto mainly in the domain of
governments, local authorities and public
sector enterprises. The plan formulation
and time phasing of investments have to
be adjusted to the changed scenery.
Plan Objectives
Development Plans since the 50s, were
initially guided by objectives of growth
with social justice, self reliance and balanced
regional development. These were
later modifi ed in the nineties to emphasize
pursuit of rapid economic growth,
balancing equity and effi ciency. The national
perspective and broad political vision
that emerged in the initial decades of
planning has somewhat been clouded by
the recent upsurge of regional aspirations
and narrower caste and community interest.
The mutually infl uencing political
activity and the implementation of economic
programmes have signifi cant impact
on the pace and pattern of growth
and even more on spread of benefi ts
across communities and states. The implications
of the change in emphasis on
policy goals and implementation process
need to be studied in depth and fi ndings
published, as there is currently a revisit to
the old questions of Role of State Vs.
Market and Speed of growth vs. quality of
growth. The current emphasis on inclusive
growth is an offshoot of this debate.
Increases in Plan Investments
Plan outlays have increased from Rs.
1,960 crores in the First Five Year Plan
(1951-56) to Rs. 15,25,639 crores in the
Tenth Five Year Plan (2002-2007). The
Eleventh Five Year Plan (2007-2012) has
been approved with an outlay of Rs.
36,44,718 crores and is in the process of
implementation (see Table 1). The Planning
Commission is getting ready with an
approach paper to the Twelfth FYP. As
earlier mentioned the Federal Constitution
of India required investment planning
and implementation of schemes to
be carried out by both the Union Government
and various State Governments. It
may therefore be appropriate to take a
look at not only the total investments