THE FIVE YEAR PLAN IN OUTLINE
The Five Year Plan involves an outlay on development by public authorities of Rs. 2069 crores over the period of 1951-56. In determining this target of expenditure, the main considerations that have been taken into account are : (1) the need for initiating a process of development that will form the basis of the much larger effort needed in the future ; (2) the total resources likely to be available to the country for the purpose of development ; (3) the close relationship between the rates of development and the requirements of resources in the public and in the private sectors ; (4) the necessity of completing the schemes of development initiated by the Central and State Governments prior to the commencement of the Plan ; and (5) the need to correct the maladjustments in the economy caused by the war and the partition.
2. Our approach to planning and the long-term targets of investment and income to be aimed at have been set Ruth in the earlier chapters. The vast and complex problems of structural and institutional re-organisation that an effort of the required magnitude will raise have also been touched upon. Viewed against this background, the Five Year Plan is essentially a plan of preparation for laying the foundation for more rapid development in the future. The targets of investment which the Plan sets, as well as the increases in production which are expected to be achieved thereby, are modest when compared to what has to be achieved within the next twenty years or so but, it must be emphasised, both are high compared to past treads.
PRIORITIES AND THE PATTERN OF OUTLAY 3. The distribution of expenditure in the development programme of the public sector is summarised in the following table :
Rs. crores Per cent of total
Agriculture and Community Development 361 17.5
Irrigation . . . . . . 168 8.1
Multi-purpose Irrigation and Power Projects 266 12.9
Power . . . . . . . 127 6.1
Transport and Communications . . . 497 24.0
Industry . . . . . . . 173 8.4
Social Services . . . . . 340 16.4
Rehabilitation . . . . . 85 4.1
Others . . . . . . 52 2.5
2069 100.0
This distribution reflects the priorities discussed in Chapter II. In the present Plan period, agricultural development receives the highest precedence, which necessitates an extensive programme of irrigation covering minor as well as major projects. Generation of
70
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THE FIVE YEAR PLAN IN OUTLINE
electric power, which is linked in most cases with the major irrigation projects, has also a high priority in its own right. Production and extensive distribution of electrical energy on a large scale is essential not only for the growth of small scale enterprises and for rural development in the larger sense of the term but for industrial expansion. In regard to transport, public authorities have a special responsibility. The railways are a nationalised enterprise which has to respond to the needs of development in both argiculture and industry. The State has further to take the initiative in linking up the whole country through a system of roads reaching down to the village, and in promoting development in new lines like shipping and aviation.
4. The high priority given to agriculture (which as mentioned above, involves large scale investment in irrigation) as well as to basic services like power and transportation limits inevitably the investment which the public sector can itself undertake in industries. Industrial expansion in this five year period will rest largely on private initiative and resources, but they will be supplemented at certain points by the resources of the public sector as well as by foreign investment; programmes of the public and the private sectors together will not therefore be inconsiderable. In the sphere of social services, the needs are so large that what can be achieved through financial investment by public authorities is limited. In the present Plan, the rehabilitation of displaced persons absorbs a considerable proportion of the additional resources available for expansion of social services. The financial investment in social services has to be supplemented by direct community effort on a large scale for the liquidation of illiteracy, improvement of sanitation and hygiene, development of civic services, imparting of elementary technical training, etc. The lump-sum provisions in the Plan for the community development programme and for local works are designed, among other things, to evoke such community effort.
5. The significance of the outlay of Rs. 2,069 crores from the point of view of the additions it will make to productive equipment in the public and private sectors, and to the production potential of the community in the larger sense of the term, will perhaps be clearer from the following rough classification:
(Rs. crores)
(1) Outlay which will add to the stock of pro-
ductive capital owned by Central and State Govern-
ments . . . . . . . . 1,199
(2) Outlay which will contribute to building
up productive capital in the private sector-
(i) Expenditure on agriculture and rural development
(excluding community projects and provision for
scarcity affected areas) . . . . . 244
(ii) Loans for transport and industry . . . 47
(iii) Provision for stimulating local development
(community projects and local works) . . . 105
(3) Outlay on social capital . . . 425
(4) Outlay unclassified above (including provision for
scarcity affected areas) . . . . . 49
TOTAL . 2,069
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THE FIRST FIVE YEAR PLAN
It will be seen that nearly 60 per cent of the planned outlay will result directly in the creation of productive capital in the ownership of the Central and State Governments ; this will be mainly under irrigation and power, Campos and communications, and industry. The remaining 40 per cent will partly add to productive equipment in the private sector, partly provide assistance in the form of working capital or of advisory and administrative services, partly help to maintain and expand social services, and partly act as an incentive for community effort in development.
DISTRIBUTION AND PHASING OF EXPENDITURE 6. A break-up of the development expenditure of the Central and State Governments by major categories is given in the statements attached at the end of this Chapter. The distribution of the total outlay as between the Central and the State Governments is summarised below:-
(Rs. crores)
Central Government (including railways) . . 1,241
States : Part A . . . . . . 610
Pan B . . . . . . 173
Part C . . . . . . 32
Jammu and Kashmir . . . . 13
TOTAL 2,069
7. According to the above classification, the outlay of the Central Government (including the railways) works out to almost 60 per cent. of the total. It must be emphasised that this distribution of outlay is not an indication of the schemes which fall within the respective spheres of the Centre and the States. The `central' multi- purpose river valley schemes (i.e., the Damodar Valley, Bhakra-Nangal, Hirakud, and Harike projects) are really the schemes of the State Governments, but in view of the fact that the, territorial coverage of these projects extends in some cases over two or three States, the exact distribution of the financial liability as between them cannot be foreseen at this stage. The responsibility of finding the necessary finance for these schemes in the form of loans to State Governments also rests initially on the Centre. In regard to certain other schemes, the sharing of the financial responsibility has yet to be finally determined. For these and similar reasons the provisions in the Plan for community projects, minor irrigation and other local works, the five new major irrigation and power projects, scarcity affected areas, rehabilitation of displaced persons, basic and social education, industrial housing, etc., are shown as part of the Central Government's development programme, though they belong primarily to the States.
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THE FIVE YEAR PLAN IN OUTLINE
8. It is in the light of these observations that the distribution of the total planned outlay as between the Centre and the States, and the allocation of this outlay as between the major developmental heads, has to be seen. The following table summarises the outlay of the Centre and of the States (excluding Jammu and Kashmir) under various heads :
(Rs. crores)
Centre Part A Part B Part C
Agriculture and Community Development 186.3 127.3 37.6 8.7
Irrigation and Power . . . 265.9 206.1 81.5 3.5
Transport and Communications . . . 409.5 56.5 17.4 8.8
Industry . . . . . . . 145.7 17.4 7.1 0.5
Social Services including Rehabilitation . 191.4 192.3 28.9 10.4
Miscellaneous . . . . . . 40.7 10.0 0.7 ...
TOTAL 1240.5 610.1 173.2 31.9
9. The outlay proposed in the development programmes of States other than Jammu and Kashmir is shown below :
State Plans
(Rs. crores)
PART A STATES PART B STATES PART C STATES
Assam . . 17.49 Hyderabad . 41.55 Ajmer . . 1.57
Bihar . . 57.29 Madhya Bharat . 22.42 Bhopal . . 3.90
Bombay . . 146.44 Mysore . . 36.60 Bilaspur . 0.57
Madhya Pradesh . 43.08 Pepsu . . 8.14 Coorg . 0.73
Madras . . 140.84 Rajasthan 16.82 Delhi . 7.48
Orissa . . 17.84 Saurashtra . 20.41 Himachal Pradesh 4.55
Punjab . . 20.21 Travancore-Cochin 27.32 Kutch . 3.05
Uttar Pradesh . 97.83 Manipur . 1.55
W. Bengal . 69.10 Tripura . 2.07
Vindhya Pradesh 6.39
TOTAL . 610.12 TOTAL . 173.26 TOTAL . . 31.86
These State Plans were drawn up initially over a Tar ago in consultation with the State Governments concerned and on the basis of forecasts supplied by them regarding their likely revenues and expenditures in the period of the Plan. In cases where the State Governments made proposals subsequently to raise the size of their State Plans, the upward revisions have been accepted provisionally subject to the resources corresponding to them being raised by the governments concerned.
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THE FIRST FIVE YEAR PLAN
10. The financial basis of the Plan has been discussed in detail in Chapter III. A rough picture of the estimates in relation to the development programmes can be had from the following summary table:
(Rs. crores)
Central States (including
Government Jammu and Kashmir) Total
Planned Outlay on Development 1,241 828 2,069
Budgetary Resources-
(i) Savings from current
revenues . . . 330 408 738
(ii) Capital receipts (exc-
luding withdrawals from re-
serves) . . . . 396 124 520
(iii) Internal inter-govern-
mental transfers in connection
with the Plan (i.e., "Central
assistance") . . (-) 229* 229* ...
497 761 1,258
Eternal Resources already received 156 ... 156
TOTAL . 653 761 1,414
As brought out in the assessment of financial resources for the Plan, the balance of Rs. 655 crores; necessary for the public development programme will have to be found from further external resources that may be forthcoming or from internal taxation and borrowing as far as possible and by deficit-financing.
11. In the phasing of development expenditures originally proposed by many of the States there was on the whole a somewhat excessive concentration of outlay in the first two years of the Plan. This was in some cases inevitable in that it only reflected the rising tempo of expenditures towards the culminating stages of certain schemes already under implementation. The actual progress of expenditure (as indicated by the revised budgets for 1951-52 and the budget estimates for 1952-53) shows that the concentration of expenditures in the first two years originally proposed has already been corrected to a great extent. It is, however, clear that in 1953- 54 expenditures on a number of schemes under implementation will reach their peak levels and that there would be in consequense a heavy pressure on resources both at the Centre and at the States. New schemes which can be postponed without detriment should not therefore be taken up in this year. In so far as can be foreseen at this stage, there will be scope for starting work on new schemes, which involve large expenditures once they are undertaken, only towards 1954-55 and in 1955-56.
*Includes Rs. 4 crores by way of statutory grants for scheduled tribes which will be available for part of the development expenditure on scheduled tribes in the Assam state Plan.
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THE FIVE YEAR PLAN IN OUTLINE
APPRAISAL OF THE PROGRAMME IN THE PLAN 12. In appraising the results of the Plan, the development programme in the public sector cannot be taken by itself. This progamme, as mentioned earlier, is based on an appraisal of the needs of the economy as a whole and is related to an assessment of the effort that is likely to be forthcoming from the private sector. In the case of agriculture, where the problem is primarily one of providing irrigation, fertilisers and manures, better seeds, as well as extension services which will carry to the farmer the know-how of technical improvements, the supplemental investment required would to a great extent be in the form of direct contributions of labour by the farmers themselves. In the sphere of industrial development, we have taken into account the working plans of 40 large and medium scale industries which cover about two-thirds of the total output of factory enterprises in the country. Approximate estimates regarding the likely requirements of manufacturing industries and of the likely sources of finance are shown elsewhere in this Report. The results of the Plan can thus be viewed within a wider setting as far as agriculture and manufacturing industry are concerned. In other spheres of development, particularly in respect of professions and services and smallscale enterprises in transport and industry, only broad judgements can be made at this stage. The contribution that community effort may make to extension of education, sanitation, communications, etc. cannot also be assessed in advance in precise terms. In the paragraphs that follow are outlined the salient features of the development programmes in the public and private sectors ; their results in terms of certain select targets and indices are shown in the statement below:-
1950-51 1955-56
I. Agriculture
Foodgrains* (million tons) . . 52.7 61.6
Cotton (lakh bales) . . . 29.7 42.2
Jute (lakh bales) . . . 33.0 53.9
Sugarcane (million tons) . . . 5.6 6.3
Oilseeds (million tons) . . . 5.1 5.5
II. Irrigation and Power
Major irrigation (million acres) . . 50.0 69.7
}
Minor irrigation (million acres)
Electrical energy (installed capacity in
million kws) . . . . . 2.3 3.5
III. Industry
Iron and Steel
(lakh tons)
Pig iron available for foundries . . 3.5 6.6
Finished Steel . . . . . . 9.8 13.7
Cement (lakh tons) . . . . . 26.9 48.0
Aluminium (thousand tons) . . . 3.7 12.0
*Including gram and pulses. Output in 1949-50 (used as the base for fixing the target for 1955-56) was 54.0 million tons.
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THE FIRST FIVE YEAR PLAN
1950-51 1955-56
Fertilisers (thousand tons)
Ammonium sulphate . . . . . 46.3 450.0
Superphosphate . . . . . . 55.1 180.0
Locomotives (Nos.) . . . . . ... 150.0
Machine tools (Nos. in thousands) . . 1.1 4.6
Petroleum refining
Liquid petroleum (million gallons) . N. A. 403.0
Bitumen (thousand tons) . . . N. A. 37.5
Cotton manufactures
Yam (million lbs.) . . . . 1179 1640
Mill cloth (million yards) . . 3718 4700
Handloom (million yards) . . 810 1700
Jute manufactures (thousand tons) . . 892 1200
Agricultural machinery
(a) Pumps, powerdriven (thousands) . 34.3 85.0
(b) Diesel engines (thousands) . 5.5 50.0
Bicycles (thousands) . . . . 101.0 530.0
Power alcohol (million gallons) . . 4.7 18.0
IV. Transport
Shipping (tonnage)
Coastal (GRT thousands) . 211.0 315.0
Overseas (GRT thousands) . . 173.5 283.0
Roads
National Highways (thousand miles) . 11.9 12.5
State Roads (thousand miles) . 17.6 20.6
V. Education*
Pupils in:
Primary schools (lakhs) . . . . 151.1 187.9
Junior Basic schools (lakhs) . . . 29.0 52.8
Secondary schools (lakhs) . . . 43.9 57.8
Industrial schools (thousands) . . 14.8 21.8
Other technical and vocational training
schools (thousands) . . . . 26.7 43.6
VI. Health
Hospitals (beds in thousands) . . . 106.5 117.2
Dispensaries (number)
Urban . . . . . . . 1358 1615
Rural . . . . . . . 5229 5840
*These estimates do not cover (except in respect of industrial schools), Hyderabad, Rajasthan, Ajmer and Vindhya Pradesh. In some cases, data for a few States (e. g.. Uttar Pradesh in respect of primary schools and Madhya Pradesh in the case of junior basic, and secondary schools) are also not covered in these estimates.
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THE FIVE YEAR PLAN IN OUTLINE
VII. Developmental Institutions
panchayats (thousands) 55.1 69.1
Co-operative societies*
Credit (thousands) 87.8 112.5
Sale and marketing (thousands) 14.7 20.7
Multipurpose (thousands) 31.5 40.5
Lift irrigation (Nos.) 192.0 514.0
Co-operative farming (Nos.) 352.0 975.0
Others(thousands). 27.3 35.8
Total (thousands) 161.9 211.1
AGRICULTURE AND COMMUNITY DEVELOPMENT 13. Agriculture and community development is a comprehensive description for several items of reconstruction which include, besides agricultural production, livestock improvement and dairying, forests and soil conservation, co-operation and village panchayats. The Plan makes a total provision of about Rs. 361 crores of which Rs. 184 crores is for agriculture, a little over Rs. 100 crores for community projects and rural development, Rs. 22 crores for animal husbandry and dairying, Rs. 15 crores for stimulating local development through the agency of local authorities, another Rs. 15 crores for development programmes in scarcity affected areas, and Rs. 12 crores for forests and soil conservation. The role of the Central Government is to co-ordinate the programmes of the States and also to assist them in certain important respects. The Central Government's plan provides for the establishment of a national extension Organisation, completion of the present programmes of the Central Tractor Organisation, schemes for the improvement of livestock, measures for soil conservation as well as for co-operative training, for experiments in co-operative farming and other aspects of co- operative Organisation. The Technical Co-operation Programme initiated this year has strengthened considerably the programmes for tubewell development, marine fisheries, locust control and the training of extension workers.
14. The programme for increasing agricultural production covers foodgrains as well as cotton, jute, sugar-cane, and oilseeds. In foodgrains, the target for 1955-56 represents an increase of about 14 per cent over the level in 1949-50. In the case of cotton and jute, production is expected to go up by over 42 per cent and 63 per cent respectively above the level in 1950-51, while the increases in sugarcane and oilseeds are estimated at about 13 per cent and 8 per cent respectively. It might be mentioned fore that, in 1951-52, the production of cotton was 33 lakh bales as compared to 29. 7 lakh bats in 1950-51 and the target of 42.3 lakh bales by 1955-56. jute production in 1951-52 was 47 lakh bales-an increase of 14 lakh bales over 1950-51; the additional production now to be secured in terms of the target works out therefore at only 7 lakh bales. Foodgrains production for 1951-52, as shown by official