14. In the pattern of development envisaged in the Five Year Plans, cooperation is expected to become progressively the principal basis of Organisation in several branches of economic life, notably, in agriculture, small industry, distribution, construction and provision of essential amenities for local communities. Village and small scale industries have a crucial role in the development of the national economy, for, besides providing consumer and other goods and largescale employment, they offer a method of ensuring a more equitable distribution of the national income and the means for the utilisation of available resources in skill and manpower. Disparities in levels of development in different regions have to be steadily reduced and the benefits of industrialisation spread evenly between different parts of the country. These aims have to be achieved, as the Industrial Policy Resolution specified, through the balanced and coordinated development of the industrial and agricultural economy of each region, and through planned urbanisation and the development of economic and social services. Frequently, in the early phases of development, there is a dilemma to be faced : whether it is better to concentrate on developing Tore favourably situated areas and thus securing quicker and larger returns from the investment, or to aim at more even development of the country, through greater attention to the more backward areas. Economic considerations have necessarily to be given importance, but certain social and regional aspects cannot be ignored. Indeed, as the economy develops, it becomes possible to provide for more intensive development in the less developed areas.
15. The policies described above constitute the larger part of the programme for achieving rapid economic development and for realising the socialist pattern of society. In such a scheme the basic criterion in determining social policies and the lines of economic advance must necessarily be the interest of the community as a whole, and especially of its weaker sections. Through its very success and dynamism, a rapidly developing economy throws up new problems of Organisation and management as
OBJECTIVE OF PLANNED DEVELOPMENT 5
well as of social policy. The existing social and economic institu- tions have, therefore, to be appraised from time to time in relation to their role in the nation's development. To the extent they do not adequately fulfil the social purpose or fail to secure the economic aims of planned development, they have to be replaced or transformed.
16. Development plans reflect the changes which are taking place in the country's economic and social structure as well as the directions in which this structure has to be reorganised and strengthened. In a democracy the pace of change depends to a large extent on increase in public understanding and in public response and on the growth of a scientific outlook on the part of large numbers of people. Besides the economic and social objectives, the educational aspects of planning are, therefore, of great importance. These are emphasised through the wide sharing of responsibility for drawing up and carrying out Plans and 'through the participation in the process of planning by organisations representing all sections of opinion as well as universities and educational institutions and voluntary social service agencies. On behalf of the community as a whole the State has a large responsibility for assessing the wider long-term needs of the nation as against the claims of individual, sectional or regional interests, and in setting the goals to be achieved.
III
PROGRESS TOWARDS SOCIALISM 17. It is a basic premise in India's Five Year Plans that, through democracy and widespread public participation, development along socialist lines will secure rapid economic growth and expansion of employment, reduction of disparities in income and wealth, prevention of concentration of economic power, and equal society. values and attitudes of the free and equal society. these are vital objectives. Where the bulk of the people live so close to the margin of poverty, the claims of social justice, of the right to work. of equal opportunity and of the minimum level of the living have great urgency. Economic activity must therefore, be so organised that the tests of production and growth and those of equitable distribution are equally met. A high rate of economic growth sustained over a long period is the essential condition for all citizens, and especially for those in low income groups or lacking the opportunity to work. In- crease in population and the need for investment in basic productive capacities and in economic and social overheads, which yield their benefits after a considerable period, place large burdens on develop- ing economy. On the one hand, they limit the extent to which, over the short period, living standards can be raised' on the other, to be borne at all, their burdens must be shared widely, calling for sacri- fice, according to capacity, by every section of the community.
18. Progress towards socialism lies along a number of directions, each enhancing the value of the others. Above all, a socialist economy must be efficient, progressive in its approach to science and technology, and capable of growing steadily to a level at which the well-being of the mass of the population can be secured. In an underdeveloped country, a high rate of economic progress and the development of a large public sector and a cooperative sector are among the principal means for affecting the transition towards socialism. In the second place, a socialist economy should ensure equality of opportunity to every citizen. As a first step. it should provide for the basic necessities. in particular, for food, work, opportunity for education, reasonable conditions of health and a minimum level of income which, in the given circumstances, will ensure tolerable living standards. In the third place, through the public policies it pursues, a socialist economy must not only reduce economic and social disparities which already exist, but must also ensure that rapid expansion of the economy is achieved without concentration of economic power and growth of monopoly. Finally, a society developing on the basis of democracy and socialism is bound to place the greatest stress on social values and incentives and on developing a sense of common interest and obligations among all sections of the community. On account of the rigidities of the caste system as well as economic differences, India's social structure already presented numerous inherent conflicts and barriers to economic advance. While some of the old distinctions are passing a process which is being speeded up- urbanisation and the growth of modern industry tend to introduce new disparities in levels of income and opportunity. In turn, these are reflected in modes of living, social behaviour and a general increase in the spirit of acquisitiveness. It is the aim of public policy to check undesirable tendencies and to ensure that these do not come in the way of building up a society which is fundamentally integrated from within and derives its strength from common values and a sense of shared citizenship.
IV
EQUAL OPPORTUNITIES 19. The first condition for securing equality of opportunity and achieving a national minimum is assurance of gainful employment for developed country, failure to provide full employment can be traced to certain fundamental deficiencies in the economic structure. Until the industrial base has been greatly strengthened and education and other social services developed, the economy is unable to achieve a rate of growth sufficient to provide work at an adequate level of remuneration to the entire labour force. These processes of development necessarily take time and call for a scale of effort
6 THIRD FIVE YEAR PLAN
and investment which may be well beyond the capacity of the economy in the early stages, Poverty is most acute in areas which have heavy pressure of population or in which, on account of the scanty development of local resources, low levels of productivity persist and there is lack of continuous work. There must, therefore, be additional opportunities for work to enable the lowest income groups to earn enough through productive employment to meet their minimum needs. In the Third Plan, it is envisaged that, along with programmes of development for large and small industries, for agriculture and for economic and social services, there will also be a largescale programme for rural works especially in densely populated regions and for periods of under-employment during the slack agricultural seasons,
20. In advanced countries the development of education and other social services has played a large part in ensuring greater equality of opportunity to different sections of the population and greater social mobility. Social services have also helped to bring about a measure of redistribution of income and provide the basic necessities. In India too, the expansion of social services will exert a similar influence, specially through the extension of free and universal education at the primary level, provision of larger opportunities for vocational and higher education, grants of scholarships and other forms of aid, and improvement in conditions of health, sanitation, water supply and housing, Thus, programmes for the welfare of scheduled tribes and castes and other backward classes, for the provision of minimum amenities in rural areas for local development at the village level and for the housing of industrial workers and slum clearance and improvement, are to be viewed not merely as extensions of social services but as vital ingredients in the scheme of economic development. These and other social benefits have to be provided to a greater extent in the Third and subsequent Five Year Plans than has been possible over the past decade. They will call for larger resources, not only from the State, but also within each community, and for the participation of a growing number of voluntary workers.
21. As economic development proceeds, social security and insurance will come to have high priority. Through the scheme of provident funds and health insurance for industrial workers the first important steps in this direction have already been taken. In the course of the Third Plan, it is proposed to introduce a scheme of employment assistance for industrial workers and to make a small start with relief and assistance for destitute persons, orphans and physi- cally handicapped persons without means of support or livelihood. In areas in which the rural works programme is taken in hand, facilities for registration are to be provided for persons seeking work. Thus, social services along with intensive economic development, the provision of scholarships and other facilities in the field of train- ing and education and the beginnings of social security should go some distance in providing more equal opportunities to different sections of the community.
22. Increase in agricultural production, the growth of modern industry and of transport and power, and the development of the public and the cooperative sectors in the economy will create conditions which will make it possible to advance towards socialism and to improve living standards. These will gain 'greater social significance in the measure in which socialism develops at the level of the community and enlists widespread local effort. As the values of socialism and democracy become more pervasive, influencing everyday attitudes and behaviour, wider opportunities will open up for all sections in the community, and especially for the under-privileged.
23. A large segment of India's development plans reaches the mass of the people through community development. In promoting the growth of socialism at the level of the community amongst the rural people, therefore, the role assigned in the Five Year Plans to the community development movement should be specially stressed. Community development must seek, above all, to bring about increase in agricultural production, higher standards of productivity, and fuller utilisation of the available manpower and other resources. With its stress on the development of local initiative and responsibility and on cooperative self-help, the movement is designed to serve as a spearhead of a wide range of programmes of development, which include agriculture, cooperation, irrigation, village and small industries, rural electrification and the reform of the agrarian system. One of its major aims is to create conditions for the growth of a progressive cooperative rural economy with a diversified occupational structure in which the weaker sections of the community are brought speedily to the level of the rest. The development of a cooperative agroindustrial economy in rural areas is essential for ensuring that the benefits of industrialisation spread out evenly among different sections of the population and to different areas and for securing a large measure of integration between rural and industrial development in each region.
24. A recent development of the community development movement in the rural areas has been, what is called, Panchayati Raj, or democratic decentralisation. At the village, block and district levels, responsibility for development is entrusted to Village Panchayats, Panchayat Samitis and Zila Parishads, and they are given considerable powers. This is a revolutionary change in the structure of administration within the district and in the pattern of rural development, and is already producing significant results and changing the rural climate.
25. In the villages the task of building up socialism at the bass is facilitated as the policies
OBJECTIVES OF PLANNED DEVELOPMENT 7
of land reform and cooperative development are implemented and as the approach of bhoodan and gramdan and of common obligations begins to permeate within each rural community. In the towns and cities also there is equal need for appropriate social policies. The influx of population into urban areas leads not only to a worsening of living conditions for large section of new disparities. These developments in the values of land and property, to the creation of new disparities. These developments demand a variety of measures, including careful planning of the use of land, large scale programmes for land acquisition, housing and land allotment policies designed to assist the lower income groups and the poorer sections of the population, adequate taxation of capital gains and urban properties, avoidance of conspicuous and wasteful forms of construction, and public vigilance over conditions of tenancy and rents.
V
DISTRIBUTION OF ECONOMIC POWER 26. The growth of the corporate private sector over the past decade has brought to the fore the question of the means by which economic growth will be secured without concentration of economic power and the emergence of monopolistic tendencies. As a rule, the process of rapid economic development tends to enlarge opportunities for well-established firms to expand their size and enter new fields of enterprise. As compared to new undertakings or to smaller enter- prises, they enjoy advantages in organisation and expertise, in access to the capital market and ability to secure foreign collaboration and,generally, in the resources which they are in a position to deploy. The fact that a significant proportion of the resources available for investment in industry arises within the corporate sector itself is another factor which makes it easier for an existing unit to expand than for a new one to come into being and take firm root. In several industries technological considerations favour the setting up of large-scale units with resultant savings in capital cost and in the cost of production. Consequently, certain difficult problems arise. On the one hand, to the extent to which large existing enterprises undertake development in accordance with the priorities set in the Five Year Plans and avail of essential economies of scale, they assist the growth of the economy. On the other, excessive economic power in relatively few hands and the uses to which it may be put, disturb the balance of power in a democracy, expose the social structure to new strains and tensions, and come in the way of diffusion of economic opportunities.
The tendency towards concentration of economic power has to be countered in a variety of ways' firstly, through the extension of the public sector into fields requiring the establishment of large scale units and heavy investments; secondly, through widening opportunities for new entrants and for medium and small-sized units as well as for industries organised on cooperative lines; and, thirdly, through effective exercise of Government's powers of control and regulation and use of appropriate fiscal measures. The object, briefly, must be not merely to prevent concentration of economic power and the growth of monopolistic tendencies, but also to promote a pattern of industrial organisation which will lead to high levels of productivity and give full scope, within the framework of national planning, to new entrepreneurs, to medium and small scale enterprises and to cooperative organisations.
27. As a decisive instrument which the State can employ in preventing concentration of economic power and growth of monopolistic tendencies, the rapid expansion of the public sector serves a twofold purpose. It helps to remove certain basic deficiencies in the economic structure and, at the same time, it reduces the scope for accumulation of wealth and large incomes in private hands. In the generation and distribution of electric power, the public sector has now the principal share and is being rapidly enlarged. Its share in transport has also steadily increased. In large industries and minerals the total investment in the public sector during the Third Plan will be distinctly higher than that in the private sector. As compared to 1950-51, by the end of the Third Plan, the contribution of the public sector will increase from less than 2 per cent to nearly a fourth in organised manufacturing industries and from less than a tenth to over a third in mineral production. While these are significant developments, careful attention must be 'given to factors which will increase the capacity of the public sector to expand still more rapidly, such as efficiency of operation, availability of trained managerial and technical personnel in larger numbers and ability to earn large surpluses. It is also essential that to the greatest extent feasible construction and supply functions for State undertakings should be entrusted to public and cooperative agencies. As the relative share of the public sector increases, its role in economic growth will become even more strategic and the State will be in a still stronger position to determine the character and functioning of the economy as a whole.
28. Within the field of activity entrusted to the private sector, the major aim of policy is to ensure broad-based owenership in industry, diffusion of enterprise and liberal facilities for new entrants, and the growth of cooperative organisations. Means for achieving these objectives are already available to a large extent, but need to be employed by the Central and State Governments and the various agencies functioning under them more purposefully and with greater coordination than in recent years. In licensing new industrial units and sanctioning the expansion of existing units, there must be considerable vigilance in permitting the growth of large existing businesses and, in the greatest
8 THIRD FIVE YEAR PALN