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5 The Failure of Developmen t Planning in Indi a Shyam J. Kamath 1. Introduction Economic policy in India since it gained independence in 1947 has been conducted within a framework o f centrally directed development plannin g combine d wit h intensiv e governmen t regulatio n and contro l o f al l facet s o f economi c activity . Beginnin g i n 1951-52, a series of Five-Year Plan s have provided a comprehen sive and comple x se t of directives an d target s for savings, investment , exports, imports, public ownership of the means of production an d fo r regulatin g privat e economi c activity . Privat e enterprise an d industr y hav e bee n allowe d t o functio n subjec t to numerous physical , financial, an d noneconomi c constraints . A bewildering variet y o f interlinkin g control s an d polic y interven tions has constrained marke t forces in a manner quite unlike tha t experienced in Western developed economies.1 The plannin g an d contro l framewor k adopte d i n Indi a gre w out o f a convictio n o f th e India n elit e i n th e year s precedin g independence tha t economic growth was not possible through th e reliance o n unfettere d marke t force s becaus e o f th e "objective " conditions of underdevelopment. According to this view, equitable growth could only be achieved by systematic planning. The estab90 The Failure of Development Plannin g i n India 9 1 lishment o f th e India n plannin g framewor k followe d th e recom mendations o f th e officiall y appointe d Advisor y Plannin g Boar d (1946) and it s endorsement b y th e Economic Programm e Commit tee o f th e Congres s part y (1948). 2 Th e direction s fo r establishin g the India n Plannin g Commissio n t o develo p an d coordinat e th e economy wide plannin g effor t wer e provide d b y thes e documents . The subsequen t Industria l Polic y Resolutio n o f Apri l 194 8 out lined th e comple x o f controls tha t woul d regulat e industria l activ ity . It wa s th e first o f a serie s o f policy resolution s an d regulator y interventions tha t followed . Th e plannin g syste m an d contro l framework, se t u p i n th e postindependence er a a s a result o f thes e initial polic y directions , produce d unintende d bu t disastrou s con sequences fo r th e subsequen t economi c developmen t o f th e country. Today, afte r forty-fiv e year s o f planned economi c development , India's per capita incom e remains aroun d $300 . Almost 4 0 percen t of Indian s liv e belo w th e officia l povert y line , an d th e absolut e number o f Indians i n tha t categor y increase d sharpl y betwee n th e late 1950 s an d th e mid-1980s . Indi a lag s behin d th e majorit y o f nations o n mos t indicator s o f th e qualit y o f lif e suc h a s literacy , life expectancy , nourishment , acces s t o saf e drinkin g wate r an d sanitation, an d s o forth . Considerin g tha t almos t one-sixt h o f hu manity reside s i n India , th e failur e o f centrall y directe d develop ment plannin g ha s produce d a n economi c an d socia l debacl e o f much large r proportion s tha n wa s witnesse d b y th e collaps e o f socialism i n Eastern Europ e an d th e Sovie t Union . This chapter examine s th e nature an d structur e o f developmen t planning i n Indi a i n th e postindependenc e perio d an d analyze s the reason s fo r it s failure . I t provide s a comprehensiv e critiqu e o f the underlyin g vision , theoretica...

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