1.3.4 The growing unemployment has been a major problem of the eighties and is going to be even worse in the nineties. Provision of employment to all the job-seekers is going to be a major challenge for the planners during this decade.
1.3.5 The entire popultion does not have access to all the basic necessities of life - drinking water and health facilities, in particular. Infant mortality is still high and literacy levels, particularly among the women are low. The social infrastructure has to be attended to with a degree of urgency in the next phase of development.
1.3.6 There has been a marked acceleration in urbanisation over the past two decades. If the present trends continue, urban population may account for about one-third of the total population by the turn of the century. Urban infrastructure, even at a minimum level, for this size of population will need considerable resources.
1.3.7 Although in the eighties some signs of improvement in certain less advanced States have been observed, regional disparities continue to exist. Development institutions and organisational capabilities in the backward regions of the country and the delivery system for development programmes would need to be strengthened to deal effectively with the problems of development and redistributive justice.
1.3.8 Technological change in agriculture has led to increases in cropping intensities. But, in areas of developed agriculture, further absorption of labour is declining and there is need for greater economic diversification. In the face of the shrinking size of average holdings, the special needs of inputs, capital, processing and marketing for small land holdings should be paid attention.
1.3.9 From the point of view of long-range sustainability, the need for greater efficiency in the management of natural resources- land, water, minerals, etc.- has become urgent. A vigorous effort has to be made for recovering the wastelands and extending the green cover. A package of incentives to promote efficiency in the use of nature-based resources needs to be devised as a matter of priority. Energy use efficiency and energy conservation need particular attention in view of expanding needs and shrinking sources of fossil fuel.
1.3.10 On an overall stock taking, we find that at the threshold of the Eighth Plan, there is a high backlog in the provision of social consumption needs of the people, particularly the rural people and the poor. There is a reduced, but still unacceptably high level of poverty and hunger in the country, with high concentration in some regions. Illiteracy, particularly among women, is very high. There is high incidence of infant mortality. Decadent social practices like scavenging still prevail in large parts of the country. The widening gap between growth of labour force and growth of employment is assuming serious proportions.
1.3.11 The imperatives of growth in the face of these challenges require an innovative ap-
7
proach to development which is based on a reexamination and reorientiaton of the role of the Government, the harnessing of the latent energies of the people through people's involvement in the process of nation building and the creation of an environment which encourages and builds up people's initiative rather than their dependence on the Government and which sets free the forces of growth and modernisation. The State has to play more of a facilitating role and has to concentrate on protecting the interests of the poor and the underprivileged.
1.3.12 The need to restructure the systems of economic management has become unavoidable if India is to emerge as a vibrant and internationally competitive economy in the 90's. Systems of control and regulation, developed for good reasons in the past have outlived their utility and some positively stand in the way of further progress. Such dysfunctional systems have to be overhauled in the light of emerging realities.
1.3.13 The industrial regulatory environment of the past has led to certain unintended results which in turn have contributed to the weaknesses in our industry. Domestic competition has often been restricted, leading to lack of quality and cost consciousness in segments of industry. The level of protection offered to Indian industry, by way of quantitative import restrictions and tariffs, has been too high leading to high costs of production and inadequate technological dynamism. These weaknesses have to be removed in the context of the scarcity of resources, which puts a premium on efficiency, and also in the context of global economic trends which require a high degree of competitiveness. Indian industry is now ready to face the full pressure of domestic competition and the measures already taken in the sphere of industrial policy should help to achieve this objective. Indian industry must also be readied to face international competition in a phased manner.
1.3.14 Steps have already been taken to reduce the degree of quantitative licensing in trade and industrial policy and it is proposed to do away with quantitative restrictions altogether over a period of about three years. We have also made a start with reducing tariff levels. The tariff rates must be reduced in a phased manner so that they become comparable with those in other industrializing developing countries within a few years. This is essential to make Indian industry internationally competitive.
1.3.15 The Eighth Plan has to meet these challenges in the various sectors against the background of certain critical imbalances which have emerged recently, rather sharply. These are:
(a) increasing fiscal and budgetary deficits, mounting public debt and severe constraints on the resources of the Government and the public sector to undertake the essential developmental activities,
(b) a critical situation in the balance of payments, and
(c) a high rate of inflation.
Thus, the Eighth Plan, while providing a new orientation to planning consistent with the new thrusts in economic policy, has to ensure that the public sector investment rests on a sound resource base and that the current account deficit is limited to a level sustainable by normal capital flows.
1.3.16 The Balance of Payment situation has been continuously under strain for over almost a decade. During the Seventh Plan period the ratio of current account deficit to GDP averaged 2.4 per cent - far above the figure of 1.6 per cent projected for this period in the Plan document. This deterioration in the Balance of Payments occured despite robust growth in exports in the last three years. The already difficult Balance of Payment situation was accentuated in 1990-91 by a sharp rise in oil prices and other effects of the Gulf War. With access to commercial borrowings going down and the Non-Resident de- posits showing no improvement, financing the current account deficit had become extremely difficult. Exceptional financing in the form of assistance from IMF, the World Bank and the Asian Development Bank had to be sought. While the immediate problems have been resolved to some extent, it is imperative that during the Eighth Plan steps are taken to curb the fundamental weakness in India's Balance of Payments situation so that it does not cause serious disruption to the economy. It is, therefore, necessary to plan on a drastically reduced inflow of resources from outside.
9
1.3.17 Prices rose somewhat moderately during the Seventh Plan. The annual increase in the wholesale price index was seven per cent. However, the last two years have seen a sharp increase in the prices, more particularly of the primary articles. Maintaining a reasonable degree of price stability is essential for the smooth functioning of the economic system. In the context of the Eighth Plan, price stability is essential both to protect the interests of the poor and to prevent any deterioration in the mobilisation of resources. In the past, it has been found that while any increase in the price leads to corresponding increases in Government expenditure, a similar increase in revenue does not occur. As a consequence, the resource gap widens. Deficit financing in terms of the Central Government borrowings from the Reserve Bank must, during the Eighth Plan, be kept at a level consistent with a reasonable degree of price stability.
1.3.18 The ability to sustain a level of investment that is necessary to ensure the fulfilment of the objectives of Eighth Plan rests on the feasibility of mobilising the necessary resources. In the Seventh Plan, balances from current revenues and contribution of public enterprises, both inclusive of additional resource mobilisation, were to finance nearly 40 per cent of the total public sector investment. However, it turned out ultimately that these two sources financed no more than 20 per cent of the total public sector investment, resulting in greater recourse to borrowing. Public sector investment was thus financed in a manner which was neither envisaged nor healthy for the economy. The public sector investment of the order envisaged in the Eighth Plan requires that the dissavings of the Government must come down sharply. Improved fiscal management, leading to the generation of more savings by Government, is one of the fundamental premises underlying the financing pattern of public sector investment in the Eighth Plan. The recent trend of increasing dissavings of the Government needs to be reversed.
Objectives 1.4.1 In the light of the trends outlined above, the approach to the Eighth Plan will have the following fourfold focus:
(i) Clear prioritisation of sectors/projects for investment in order to facilitate operationalisation and implementation of the policy initiatives taken in the areas of fiscal, trade and industrial sectors and human development;
(ii) Making resources for these priority sectors available and ensuring their effective utilisation; and completion of projects on schedule avoiding cost and time overruns;
(iii) Creation of a social security net through employment generation, improved health care and provision of extensive education facilities throughout the country; and
(iv) Creation of appropriate organisations and delivery systems to ensure that the benefits of investment in the social sectors reach the intended beneficiaries.
1.4.2 Based on this approach, the following objectives will be accorded priority :
(i) Generation of adequate employment to achieve near full employment level by the turn of the century;
(ii) Containment of population growth through active people's cooperation and an effective scheme of incentives and disincentives;
(iii) Universalisation of elementary education and complete eradication of illiteracy among the people in the age group of 15 to 35 years;
(iv) Provision of safe drinking water and primary health care facilities, including immunisation, accessible to all the villages and the entire population, and complete elimination of scavanging;
(v) Growth and diversification of agriculture to achieve self-sufficiency in food and generate surpluses for exports;
(vi) Strengthening the infrastructure (energy, transport, communication, irrigation) in order to support the growth process on a sustainable basis;
9
1.4.3 The Eighth Plan will concentrate on these objectives keeping in view the need for (a) continued reliance on domestic resources for financing investment, (b) increasing the technical capabilities for the development of science and technology, (c) modernisation and competitive efficiency so that the Indian economy can keep pace with and take advantage of the global developments.
Human Development 1.4.4 Human development will be the ultimate goal of the Eighth Plan. It is towards this that employment generation, population control, literacy, education, health, drinking water and provision of adequate food and basic infrastructure are listed as the priorities. The provision of the basic elements, which help development of human capital, will remain the primary responsibility of the Government.
Employment 1.4.5 The phenomenon of growing unemployment has, of late, emerged as a major problem and therefore expansion of employment opportunities has to be the central objective of the planning effort. An accelerated expansion of employment opportunities is necessary both for poverty alleviation and effective utilisation of human resources for economic and social development of the country. During the past two decades, employment has grown at a rate of about 2.2 per cent per annum, but due to a faster increase of labour force at about 2.5 per cent, the backlog of unemployment has been rising. A declining trend in the employment elasticity with respect to GDP growth in recent years has made the task of accelerating, the growth of employment more difficult. A deliberate and conscious effort towards employment orientation of the growth process is therefore essential.
1.4.6 It is considered necessary and reasonable to set the goal of employment for all for achievement in a time span of the next ten years. Assessment of the present backlog of unemployment and likely additions to the labour force suggest that this goal will require generation of additional ten million employment opportunities per year on an average, or about a three per cent average annual growth of employment. A relatively high rate of economic growth combined with a pattern of sectoral growth yielding a higher aggregate employment elasticity will be necessary for achieving the rate of employment growth envisaged. Raising employment elasticity in aggregate will require faster growth of the sectors, the sub-sectors and the areas which have relatively high employment potential. A geographically and crop wise diversified agriculture, wasteland development for crop cultivation and forestry, rural non-farm sector, small scale manufacturing, urban informal sector, rural infrastructure, housing and services, have been identified as sectors and areas constituting the basic elements of an employment oriented growth strategy.
1.4.7 It also needs to be recognised that in addition to the generation of new stable employment opportunities of the order of 10 million per year, which will take care of the open unemployment, it should be ensured that those underemployed and employed at very low levels of earnings, are able to raise their productivity and income levels. Upgradation of technologies of the self-employment in the traditional and unorganised sectors and improved access to credit and markets would need to be ensured. It would also be necessary, in the meantime, to continue programmes for providing supplementary work to the underemployed poor in infrastructure building and other activities.
Population and Family Welfare 1.4.8 The rate of population growth during the eighties, though marginally slower than what it was during the seventies, was still around 2.1 per cent per annum, which implied an addition of around 18 million to the nation's population every year. The country will cross 1 billion mark by the year 2001. If this trend is not halted, it will never be possible to render social and economic justice to millions of our masses. The Eighth Plan will make vigorous efforts to contain the population growth.
1.4.9 To give a major thrust in this priority area, which constitutes the pivotal point for the success of all developmental efforts, a National Population Policy needs to be enunciated and adopted by the Parliament. Given the political commitment at all levels, it must generate a cascading effect to become a peoples' move- ment. Social determinants such as female literacy, age at marriage, employment opportunities for women, and their status in society are as important as achieving a reduction in infant
10
mortality, improving health and nutrition of pre-school child, and providing a comprehensive package of maternal health care services. Such an intersectoral interaction, supported by political commitment and a popular mass movement, should constitute the approach to strategic interventions.
Literacy and Education 1.4. 10 Expansion and utilisation of employment opportunities and increase in productivity are strongly influenced by education. In the process of development, education is, therefore, an investment. This investment has to be made well in time to derive full benefits from the overall developmental effort.
1.4.11 Recent efforts made in the state of Kerala, and in some districts of Tamil Nadu and West Bengal to achieve 100 per cent or near 100 per cent literacy are an example of what can be achieved through determination and people's involvement. There are wide variations in literacy rates across the States. The Eighth Plan sets the target of achieving 100 per cent literacy among the people of age group 15 to 35 years in all the States. This will involve changing the literacy status of about 110 million people. Students in colleges and universities, teachers and other motivated people will have to be mobilised for this mission. Far more vigorous efforts in this respect are needed in the states of Rajasthan, Haryana, Uttar Pradesh, Bihar, Madhya Pradesh and Orissa than in the other States.
1.4.12 The intensity of the problems of education and population growth corresponds to the degree of lack of development in the rural areas, inequitous distribution of assets in terms of land and water- supply in a given rural community, and educational deprivation of women. The broad priorities, therefore, are to prepare the ground for the spread of literacy and primary education through socio-economic justice and to remove the traditional constraints on the status and education of rural women, in particular. A demand for education, modernization and efficiency has to be stimulated through a general awakening and mobilisation of the rural communities especially in the educationally backward states.
1.4.13 The Eighth Plan will aim at universal primary education, both through full-time formal schools and part- time, non formal arrangements for working children and girls in particular. Special programmes will be launched for education of tribal children with due regard to tribal culture, economic problems, and removal of disparities between tribal and non-tribal population groups, with substantial inputs of Science and Technology leading towards the reduction of isolation of the tribal people from the rest of society.
1.4.14 Higher Education needs to be extended in an equitable and cost effective manner mainly by large-scale expansion of distance education system and increased involvement of voluntary and private agencies. Apart from strengtheing of facilities and restructuring curriculam, the component of value education should be introduced as part of foundation programme. While an integrated approach to the development of higher education needs to be adopted, measures to promote excellence should be emphasised. Technical education including Management Education is one of the most, potent means for creating skilled manpower required for developmental tasks. While this imples high costs of construction, laboratory equipment, library books and journals and high rate of obsoloscence, such high cost, being directly related to development, should be viewed as an essential productive investment, yielding valuable returns to the society. The quality of technical and management education needs to be improved not only through modernisation and upgradation of infrastructures but also by adopting futuristic approaches and strengthening industry-institutional and R&D Laboratories inter- action.