Government Policies for Development and Arising Issues

Introduction:

Government policies and interventions for development in various sectors and issues arising out of their design and implementation. India is developing country and has implemented growth strategies in different sectors to enhance its economic status. At global scale. It has continually shown high growth rate during the post-liberalisation period through the execution of economic reforms in the beginning of 1990s. After independence, development of the country and the community has always been the major objective of the government. It has attained excellence in several key areas that range from information technology and pharmaceuticals to automotive parts, and is currently considered as one of the rapidly growing economies of the world. Though India has gained success in some areas and there is positive developments, it is still among the countries with some of the lowest indicators of human development. The levels of malnutrition, illiteracy and poverty are unsatisfactorily high in India. There are numerous issues like the increase in income disparities and regional discrepancies which disrupt the growth of nation. Though employment opportunities have increased but the jobs created are not of high quality. Although there has been an increase in several social services like health, nutrition and education, the quality of most of these services remains poor in most of the rural areas. Major issue is irresistible majority of the population deprived of basic social protection. Policy-makers are facing with inconsistency in the persistence of deprivations and increasing uncertainties among majority of public in growing wealth and prosperity for some groups.

The Constitution of India authorised the Government to establish a democratic social order to secure the people and provide social, economic and political justice. Therefore, the country embarked onto a path of planned socio-economic development to attain the goals of justice. However, the patterns of development have changed with time based on experiences. During the early decades, development was considered in terms of economic development and the importance was on a growing public sector with huge investments in basic and heavy industries. Major objectives of development were formulated and prioritized by a centralized planning system. Actually, it was basically a ‘government-led, bureaucracy managed and expert- guided’ enterprise. Main aim of government for development was to attain material affluence through economic, industrial and infrastructural development. This basic approach to development continued to guide policy makers for the subsequent few decades until new realizations started dawning upon them.

Mahbubul Haq, the originator of the UN’s HDR stated that “The basic purpose of development is to enlarge people’s choices”. It means creating and permitting environment for them to exercise choices. Any development strategy, must aim at human development by focusing on facilitating greater access to knowledge; Better nutrition and health services; More secure livelihoods; Security against crime and physical violence; Satisfying leisurely hours; Political and cultural freedoms; and A sense of participation in community activities. Likewise, Nobel laureate, Prof. Amartya Sen specified that “development meant expansion of human freedoms, i.e. enhancement of the capacity of individuals to fully lead the ‘kind of lives they value”.

It has been said by economists that if certain basic rights of the individuals, such as right to elementary education, right to basic health care, right to work are secured then there will be rapid growth of country. In other words, development must move beyond economic growth. It must incorporate major social goals such as reducing poverty, enhanced opportunities for better education and health and, in general improved quality of life.

Economic Policy:

Economic policies are vital in the perspective of any country, especially in India in order to make the development of its economy. The condition of the economy depends on the trade of this country. In order to maintain international trade, it is important to introduce well-structured economic policies. India has followed this strongly in every perspective. Through the maintenance of these economic policies, this country tries to maintain its growth in the upcoming days.

Agriculture: 

Agriculture plays a vital role in the Indian economy.  Over 70 per cent of the rural households depend on agriculture. Agriculture is an important sector of Indian economy as it contributes about 17% to the total GDP and provides employment to around 58% of the population. Indian agriculture has registered impressive growth over last few decades.  The foodgrains production has increased from 51 million tonnes (MT) in 1950-51 to 250MT during 2011-12 highest ever since independence

The share of agriculture in GDP increased to 19.9 per cent in 2020-21 from 17.8 per cent in 2019-20. The last time the contribution of the agriculture sector in GDP was at 20 per cent was in 2003-04.

Nowadays Government of India is giving more priority for the welfare of farmers. In this regard it is implementing several farmers welfare schemes to re-vitalize agriculture sector and to improve their economic conditions.  Therefore, the government has rolled out new initiatives, schemes, programmes and plans to benefit all the farmers.

Industrial Development:

Industrial Policy is the set of standards and measures set by the Government to evaluate the progress of the manufacturing sector that ultimately enhances economic growth and development of the country.

The government takes measures to encourage and improve the competitiveness and capabilities of various firms.

Objectives of Industrial Policy

1. To maintain steady growth in productivity.
2. To create more employment opportunities.
3. Utilize the available human resources better
4. To accelerate the progress of the country through different means
5. To match the level of international standards and competitiveness

Industrial Policy in India

The various industrial policy introduced by the Indian government are as follows:

Industrial Policy Resolution, 1948

• It declared the Indian economy as Mixed Economy
• Small Scale and Cottage Industry were given the importance
• The government restricted foreign investments
• Industries were divided into 4 categories
  • Exclusive monopoly of central government(arms and ammunitions, production of atomic energy and management of railways)
  • New undertaking undertaken only by state(coal, iron and steel, aircraft manufacturing, ship building, telegraph, telephone etc.)
  • Industries to be regulated by the government(Industries of basic importance)
  • Open to private enterprise, individuals and cooperatives(remaining)

Industrial Policy Resolution, 1956 (IPR 1956)

• This policy laid down the basic framework of Industrial Policy
• This policy is also known as the Economic Constitution of India

It is classified into three sectors

• Schedule A – which covers Public Sector (17 Industries)
• Schedule B – covering Mixed Sector (i.e. Public & Private) (12 Industries)
• Schedule C – only Private Industries

This has provisions for Public Sector, Small Scale Industry, Foreign Investment. To meet new challenges, from time to time, it was modified through statements in 1973, 1977, and 1980.

Industrial Policy Statement, 1977

• This policy was an extension of the 1956 policy.
• The main was employment to the poor and reduction in the concentration of wealth.
• This policy majorly focused on Decentralisation
• It gave priority to small scale Industries
• It created a new unit called “Tiny Unit”
• This policy imposed restrictions on Multinational Companies (MNC).

Industrial Policy Statement, 1980

• The Industrial Policy Statement of 1980 addressed the need for promoting competition in the domestic market, modernization, selective Liberalization, and technological up-gradation.
• It liberalised licensing and provided for the automatic expansion of capacity.
• Due to this policy, the MRTP Act (Monopolies Restrictive Trade Practices) and FERA Actb were introduced.
• The objective was to liberalize the industrial sector to increase industrial productivity and competitiveness of the industrial sector.
• The policy laid the foundation for an increasingly competitive export-based and for encouraging foreign investment in high-technology areas

New Industrial Policy, 1991

The New Industrial Policy, 1991 had the main objective of providing facilities to market forces and to increase efficiency.

Larger roles were provided by

• L – Liberalization (Reduction of government control)
• P – Privatization (Increasing the role & scope of the private sector)
• G – Globalisation (Integration of the Indian economy with the world economy)

Because of LPG, old domestic firms have to compete with New Domestic firms, MNC’s and imported items

The government allowed Domestic firms to import better technology to improve efficiency and to have access to better technology. The Foreign Direct Investment ceiling was increased from 40% to 51% in selected sectors.

The maximum FDI limit is 100% in selected sectors like infrastructure sectors. Foreign Investment promotion board was established. It is a single-window FDI clearance agency. The technology transfer agreement was allowed under the automatic route.

Phased Manufacturing Programme was a condition on foreign firms to reduce imported inputs and use domestic inputs, it was abolished in 1991.

Under the Mandatory convertibility clause, while giving loans to firms, part of the loan will/can be converted to equity of the company if the banks want the loan in a specified time. This was also abolished.

Industrial licensing was abolished except for 18 industries.

Monopolies and Restrictive Trade Practices Act – Under his MRTP commission was established. MRTP Act was introduced to check monopolies. The MRTP Act was relaxed in 1991.

On the recommendation of the SVS Raghavan committee, Competition Act 2000 was passed. Its objectives were to promote competition by creating an enabling environment.

Review of the Public sector under this New Industrial Policy, 1991 are:

• Public sector investments (Disinvestment of Public sector)
• De-reservations –Industries reserved exclusively for the public sector were reduced
• Professionalization of Management of PSUs
• Sick PSUs to be referred to the Board for Industrial and financial restructuring (BIFR).
• The scope of MoUs was strengthened (MoU is an agreement between a PSU and concerned ministry).

Banking and Insurance:

The Banking and the Insurance sector of India play a major role in the growth of the economy. Since, the initiation of these two sectors, they have gone through drastic changes catering to the changing demographics and the priorities of the population of the country.

In order to keep up with the changing times, this industry has had to adapt and give rise to a new way to take viable actions for this purpose. Indian Banking and Insurance system is a very well structured one; it focuses on the need of each part of the country contributing to the growth of the economy. As the Indian economy is poised for a faster growth rate, its financial sector dominated by both insurance and banking companies looks attractive for long-term investment. Indian banks and insurance companies can take advantage of the growing domestic market while aspiring for global competitiveness.

The banking sector in India has the advantage of access to one of the largest and most stable global financial networks. It has been strengthened by a series of financial and regulatory reforms implemented recently. The insurance sector is a colossal one and is growing at a speedy rate of 15-20%. Together with banking services, insurance services add about 7% to the country’s GDP. A well-developed and evolved insurance sector is a boon for economic development as it provides long- term funds for infrastructure development at the same time strengthening the risk-taking ability of the country.

These two sectors are much looked upon by young aspirants, trying to find their footing in terms of career. Various competitive exams are held throughout the year to recruit banking and insurance personnel. Lakhs of candidates appear every year to try their luck with these exams to secure a lucrative career in the Banking and Insurance sector.

Each year many people aspire to join the lucrative Banking and Insurance sector of India which provides ample opportunities for growth and learning. There are various agencies that conduct examinations in these two sectors. This article aims at educating you about the various agencies that conduct the examinations and the different examinations conducted.

Infrastructure, Energy and Minerals:

Already home to 1.37 billion people – almost a fifth of the global population – India is projected to overtake China and become the world’s most populous nation by 2027. Around the same time, rural to urban migration is expected to tilt the proportion living in urban centres over the 40 per cent mark for the first time.

This population growth and urbanisation coupled with ongoing industrialisation and India’s status as the world’s fastest-growing economy will see its energy consumption – which has already more than doubled since 2000 – increase considerably in the coming years.

The country – whose energy usage on a per capita basis is currently only around 20-30 per cent of the global average – will see demand for energy increase at a rate higher than that of any other country over the next two decades. By 2040, according to the International Energy Agency’s (IEA) 2021 India Energy Outlook, it could account for a quarter of global energy demand growth.

Already the world’s third-largest carbon polluter, without significant changes to its energy mix – including the upscaling of investment in renewable energy sources – India will struggle to simultaneously meet demand for new energy generation and its commitments to curtailing its contribution to rising levels of greenhouse gas emissions.

Since 2000, India’s carbon emissions have risen faster than energy demand, growing 2.6-and 2.1 times respectively. In its ‘stated policies’ scenario (a conservative outlook that does not factor in its COP26 commitment and does not meet the goals set in the Paris Agreement), the IEA sees the South Asian nation’s CO₂ emissions rising by an additional 50 per cent over 20 years.

On a per capita basis, however, India’s CO₂ emissions are – currently – just half the global average. Even if this increases as the IEA predicts, India would still be producing 35, 65 and 75 per cent less CO₂ per person in 2040 than Europe, China and the US, respectively.

Though fossil fuel power generation is gradually losing share, it still dominates the country’s power mix, and India’s reliance on thermal energy generation is significantly higher than its global peers, accounting for about 85 per cent of energy generation versus a global average closer to 60 per cent.

At this year’s United Nations Climate Change Conference (COP26), India’s Prime Minister, Narendra Modi, announced that the country would escalate their displacement and raised its renewable energy capacity target for 2030 by 50GW to 500GW (for context the target for 2020 was 80 GW). He also committed to reaching net zero by 2070.

A 2021 report by the Institute for Energy Economics Financial Analysis (IEEFA) highlighted that India would require an additional $US500 billion in investment in new wind and solar infrastructure, energy storage, and grid expansion and modernisation to reach its original 450 GW of renewable capacity by 2030.That was before the target was upgraded at this year’s COP26, meaning more is almost certainly needed today.

The integration of renewables into the national grid was highlighted in the report as a major challenge for the country and one that would require – amongst other solutions – better storage systems and the building in of additional resilience and responsiveness to its electricity distribution infrastructure to facilitate the expansion of renewable power.

Health:

Constitution considers the “Right to Life” to be fundamental and obliges the government to ensure the “right to health” for all. To a significant extent, India’s health sector has been shaped by its federal structure and the Centre–state divisions of responsibilities and financing.
The states are responsible for organizing and delivering health services to their residents. The central government is responsible for international health treaties, medical education, prevention of food adulteration, quality control in drug manufacturing, national disease control and family planning programs. It also sets national health policy including the regulatory framework and supports the states.

Ministry of Health and Family Welfare (MoHFW) was established with independence from Britain in 1947. The government has made health a priority in its series of five-year plans, each of which determines state spending priorities for the coming five years. The National Health Policy was endorsed by Parliament in 1983. The policy aimed at universal health care coverage by 2000, and the program was updated in 2002.
The health care system in India is primarily administered by the states. Indian Constitution tasks each state with providing health care for its people. In order to address lack of medical coverage in rural areas, the national government launched the National Rural Health Mission in 2005. This mission focuses resources on rural areas and poor states which have weak health services in the hope of improving health care in India’s poorest regions.

Education:

India has a rich tradition of imparting knowledge. The ‘gurukula’ was a type of education system in ancient India with shishya (students) living with the guru in the same house. Nalanda was the oldest university system of education in the world. Students from across the world were attracted to Indian knowledge systems. Many branches of the knowledge system had their origin in India. Education was considered a higher virtue in ancient India. However, the renaissance and scientific thinking as happened in Europe didn’t happen in India at that time. However, later, the British established the modern education system still followed in India. They replaced age-old systems of education in the country with English ways. Still, the education system in India needs a lot of reforms. In the larger domain of human capital, education and skill development has a big role. Census 2011 data on literacy gives us a quick perspective on the current status of education. However, education is not just about literacy. RTE act acts as a cornerstone for Indian education. Nevertheless, it is the various education policies, charted out since Independence, which led to the historical evolution of the education system in India. The results of these policies can be said to be mixed. There is still a lot of room for improvement. There are various government initiatives targeting each level of the education system in India. Higher Education System is given a greater focus these days. The latest update in the education sector is the Kasturirangan report or draft new education policy. It captures the need of the hour for reforming education. The modern Indian education system is crying for a revamp. The draft New Education Policy (NEP) is the right moment to take stock of its past history, achievements, misgivings and to chart out a futuristic education plan for 21st century India.

Science and Technology:

Several scientific and technological developments have touched the lives of common people in the last seven decades. In the past seven decades, India has built satellites and sent probes to the moon and Mars, established nuclear power stations, acquired nuclear weapon capability and demonstrated firepower in the form of a range of missiles. Undoubtedly these are all fabulous achievements of Indian scientists and technologists. At the same time, scientific research – combined with favourable public policies – has made India self-sufficient in production of food, milk, fruits and vegetables, drugs and vaccines. All this has had great social and economic impacts and directly and indirectly touched the lives of ordinary Indians. Developments in communications and information technology have enabled timely forecast of weather and early warning of cyclones, saving thousands of lives. These are all results of investments made in scientific research soon after the independence and science-politics network built in decades prior to that. Investment in scientific research was 0.1 percent of GNP in 1947. It went up to 0.5 percent in less than a decade. Scientists like Shanti Swarup Bhatnagar, Homi Jehangir Bhabha and Prasanta Chandra Mahalanobis not only built scientific institutions but also helped shape policies.

Society and Religion:

Religion’s existence in human civilisation is one of the most persistent social phenomena that stimulates sociological analysis, it is intertwined with the fabric of daily social life. Religion appears to have a stabilising effect in society, yet it has also been used to foment hatred and commit crimes against humanity. It has been a primary source of justification for inequality and exploitation. Religion exists as an institution in every community. Sociologists have attempted to comprehend the different meanings that religion provides to humans. Its importance in the organisation of social life is enormous. It appears to assist people in approaching and dealing with life’s crises.

Protection of Environment:

Environmental Protection includes programs that are aimed at reducing risks to the environment from contaminants such as hazardous materials and wastes, fuels, and oils.  These programs address pollution prevention measures and regulatory compliance by providing procedures for safely working with these materials, inspecting the storage vessels and locations, and designating preventative maintenance procedures.  Also included are environmental emergency plans, which provide the appropriate actions to be taken in the event of a spill or release.

Role of Planning in India:

Accelerating Economic Growth:

There were two main features of India’s economic policy that emphasized the role of planning and intervention by the State in the development process of the Indian economy in the first three decades of planning. First, to accelerate economic growth economists and planners recognized that raising the rate of saving and investment was essential to accelerate the rate of economic growth.

It was thought that the private sector on its own would not be able to achieve a higher rate of saving and investment required to break the vicious circle of poverty. Therefore, the state had to intervene to raise resources and increase the rate of saving and investment. This made the planning and the expansion of the public sector essential to accelerate economic growth.

Emphasis on Industrialisation, Second, the strategy of development, adopted since the adoption of Second Five Year Plan which was based on Mahalanobis growth model, laid stress on the industrialisation with an emphasis on the development of basic heavy industries and capital goods industries.

This model implied allocating a higher proportion of investible resources to capital goods industries than to consumer goods industries. Private sector which is driven by profit motive could not be expected to allocate sufficient resources to the growth of capital goods industries.

Therefore, the role of planning and the public sector was considered essential for rapid growth of basic heavy industries. Mahalanobis growth model was wrong in neglecting the role of agriculture and importance of wage goods for accelerating growth of output and employment. In fact, shortage of food, a cheap wage good, rather than machines could act as a constraint on the growth process. This became evident by the time of the Third Plan which laid a relatively greater stress on growth of agriculture to achieve self-reliance.

But rapid growth of agriculture itself requires a good deal of state intervention and planning. The land reforms in agriculture, supply of adequate credit to farmers, development of infrastructure such as irrigation, power, roads were necessary where planning and State could play an important role.

To Compensate for Market Failures:

The dominant view in development economics in the fifties and sixties also laid stress on the planning by the State to compensate for ‘market failures’. It was argued that while market mechanism was efficient in distributing a given stock of available goods, it was quite inefficient in allocating resources over time for investment.

This was because of myopic nature of private sector which guided the working of markets. It was therefore asserted that the State and planning could play an important role in allocating resources for investment to bring about rapid economic growth.

Besides, failures of market mechanism and free working of private sector to allocate adequate amount of resources for investment in infrastructure such as power, transport, communication created substantial external economies and also where significant economies of scale existed. Therefore, in the development of infrastructure, the State and planning had an important role to play.

Regulatory Role of the State:

There is another important aspect of the role of State and planning in the development of the Indian economy which dominated economic thinking in the pre-reform period. Though the private sector was given an important role to play in the framework of mixed economy, to achieve optimal allocation of resources among different industries according to plan priorities, economic activities in the private sector were required to be regulated by the State. Further, to achieve other objectives of planning such as restraining the concentration of economic power in a few big business houses, the private sector was subjected to industrial licensing controls.

To quote C. Rangarajan, the former Governor of the Reserve Bank of India, “while the private sector was given space to operate in keeping with the concept of a mixed economy, in the field of industry particularly the decisions of the private sector were circumscribed by the licensing mechanism. Hence, while foreign trade was subject to control because of the strategy of import substitution, industrial production and investment were subject to control because of the need to direct resources according to plan priorities”.

Tackling the Problems of Poverty and Unemployment:

The other problem which makes role of planning and state intervention important is the need to tackle the problems of poverty and unemployment. Since the beginning of the seventies the Indian planners realised, especially in the Fifth, Sixth and Seventh Five Year Plans, that even if growth rate of GDP was raised to 5 to 6 per cent per annum, it was not possible to make a significant dent on the problems of mass poverty and unemployment prevailing in the Indian economy.

Some argued that benefits of economic growth did not trickle down to the poor. Others were of the view that even if the poor get benefits from growth by way of more employment opportunities generated by it, mere economic growth was not enough to eradicate poverty and unemployment. Therefore, role of planning and State was necessary to start and implement special poverty and unemployment schemes such as Food for Work Programme and Employment Guarantee Schemes to help the poor and weaker sections of the society.

Development Strategy in India’s Five Year Plans:

In the Second Five Year Plan strategy which continued practically till the Fourth Plan period (1969-74) it was visualized that basic constraints on development was the acute deficiency of physical capital which was responsible for small productive capacity of the Indian economy. It was further thought that the rate of capital formation depended on the domestic rate of saving which could be raised by the adoption of proper fiscal and monetary policies.

However, Mahalanobis, author the Second Plan’s development strategy, asserted that even if domestic rate of saving could be increased, the non-availability of the domestic capacity to produce capital goods would prevent the transformation of these savings into real productive investment. Note that real investment occurs when savings are spent on purchasing capital goods such as machinery and equipment. The alternative to the expansion of domestic capacity to produce capital goods would be importing capital goods to ensure sustained increase in the rate of real investment.

Mahalanobis ruled out import of capital goods on grounds of lack of foreign exchange earnings from exports. He argued that if large investment was not made in basic heavy industries producing capital goods, the country would ever remain dependent on foreign countries for the import of steel and capital goods.

Mahalanobis’ Four-Sector Growth Model and Employment Generation:

Mahalanobis realised that the basic heavy industries being capital-intensive would not ensure rapid expansion of employment opportunities and to bring the employment aspect into sharp focus he put forward a four-sector growth model in which he kept heavy industry sector (i.e. K-sector) intact but divided the C-sector (i.e. consumption goods sector) into three sub-sectors : C₁, C₂, and C₃ (sector C₁ represented factory enterprises using mechanized techniques and producing consumer goods; sector C₂ represented the household and small-scale enterprises also producing consumer goods, and sector C₃ represented provision of services).

It was sector C₂ representing households and small-scale industries which in Mahalanobis’ four-sector model was visualized to ensure the increased supply of consumer goods to meet the rising demand for them and also to ensure, being labour-intensive, expansion of employment opportunities. In keeping with this approach, Second Five Year Plan put restrictions on the growth of capacity in factory enterprises engaged in commodity production.

Vital Role of the Public Sector:

Lastly, the other important element of development strategy pursued in India’s Five Year Plans (which continued up to the end of 1980s) was the vital role given to the public sector in economic development of the Indian economy.

In the Third Plan (1961-66) also the strategy of Second Plan was continued as is clear from the following:

“In the Third Plan, as in the Second, the development of basic industries such as steel, fuel and power and machine building and chemical industries is fundamental to rapid economic growth. These industries largely determine the pace at which the economy can become self-reliant and self-generating.”

The Fourth Five Year Plan (1969-74) which was prepared under the Deputy Chairmanship of Late Prof. D.R. Gadgil, tried to give a new shape to the planning strategy and emphasis was sought to be placed on the common man, the weaker sections and the less privileged. The Fourth Plan slightly raised the allocation of public sector outlay to agriculture and irrigation to about 23 per cent as against 20 per cent in the Second Plan and the Third Plan. However, a good deal of hangover of the heavy industry biased strategy still prevailed in this plan too.

Development Strategies in the Fifth, Sixth and Seventh Plans:

Besides, in the early seventies, it was realised that growth-oriented development strategy adopted in the first over two decades of planned development (1951-74) had not succeeded in alleviating poverty. Statistical evidence revealed that about 321 million people lived below the poverty line in 1973-74 and unemployment problem was mounting.

At this time political situation in the country became uncertain with Congress party losing election in some States. Further, while preparing the 5th Five Year Plan it was recognized that trickle down effect of economic growth on the poor and unemployed was not working. Thus, in “Towards an Approach to Fifth Five Year Plan” it was stated that “Economic growth by itself would not lead to the solution of the problem of poverty and unemployment in the foreseeable future”.

The Sixth Five Year Plan (1980-85):

It may be noted that there were two Sixth Five Year Plans. One Sixth Five Year Plan for the period (1978-83) was prepared by Janata Government but it could not be completed as Janata government collapsed and failed to win the new election held in Dec. 1979. The Congress Government again came to power in 1980 and formulated new Sixth Five Year Plan for the period 1980-85.

The development strategy of Sixth Plan (1980-85) laid emphasis on promotion of efficiency in resource use and improvement in productivity to achieve 5.2 per cent growth in GDP. Besides, the infrastructure sector was given the topmost priority in the allocation of resources. Further, in the Sixth Plan employment generation and poverty eradication were given high priority.

The Seventh Plan (1985-90) Strategy:

The Seventh Plan’s strategy of development was to improve the utilisation of existing productive capacities rather than creating new capacities. It sought to secure more output out of productive assets that had been built up in the previous years. Besides, the plan strategy laid emphasis on a direct attack on the problems of poverty and unemployment by providing a greater outlay on special employment schemes rather than relying on ‘trickle -down’ effect of economic growth.

The other important aspect of development strategy of the Seventh Plan was that it planned for a non-inflationary growth process by laying greater emphases on the production and supply of mass consumption goods like food grains, edible oils, sugar, cooking fuel and textiles.

India’s Economic Performance in the First Four Decades (1951-91) of Development Planning (Pre-Reform Period):

The development strategy pursued in the four decades planning (1951-91) has both successes and failures in achieving the objectives and targets. The Indian economy witnessed a profound structural transformation during this period. We became wholly self-sufficient in food grains and most other agricultural commodities. Food production grew at a rate faster than that of population.

As a result of industrial growth during the first three decades of the Indian industry planning (1950-80) became capable of meeting nearly 100 per cent of our requirements of consumer goods and about 85 per cent of our annual demand for capital goods. The strong base of future industrial growth rate was laid as a result of significant development of basic and heavy industries.

A Critical Evaluation of Planning in the First Four Decades (1951-91):

The first three decades of planning in India (1951-81) was characterized by lower rate of economic growth at around 3.6 per cent per annum on an average. There are mainly two explanations of this. First, Late Prof Sukhamoy Chakravarty attributed it to the gross inefficiency of public sector enterprises which were given a crucial role in economic development during this plan period.

It is important to note that it is only from mid-eighties when industrial policy was liberalized somewhat and private sector was given relatively greater role that economic growth rate picked up and overall GDP growth rate of 5.6 per cent was achieved in the decade of 1981-91.

In contrast to the planning in the first three decades. (1951-80), in the decade of eighties growth rate picked up to 5.6 per cent due to revival of public sector investment and along with expansionary fiscal policy financed by commercial borrowing mainly from abroad which proved to be quite unsustainable as it led to balance of payments crisis of 1991. Explaining this consequence of debt-driven unsustainable consequences of policy of fiscal expansionism Srinivasan and Tendulkar write, “The current account deficit rose to a record 3.2 per cent of GDP in 1990 and debt-service payments amounted to as much as 35.3 per cent of current foreign exchange receipts.” Foreign exchange reserves were down to a level barely enough to finance imports for 2 ½ months.

Short-term deposits amounted to a dangerously high level of 146.5 per cent of foreign exchange reserves by the end of March 1991. The rate of inflation soared exceeding 10 per cent in 1990. Expectations of an immediate devaluation of the rupee led to withdrawal of deposits by non-resident Indians. A spectre of default on short-term loans and downgrading of India credit rating loomed. Such was the nature of crisis that it compelled India to go in for structural reforms.

The other drawback of planning in the first four decades has been that industrialisation to which a large chunk of resources were allocated failed to generate adequate employment opportunities and the goal of transformation of occupational structure by transfer of population from agriculture to organised industries and services remain unfulfilled. The occupational structure remained almost unchanged, Besides, rate of unemployment increased as the increase in employment opportunities could not keep pace with the growth of labour force. No wonder that the change in plan strategy was called for.

Functions of NITI Aayog:

The Planning Commission of India supervised the five-year plan for the economic development of the country. However, in 2014, the 65-year-old Planning Commission was dissolved and a
think tank – NITI Aayog (National Institution for Transforming India) took its place.
The NITI Aayog (National Institution for Transforming India), is a think tank of the
Government of India established on 1 January 2015 as a Commission to give suggestions to
the Governments at the central and state levels with relevant strategic, directional and
technical advice across the spectrum of key elements of policy / development process. The
Prime Minister of India heads the Aayog as the Ex-officio Chairperson. Currently Rajiv
Kumar is the vice chairperson of the NITI
Further, it has some full-time as well as part-time members along with four Union
Ministers serving as ex-officio members. It also has a governing council which includes all State
Chief Ministers and Lt. Governers of the Union Territories.
The council works towards fostering cooperative federalism for providing a national
agenda to the Center and the individual States. Additionally, there are specific regional councils
and the Prime Minister invites some special invitees who are experts and specialists in various
fields too.
Since it serves as a think tank of the government or as a directional and policy dynamo,
it provides advice on strategic policy matters to the governments at the Center and the
States. Further, it includes economic issues of both domestic and international importance.
The Aayog provides direction to the Monitoring and Evaluation (M & E) activities in
India. It also pegs importance to the quality standards, ethical procedures and provides
appropriate institutional mechanisms.
Therefore, NITI Aayog means:
• A group of people that the Government entrusts for formulating and regulating policies
concerning the transformation of India.
• A Commission assists the Government in both social and economic issues.
• An institution with experts
• A body that actively monitors and evaluates the implementation of the Government’s
programs and initiatives.
Seven Pillars of NITI Aayog:
1. Pro-People: Full fill aspiration of society as well as individual.
2. Pro-Active: In anticipation of and response to citizen needs.
3. Participation: Involvement of all
4. Empowering: Women in all aspects
5. Equity: of opportunity for the youth.
6. Transparency: Making government visible and responsive
7. Inclusion of All: SC, ST, OBC, Minorities, Gareeb, Gaon and Kisan.
2
Composition of NITI Aayog:
1. Chairperson – Prime Minister of India
2. Governing Council – comprising the Chief Ministers of all the States and Lt. Governors of
Union Territories.
3. Experts, specialists and practitioners with relevant domain knowledge as special invitees
nominated by the Prime Minister
4. Vice-Chairperson – appointed by the Prime Minister (Dr. Rajiv Kumar)
5. Full-time members (Dr. Bibek Debroy, Shri V.K. Saraswat, Prof. Ramesh Chand, Dr. V.
K. Paul)
6. Maximum of 2 part-time members.
7. Ex Officio members -Maximum of 4 members of the Union Council of Ministers to be
nominated by the Prime Minister.
v. Chief Executive Officer – appointed by the Prime Minister for a fixed tenure, in the rank of
Secretary to the Government of India.
Aims of the NITI Aayog:
1. Provide a critical directional and strategic input to the development process of India.
2. Serve as a think tank of the Government both at the Center and State-level. Also,
provide relevant strategic and technical advice on key policy matters.
3. Try to replace the center-to-state, one-way flow of policy with an amicably settled
policy which a genuine and continued partnership of state frames.
4. Seek to put an end to the slow and tardy implementation of the policy. This is possible
through better Inter-Ministry and state-to-state coordination.
5. Further, it help to evolve a shared vision of national development priorities and foster
cooperative federalism. Work with the view that strong states = a strong nation.
6. Develop mechanisms to formulate credible plans at the village level. Further, aggregate
these plans progressively at the higher levels of the Government. In other words, ensure
that special attention is paid to the sections of the society which carry the risk of not
benefitting from the overall economic progress of the country.
7. Create a Knowledge, Innovation, and Entrepreneurial system through a collaborative
community of national and international experts and practitioners. Offer a platform for
the resolution of inter-sectoral and inter-departmental issues to accelerate the
implementation of the development agenda.
8. Monitor and evaluate the implementation of programs and also focus on upgrading
technology and building capacity.
Objectives:
The NITI Aayog tries to accomplish the following objectives and opportunities:
• Creating an effective administration paradigm in which the Government is an enabler
rather than a provider of the first and last resort.
• To focus on technology upgradation and capacity building for implementation of
programmes and initiatives.
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• To undertake other activities as may be necessary in order to further the execution of the
national development agenda, and the objectives mentioned above.
• Attaining progress from food security. Focusing on a mix of agricultural production and
the actual returns that farmers get from their produce.
• Ensuring that India is an active participant in global debates and deliberations.
• Ensuring that the economically vibrant middle-class is actively engaged and utilized to
its full potential.
• Leveraging India’s pool of entrepreneurial, scientific, and intellectual human capital.
• Incorporating the geo-economic and geopolitical strength of the NRI Community.
• Using urbanization as an opportunity to creating a secure habitat via modern technology.
• Using technology to reduce opacity and potential for misadventures in governance.
• To pay special attention to the sections of our society that may be at risk of not
benefitting adequately from economic progress.
The measures were taken by the NITI Aayog to help India face complex challenges
• Leverage India’s demographic dividend and realize the potential of young men and
women. This is done through imparting education, skill development, the elimination of
gender bias and providing employment opportunities.
• Eliminate poverty and offer Indians a better chance to live a life of dignity and respect.
• Redress inequalities based on gender bias, caste, and econmic disparities.
• Integrate villages into the development process of the country.
• Provide policy support to more than 50 million businesses – a major source of
employment generation.
• Safeguard our environmental and ecological assets.
Functions of NITI Aayog:
1. Cooperative and Competitive Federalism
• Primary platform for operationalizing Cooperative Federalism by enabling States to
have active participation in the formulation of national policy, as well as achieving
time-bound implementation of quantitative and qualitative targets.
2. Shared National Agenda
• Evolve a shared vision of national development priorities and strategies, with the
active involvement of States. This will provide the framework ‘national agenda’ for
the Prime Minister and Chief Ministers to implement.
3. State’s Best Friend at the Centre
• Support States in addressing their own challenges, building on strengths and
comparative advantages. This will be through coordination with Ministries,
championing their ideas at the centre, providing consultancy support and building
capacity.
4. Decentralized Planning
• Restructure the planning process into a bottom-up model.
5. Vision & Scenario Planning
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• Design medium and long-term strategic frameworks across all sectors.
6. Network of Expertise
• Main-stream external ideas and expertise into government policies and programmes
through a collaborative community of national and international experts, practitioners
and other partners. This would entail being Government’s link to the outside world.
7. Knowledge and Innovation hub
• Be an accumulator as well as disseminator of research and best practices on good
governance, through a Resource Centre which identifies, analyses, shares and
facilitates replication of the same.
8. Harmonization
• Facilitate harmonization of actions across different layers of government through
communication, coordination, collaboration and convergence amongst all
stakeholders. The emphasis will be on bringing all together on an integrated and
holistic approach to development.
9. Conflict Resolution
• Provide a platform for mutual resolution of inter-sectoral, inter-departmental, interstate as well as centre-state issues.
10. Coordinating interface with the World
• Be the nodal point for strategically harnessing global expertise and resources from
multilateral platforms , nations etc.
11. Internal Consultancy
• Offer an internal consultancy function to central and state governments on policy and
program design , specialised skills such as structuring and executing Public Private
Partnerships.
12. Capacity building
• Enable capacity building and technology up-gradation across government,
benchmarking with latest global trends and providing managerial and technical
knowhow.
13. Monitoring and Evaluation

Guiding Principles of Development in a Federal State:

Mission Antyodaya:

Adopted in Union Budget 2017-18, Mission Antyodaya is a convergence and accountability framework aiming to bring optimum use and management of resources allocated by 27 Ministries/ Department of the Government of India under various programmes for the development of rural areas. It is envisaged as state-led initiative with Gram Panchayats as focal points of convergence efforts.

Inclusion:

The World Bank defines the term as the following:

“Financial Inclusion means that individuals and businesses have access to useful and affordable financial products and services that meet their needs – transactions, payments, savings, credit and insurance – delivered in a responsible and sustainable way.”

In India, the government too has tried to financially include its citizens through initiatives like Pradhan Manri Jan Dhan Yojana (PMJDY), aadhar etc.

National Strategy for Financial Inclusion (2019-2024) This article will provide relevant facts about Financial Inclusion and the government’s National Strategy for Financial Inclusion.

Governance:

Governance is commonly defined as the exercise of power or authority by political leaders for the well-being of their country’s citizens or subjects. It is the complex process whereby some sectors of the society wield power, and enact and promulgate public policies which directly affect human and institutional interactions, and economic and social development. A great deal about governance is the proper and effective utilization of resources.

Today, governance includes three sectors: the public sector (state actors and institutions), the private sector (households and companies), and the civil society (non-governmental organizations). These three sectors are said to work hand in hand in the process of governance.

Sustainability:

The integration of environmental health, social equity and economic vitality in order to create thriving, healthy, diverse and resilient communities for this generation and generations to come. The practice of sustainability recognizes how these issues are interconnected and requires a systems approach and an acknowledgement of complexity. Sustainability is the balance between the environment, equity, and economy. Sustainable practices support ecological, human, and economic health and vitality. Sustainability presumes that resources are finite, and should be used conservatively and wisely with a view to long-term priorities and consequences of the ways in which resources are used. In simplest terms, sustainability is about our children and our grandchildren, and the world we will leave them.