INDIAN PLANNING —PAST & FUTURE

Summary

This Forum of Free Enterprise booklet gathers three independent essays by prominent Indian voices in industry, economics, and finance, all converging on a single verdict: fifteen years of Five-Year Plans have failed to improve the material condition of the average Indian, and the Fourth Plan must radically reconsider both its diagnosis and its methods. The frontispiece frames the volume’s ideological stance with a Eugene Black epigraph insisting that private enterprise be embraced as “an affirmative good” rather than a tolerated evil. Mookerjee’s opening essay argues that planning success is impossible without sweeping modernisation—mechanisation, automation, and managerial pragmatism—and lays particular blame on restrictive public-sector licensing and labour-monopoly policies. Das furnishes a dense statistical indictment, showing that per capita income, diet, housing, and employment all registered negligible or negative improvement across the planning period. Parekh, writing on the eve of the Fourth Plan, reframes the central problem as runaway inflation produced by contradictory fiscal, monetary, and price-control policies, and urges a shift from prestige-driven outlay targets to economical, productivity-oriented resource use.

Essays

PLANNING SUCCESS DEPENDS ON MODERNISATION

By SIR BIREN MOOKERJEE

Mookerjee opens with Lewis Carroll’s Red Queen parable—India has been running ever faster under its Plans yet finds itself standing under the same tree—and uses this to argue that the real obstacle to planning success is not insufficient outlay but a failure to embrace modernisation. He documents the stagnation of Indian agriculture (70% of workers cannot produce enough to feed themselves and the remaining 30%) against New Zealand’s example where mechanised farming supports 96 people per agricultural worker. He extends the argument to industry: automation and computers are no longer optional, and the fear that they cause unemployment is contradicted by the experience of expanding economies in the USA, Europe, Japan, and the USSR. The deeper problem, he argues, is a “labour monopoly” that raises production costs, prices Indian goods out of world markets, and forces the taxpayer to subsidise export gaps. He concludes with a pointed warning that if government policy of appeasing labour monopoly continues, it will, like Frankenstein’s monster, turn on its own creator.

• Uses the Lewis Carroll Red Queen allegory to argue India has made no real progress despite fifteen years of planning effort.
• Contrasts Indian agricultural productivity (70% of workers cannot feed the country) with New Zealand (one farmer feeds 96 people on average).
• Argues automation and mechanisation are essential and that fears of resultant unemployment are not borne out in any expanding economy.
• Identifies ‘labour monopoly’ and government appeasement of trade unions as the primary cause of rising production costs and loss of export competitiveness.
• Calls for a change in government and trade-union attitudes toward technical modernisation as a prerequisite for any planning success.

POOR PERFORMANCE OF 15 YEARS OF PLANNING IN INDIA

By DR. N. DAS, I.C.S. (Retd.)

Das offers a meticulous data-driven assessment of fifteen years of Indian planning, originally published in the Times of India (February 24, 1966). While acknowledging macro-level gains—national income up 68.7%, the industrial production index rising from 73 to 174.8, and reduced import dependence in key industries—he argues these aggregate figures mask a deeply disappointing human reality. Per capita income at constant prices rose by only Rs.66.9 over fifteen years. Diet surveys show no appreciable quantitative improvement in foodgrain consumption: the daily per capita figure moved from 16.88 oz in 1935–48 to 16.98 oz in 1955–58, and by 1964 had actually fallen below pre-war levels. The housing shortage more than tripled. Unemployment backlogs grew from 4.1 million to an estimated 12 million by the end of the Third Plan, with underemployment pushing the figure to 32 million. Drawing on Galbraith’s consumption criterion, Sukhatme’s nutrition studies, USAID findings, and Colin Clark’s investment-employment ratio, Das concludes that planning has failed to achieve even minimum human needs for food, clothing, and shelter, and calls for a fundamental reappraisal of planning strategy.

• National income rose 68.7% in constant prices, 1950–65, but 41.7% of that gain was neutralised by population growth, leaving only about 27% available as per capita increase.
• Per capita daily foodgrain availability actually declined from 16.4 oz in 1961 to 15.7 oz in 1964—lower than in the pre-war period 1935–48.
• Housing shortage grew from 1.6 million units in 1951 to 5.6 million in 1961, with overcrowding and sanitation conditions essentially unchanged.
• Unemployment backlog rose from 4.1 million at the start of the First Plan to 8 million in 1960–61 and an estimated 12 million at the end of the Third Plan; adding underemployed, the figure reaches 32 million.
• Applies Galbraith’s consumption criterion and Sukhatme’s nutrition data to show that the average Indian’s diet is only three-quarters of the index for poor countries (excluding India), and that 250 million Indians are undernourished or malnourished.

PROBLEMS OF THE FOURTH PLAN

By H. T. PAREKH

Parekh addresses the challenge of the Fourth Plan from his vantage point as General Manager of the Industrial Credit and Investment Corporation of India. His central argument is that plan size and resource availability are not the real problems; the crux is the rising cost of living and runaway inflation. He traces the inflationary spiral to a contradictory combination: governments at both central and state levels add to indirect taxes, businesses pass costs on through higher prices, and even price controls paradoxically help industry recoup costs with government backing. The sugar industry is cited as a classic case of government-industry-farmer collusion exploiting the consumer. On agriculture, Parekh welcomes the lesson of the 1965 national emergency—it dispelled complacency about foreign aid and directed attention to genuine self-reliance—and is optimistic that with adequate inputs, agricultural self-sufficiency within five years is achievable. The essay is cut off at printed page 18 (PDF page 20), mid-argument on monetary policy and the limits of credit-squeeze approaches.

• Argues that plan outlay size is a misleading metric: each successive plan left more intractable problems than it solved.
• Identifies the rising cost of living and inflation as the central challenge for the Fourth Plan, overriding concerns about resource availability.
• Critiques the sugar-control system as a textbook case of government, industry, and farmers jointly exploiting the consumer over twenty years.
• Welcomes the 1965 withdrawal of US aid as a catalyst for genuine self-reliance and welcomes remunerative foodgrain prices as a stimulus to production.
• Argues that the credit squeeze has disproportionately damaged small traders and entrepreneurs who rely on indigenous (informal) bankers charging 15–20% interest, not the organised banking system.