PREFACE
PLANNING is the vital instrument we have adopted to realise the social objective enshrined in our Constitution. Though the Five Year Plans we have already achieve a significant increase in the national income in the past eighteen years and laid the foundations of technological advance. The Man is fast modernising our agriculture and strengthening and diversifying our industry. Above all, It has reinforced national unity and purpose.
The attack on our territory in 1962 and again in 1965 forced us to modify the pattern of national expenditure. Before we could reconcile the competing claims of development and defence, drought struck us. Foreign, credits became uncertain. Recession followed. All these seriously restricted our freedom of choice. We had to divert our energies to fight drought and near famine and their aftermath. For some time, long-term planning had to be virtually suspended. But we succeeded )II turning adversity to good use. We concentrated on import substitution which further enlarged our industrial base. This along with the need for more foreign exchange put us on the path of a more fruitful export drive. We maintained our investment in development work, especially in intensive agricultural programmes.
A new period has how opened. There is a welcome upsurge in the economy, and the increases in agricultural production have brought us nearer to self-sufficiency in foodgrains. But, inevitably, there are other problems, and a fresh challenge to face. Rural disparities have increased, partly owing to the very effort we have made to move rapidly towards self-sufficiency in food, and partly owing to a certain tardiness in the matter of implementing the land reforms. Although the Industrial recession has wanted, new industries are not coming up fast enough and unemployment, especially of technically trained persons, continues to be acute. We have a larger and, understandably enough, a more articulate population.
Planning is the method to which we are committed for meeting such challenges. We have carried out three Five Year Plans. Each Five Year Plan has addressed itself specially to problems which have emerged either because of new political and economic developments in the country and in the world, or as a consequence of progress already achieved. The priorities and the emphasis have necessarily changed and have had to be adjusted from Plan to Plan, but we have always kept in view our longterm objectives.
The Fourth Plan represents a conscious, internally consistent and carefully thought out programme for the most efficient exploitation of our resources possible, in existing conditions. The basic aim is to raise the standard of living of the people, especially of the less privileged sections of society. Our planning should result not only in an integrated process of increased production, but rational distribution of the added wealth. The overriding inspiration must be a burning sense of social justice. While increased production is of the utmost importance it is equally important to remove, or reduce, and prevent the concentration of wealth and economic power. The bene- fits of development should accrue in increasing measure to the common plan and the weaker sections of society, so that the forces of production can be fully unleashed. A sense of involvement, of participation by the people as a wrote, is vital for the success of any plan of rapid economic growth. This can only be evoked by securing social justice, by reducing disparities of income and wealth, and by redessing regional imbalances. A reorientation of our socioeconomic institutions in this spirit is, accordingly, a first necessity.
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One year of this Plan has already gone by. Between the Draft Plan and the present document, certain important changes have been made. The projected investment in the public sector has been stepped up so as to enable us to undertake a larger and bolder agenda of work. New schemes have been added to help the small farmer throughout the country, especially in the unirrigated areas. The emphasis is squarely on areas that have hitherto suffered from neglect. Transport and housing problems in urban regions will receive more attention. A small but significant beginning is also being made with special programmes for children.
The Fourth Plan thus provides a necessary corrective to the earlier trend which helped particularly the stronger sections in agriculture as well as in industry to enable them rapidly to enlarge and diversify the production base. In the long run, the full potential of growth cannot be realised unless the energies of all our people are put to profitable use. The emphasis on spreading the impetus and benefits of economic growth to the weaker sections is thus necessary in the interest of equality as well as growth. The Plan will now assist the less prosperous sections of our farming population to improve their position and make a yet bigger contribution to the national economy. Greater industrial activity and the modernisation of agriculture such as is proposed through the wider use of electric power and the adoption of intensive methods of cultivation in both irrigated and dry areas, would mean that a larger proportion of young people seeking jobs could find employment nearer home. At the same time, there are some new schemes, e.g., for a network of service centres in the rural areas, which will open out opportunities for young entrepreneurs.
The nationalisation of the fourteen big banks is evidence of our determination to bring a greater volume of resources within the area of social decision. It has effected a major change in our economic structure. It enables us to pay more attention to the "small mans" needs, and it restricts the scope for the monopolistic operations of the privileged few. Among other areas where social considerations have still to make a comparable impact are the enforcement of land laws, the management of public sector enterprises, and the toning up of the administration as a whole.
There can be no doubt that the responsibilities devolving upon the public sector without diminishing those of the private sector, in our mixed economy-will grow in range and volume. Socialism involves a reordering of society on a rational and equitable basis and this can only be achieved by assigning an expanding role to the public sector. Following the reorganisation of credit policies resulting from the nationalisation of major banks, the public sector can be expected more and more to occupy the commanding heights of the economy. It alone would be in a position to undertake investments of the requisite magnitude in such industries of vital importance to us as steel, machinery, machine tools, power generation, ship-building, petrochemicals, fuels and drugs. Naturally, the administration of public enterprises poses some problems of its own (here as in other countries) but they are not insuperable and will be overcome as we gain experience.
In addition to the fight against poverty and economic inequalities, the Plan seeks to enlarge the area of self-reliance in terms of financial resources and technological inputs. Here, too, the public sector has an important part to play. Besides striving to set an example in better management methods and ushering in a new pattern worker management relations, the public sector should increasingly base itself on domestic know-how. The public and private sectors have both been too ready to look to foreign collaboration not only for financial but for technological resources,. Such collaboration may be unavoidable when new processes have to be introduced but excessive reliance on it has induced a state of mind which inhibits the develop- ment of our own technological skills and managerial talents. We should rely more and more on our own machinery and technical know how, even though it may entail
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some initial risks and difficulties. This does not mean that we should be indifferent to the latest developments in technology, especially in the fastgrowing sectors. But it would be folly to forget that a nation's strength ultimately consists in what it can do on its own and not in what it can borrow from others.
There has been a noticeable change in recent years in the climate of international economic cooperation. It is now increasingly reafirmed by responsible sections of public opinion in the lending as well as in the borrowing countries that development assistance should not be regarded as an instrument of foreign or commercial policy but as a means of correcting dangerous imbalances in the world economy. However, "aid" is in reality credits which have to be repaid; and even if such credits are available on terms which are concessional in some respects, they often have features which are not consistent strictly with the objective of development. For some time to come we can benefit by more external credits, especially untied credits on concessional terms. But we have to take note of international realities as they are and reduce our reliance on foreign credits.
The policy of self-reliance does not mean that we should be actually reducing imports from the rest of the world. In fact, as the pace of development quickens, imports of industrial raw materials, intermediates and special components will go up. But. we propose to pay for them increasingly through our own earnings from exports. Economic independence, therefore, hinges to a considerable extent on how we fare in export markets; and our export performance in turn would depend on the state of our economy at home and our sucess in developing a purposive, planned approach to the problem.
The complaint that planning has led to a rise in prices and that planning is, therefore, harmful, is misconceived and unfounded. Consumers with fixed incomes, particularly in urban areas face hardship when prices rise; but at the other extreme, when prices are reduced or depressed to uneconomic level, producers suffer and employ- ment sags. If development means larger real incomes to ever larger numbers of people. some price increases can hardly be avoided. What we must ensure, however, is stability in respect of the core items of family consumption. An adequate supply of foodgrains and articles of everyday use must be maintained at fairly stable prices. Agricultural scientists who have brought about such notable increases in yields of wheat, and to some extent of millets and rice, have bow turned to the task of bringing about similar gains in pulses and cash crops like oilseeds, cotton and sugarcane. In general, the possible impact of development plans on the price 'situation has been carefully studied, and every effort will be made to keep production and prices in balance.
Planning certainly has its critics, but the fact remains that in modern conditions, and in a developing country like ours, economic planning has become indispensable. Compared to the tasks to be accomplished, the resources of money, trained manpower and administrative and managerial skills are in short supply, and they have to be allocated primarily with a view to the national interest rather than the interest of any private individual or group. This is, after all, what the Plan seeks to do. At the same time, and through such rational allocation, it can lead to an augmentation of the now scarce resources, and this gradually extend the limits of our economic freedom.
For us in India, planning is a charter of orderly progress. It provides a frame-work of time and space that binds sectors and regions together and relates each year's effort to the succeeding years, impelling us all constantly to greater cooperative endeavour. By strengthening the economic fabric of the country as a whole and of the different regions, it makes a powerful contribution to our goal of national integration.
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The Plan gives concrete expression to our national purpose. With its implementation, we shall nave advanced yet another stage towards our goal of a prosperous, democratic, modern, socialist society. In meetings of the National Development Council, I have found that all States, irrespective of the political beliefs their Governments hold, have very similar expectations of the Plan. This is so, because our people as a whole have pinned their hopes on the Plan, and want it to succeed, I am confident that they will not spare themselves in a determined effort to ensure that it does succeed.
INDIRA GANDHI
18 July 1970.
SUMMARY OF CONTENTS
PAGE
PREFACE iii
1. APPROACH AND POLICY 1
2. THE LONG TERM PERSPECTIVE 15
3. PLAN IN OUTLINE 26
4. FINANCING THE PLAN 39
5. FOREIGN TRADE 50
6. IMPLEMENTATION 57
PROGRAMMES OF DEVELOPMENT
7. AGRICULTURE 60
8. ANIMAL HUSBANDRY, DAIRYING, FISHING AND FORESTS 99
9. COOPERATION AND COMMUNITY DEVELOPMENT 113
10. FOOD AND NUTRITION 123
11. IRRIGATION AND FLOOD CONTROL 130
12. POWER 143
13. VILLAGE AND SMALL INDUSTRIES 154
14. INDUSTRY AND MINERALS 160
15. TRANSORT AND COMMUNICATIONS 180
16. EDUCATION AND MANPOWER 188
17. SCIENCE RESEARCH 204
18. HEALTH AND FAMILY PLANNING 207
19. REGIONAL DEVELOPMENT, HOUSING AND WATER SUPPLY 214
20. SOCIAL WELFARE 219
21. WELFARE AND DEVELOPMENT OF BACKWARD CLASSES 222
22. LABOUR AND EMPLOYMENT 225
23. OTHER PROGRAMMES 231
INDEX 235
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C O N T E N T S
PAGE
PREFACE iii
CHAPTER 1 APPROACH AND POLICY 1
Aims and Objectives of Planning 1
Review of Economic and Social Situation 3
Economic Situation 3
Social Situation 5
General Approach to Fourth Plan 6
Tempo of Development 6
The Problems of Weaker Sections 8
Correction of Regional Imbalances 8
Social Services 9
Employment and National Minimum 10
Refashioning of Institutions 10
Organisation of Agricultural Production 11
Panchayati Raj and Planning 11
Contribution of Cooperatives 11
Nationalisation of Banks 12
Regulation of the Economic System 12
Public Sector Operation 13
CHAPTER 2 THE LONG TERM PERSPECTIVE 15
Population Growth 15
Macro-Economic Projections 16
Structure of Production 17
Crucial Role of Agriculture 17
Industrial Development 19
Imports 21
Exports 21
Balance of Payments 21
Domestic Resource Mobilisation 23
Savings 23
Manpower Planning 24
Design Organisation 24
Survey of Natural Resources 24
Scientific Research 25
Quality of Environment 25
Long Term Perspective-A Quantitative Framework 25
CHAPTER 3 PLAN IN OUTLINE 26
Size of the Plan and Pattern of Outlay 26
Central Assistance 27
Centrally Sponsored Schemes 28
Centre's Plan 29
State Plans 30
Rate of Growth 32
CHAPTER 4 FINANCING THE PLAN 39
Third Plan 39
Annual Plans 39
Fourth Plan 41
Balance from Current Revenues 43
Surpluses of Enterprises 43
Retained profits of Reserve Bank 43
Market Borrowings 44
Small Savings 44
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Annuity Deposits, Compulsory Deposits 44
State Provident Funds 44
Miscellaneous Capital Receipts 44
Loan from LIC 45
Budgetary Receipts Corresponding to External
Assistance 45
Deficit Financing 45
Additional Resource, Mobilisation 45
Resources for Private Investment 46
External Resources 46
Savings and Investment 47
CHAPTER 5 FOREIGN TRADE 50
Exports 50
Third Plan 50
Devaluation of the Rupee 51
Annual Plans 51
Export Programme 52
Imports 53
Third Plan 53
Devaluation and Import Liberalisation 55
Annual Plans 55
Import Requirements 55
CHAPTER 6 IMPLEMENTATION 57
Importance 57
Annual Plans 58
State Plans 58
District Planning 59
Administrative Machinery 59
Public Accountability 59
Training 59
CHAPTER 7 AGRICULTURE 60
Review of Progress (1961-69) 60
Evolution of Agricultural Strategy 60
Review of Agricultural Production 61
Objectives, Targets and Strategy of Fourth Plan 63
Objectives 63
Targets of Production 63
Strategy of Production 63
Financial, Outlays 65
General Programmes of Agricultural Development 65
Agricultural Research and Education 65
Farmer's Training and Education 66
Material Inputs 67
Improved Seeds 67
Fertilisers and Manures 68
Plant Protection 69
Agricultural Implements and Machinery 70
Minor Irrigation 71
Soil Conservation and Land Reclamation 71
High-Yielding Varieties Programme 72
Multiple cropping 72