Five-year Planned Development in various Fields in India!
The First Five Year Plan (1951-56) stressed the role of agriculture. At that time, around 80 per cent of India’s population was in the rural areas and agriculture was the mainstay of the economy.
Hence, the planners felt that agricultural development would help in the uplift of the rural poor. Moreover, it did not seem feasible to go in for industrialisation of the newly independent country as it did not have much capital to invest.
It was believed that the existing industries such as Tata Steel could be expanded to meet the growing needs of industrialisation. This turned out to be wrong because these industries refused to expand as the investment required to do so was high and they were not assured of a market for their expanded production.
It was necessary to develop industries as these help in increasing agricultural production. At that time, one line of thinking was that if the stress was on agriculture, the industrial aspect could be met through collaborations with developed capitalist countries.
However, the latter were not interested in India’s industrial development for they felt that newly independent nations such as India, Egypt and Indonesia should develop their agriculture and depend on them for supply of industrial goods. India then, turned to the socialist countries such as the Soviet Union and GDR for help. This shaped the Second Five Year Plan which was a marked departure from the first.
Before the second five-year plan was framed, the government passed the Industrial Policy Resolution of 1956, which is also referred to as India’s economic constitution’. The Resolution focused on state intervention so as to enforce a certain pattern of industrial development and manner of utilisation of resources.
This formed the basis of the second five-year plan, also known as the Nehru-Mahalanobis plan. India was politically independent, but this plan turned the spotlight on the country’s economic independence, for which, the country had to be self-sufficient.
Subsequently, this plan placed a lot of importance on promoting heavy, basic industries which included steel, coal and metals, power generation and infrastructure. It was during this period that units such as Bharat Heavy Electricals Ltd (BHEL), in Haridwar, Heavy Engineering Corporation (HEC), in Ranchi, and steel plants in Bokaro, Durgapur and Rourkela were set up, as also plants for manufacturing railway engines and coaches, among others.
These industries were established because power and steel were essential for the development of industry as well as agriculture. The hand pumps for irrigation or pipes for carrying drinking water and water for agricultural purposes needed steel. So also, the railways required steel for building lines as well as for their coaches and engines.
It was felt that if we had to depend on developed countries for these goods, the nation would have to pay a heavy price in terms of foreign exchange. These large factories (which Prime Minister Jawaharlal Nehru described as the ‘temples of modern India’) were set up in collaboration with socialist countries.
The terms were favourable because they accepted payment in Indian currency. Egypt and Indonesia also followed a similar trend in the initial stages, but later, their governments were overthrown by opponents who were supported by the developed capitalist countries and they started opening up their markets to foreign capital.
Owing to our focus on a socialistic pattern of society, core industries and a majority of the public utility services were concentrated in the public sector. The private sector was allowed to expand alongside, and the growth of the cooperative sector was encouraged.
The Monopolies and Restrictive Trade Practices Act (MRTP), 1969, emerged as a regulatory mechanism that controlled business depending on their investment output, and the Industrial Licensing Policy of 1970 (and later in 1973) encouraged the growth of small, medium and ancillary sectors.
The Industrial Policy Statement, 1977, had decentralisation at its core, while supporting the 1956 resolution which emphasised full utilisation of installed capacity, higher productivity, employment generation, correction of regional imbalances, strengthening of the agricultural base, promotion of export-oriented industries, economic federalism and consumer protection.
From 1984 onwards, the policy focused on technological upgrading of industrialisation for promoting an increase in productivity and quality while trimming the costs. Modernisation at both technological and managerial levels was seen as the key for acquiring a competitive edge in the global market.