ECONOMIC PLANNING IN INDIA

OBJECTIVES
Removal of poverty through rapid economic growth and increase in employment. Social Justice through mitigating inequalities of income and establishing a socialist society.

Achieving economic democracy (focus on socialist factors).

Economic democracy is the availability of opportunities for education, public health and sanitation, drinking water supply etc for large masses of people, irrespective of whether they are rich or poor.

STRATEGY FOR PLANNING

Strategy of Planned economic Development. Mahalanobis strategy of Self-sustained growth based on heavy industries for 2nd and 3rd five year plans. Focus was on rapid industrialization through investment in heavy, basic (coal, electricity,iron and steel etc) and machine building industries.

Social objectives of planning achieved through Fiscal Policy aimed at reducing the inequalities of income and wealth.

Highly progressive income tax to limit high incomes beyond certain level (marginal rate of income tax at one time was as high as 97.25%). Wealth, Capital gains and gift tax was exclusively imposed on affluent sections. Direct taxes a source of income to the Government. Public money- used to fund welfare plans for weaker sections of the society.

LPG MODEL OF DEVELOPMENT

Disinvestment of highly profit making PSUs to reduce Fiscal deficit. Private investment permitted without license. FDI allowed (up to 51% in priority areas). Greater autonomy to PSU Management to improve their performance. Export- Import barriers reduced to facilitate foreign trade.

PURADEVELOPMENT MODEL
It proposed an integrated action on:

Agriculture and food processing (360 mt of food and agricultural production by 2020. Reliable and quality electric power for all parts of country. Education and health for all. Expansion of ICT to rural areas to promote education and create national wealth. Development of strategic sectors- nuclear, space and defence technology.

Four connectivities in PURA model: Physical- linking a group of 15-25 villages by a ring road and provision of electricity and transport. Digital- link villages with ICT e.g. public call offices, cyber cafes etc. Knowledge- establish a school, hospital etc on every 5 to 7 kms on circular ring road. Economic- provide marketing facilities for purchase and sale of daily use commodities.

Government has taken up development of over 4000 clusters. Rs 3 crores was allocated to each clusters. Therefore Rs. 12,000 crores were to be spent on 4000 clusters.