Achievements of Planning – UPSC Economy Notes

Planning is the cornerstone of progress, a deliberate and systematic approach to achieving desired outcomes. Throughout history, societies have relied on planning as a means to navigate complexities, overcome challenges, and fulfill collective aspirations. The achievements of planning span diverse domains, from urban development and infrastructure to economic growth and social welfare. By harnessing foresight, collaboration, and innovation, planning has facilitated monumental advancements, shaping the landscapes of nations and the lives of countless individuals. From the construction of iconic landmarks to the implementation of policies that improve quality of life, the legacy of planning resonates as a testament to human ingenuity and the power of strategic thinking.

Achievements of Planning:

Over the past seven decades, India’s planning efforts have contributed to several notable achievements. Here are some key accomplishments:

1. Economic Growth:
   • India’s national income has witnessed significant growth, making it the third-largest economy in Asia by GDP.
   • In 2019, India ranks as the seventh-largest economy globally, and by Purchasing Power Parity (PPP), it is the third-largest after China and the USA.
2. Social Indicators:
   • Improvements in social indicators, including reductions in Maternal Mortality Rate (MMR) and Infant Mortality Rate (IMR).
   • Progress in literacy rates and disease eradication efforts.
3. Infrastructure Development:
   • Strong industrial infrastructure in sectors like cement, steel, fertilizers, and chemicals.
   • Record levels of food grains production, indicating momentum in agricultural growth.
4. Foreign Exchange Reserves:
   • Substantial growth in foreign exchange reserves, showcasing economic stability.
5. Services Sector Recognition:
   • Global acknowledgement of India’s services sector, contributing significantly to the economy.
6. Higher Education Expansion:
   • Considerable expansion in higher education, with a significant increase in the number of universities and colleges.

Challenges and Failures:

However, alongside these achievements, several challenges and failures persist:

1. Poverty and Unemployment:
   • Rampant poverty and high unemployment rates remain significant challenges.
2. Education Quality:
   • Despite increased access to education, the quality of educational outcomes needs improvement.
3. Gender Disparities:
   • Gender disparities persist, reflecting challenges in achieving gender equality.
4. Research and Development:
   • India’s Research and Development (R&D) efforts are not globally competitive.
5. Export Growth:
   • Exports have not experienced substantial growth.
6. Agricultural Productivity:
   • Agricultural productivity remains low, impacting rural livelihoods.
7. Regional Imbalances:
   • Regional imbalances have intensified, leading to uneven development.
8. Malnutrition:
   • Malnutrition continues to affect a significant portion of children in India.

In summary, while planning has contributed to substantial progress, addressing persistent challenges is crucial for achieving more inclusive and sustainable development.

Economic Reforms in India (1991 Onwards):

Since July 1991, India has undertaken significant economic reforms intending to involve market forces and private investment to achieve higher rates of economic growth. These reforms were initiated under the leadership of Dr. Manmohan Singh, who served as the Union Finance Minister (1991-1996) and later as the Prime Minister (2004-2014). The key reasons for implementing economic reforms were:

1. Maturity of Indian Economy:
   • The Indian economy had reached a level of growth and strength that could benefit from an open-market model.
2. Private Sector Capability:
   • The private sector in India has matured, demonstrating the willingness and capability to play a major role in economic development.
3. Integration with the Global Economy:
   • Integration with the global economy was deemed necessary to gain advantages such as capital flows, technology infusion, higher exports, participation in global stock markets, and Indian corporates raising finances abroad.

Objectives of Economic Reforms:

1. Addressing Economic Crisis:
   • Economic reforms were initiated in response to a deep crisis in 1991, caused by domestic economic issues, political instability, and the Gulf crisis.
2. Structural Reforms:
   • Recognizing the need for fundamental changes, structural reforms were adopted to replace the closed, over-regulated, and uncompetitive economic structure.
3. LPG Strategy:
   • The LPG (Liberalization, Privatization, Globalization) strategy was embraced to open up the economy, allowing for greater market participation.
4. Global Integration:
   • Opening up to global influences was seen as essential for technological advancements, increased global trade, and attracting foreign direct investment (FDI) and foreign portfolio investment (FPI).

Challenges and Resistance:

The initial phase of economic reforms faced challenges and resistance, including concerns about

1. Unemployment:
   • Fears of large-scale unemployment due to the capital intensity of the growth process to remain competitive.
2. Poverty Concerns:
   • Apprehensions about worsening poverty as fiscal concerns might reduce social sector expenditure.
3. Import Pressures:
   • Anticipation of a flood of imports as customs duties were reduced.
4. Food Security Apprehensions:
   • Concerns about food security suffering due to reduced social sector expenditure.
5. Labor Sector Pressures:
   • Pressures on the labour sector due to the domestic industry’s need to cut costs.

Outcomes:

While some fears, such as jobless growth and uncertainties in farming, have materialized, overall, economic reforms have contributed positively to India’s economic development. The country has witnessed substantial growth, increased global integration, and improvements in various sectors.

Key Areas Targeted by Economic Reforms (1991 Onwards):

The economic reforms implemented in India since 1991 were strategically targeted at various areas to bring about significant changes and foster sustainable economic growth. The key areas addressed by these reforms include:

1. Dismantling License Raj:
   • The dismantling of the license raj aimed to create a level playing field for both the private sector and the government, reducing bureaucratic controls and restrictions.
2. Public Sector Reforms:
   • Reforms targeted at driving the public sector toward sustainable profitability and global competitiveness. This involved dereservation, disinvestment, professionalization of management, and other measures.
3. Fiscal Reforms (FRBM):
   • Fiscal reforms, including the implementation of the Fiscal Responsibility and Budget Management (FRBM) Act, aimed at achieving various fiscal objectives and ensuring financial discipline.
4. Monetary Policy Institutional Infrastructure:
   • Revamping the monetary policy institutional infrastructure, including the establishment of the Monetary Policy Committee (MPC) and the introduction of inflation targeting to enhance the effectiveness of monetary policy.
5. Banking Sector Deregulation:
   • Selective deregulation of the banking sector and the adoption of global prudential norms to ensure financial stability.
6. Exchange Rate and Convertibility:
   • Moving towards the free float of the rupee, relaxation of controls on convertibility, and aggressive promotion of exports, foreign direct investment (FDI), and foreign institutional investment (FII).

Sequencing of Reforms: Reforms were strategically sequenced to ensure sustainability and pave the way for further reforms. The sequencing involved:

1. First Generation Reforms:
   • Non-legislative government initiatives, such as reducing Statutory Liquidity Ratio (SLR) and Cash Reserve Ratio (CRR) for the banking sector, disinvestment of Public Sector Enterprises (PSEs), and gradual deregulation of the rupee.
2. Second-Generation Reforms:
   • Building on the success of the first-generation reforms, second-generation reforms included legislative reforms that impacted a wider section of society. Examples include labour reforms, the introduction of the Goods and Services Tax (GST), and the expansion of FDI.

Human-Centric Reforms: A crucial aspect of the reforms was ensuring a “human face.” This approach aimed to distinguish Indian reforms from those in other parts of the world, such as South America in the 1980s. The social impact of the reforms is evident in flagship schemes that have made a positive impact on health, education, social protection, and more.

Positive Outcomes of Reforms: The economic reforms in India have yielded numerous positive outcomes, including

1. Economic Growth:
   • Rates of economic growth increased significantly.
2. Balance of Payments (BOP):
   • The BOP crisis was resolved in the initial years, and India now holds substantial forex reserves.
3. Services Sector Growth:
   • The services sector (tertiary sector) has grown in importance, contributing almost 55% to the GDP and establishing India as a global player, especially in the IT and business process outsourcing (BPO) sectors.
4. Resilience During Global Recession:
   • The Indian economy demonstrated resilience during the Great Recession (2008-2013).
5. Consumer Choice:
   • Consumer choice increased, reflecting the benefits of market-oriented reforms.
6. Tax Collections:
   • While the tax-GDP ratio may have shrunk, tax collections and the tax base increased.
7. External Debt Transformation:
   • The nature of external debt changed, with a reduced short-term component.
8. Global Market Presence:
   • Indian companies are listed on international stock exchanges like NASDAQ and the New York Stock Exchange, raising billions of dollars for investment.
9. Foreign Investments:
   • Foreign Institutional Investors (FIIs) and Foreign Direct Investment (FDI) increased.
10. Global Expansion of Indian Corporates:
    • Indian corporates expanded globally, acquiring major companies such as Jaguar and Anglo-Dutch steelmaker Corus.

The economic reforms have contributed to the transformation and global recognition of India’s economy, despite challenges and ongoing areas for improvement.

FAQs

Q: What are the main achievements of planning in modern economies?

A: Planning has facilitated the efficient allocation of resources, leading to sustained economic growth and development. It has helped in reducing poverty, improving infrastructure, and enhancing living standards.

Q: How has planning contributed to social welfare?

A: Planning has enabled governments to implement social welfare programs effectively, such as healthcare, education, and housing initiatives. By allocating resources strategically, planning has helped in reducing inequality and improving access to essential services for all citizens.

Q: What role has planning played in environmental sustainability?

A: Planning has increasingly integrated environmental concerns into development strategies, promoting sustainable practices in sectors like energy, transportation, and agriculture. It has facilitated the adoption of green technologies and regulations to mitigate environmental degradation and address climate change.

Q: What are some notable achievements of planning in urban development?

A: Planning has played a crucial role in shaping cities by managing urban growth, improving infrastructure, and creating livable environments. It has promoted mixed land use, efficient transportation systems, and green spaces, enhancing the quality of life for urban residents.

Q: How has planning supported industrial and technological progress?

A: Planning has fostered industrial development by directing investments towards key sectors, promoting innovation, and facilitating technology transfer. It has supported the growth of industries through infrastructure development, research and development initiatives, and policies conducive to entrepreneurship and industrialization.

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