The take place. As a result, the capacity

The basic objectives of all the plans in India have been largely been three-fold: first, to make the economy grow, that is, to aim for a sustained increase in national income. Secondly, to ensure that social justice is provided to people. Social justice broadly encompasses ideas of equity, poverty alleviation, meeting minimum and basic needs, and generation of employment. Thirdly, the achievement of self-reliance. The concept of self- reliance has undergone a change in meaning over time. Although broad objectives of planning have stayed the same, what has changed, particularly after 1991, have been the strategies and the policy framework.

The planning process assumed that investment in basic and capital goods industry was desirable. The Plans also assumed that capital goods could not or would not be imported. Because of this, priority was not given to exports of industrial products. Moreover, since the planning strategy focussed on development of capital goods and heavy industry, a dynamic growth of consumer goods industry did not take place. As a result, the capacity utilisation in the capital goods sector was sub-optimal. This pushed up the price of capital goods and made them higher than those prevailing in international market. Another weakness of the planning process as well as the democratic system has been the structural weakness of the Indian State. Large number of interest groups and pressure groups sprang up in this period which competed for the benefits of development and led to sub-optimal resource allocation.

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Very often the benefits did not go to the intended beneficiaries. Finally, the Indian planning process did not provide adequate incentive for capital formation in the private sector and for entrepreneurship. Two main targets of the planning process were, first, to generate the investment necessary for the targeted growth. For this, it was necessary to make investors believe in the possibility of growth so that they were induced to invest. Secondly, the planning process was to be able to generate enough savings for this purpose.

Before planning process started in India, the rate of saving was quite low. Since population increased at the rate of about two per cent per annum per capita income increased at the rate of two per cent per annum. This was not enough to raise a large section of the poor above the poverty line. Moreover, the pattern of growth was not such as to absorb labour and create employment.


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