Class 12 Political Science Chapter 3 Politics of Planned Development NCERT Notes

Chapter 3 Politics of Planned Development Class 12 Political Science II CBSE NCERT Notes

Introduction

In this chapter, we will study the story of political choices involved in some of the key questions of economic development. Which strategy was adopted by our leaders in the first two decades and why?

We will also discuss the main achievements and limitations of this strategy and why this development strategy abandoned in later years.

Political Contestation

In a democracy or in a democratic country, the final decision must be a political decision, taken by people’s representatives who are in touch with the feelings of the people.

After independence, everyone agreed that the development of India will take place by, economic growth alongwith social and economic justice. It was widely agreed that the government should play a key role in this development, rather than leaving it to businessmen, industrialists, and farmers alone.

However, there were disagreements on the nature of the government’s role in ensuring growth with justice. Some debated on having a centralized institution for planning the entire country, or the government itself running key industries and businesses.

There was also a debate on how much importance to give to justice if it conflicted with economic growth requirements.

Ideas of Development

The first decade after Independence witnessed debates on the definition of development, with the West serving as the standard for measuring development. There were two models of modern development existed in the world during the time of India’s independence.

Western model or Liberal Capitalist model of development.
Socialist model or Soviet model of development.

The idea of development was associated with modernization, growth, material progress, and scientific rationality.

Western model of development

Western model of development was associated with modernisation. Modernisation involved in the breakdown of traditional social structure and rise of liberalism and capitalism.

It was also associated with the ideas of growth, material progress and scientific rationality. On the basis of this model countries were classified as developed, developing and underdeveloped.

This system existed in USA and much of the European states.

Soviet model of development

It was also known as Soviet model of development, where everything was controlled by the state.

Centralised planning and Five Year Plans were important feature of soviet model.

Equitable distribution of resources was the another important feature.

Many of the Indian leaders were deeply impressed by the Soviet model of development. These included leaders of the Communist Party of India, the Socialist Party and leaders like Nehru within the Congress.

Planning

Despite the various differences, there was a consensus on one point: that development could not be left to private sectors. So, there was the need for the government to develop a design or plan for development.

Planning as a process of rebuilding the economy gained public support in the 1940s and 1950s.

The Planning Commission was established soon after India’s independence. The Commission was chaired by the Prime Minister and became the most influential machinery for deciding India’s development path and strategy.

The Bombay Plan, drafted by a group of industrialists, proposed a planned economy in India, with the state taking major initiatives in industrial and other economic investments.

The Early Initiatives

The Planning Commission of India opted for five year plans, similar to the Soviet Union’s approach.

Accordingly the budget of the central and all the State governments is divided into two parts: ‘non-plan’ budget that is spent on routine items on a yearly basis and ‘plan’ budget that is spent on a five year basis as per the priorities fixed by the plan.

The first Five Year Plan generated excitement in India and was discussed extensively by people from all walks of life.

The excitement with planning reached its peak with the launching of the Second Five Year Plan in 1956 and continued somewhat till the Third Five Year Plan in 1961.

By the time the Fourth Plan was due to start in 1966, the novelty of planning had declined, and India was facing an economic crisis, leading to a ‘plan holiday’.

Despite criticisms, the foundation of India’s economic development was firmly in place by then.

The First Five Year Plan

The First Five Year Plan (1951-1956) aimed to address poverty in India. The Plan focused mainly on the agrarian sector, investing in dams and irrigation.

Huge allocations were made for large-scale projects like the Bhakhra Nangal Dam.

Land reforms were identified as the key to the country’s development.

The planners aimed to increase the level of national income by pushing up savings.

The people’s savings did rise in the first phase of the planned process until the end of the Third Five Year Plan.

From the early 1960s to early 1970s, the proportion of savings in the country dropped consistently.

Rapid Industrialisation

The Second Five Year Plan (FYP) in India was drafted by a team of economists and planners led by P. C. Mahalanobis.

The Congress party declared “socialist pattern of society” as its goal in its session held at Avadi, which was reflected in the Second Plan.

The government imposed substantial tariffs on imports in order to protect domestic industries.

The plan resulted in the development of industries such as electricity, railways, steel, machinery, and communication in the public sector, marking a turning point in India’s development.

The focus on industry attracted more investment than agriculture, leading to a possibility of food shortage as balancing industry and agriculture was difficult.

Critics pointed out an “urban bias” in the plan strategies, while others wanted a focus on agriculture-related industries rather than heavy industries.

Key Controversies

Agriculture versus industry

After first two plans agriculture could not develop at appreciable level. Gandhian economist J.C. Kumarappa proposed an alternative blueprint that put greater emphasis on rural industrialisation.

Others argued that without a drastic increase in industrial production, there could be no escape from the cycle of poverty.

The failure was not that of policy but its non-implementation, because the landowning classes had a lot of social and political power.

They also argue that even if the government had spent more money on agriculture it would not have solved the massive problem of rural poverty.

Public versus private sector

India’s model of development was a mixed economy, incorporating elements from both capitalist and socialist models.

Much of agriculture, trade, and industry were left in private hands, while the state controlled key heavy industries, provided industrial infrastructure, regulated trade, and made crucial interventions in agriculture.

The state’s policy to restrict imports of goods that could be produced domestically left the private sector with no incentive to improve products and make them cheaper.

Some critics pointed out that the state did not spend any significant amount for public education and healthcare. The state intervened only in those areas where the private sector was not prepared to go.

State intervention ended up creating a new “middle class” that enjoyed the privileges of high salaries without much accountability.

Major Outcomes

Among the three challenges, the third proved most difficult to realise. Land reforms did not take place effectively in many parts of the country.

Political power remained in the hands of landlords and big industrialists continued the benefits. Poverty did not reduce much.

Foundations

Foundations for future economic growth were laid during this period. Some of the largest developmental projects like Hirakud and Bhakranangal (for irrigation and power generation) dams were constructed during this period.

Some of the heavy industries in public sector-steel plants, oil refineries, manufacturing units, defence production etc. were started during this period. Infrastructure for transport & communication improved substantially.

Land Reforms

In the agrarian sector there was a serious attempt at land reforms. Land reform had four components:

The most significant of these was the abolition of Zamindari system, which reduced the political power of the landlords.
Attempts of consolidation of land (bringing small pieces of land together for agriculture) were also fairly successful.
But the govt. Could not implement ceiling on agricultural land one person could own.
They also failed to ensure tenants legal security against eviction.

Many proposals for land reforms were either not translated into laws, or, when made into laws, they remained only on paper. In short land reform was a failure in India because the landowners were very powerful.

Green Revolution

The government of India adopted a new strategy for agriculture in order to ensure food sufficiency. This was mainly because of the influence of the US in economic policies.

Instead of giving more support to backward areas and farmers, it was decided to put more resources to those areas which already had irrigation and those farmers who were already well off.

The govt offered High Yielding Variety seeds, fertilizers, pesticides and better irrigation at highly subsidised prices. The government also give a guarantee to buy the produces of the farmers at a given price. This was the beginning of the green revolution.

Results of green revolution

Rich peasants and large landholders were the major beneficiaries.
The green revolution delivered only a moderate agricultural growth.(especially in wheat production).
Raised the availability of food in the country.
Increased polarisation between regions (for example, Punjab, Haryana, western UP. became agriculturally prosperous, while others remained backward).
It helped left organisations to organise poor peasants.
Green revolution resulted in the rise of middle peasant sections.

Later Developments

After Nehru’s death, Indira Gandhi emerged as the popular leader. The period from 1967 onwards, witnessed many new restrictions on private industry. Fourteen banks were nationalised. The govt announced many pro poor programmes. There was an ideological tilt towards socialism.

Between 1950-80s,Indian economy grow at a sluggish annual rate 3 to 3.5. This was mainly because of the inefficiency & corruption in some public enterprises & the not so positive role of bureaucracy in economic development. As a result, the policy makers decided to reduce the role of state in the economy from 1980s onwards.

Food Crisis

Between 1965-67 severe droughts were occurred in many parts of the country. During this period India faced two wars & foreign exchange crisis. All these resulted in severe food shortage & famine like conditions in many parts of the country.

Food crisis most acutely felt in Bihar. Food deprivation subsequently led to malnutrition. Death rate in Bihar in1965 was 37 percent. Food prices also hit a high. The ‘Zoning policy’ of the govt.(prohibited trade of food across states) reduced availability of food in Bihar.

In order to overcome this food crisis the govt. decided to import wheat & had to accept foreign aid from foreign countries especially from the US.