Let us take stock of the achievements and shortcomings of the Second Five Year Plan before we introduce ourselves to the Third Plan. The achievements of the Second Five Year Plan are not inconspicuous, judged by the rate of growth and the increase in the production of strategic commodities. The Plan is expected to end up with an increase in national income of about 20 per cent, a rate higher than that which the economy had achieved during the First Plan.
And this in spite of bad harvests during the greater part of the Second Plan period. The weight of agricultural output in the national economy is so great that even a small shortfall in that sector tends to produce a large effect upon the national output. A growth rate of about 4 per cent per year in the face of three consecutive years of low agricultural output since the Second Plan started is, therefore, no mean achievement. What is more significant is the rate of expansion of strategic industries. The output of steel increased during the Second Plan by 100 per cent; electricity by 70 per cent; coal by 40 per cent; cement by 90 per cent; and fertilizer by 166 per cent. So economic plan is important.
The performance in respect of food grains has no doubt been the least encouraging. Yet, even here,, with all the vicissitudes of circumstances, production has increased by 15 per cent thus giving the lie to the common apprehension that in its preoccupation with heavy industries the Second Plan neglected agriculture altogether; after all, the growth of food production has exceeded the growth of population, even if slightly.
The rate of growth that the Plan has generated is on the whole satisfactory; it has laid a foundation for an accelerated growth, as seen from the rate of increase of strategic commodities like iron and steel, cement, fertilizers, etc. And yet in some sense the Plan has failed. It has failed to achieve many of the targets that had been set originally, and in certain directions the shortfall has been serious indeed. In most of the strategic commodities the achievement has been below the target. In iron and steel the shortfall is 42 per cent, in electricity it is 16 per cent, in cement 32 per cent, in coal 12 per cent and in fertilizer 27 per cent of the respective targets. Only in machine tools among strategic commodities, has the achievement gone beyond the target.
Food grains production, again contrary to the common belief, has been on a par with the original target, even though it is a little below the revised target. The over-all position is also below what had been originally envisaged for the Second Plan; the increase in national income over the Plan period is anticipated to be at least 5 per cent below the target. So economic plan is important.
Secondly, although the over-all investment in the Second Plan will turn out to be very near the target of Rs 6200 crores (at 1952-3 prices), the distribution between the public sector and private sector will be substantially different from what was originally contemplated. The ratio originally contemplated was 60:40; recent estimates suggest it to be in the neighborhood of 50:50—the private sector having had a more generous deal.
Thirdly, whereas the target for savings, as originally contemplated, was of the order of 11 per cent of the national income, recent estimates place the ratio at 8 per cent. This surely is a serious shortfall, indicating a vital deficiency in our planning. If the over-all investment was kept up, it was because of larger foreign assistance and larger drafts on sterling balances than were originally envisaged. So economic plan is important.
Finally, on the employment front, the target was to take on an additional 10 million, while recent estimates suggest that the plan will end up with an additional employment of just about 8 million. There will thus be an addition of about 2 million to the backlog of 5 million with which the Plan had started. This also is a vital crack in our plan edifice. What kind of a plan is it, one will surely ask, if it leads up to as much as a 40 per cent increase in the volume of unemployment in five years, whereas the growth of population during the period is only about 11-12 per cent? So economic plan is important.