Economic plan-III

Economic plan-III No drastic changes in organization have been suggested in any of the papers; there is general appreciation of the urgency to keep within the democratic framework. This certainly is refreshing. In a world where planning has been almost inseparably associated with totalitarianism, no occasion can be missed to stress the need for the preservation of democratic values in our society and to tell people that the path of gradualness is not just a refuge of the coward.

While this is true and while it is also true that our Government has unequivocally accepted the democratic path of gradualness in its scheme of planning, it would surely be going too far if one says, as does one of our contributors, that the role of the State in our planning is for it just to act as ‘a countervailing power against monopolistic concentration of economic power’, or that ‘the economic philosophy of Indian socialism is a combination of Adam Smith’s Wealth of Nations and Keynes General Theory. Whether the practice of our Government in Socialism is up to its profession or not, it has surely gone beyond Adam Smith and Keynes!
It is interesting that those of our contributors who have a rather pessimistic outlook on the size of the Plan are also in favour of leaving things more to the private sector. While they argue that the plan must be ‘realistic’ and its size kept within ‘available resources’, they also favour a reduction in the rate of taxation and giving more encouragement to the private sector.

One may well wonder what connexion there is between the two processes. Simply because you want the size of the plan to be moderate, you are not logically compelled to ‘mix’ the economy with a relatively larger dose of private investment. Nor is there any compelling economic reason why, if the private sector is prepared to accept the challenge, a relatively bigger share of a bigger total of investment should not be assigned to it. It appears on ultimate analysis that these are matters on which one’s verdict would depend upon one’s attitude of mind. Some are born a little conservative and some are born a little progressive.

1 The general consensus among our contributors is in favour of greater decentralization of our planning organization. There is indeed a growing awareness in the country that our plan has not been able to rouse as much enthusiasm in our people as one would wish it had. It is widely felt that people’s participation in the Plan could be secured only if they were given enough responsibility. The demand expressed in most of the papers for ‘planning from below’ will, therefore, receive general approval. The introduction of village autonomy through the Panchayat system is a step in this direction. So economic plan is important.

One may underline in this connexion the proposition suggested in one or two papers that whatever resources can be raised in a particular village unit should be utilized for local development, the idea being that it is then that the village people will take a personal interest in planning and development. One may perhaps take it that
`How Nature does contrive That every boy and every gal That’s Born into this world alive Is either a little Liberal Or else a little Conservative.’

This is already a part of the Planning Commission’s thinking. This certainly is a move in the right direction. When linked up with the Community Development and National Extension Service activities this may release forces destined to provide a strong base for economic development in our country. If democratic planning is to be made a success, the starting point has to be the village. The principle of financial autonomy must, however, be read with caution. A general extension of the formula, as done by one of the contributors, suggesting that ‘saving generated in one sector should be spent in that sector alone’ has an implication which, to say the least, is awkward.

An associated problem is that of the utilization of rural manpower. One should have expected our contributors to devote some attention to this. How is the surplus labour in the rural areas to be gainfully employed? Should our system encourage transfer of surplus labour to the urban sector in so far as resources are available there, or should these resources be dispersed in rural areas to accommodate the surplus labour existing there ? The former happens to be the traditional method of industrialization. It is through the proletarianization of rural labour and then absorbing the unemployed in urban areas at depressed wages that industrialization proceeded in most of the economies of the West, planned or unplanned. In over-populated agricultural economies, however, this process raises the question of the creation of enough wages-fund in the urban sector. How could this be done? Is there any mechanism, short of coercion, by which the agricultural surplus created by the transfer of rural labour could be mobilized for use in the urban sector? And if no such mechanism is available, could not the process be reversed? These are questions answers to which can no longer be postponed. So economic plan is important.

On Finance, there seems to be a fair degree of agreement among the contributors on two things, namely (a) that we should not pitch our reliance on foreign aid too high, if only because of future repayment difficulties, and, (b) that the scope of deficit-financing is much more limited than it was for the Second Plan. Both these are common ground, but their value is just negative. On the positive side, special significance has been given to two sources of finance, namely, (a) profits from public enterprise, and, (b) agricultural taxation. Both these again are in consonance with the recent trend of thinking in the country.
Neglect of agriculture as a source of public revenue in our country has been historical, being bound up with our land revenue system. However, in the context of planning for economic development this largest source of national income cannot surely escape being tapped a little more for the creation of investible surplus. Also pertinent is the emphasis on profits of public enterprises as a source of investment.

The debate as to whether public enterprises should be run on profits basis or not is of marginal importance in the context of our economy and perhaps an unnecessary fuss is being made of it in current discussions. They are run on profits basis, and as the public sector is expanding rapidly, they are naturally expected to make a significant contribution to the finance of our future plans. So economic plan is important.

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