 THE PROBLEM OF DEVELOPMENT

1. PLANNING : ECONOMIC AND SOCIAL ASPECTS

The central objective of planning in India at the present stage is to initiate a process of development which will raise living standards and open out to the people new opportunities for a richer and more varied life. The problem of development of an under developed economy is one of utilising more effectively the potential resources available to the community, and it is this which involves economic planning. But the economic condition of a country at any given time is a product of the broader social environment, and economic planning has to be viewed as an integral part of a wider process aiming not merely at the development of resources in a narrow technical sense, but at the development of human faculties and the building up of an institutional framework adequate to the needs and aspirations of the people.

2. An underdeveloped economy is characterised by the co- existence, in greater or less degree, of unutilised or underutilised manpower on the one hand and of unexploited natural resources on the other. This state of affairs may be due to stagnancy of techniques or to certain inhibiting socioeconomic factors which prevent the more dynamic forces in the economy from asserting themselves. Corresponding to each stage of development, there tends to grow a certain economic and social stratification which is conducive to the conservation of the gains from the use of known techniques. Such stratification has a part to play in social progress. But, beyond a point, it hampers innovation and change, and its very strength becomes a source of weakness. For development to proceed further, a re- adaptation of social institutions and social relationships thus becomes necessary. In planning for a better economic order, the close interrelation between the technical and social aspects of the process of development has to be continually kept in view. While there is need for concentrating effort on the more immediate problems, planning implies the readiness on the part of the community to view the social process as one whole and to take action designed to shape this process along desired lines over a defined period.

3. In spite of considerable advance in public thinking on the subject, the acceptance of such an approach to the problems of economic development and social change represents a relatively new phase in policy-making and in administration. Planning involves the acceptance of a clearly defined system of objectives in terms of which to frame over-all policies. It also involves the formulation of a strategy for promoting the realisation of the ends defined. Planning is essentially an attempt at working out a rational solution of problems, an attempt to co-ordinate means and ends ; it is thus different from the traditional hit-and-miss methods by

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which `reforms' and `reconstruction' are often undertaken. A planned economy has inevitably in view a somewhat wider time-horizon, to which the day-to-day decisions have to be related. And yet, practical policy cannot operate in terms of mere set doctrines ; it must satisfy certain pragmatic tests. In spite of the considerable developments in economic and social sciences in the last few decades, our knowledge of human motivation and of social processes is but limited. We cannot always say for certain that a given set of causes will produce a particular, clearly definable, set of results and none other ; we do not always know at what rate the effects of a particular change in a part of the system will be transmitted to the other parts of the system. Responses of individuals or of groups of individuals and of classes cannot always be predicted in advance. Even if the conceptual relationships between different aspects of the phenomena under study are clearly understood, there is often the lack of precise statistical data on which to base an assessment of the requirements of a given situation. It follows that a considerable part of the planning authority's task is to assess the significance of some of these indeterminate or partially known factors at work in the life of the community and to recommend policies on the best judgment available. This is particularly so in India today.

4. The urge to economic and social change under present conditions comes from the fact of poverty and of inequalities in income, wealth and opportunity. The elimination of poverty cannot, obviously, be achieved merely by redistributing existing wealth. Nor can a programme aiming only at raising production remove existing inequalities. The two have to be considered together ; only a simultaneous advance along both these lines can create the conditions in which the community can put forth its best efforts for promoting development. The problem, therefore, is not one of merely re- channelling economic activity within the existing socioeconomic framework ; that framework has itself to be remoulded so as to enable it to accommodate progressively those fundamental urges which express themselves in the demands for the right to work, the right to adequate income, the right to education and to a measure of insurance against old age, sickness and other disabilities. The Directive Principles of State Policy enunciated in Articles 36 to 51 of the Constitution make it clear that for the attainment of these ends, ownership and control of the material resources of the country should be so distributed as best to subserve the common good, and that the operation of the economic system should not result in the concentration of wealth and economic power in the hands of a few. It is in this larger perspective that the task of planning has to be envisaged.

5. A process of all-round and orderly development, such as is indicated above, must inevitably take time to come into full fruition. Large scale changes in modes of production, in commercial and industrial organisation and in the institutional framework of corporate life cannot be seen through within a brief period of four or five years. In the initial stages of development, divergence in the economic and social interests of different sections of the community may create special problems. While this fact has to be recognised, persistent effort must be made to give a new sense of direction and purpose to the community It is important also to ensure that in the process of development, the forces of growth from within are not stifled by attempts abruptly to superimpose preconceived patterns of life and activity. The strengthening of these inner forces and the creation of new institutions must proceed side by

THE PROBLEM OF DEVELOPMENT

side so as to facilitate rapid advance through a process of interaction. The modern world is changing so rapidly that it is not enough to think in terms of slow changes and marginal adjustments, a minor shake-up here and a little cementing elsewhere. An underdeveloped country which has suffered long from the effects of cramped development desires inevitably to progress rapidly and in many directions ; the aim of planning must be to make this possible. Political independence provides the needed opportunity. It is therefore natural that improvement in economic and social conditions through the acceptance of more progressive ideas and through suitable institutional changes is regarded as the practical test for judging the adequacy of the new political system.

6. The rapid advances in science and technology over the last few decades have opened out new possibilities in the direction of abolition of want and the restoration of man to a new sense of dignity, but they also carry potentialities of harm and danger. Our knowledge of the socioeconomic changes which utilisation of these techniques calls for is neither complete nor certain. In the nature of the case, the problem does not admit of a generalised solution. Conditions vary as between countries, and each country has to evolve a solution in the light not only of contemporary conditions but also of its traditions and culture. In planning for a transformation along the right lines, there are many pitfalls to be avoided, and it is of the utmost importance to strike the appropriate balance between various considerations so as to secure the optimum pattern and rate of progress. Parallels from past history or from contemporary conditions in other countries are useful upto a point, but they cannot provide a complete answer. A nation, like an individual, has to work out its inner potentialities by a process of experimentation. All that can be said is that there is need, on the one hand, for clarity in regard to basic values and, on the other, for readiness to adapt practical solutions to the concrete problems arising in the process of transition to a different economic and social order.

7. We should like in this context to stress the essential political and administrative conditions essential to successful planing. Briefly these are :

(a) a large measure of agreement in the community as to the ends of policy;

(b) effective power, based on the active co-operation of citizens, in the hands of the State and, earnest and determined exercise of that power in furtherance of these ends; and

A national plan has to be an expression of a basic unity of purpose in the community. It is this unity which would constitute the ultimate sanction behind the plan, give it driving force and evoke the necessary sacrifice and effort on the part of members. joined to this unity of purpose must be effective power in the hands of the State to be exercised with the necessary persistence and determination in order to ensure the furtherance of accepted ends. Constructive use of this power calls for integrity, efficiency and responsiveness in administration. The creation and maintenance of these basic pre- requisites of economic and

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social growth have to be considered as matters deserving continuous and careful attention, and if we revert to this theme several times in this report, it is because we feel that the need for creating in the country an environment favourable to progress can hardly be overemphasised. The changes in administration appropriate in the context of the new role of the State are dealt with in detail in subsequent chapters.

8. The task of organising a democracy for rapid and coordinated advance along several lines is one of special difficulty. The party in power has not only to carry public opinion with it; it has to get the active co-operation of all sections. In a democratic country, every citizen is free to think and vote as he likes, and political parties have the right freely to canvass public support for their programmes and in the event of securing a majority in the legislature to form the government. Under these conditions, the greater the responsiveness of the party in power to trends of opinion outside, the greater will be its effectiveness for action. The smooth functioning of the party system rests on an underlying agreement as to objectives, though there may be differences as to approach or to the pace of change with reference to certain problems. These differences are a necessary concomitant of democracy ; they ensure a continuous re- examination and re-adaptation of governmental policies. The rights of free expression of opinion and of reedom of organisation inhere in the very concept of government by consent. Through these alone is a vigorous, creative political life possible. At the same time, it is evident that the problems of the modern world are too complex to be dealt with in terms of rival or opposing programmes of action. On various matters, different parties tend inevitably to come together and co-operate. For planning to proceed with the necessary momentum and continuity, it is essential that the country adopts a programme of action which reflects the unity of outlook and approach among the members of the party in power and draws forth at the same time the support and co-operation from shades of opinion outside the party. It is through enlargement of the area of agreement that conditions call be created for the most effective mobilisation of the community's resources towards the common objective of all-round economic development.

9. Democratic processes are complex, and they make large demands on the government as well as the governed. It cannot be assumed that the apparatus of democratic forms or procedures necessarily ensures the preservation of the basic values which a democratic way of life connotes. Real democracy means much more than adult suffrage and parliamentary government ; it means a reordering of social relationships in terms of new values. It is not without significance that in several parts of the world the emergence of a new leadership determined to carry through far-reaching economic and social changes in keeping with the needs and urges of the people has been accompanied by a great upsurge of public enthusiasm and a release of the pent-up energies of the community. The relationship between political forms and the spirit underlying them is a vast and intricate subject in which no easy judgments are possible. But, it must be emphasized that for democratic planning to succeed, it will have to energise the entire community and to place before it a goal of endeavour which will call forth all its latent creative urges. Under pressure of crisis such as war, democracies have proved capable of effective action on a mass scale, and there is no doubt that once the community has

THE PROBLEM OF DEVELOPMENT

come to appreciate the vital significance of the tasks in hand, it will rise to similar heights for constructive purposes also. The crucial factor in organising the community for action is leadership, and, in a democracy, not merely leadership at the top but at all levels.

10. Under the Constitution, India is organised as a federation, in which the Central Government and the Governments of States have their assigned spheres of action. There are certain concurrent subjects in which the Centre as well as the States can undertake legislation. Economic and social planning is in the concurrent list, as this is a subject in which the Centre as well as the States are interested and have to work in unison. The Centre has certain emergency powers,but normally coordination of policies has to be effected through mutual consultation. This system of consultation and of formulation of policies on the basis of over-all national requirements will have to be strengthened in the interests of planning. Care will have to be taken to see that the plan is implemented throughout the country as a single coordinated whole. The National Development Council which has been set up recently and which comprises the Cabinet, Ministers of States and the members of the Planning Commission with the Prime Minister as Chairman, is intended to secure this result. It is obvious that without complete coordination of policies and timely, concerted action, there is danger of waste and misdirection of effort, which may have consequences extending far beyond the area of responsibility of any single authority, and this, it must be recognised, places special responsibilities on the Centre.

11. A planned economy aiming at the realisation of larger social objectives entails a vast increase in governmental functions. For these to be discharged efficiently, appropriate local, regional functional organisations have to be built up and strengthened. Each of these must have a defined sphere of action and responsibility, and must be able to function with a measure of autonomy Arrangements for the necessary coordination between them must be made at various levels from the village upwards. The activities of all developmental institutions in the country, official and non-official will have to be reorientated in terms of the requirements of the Plan, and in this process, due stress must be laid on the appropriate role of various local and functional organisations. The function of the Central Government is to evolve a national plan, to work out a coordinated policy for implementation of the same, to watch and assess the progress of major development schemes in the different parts of the country, and constantly to initiate and promote action in furtherance of the objectives and targets defined.

II. THE DETERMINANTS OF ECONOMIC DEVELOPMENT

12. While developmental planning, as stated above, is an all embracing process, which cannot be compartmentalised, the accent of endeavour under present conditions in India has to be on economic development. The latter may in a sense be regarded as a consequence of intellectual, social and cultural advance. It is true, nevertheless, that economic development of an underdeveloped country cannot proceed far unless the community learns how to get from its resources of men and materials a larger output of commodities and services.

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13. In the last four or five decades, there has been considerable industrial development in India, accompanied by urbanisation and expansion of commerce. Large towns and cities have grown and transport and communications have developed extensively. The isolation of the village has been broken and the average citizen lives in an environment significantly different from the one in which he lived and worked fifty or sixty years ago. Indian enterprise has made considerable headway, and the country has now considerable experience in the fields of modern business, industry and finance. New economic and social relations have emerged, giving rise in turn to a general desire for more rapid change. But the development that has taken place is partial and limited when judged in terms of the country's needs and potentialities. Industrialism and the use of modern techniques have affected only limited segments of the economy. Agriculture is still the mainstay of life for about 70 per cent of the population, and productivity in this sector is exceedingly low. The size of agricultural holdings has progressively diminished ; the old cottage and small-scale industries have been decaying, and the rural population which constitutes about 83 per cent of the total suffers from chronic underemployment and low incomes. Population has increased by more than fifty per cent in the last fifty years, but the growth of alternative occupations either in the rural areas or in the towns has not been on a scale which could absorb this growing population. In the limited spheres which have registered expansion, the level of productivity and the level of incomes have naturally been higher. But, for the community as a whole, the economic development of the last few decades has brought no significant improvement in standards of living and opportunities for employment, and has perhaps accentuated to some extent inequalities of income and wealth.

14. The pace of economic development depends on a variety of factors which constitute the psychological and sociological setting within which the economy operates. A major element in this setting is the community's will to progress and its readiness to develop and adopt new and more efficient methods and processes of production. Basically, development involves securing higher productivity all round and this is a function of the degree of technological advance the community is able to make. The problem is not one merely of adopting and applying the processes and techniques developed elsewhere, but of developing new techniques specially suited to local conditions. Modern technology is changing rapidly and no country can hope to maintain a steady pace of advance unless it keeps abreast of current developments. Techniques in turn affect and are affected by economic and social organisation. Certain forms of economic and social organisation are unsuited to or incapable of absorbing new techniques and utilising them to the best advantage. To some extent techniques must of course be adapted to economic and social organisation, but the latter has also to change in order to accommodate new techniques which need to be applied not merely in one or two isolated lines but in several lines of economic activity so that advance in one line could react on and stimulate advance in others.