Table Of ContentINDIA'S ECONOMIC DEVELOPMENT STRATEGIES,
1951-2000 A.D.
INDIA'S ECONOMIC
DEVELOPMENT
STRATEGIES
1951-2000 A.D.
PROF. J.N. MONGIA
Editor
D. REIDEL PUBLISHING COMPANY
M
A \1EMBER OF THE KLUWl:R ACADE'"lIC PUBLISHERS GRGUP
DORDRECHT I BOSTON / LANCASTER I TOK YO
Library of Congress Cataloging-ill-Publication Data
Main entry III/del' title :
India's economic development strategies, 1951-2000 A.D.
Includes index.
\. India-Economic policy-1947-- -Addresses,
essays, lectures. 1. Mongia, J. N., 1928-
HC435.2.16227 1%6 338.954 85-30173
ISBN-13: 978-94-010-8550-2 e-ISBN-13:978-94-009-4614-9
DOl: 10.1007/978-94-009-4614-9
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All rights rescl'l'ed
Cl::) J. N. Mongia 1985
Softcover reprint of the hardcover 1st edition 1985
No pal t of the maferial protected by this copyright notice may be
reproduced or utilized ill any form or by any means, electronic or
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Published by R. N. Sachdev alld prillud by Pratibha Printing Press
F-117, Sudarshan Park, New Delhi 11 0015
Dedicated
to the memory of
Late Smt. Indira Gandhi
- the eternal woman-
Contents
Page
PREFACE
J.N. MOllgia xi
EDITOR'S NOTE
J.N. Mongia xv
INDIRA GANDHI-A TRIBUTE
V.K.R.v. Rao xxv
PROLOGUE-INDIA'S ECONOMIC DEVELOPMENT
STRATEGIES: AN APPRAISAL
A.M. Khusro xxxv
Strategies relating to
1. POPULATION
Ashish Bose and Vir Narain
2. AGRICULTURE
P.C. Joshi 25
3. !NDUSTRY
Manmohall Singh 67
4. SMALL-SCALE SECTOR
R.P.S. Verma and J.D. Verma 117
5. FISCAL MANAGEMENT
G. Thimmaiah 153
6. DEFICIT FINANCING
J.N. Mongia 201
7. INFLATION CONTROL AND PRICE REGULATION
P.D. Ojha 239
vii
viii
8. FOREIGN TRADE AND BALANCE OF PAYMBNT
V.R. Panchmukhi 291
9. LABOUR AND INDUSTRIAL RELATIONS
C.P. Thakur 315
10. WAGES AND INCOMES
Malcolm S. Adiseshiah 349
I I. PRODUC f1VITY
A.N. Saxena 385
12. ENERGY
S.L. Khosla 417
13. TRANSPORT
R.K. Saggar and J.N. Mongia 453
14. POVERTY
S.P. Gupta 495
15. RURAL DEVELOPMENT (SOME ASPECTS)
D. Bal1dyopadhyay 517
16. HOUSING AND URBAN RENEWAL
J.N. Mongia 539
17. URBANIZATION
V. Nath 585
18. PUBLIC ADMINISTRATION AND PLAN IMPLEMENTATION
P. R. Dubhashi 517
EPILOGUE-ECONOMIC STRATEGIES FOR THE NINETIES
L.K. Jha 641
The Contributors 669
Appendix-Summary of Seventh Plan (1985-90) 681
Appendix Il-India's Long-Term Fiscal Policy 713
Index 756
Words of Wisdom
"The emphasis on rural employment through NREP, RLEGP
and IRDP continues. However, much closer monitoring and much
tighter planning and organisation are essential for effective imple
mentation. From all over the country I get reports that beneficia
ries are seldom able to make full use of the assistance which we
give them because of shortage or even the complete lack of back
ward and forward linkages. Are we providing such linkages ?"
"The tasks that I have outlined call for radical changes in this
sphere. I would suggest that our priorities in the Seventh Plan
should be FOOD, WORK, and PRODUCTIVITY and these
considerations should guide alternative growth scenarios. In
Hindi we could say 'ROTI, KAM, UTPADAN hamara lakshya
hona chahiye".
"Freedom cannot be complete without economic security.
That is way we have consistenly laid stress not only on more pro
duction and development but also on distributive justice. The
removal of poverty has always been an objective which my Govern
ment, my party and I have consistently kept before us".
-"The success or failure of any technological innovation depends
on economic considerations. The main reason for the gap between
knowledge gathered in our laboratories and their application by
industry is inadequate interaction between technologists and
economists. I want closer collaboration between scientists and
social scientists. Social scientists should be inducted into our major
applied research laboratories, so that the socio-economic aspects of
technology transfer are attended to concurrently."
"The question of the backward classes is one which is impor
tant not only for those who belong to those classes or castes or to
backward regions. It is a national question and it is one with
which all of us have to concern ourselves if we want balance and
equality in our society, if we want peace and harmony, without
which there can be no economic or other progress •... "
ix
x
"Oil is to modern industry what blood is to our bodies. So it
is perhaps natural that it should become a politically explosive
item, influencing world politics and world economics and leading
to all kinds of tensions, alliances and confrontations. We cannot
regard oil merely as an essential commodity but have always to
keep in view its political sensitivity and the consequences of any
action connected with it."
"We do not look for magic deliverance. The only sure road
to prosperity is to mobilize our peoples for work. Enduring
solutions call for the strengthening of our own economies towards
self-reliance. This does not preclude international co-operation.
The two are mutually supportive. Hence, along with a North
South dialogue, we urge greater co-operation among developing
countries. South-South co-operation is an integral part of the New
International Economic Order that we envisage."
"The benefits flowing from a host of development schemes,
especially from the relatively recent programmes for the alleviation
of poverty, are gradually reaching down. We can't reach 700miIIion
people all at once. Even if we had all the finances we would not
be able to do it. It is a long and gradual process and in it we
have to get the people's participation in a large measure and of
course the participation of the State Governments. So far as we
are concerned, we make no distinction between those States which
are ruled by those who are in opposition. In our planning, in the
implementation of the plan, in extending our help to them, we give
absolutely equal treatment."
"Most developing countries today find themselves in what is
known as a debt trap. But the Indian economy is strong and
stable. We have had handsome acknowledgement of this fact by
Heads of Governments and by international financial institutions.
But I want to say here that this is not just an accident. It is the
result of prudent management. It is the result of our planning and
the manner in which we are trying to implement our plans and our
programmes. "
-Indira Gandhi
Preface
It has been often said, even by dispassionate observers, that our
economic policies built on ideological considerations and economic
assumptions are far removed from the realities of our situation.
For more than three decades, we have been striving to design an
economic policy and a planning procedure that are distinctly Indian,
but the effort has often resulted in only mixing and merging borro
wed ideas and experiences. However, whatever may have been the
ideological elements influencing the thinking on economic policies in
the formative period of the pre-independence days, the situation has
changed considerably in the actual formation of economic policies
since Independence, and the effort has been not to be too closely
identified with any ideology, but to work out a policy that will
draw upon all these ideological positions. To what extent we
have succeeded, required a detailed examination. Accordingly, I
brought out, a few years ago, a treatise on 'India's Economic
Policies' which continues to be extremely popular, with the inteIlec
tual elite, the world over. In this, the learned contributors, dwelt
at length on the different aspects of India's Economic Policies from
1947-77, and brought out the strength and weaknesses of the Indian
economic scene.
The present work on 'India's Economic Development Strategies'
is born out of the conviction that what India needs now is a set of
strategies, which are a consistent set of policies, and that there is
an urgent need for the same in Indian Planning. This strong
conviction has propelled me to design the present work which has
the benefit of contributions by some of the most eminent econo
mists and economic administrators of India who also happen to be
xi
xu
admirers of the late Prime Minister's contributions to India's
economic planning and policy. Indeed, the decision to dedicate
this Volume to her memory is an ample testimony of the contri
butors' recognition of her deep and ever-lasting contribution in the
field. Her major contribution to Indian economic development
was in the field of social justice to which she gave a new and
vigorous thrust during her Prime Ministership, adding a visible
content to the doctrine of economic growth with social justice.
She made garibi hatao (eradicate poverty) the guiding slogan of her
economic policy and took the lead in promoting plans for a direct
attack on poverty. Her personal sponsorship of the 20-Point
Programmes gave a new dimension to our plan priorities, the
implementation of which had an undoubted effect on the socio
economic development of the country.
Under the able stewardship of our dynamic Prime Minister
Shri Rajiv Gandhi, India has now started making rapid strides
towards the 21 st century. It is against this background that India's
economic strategies from now onwards to 2000 A.D. have to be
viewed. It is possible that any such attempt may be frowned upon
because of the misconception that the adoption of new strategies
implies a condemnation of old ones, and this is tantamount to a
confession of failure. Nothing can be farther from the truth since
development is a dynamic process, and strategies for development
cannot be static. The very process of development brings about
changes which open new opportunities and also give rise to fresh
challenges. A change in strategy is necessitated as much by the
success of previous -strategies as by their shortcomings.
It is these new challenges which have set in motion a process of
liberalization which encompasses many important spheres of
economic strategies viz. Industry, Commerce, Foreign Trade,
Monetary and Fiscal Management etc. A process has to be set in
motion which will ensure that lndians must stand on their own
feet relying more on resourcefulness rather than resources, in an
atmosphere of liberty rather than license.
The greatest debt I have incurred in this venture is to the
various contributors who agreed to cooperate in view of their
