This brings us to the question of size and pattern of investment. The degree of effort we are prepared to put in determines the size and pattern of investment in each phase of planning and this latter in turn determines the duration of transition towards the full employment growth level. The smaller the size of investment and the more quick-yielding its pattern is, the easier is the transition; and vice-versa.
How should we choose the size and pattern of investment?
The majority of our contributors seem to accept the size envisaged in the Second Plan, viz. Rs 9900 crores, subject to such revisions as are indicated by the rise of prices and the change in the rate of growth of population as revealed since the Second Plan was formulated. A few, however, consider this projection to be a little over-ambitious, having regard to the availability of resources. The pessimism of this latter group apparently arises from the experience of bottle-necks that confronted the Second Plan bottle-necks relating not only to foreign exchange but also and perhaps more to shortage of internal finance.
Surely the experience of the Second Plan fails to inspire optimism. In spite of the very generous foreign assistance that we received during this period the amount of foreign assistance has indeed exceeded our original estimate and in spite of a heavy dose of deficit financing, we have had to make a sizeable reduction in our investment target in the public sector. We have had a considerable short-fall on the resources front. Whether, however, this short-fall is due to a basic deficiency in our resources position or it is due to a deficiency in the organization of the system is an open question. So economic plan is important.
As regards pattern of investment, the majority of the contributors are in favour of the continuance of emphasis on heavy industries, with this reservation that greater attention than was given in the Second Plan has to be devoted to agriculture, if only because of the food shortage that we are currently experiencing. Perhaps also there is a general agreement in favour of a shift from major to minor irrigation and of a general preference for fertilizer as against irrigation in so far as these two are substitutes and not complements. All this suggests an awareness of the need for progress to be tempered by considerations of security. This surely is understandable.
One of the contributors has come out with a suggestion that the phasing of our Plan must be based on the rate of technical progress and the period covered by an agricultural cycle; as such our planning should be for seven years instead of five, as it has been hitherto.
It is also suggested in this connexion that there should be a ‘minimum variant’ and a ‘maximum variant’ of the Plan, the implementation of one or the other depending upon the degree of favourableness of the situation. This last suggestion may readily be accepted in so far as technically there is scope for flexibility; in fact some allowance for variation of targets is implicit in any Plan. This, however, has little to do with the fixation of the period of planning. One would also find it difficult to see the connexion of the planning period with agricultural cycle or with the rate of technical progress; one should have thought it was essentially a question of how far ahead one could look. So economic plan is important.
On the whole, one gets the impression from a perusal of the papers that we have our pessimists and our optimists, the former taking their stand on the fact of scarcity, and the latter on the belief that the rigor of scarcity can at least be mitigated by organizational improvements. To this question we may now turn. So economic plan is important.