Western Ghats Field Research Station at Kozhikode (Calicut), Kerala state, was established in April, 1980, under the

Sixth Five Year Plan of the

Government of India.

INDIRA GANDHI Chairman

NARAYAN DATT TIWARI Deputy Chairman
R. VENKATARAMAN Member
M. S. SWAMINATHAN Member
MOHD. FAZAL Member
MANMOHAN SINGH Member-Secretary

The day will dawn. Hold thy faith firm " —TAGORE

Progress in a country of India's size and diversity depends on the participation and full involvement of all sections of the people. This is possible
only in democracy. But for democracy to have meaning in our circumstances, it must be supported by socialism which promises economic justice
and secularism which gives social equality. This is the frame for our planning.

The Planning Commission is to be congratulated on the manner in which it has worked practically round the clock to bring out the Sixth Plan in a
year as we had promised to do. The drawing up of this plan posed special difficulties. We faced a plan gap and a budget gap at a time when the
whole world, and India more than other countries, was hard hit by inflation, the continuing rise in the price of petroleum while the price of our raw
materials remains static, as well as other political and economic tensions and international confrontations.

In view of the severe financial constrictions and the political expectations, it is not surprising that the Plan should be unsatisfactory to many.
However, this is no reason to denigrate it. Planning is more than the putting together of a number of Central and State Government projects. It is a
direction. And this the Sixth Plan provides. Once the nation is clear about the path to be followed, the details can be adjusted as we go along.

Let us cast a backward glance. In the last thirty years, through our Plans we have built the foundations of a modem, self-reliant economy. We have
achieved self-sufficiency in food, diversified our industrial structure and made significant progress in science and technology. The continuity of the
planning process, with its thrusts and checks, has lielped us to create and renew national assets and to take up programmes for the amelioration
of the weakest strata and the uplift of the most backward regions. Economic growth must be balanced, it must ensure self-reliance, stability and
social justice. All sections should be assured that there will be no discrimination. No society can prosper if merit is not given its due.

A developing nation must marshal its scarce resources for a concerted effort to build its capital base in various sectors of the economy to enhance
production capabilities and allow larger savings. Increased output and a balanced inter-sectoral allocation of the incremental savings promote
further development. So the process goes on.

The progress so far achieved has been steady and substantial, although somewhat slower than envisaged. The very process of development
generates new expectations and makes fresh demands on resources. Our goal of self-reliance was bound to strain our external resources. Also,
we were not allowed to concentrate undisturbed on our development endeavour, for there have been frequent challenges to national security.
Another factor adding to the complication of our development is the continuous increase in population, primarily owing to the very success of our
programmes of public health and epidemic control, as a result of which infant mortality has decreased dramatically and life expectancy risen.

We have resolutely stood up to each new challenge. We have come to a stage where we can confidently assert that development has contributed
to strengthening our nation in spite of its regional, linguistic, social and communal diversities. It has consolidated our democracy and is guiding our
society towards socialism. We can now speak of an India in which the fruits of growth will reach to the last. This is a stage when the planning
process assumes even greater importance.

Five-Year Plans are formulated in the perspective of long-term development. This enables us to raise the national effort to match specific goals
and meet critical challenges. Annual Plans give operational meaning to tlie exercise. Monitoring, review and evaluation procedures help to keep
the vessel on the course. The voyage has been longer and rougher than we had imagined, but there is little doubt about the rightness of the
course we have charted.

The Sixth Plan envisages a significant augmentation in the rate of growth of the economy with an annual growth rate of over 5 per cent. In this
five-year period we expect to see progressive reduction in the incidence of poverty and unemployment and also in regional inequalities. Greater
emphasis has been laid on the speedy development of indigenous sources of energy and infra-structural sectors of coal, energy, irrigation and
transport. High priority has been given to agriculture and rural development and allied agricultural activities like animal husbandry, dairying,
fisheries and also the forestry sector, with accent on development and conservation. Substantial outlays have been allocated for expansion in core
sectors and also for cottage, village and small industries as well as for programmes to provide minimum needs.

The measure of a plan is not intention but achievement, not allocation but benefit. We are determined to implement this Plan with steadfastness of
purpose. Democratic planning means the harnessing of the people's power and their fullest participation. We sail on stormy seas. But the Indian
people have weathered many storms. Their spirit is indomitable and it will prevail. Let us help them to bend their energies with unity and discipline
in the great endeavour to reach towards a brighter future.

(INDIRA GANDHI)
New Delhi

1. Development Performance 15. Energy

2. Development Perspective 16. Industry and Minerals
3. Objectives and Strategies of the Sixth Five Year Plan 17. Transport
4. Public Sector Outlays 18. Communication, Information and Broadcasting
5. Resources for the Plan 19. Science and Technology
6. Balance of Payments 20. Environment
7. Policy Framework 21. Education
8. Plan Implementation, Monitoring and Evaluation 22. Health, Family Planning and Nutrition
9. Agriculture and Allied Sectors 23. Housing, Urban Development and water Supply
10. Irrigation, Command Area Development and Flood 24. Labour and labour Welfare
Control 25. Hill Area Development
11. Rural Development and Cooperation 26. Development of Backward Classes
12. Village and Small Industries 27. Women and Development
13. Manpower and Employment 28. Social Welfare

14. Minimum Needs programmes

 29. APPENDIX

6th Five Year [ Home ] << Back to Index

Plan
Foreword || Preface || Planning Commission
Chapter 1 || 2 || 3 || 4 || 5 || 6 || 7 || 8 || 9 || 10 || 11 || 12 || 13 || 14 || 15 || 16 || 17 || 18 || 19 || 20 || 21 || 22 ||
23 || 24 || 25 || 26 ||
27 || 28 || Appendix

Chapter 1:
DEVELOPMENT PERFORMANCE

India began the process of planned development nearly thirty years ago with the start of the First Five Year Plan in April, 1951. The central
purpose of planning was identified as that of initiating "a process of development which will raise living standards and open out to the people new
opportunities for a richer and more varied tire" (First Five Year Plan). The manner in which this purpose has been translated into specific objectives
has varied from Plan to P!an. However, in a broad sense, the basic objectives of planning in India can be grouped under four heads: growth,
modernisation, self-reliance and social justice. In one form or another but possibly with varying emphasis these objectives reflect the views of all
sections of the population and represent a national consensus on the aims of planning.

GROWTH

1.2 Betwen 1950-51 and 1978-79 the underlying trend rate of growth of national income was 3.5 per cent, of agricultural production 2.7 per cent
and of industrial production 6.1 per cent. In per capita terms, income has grown at a trend rate of 1.3 per cent, which, after allowing for the rising
share of investment in national income, has meant a modest 1.1 per cent per annum rise in per capita consumption.

1.3 The growth of the economy during the planning era has to be judged in the context, of the prolonged period of stagnation that preceded
Independence. Judging by expert estimates of the national income of undivided India, the trend growth rate between 1900-01 and 1945-46 was
1.2 per cent for national income, about 0.3 per cent for agricultural production and 2.0 per cent for industrial production. One of the most significant
achievements of our development' policy after Independence has been the fact that this handicap of stagnation was overcome and the process of
growth initiated.

1.4 The grov/th performance of the economy in different plan periods is presented in Annexure 1.1. These data show that except for the Third Plan
where, in the last year of the Plan, the economy was badly hit by a severe drought, the rate of growth of national income has ranged between 3
and 5 per cent which is a significant achievement. However, except in theFirst and Fifth Plan, the actual growth rates have been less than the
higher targets specified in the Plans:—

Table 1.1 Targetted and Actual Growth Rates (Percentages)

Sl. No. Plan Target Actuals Growth rate for

(0) (1) (2) (3) (4)
1 First Plan 2.1 3.6 national income
2 Second Plan 4.5 4.0 national income
3 Third Plan 5.6 2.2 national income
4 Fourth Plan 5.7 3.3 net domestic product
5 Fifth Plan 4.4 5.2 gross domestic product.
Note: Targets were generally specified in terms of net national income/product upto the Fifth Plan in which for the first time, targets were specified
in terms of gross domestic product.

The shortfall in the growth in national income has of course meant a corresponding shortfall in targetted levels of per capita income.

1.5 The growth of national income depends on a complex interaction of large number of variables, not all of which are amenable to government
control. However, it is well known that the quantum of investment and the productivity of this investment, as measured in a simplified model by the
capital output ratio, exercise an important influence on the overall growth rate. An approximate and first-order explanation for the gap between
target and actual levels of income growth can be found in a comparison of the trends in income and investment. The main conclusion siiesested by
such a comparison is that shortfalls for excesses) in income growth are larger than what would follow from the shortfalls (or excesses) in
investment. The main reason for this is that realised capital output ratios, particularly during the Third and Fourth Plan periods, have been much
higher than anticipated. One further point in the comparison that is worth noting is that total investment targets have, by and Ipree. he^n me1' or
exceeded m recent plans. However. in the Fifth Plan peno'd, the excess was due largely to hirher levels of private sector investment and stock
accumulation in the public sector. The with the Industrial Policy Resolution of 1956, articulated explicitly the objective of rapid industrialisation.
Apart from rapid growth, this strategy involved certain other key components viz.. a shift in the industrial structure towards industries producing
basic materials and capital goods and the growth of the public sector in industry.

With the Industrial Policy Resolution of 1956, articulated explicitly the objective of rapid industrialisation. Apart from rapid growth, this strategy
involved certain other key components viz.. a shift in the industrial structure towards industries producing basic materials and capital goods and
the growth of the public sector in industry.

1.21 At Independence we inherited an industrial structure that was restricted to a few industries like textiles and sugar. The first steel plant had
been set up and there was some limited development of engineering in railway workshops and assembly plants. the drive to diversify this
structure, a drive linked to the search for self-reliance, has been the keynote of the industrial strategy of our plans. The extent of change brought
about by this drive is indicated in Annexure 1.6. As these data show the relative share in industrial production of the traditional manufacturing
sectors like food and textiles has declined and that of new sectors like chemicals and engineering has increased very substantially. In terms of
sophistication of technology and the range of goods manufactured an extensive degree of industrial diversification has been achieved.

1.22 The organisation of industry has also undergone a major change with the development of the public sector. Between 1960-61 and 1977-78,
the share of the public sector in the value added in mining and organised manufacturing grew from 8.1 per cent to 28.9 per cent. The development
of the public secior has been the principal element in our drive for industrial diversification and in industries like steel, non-ferrous metals,
petroleum, fertilisers, petrochemicals and heavy engineering, public sector units play a dominant role-

1.23 The industrial policy of the Government accepted the important role of the private sector and an elaborate network of institution has been
established to support it and to regulate its activities. A major component of the support system is the network of development banking institutions
which have been established to finance private investment in industry. The cumulative disbursements of these institutions amounted to over Rs.
5,000 crores by March, 1979 of which over 80 per cent was disbursed in the last ten years. Apart from these development banks, the government
has set up a variety of institutions to assist in the provision of infrastructure, raw material supply, marketing and technology development. Small
scale industries and artisans have also been protected through product reservations and fiscal concessions. The regulatory framework for
controlling the pattern of private industrial investment was set up in the early years of the planning era with the Industries (Development and
Regulation) Act and elaborated later through the Monopolies and Restrictive Trade Practices Act and other measures. The manner in which these
regulatory functions have been exercised has been reviewed from time to time and appropriate changes made. The institutional framework for
supporting and regulating private industry is by no means perfect. The essential point, however, is that a variety of institutions and agencies have
been established and have succeeded in stimulating the development of new industrial activities, new centres of industry and new entrepreneurs.
But their success in these matters is less than what we sought and hence there is a need for adapting and elaborating both the support system
and the regulatory framework to suit the fast changing needs of a diversified industrial economy.
1.24 The tasks of modernisation and structural change in agriculture were even more daunting at the start of the planning era. The outmoded land
tenure system, the primitive technology of cultivation and lack of an infrastructure for raising productivity proved formidable barriers to agricultural
advance. The fact that these barriers have been overcome to an extent is one of the major successes of our planning effort. Zamindari and other
intermediary tenures have been almost eliminated. The technology of cultivation has changed substantially with the spread of high-yielding
varieties and the extension of irrigation, a change which was facilitated by the elaborate network of agricultural research and extension set up
during the planning era. One further change of consequence is the establishment of a system of support prices, procurement and public
distribution. Significant progress has been made no't only in the production of major foodgrains but also in horticultural crops like apples and
animal products like eggs, milk and fish.

1.25 Some data on the indicators of modernisation in agriculture are presented in Annexure 1.7. The growth in irrigation is a common feature
which runs through the plans though the pace of expansion in recent years is far higher than before. The use of the new technology based on high
yieldina varieties and fertilisers spread rapidly only after 1965. This difference is reflected in the larger contribution of productivity "ain to production
growth in the period after 1964-65, the relevant annual growth rates being as follows:

Table 1.3 Growth Rate of Area, Production and Yield

Sl.No. Item Foodgrains Non-foodgrains

1949-50 to 1964-65 to 1949-50 to
1964-65 to 1978-79
1964-65 1978-79 1964-65
(0) (1) (2) (3) (4) (5)
1. Area 1.4 0.6 2.5 0.8
2. Production 3.0 3.4 3.5 2.6
3. Yield 1.4 2.3 1.0 1.3
The process of technological modernisation in a culture has, however, just begun. Average yield le in most regions and farming systems are below
v can be attained with known technology. We need to extend modern technology to new areas, develop a technology for ecologically handicapped
regions and utilise fully our irrigation potential as well as the potential of rainfed areas.

1.26 Several changes have taken place in agricultural credit and marketing. The system or cooperative credit has spread, lessening the
dependence of the cultivator on exploitative moneylending and trading practices. Institutional term finance lor agriculture has grown with the
reorientation of the banking system and the establishment 01 Land Development Banks, Regional Rural Banks and apex in'siitirtions like the
Agriculture Refinance and Development Corporation. In agricultural marketing, the dominant role of the Food Corporation of India in foodgrain
trade and the growth of marketing and processing cooperatives have helped both farmers and consumers. In the case of milk, cooperatives and
urban milk supply schemes have captured, a substantial part of the market. These and other change's in the field of credit and marketing have
altered the very unequal relationship between the farmer and the trader and, by doing so, have stimulated agricultural progress.

1.27 The foundations of industrial and agricultural advance lie ultimately in the availability and effective use of human skills. All our plans have
emphasised the need to develop these skills at all levels from those required at the shop floor or the farm to those required in fundamental
research. In agriculture, an integrated system involving research institutes, agricultural universities and an extension machinery has been set up.
In Industry, there is a network of industrial research laboratories, R&D divisions in major enterprises and consultancy firms for project consultancy
and design engineering. At the shop floor level there is no major shortage of industrial skills. The basis for this major advance lies in the rapid
expansion of technical education. Thus, between (1950-51 and 1975-76), the number of students in engineering, technological colleges increased
from 13 thousand to 286 thousand and in Industrial Training Institutes from 10 thousand to 138 thousand. The same picture holds true for other
categories like scientists, doctors and agricultural graduates. In fact, India now has the third largest scientific and technical work force in the world.
However, the capacity of the system to absorb fully these skills in productive employment has been less ''•'•in adequate. Also in pure and applied
research advances have been limited except in a few areas like agricultural research, atomic energy and space. At the farm or shop floor level,
average productivity levels are below what can be attained with known technology. Human skills are a formidable asset since they last not merely
during one working life but because they are transmitted, for generations. If these assets are used effectively, they may w-!l turn out to be one of
the most fruitful results of pi'inning.

1.28 The mobilisation of savings and their use in preferred directions is a crucial element in any development effort. Our success in this regard his
been dealt with earlier. A significant feature of the savin"-; mechanism has been the growing fungibility of savings as the share of savings
accumulated by households in the form of deposits, shares, debentures, life insurance and pension funds has increased from 10.0 per cent of net
savings in 1950-51 to 33.0 per cent in 1978-79. Thus, primitive processes of accumulation in which households and small enterprises invest ineir
savings directly in their own activities or in currency hoards have given way to more complex forms in which, through financial intermediaries and
capital markets, households savings can be channelled into a much wider variety of activities.

1.29 There is one quaiification, however, to this picture of a deepening of financial structure. The market for corporate issues continues to remain
very narrow. .Net household savings in the form of coi-porate shares and debentures which amounted to 8.0 per cent of savings in 1950-51 have
tended to stagnate even in nominal terms and, in 1977-78, when they were well above the trend, they amounted tc only 2.1 per cent of net
savings. Since the share of corporate savings in total savings has also tended to decline, it has become increasingly difficult to maintain the tempo
of development in the private corporate sector though the deficiency has been covered to a considerable degree by the growth of developmeni
banking which was mentioned earlier.

1.30 The pattern of utilisation of savings has beer influenced by several innovations like the development banks for industry and agriculture and
the system of cooperative credit. A major change in the functioning of capital markets was effected through the nationalisation of banks in 1969
after which there has been a substantial increase in bank lending to agriculturists, artisans, small industrialists and transport operators and others
whose access to bank credit was hitherto severely limited.

1.31 Planning implies state intervention in economic matters which involves not just a few big projects but also a large number of small works and
programme directed at individuals. At Independence we inherited a patchy administrative structure oriented toward; maintenance of law and order
and revenue adminis tration. Over the planning period an elaborate development administration has been built up from th village, through the block
and district to the secretariat level. Though there are deficiencies in this structure in terms of motivation, probity and efficiency it at least provides a
point of contact between th government and the household or the enterprise. A further change has been introduced by the establishment of
panchayati raj which, in many states, play an important role in development administration.

1.32 Over thirty years of planning the structure of the Indian economy, the technology of production in agriculture and industry and the institution
framework within which economic activities are conducted have changed substantially. The bedrock on which these changes are based lies in the
tremendous growth in human skills and, because of this firm base, the force of modernisation and technological advance are firm Iv entrenched in
all sectors of the economy even though the pace of diffusion varies from one sector to anothe and from one region to another. The major problem

the extension of scholarships for weaker sections and better geographical spread of institutions. Yet the illiteracy rate remains large (65.5 per cent
in 1971 ex-cirding the 0-4 age group) and the quality of the schooling provided needs substantial improvement. Besides these two major social
services, public expenditure has provided water supply and other municipal services in urban slums and in villages, house sites for the poor in
rural areas and supplementary nutrition for vulnerable mothers and children, all of which benefit the poor but do not necessarily show up in the
data on consumption expenditure.

1.48 An individual obtains an income from the ownership of assets and from employment. The limited impact of the Plans on the well being of the
poor sections of the population is a consequence of our inability to restructure the distribution of assets and to provide a sufficiency of employment
for a growing work force.

1.49 Accord^e to the all India debt and investment survey tb° distribution of assets in rural areas, where the bulk of the population lives, was as
follows:

Table 1.5 Distribution of Assets in Rural Areas (Percentage)

S). No. Percentage share in assets of 1961 1971
(0) (1) (2) (3)
1 Lowest 10% 0.1 0.1
2 Lower 30% 2.5 2.0
3 Top 30% 79.0 81.9
4 Top 10% 51.4 51.0
These figures bring out the very low level of asset hakims'; o" the poorest 30 per cent in rural areas. They also show that there has not been any
major change in the structure of asset ownership in rural areas during the sixties. In fact if 'poor' householders ai'3 defined as those with less than
Rs. 1000 of assets in 1961 or, to allow for inflation, Rs. 2500 in 1971, the percentage of such households increased from 30 per cent in 1961 to 35
per cent in 1971. The bulk of the assets of these poor housaeholds consist only of their huts, some household goods and some livestock.

1.50 The principal productive asset in rural areas is land which in 1976-77 was distributed as follows:

Table 1.6 Distribution of land

(percentage)

Sl. No. Operational holdings of Number Area operated

(0) (1) (2) (3)
1 Less than 2 hectares 72.6 23.5
2 2—10 hectares 24.4 50.2
3 Over 10 hectares 3.0 26.3
Small and marginal farmers who constitute over 70 per cent of the landholders operate barely 24 per cent of the land. The very substantial
improvement in agricultural productivity brought about by irrigation and the new seed-fertilizers technology improve directly the earning power of
agricultural land and only indirectly that of agricultural labour. Hence agricultural growth by itself may not solve the problem of poverty. It is,
therefore, necessary to adopt positive measures combining a mix of employment generation, diversification of occupations, land reforms,
reorientation of the credit systems and massive public investment in rural infrastructure so as to ensure that the fruits of economic progress are
more equitably distributed in rural areas.

1.51 The programme of land reforms instituted right at the beginning of the planning period was meant to redistribute this primary resource. The
first phase of this programme which involved the abolition of zamindari and intermediary tenures has been, to a large extent, successfully
implemented. The later phases of land reform involved elements like tenancy reforms, protection of share-croppers, land ceiling and land
consolidation. The pace of implementation of these measures particularly of ceiling legislation has been slow and full of loopholes so that their
impact on the structure of land holdings has been minimal. The land reform programme is by no means complete and has to be pursued further if
we are to tackle effectively the problems of poverty and inequality.

1.52 Trends in the ownership of assets in urban areas are less fully known. The principal instruments used to influence the distribution of assets
other than land are essentially fiscal in character e.g. progressive taxation of income and wealth and the preferential treatment of poorer sections
in the provision of credit. The extent to which progressive taxation has helped to check inequalities his been limited by tax evasion which creates
the further problem of black money and ostentatious consumption. The one direct measure to control the distribution of assets in urban areas viz.
(he Urban Land Ceiling Act has faced major difficulties in implementation. In an indirect way the growth of the public sector in industry and the
nationalisation of almost the entire financial system have probably helped to restrict the number of people at the very top of the income distribution.

1.53 The limited success m redistributing assets may not have mattered as much for poverty reduction had employment increased at a faster rate.
Such a growth m employment would have increased incomes both by reducing idle time and by exerting an upward pressure on wages. However,
the pace 01 generation a employment opportumtit-s seems to have lagged behind me growth in the labour force.

Thus the Rural Labour Enquiry has shown that between 1964-65 and 1974-75, the number of days for which employment was available for rural
labourers declined by 10 per cent for men, 7.5 per cent for women and 5 per cent for children. The data on average earnings from these enquiries
when corrected for inflation also show a decline, in urban areas the figures for the number of persons en tile live register provide some indication
of the trend. These figures show an increase from 1.6 million in 1960 to 12.7 million in 1978, an increase that is attributable partly to changes in
coverage but which nevertheless reflects a substantial deterioration in the availability of employment. Direct data on unemployment from the
National Sample Survey are unfortunately not comparable over time. However, the latest available data for 1977-78 show the following person-day
unemployment:

Table 1.7 Rates of unemployment by Daily Status

(Percentage of labour force)

Sl. No. Category Rural Urban

(0) (1) (2) (3)
1 Male 7.1 9.4
2 Female 9.2 14.6
The average over all categories is 8.2 per cent which in terms of absolute numbers means that on a typical day about 21 million persons are
seeking and available for work but unable to find it. A major challenge of the decade that lies ahead is the speedy expansion and diversification of
opportunities for productive employment.

1.54 Problems of poverty and unemployment have been greatly aggravated by the rapid expansion in population and labour force. Poor
households are often above average in size. This, at least partly, accounts for the low level of consumption and the incidence of unemployment. A
lower family size in these households and the consequential reduction in the growth rate of population would have made it easier to move closer to
the plan objectives of removing poverty and unemployment.

1.55 The search for social justice has one further dimension that has been articulated in our plans; The desire to reduce regional imbalances. At
Independence we inherited an economy where industry and modem agriculture had developed only in a few pockets. the deliberate policy 01
industrial dispersal mat we have followed has led to the development of some new industrial centres situated away from the older centres situated
like Bombay, Calcutta and Ahmedabad, but the degree of success achieved is limited since even in 1971 around 27.5 per cent of the employment
m manufacturing was concentrated in 9 towns. In agriculture the lack of diffusion of the new seed-fertiliser technology has probably accentuated
regional imbalances and in 1977-78 the value of agricultural output per head of rural population ranged between Rs. 866 in Rajasthan and Rs.
3361 in Punjab. These imbalances in the pace of agricultural and industrial advance are reflected in the large differences between states in the
percentage of population below the national poverty line. The data for 1977-78 given m Annexure 1.12 show a range from 15 per cent 1.11 Punjab
to 66 per cent in Orissa. The geographical spread of industry and modern agriculture is undoubtedly better now than at the start of the planning
era but it is clear that we have a long way to go in this task of reducing regional imbalances.

1.56 A simple summary assessment is not possible about the extent to which plan objectives with regard to social justice have been attained.
There are no specific quantified targets against which performance can be compared since what the plans indicate is a direction of movement, not
a specific goal. The evidence presented above suggests that the most that can be claimed is that there has been no perverse movement, no
worsening of inequalities or in the incidence of poverty. In fact, in some respects a degree of progress has been achieved. But, on balance, the
pace of movement is much slower than what is acceptable or possible within the framework of the plans air-a greater degree of redistributive bias
has to be built into our development effort.

CONCLUSION

1.57 In the eighties, the economy is faced with a formidable task of maintaining and accelerating the tempo of economic growth in face of a sharp
deterioration in the international environment. The ever rising prices and highly uncertain supply of imported energy can disrupt the implementation
of development plans. Nevertheless, the fact that the economy now enjoys the advantages of a high savings rate, a developed skill base and a
substantial degree of self-reliance provides a valuable cushion to absorb external shocks. If these advantages are to be turned to good account,
we need to learn certain important lessons from our past experience.

1.58 With regard to growth and modernisation the first lesson is that we must mobilise resources to maintain and increase the tempo of investment
and protect the size of the Plan both against inflation and external disturbances. The second is the paramount need to improve efficiency in key
infrastructural and industrial sectors. The third is that we must reduce the variability of the growth rate and ensure that weather abnormalities and
inflation do not lead to undue cutbacks in public or private investment. The fourth is the need to extend the agricultural revolution to all areas and
farming systems and in particular to ensure that the incomes of the poor are raised in the process of agricultural development. The fifth is the need
to ensure a vigorous expansion in exports and a rapid increase in domestic production of oil, steel, fertilisers and vegetable oils so as to restrain
growth of imports in order to maintain viability of our external payments. Sixth, we must develop effective domestic substitutes for imported energy
so that our dependence on imported oil is contained within reasonable limits. Finally, there is urgent need to revitalise the family planning
programme so as to bring about a substantial decline in me birth rate through the voluntary adoption of the small family norm. Success on all these
points is essential if the overall rate of growth is to be raised, as it must be, well above the levels reached in the past.

1.59 As far as self-reliance is concerned the economy today is in a stronger position than at the start of the planning era. Dependence on external
finance has been substantially reduced and in many areas of production, a high degree of import substitution achieved. But there are many
unfinished tasks in this area, particularly in the field of energy and technology. The world economy is in a much more disturbed state since the mid
seventies than at any time in the past three decades and there is an atmosphere of confrontation rather than cooperation in international economic
relations. In this situation the objective of self-reliance needs to be pursued with continuous vigour. However, self-reliance can no longer take the
form of indiscriminate import substitution. There is a continuous need to replace imports in critical areas where there are sudden and sharp
changes in prices and availability. But, as the complexity of the economy grows, import requirements will also increase and in order to finance
these, export earnings will have to be stepped up substantially. In the eighties, export promotion is as much a part of the drive for sell-reliance as
efficient import substitution.

1.60 With regard to social justice, what we have achieved is far short of what we aimed at. After three decades of planned development large
segments of the population have yet to share in the benefits of progress or participate in the process ot development. From the Fourth Plan,
several programmes for assisting backward areas and weaker sections have been in force. Yet, judging by the statistics on asset distribution,
employment and consumption the impact seems to be limited. What is needed is a more effective implementation of asset transfer measures such
as land reforms, more equitable distribution of credit and a coordinated effort that enables the poor to join the mainstream of economic activity and
provides them with an opportunity for advancement. This will require firstly, an improvement in their productivity and earning power in their existing
activity, secondly, supplementary employment in new activities to use up any spare labour time and thirdly, training, credit and support systems to
assist them in both their existing and new activities.

1.61 Growth, modernisation, self reliance and social justice are not independent objectives. They are linked in that success with respect to any one
makes it easier to achieve the others. The sustained growth of the past thirty years and the very considerable diversification of our economic
structure that has taken place during this period constitute positive national assets for launching a more direct attack on poverty and under-
development in the Sixth Plan, However, the enormity of the task should not be underestimated, particularly in view of a sharp deterioration in the
external environment. The nation will have to mobilise all its latent energies for a more vigorous pursuit of cherished national objectives of
accelerated growth, greater social justice and a modern self reliant economy.

Annexure 1.1
Growth Performance in the Plans

Sl. No. Items First Plan Second Plan Third Plan Annual Plans Fourth Plan Fifth Plan* 3950-51 to
1951-52 to 1956-57 to 60- 1961-62 to 1966-67 to 68- 1969-70 to 1974-75 to 1978-79
55-56 61 65-66 69 73-74 78-79
(0) (1) (2) (3) (4) (5) (6) (7) (8)
Annual Growth rates
1 National income 3.6 4.0 2.2 4.0 3-3 5.4** 3.5
2 Agricultural Production 4.1 4.0 (~)1.4 6.2 2.9 4.2 2.7
3 Industrial Production 7.3 6.6 9.0 2.0 4.7 5.9 6.1
4 Per Capita Consumption 1.7 1.8 0.1 2.0 0.4 2.3 1.1
5 Gross Fixed Investment 3.0 5.8 8.7 1.5 3.1 6.6 5.5
Note:— Col. 8 gives the trend rate calculated from a semilog regression. All other columns give compound growth rates between the base year
before the Plan and the last year of the Plan.
*For the time period orginally envisaged for the Fifth Plan.
** This. is the growth rate for net national product (national income). The growth rate of gross domestic product over this period was 5'2 per cent
as referred to in Table 1.1.

Annexure 1.2 Resource Mobilisation

Sl. No. Item Pre-plan End of End of Second End of Third End of Annual End of Fourth End of
1950-51 First Plan Plan 60-61 TPlan 65-66 Plan 68-69 Plan 73-74 Fifth Plan
55-56 78-79*
(0) (1) (2) (3) (4) (5) (6) (7) (8)
Percentage ofGD.P at
current market prices
1 Gross capital formation ..... 10.0 14-3 16-9 18-2 15-4 20-0 23'7
2 Gross domestic saving 10-2 13-9 13-5 15-6 14-1 19-3 23-9
Share in net domestic saving
(Percentage)
3 Household saving in financial 10-0 15-3 19-1 31-1 20-5 28-3 32-9
assets other than currency
and claims on the
government .
4 Public Sector saving ..... 18-9 10-6 23-3 23-1 17-3 12-9 19-0
5 Private Corporate 6-8 6-2 8-8 3-9 2-6 5-7 2-8
cooperative sector saving
•The figures given are for the originally envisaged terminal year of the Fifth Plan.

Annexure 1-3 Distribution of Rainfall Divisions According; to Scanty or Deficient

Rainfall—1951 to 1976
Sl. No Item 1951-55 1956-60 1961-65 1966-70 1971-76
(0) (1) (2) (3) (4) (5) (6)
i No. of Divisions without a single 21 22 15 11 5
deficient/scanty year
2 No. of Divisions with one deficient/scanty 11 7 16 18 16
year .....
3 No. of Divisions with two deficient/scanty 3 6 4 3 10
years .....
4 No. of Divisions with three deficient/scanty •• •• •• 3 4
years ....
Annexure 1.4 Frequency Distribution of Annual Growth Bates 1951-52 to 1978-7&

Sl. No. Range National Income Agricultural Production Industrial production*

(0) (1) (2) (3) (4)
1 —10% or Less
2 —10%to-5% 1 3 ••
3 -5%to-2% 1 2
4 -2%to0% 1 4 2
5 0% to +2% 6 4 3
6 +2% to+5% 6 2 4
7 +5% to+10% 13 6 15
8 -HO% or More 6 3
•For Calendar years from 1952 to 1978.

Annexure 1.5: Composition of Gross Domestic Product (at 1970-71 prices)

(Percentages)
SI. No. Sector Pre-plan End of first End of Second End of Third End of Annual End of Fourth End of
1950-51 Plan 55- Plan 60-61 Plan 65-66 Plan Plan 73-74 Fifth Plan
56 68-69 78-79**
(0) (1) (2) (3) (4) (5) (6) (7) (8)
1 Agriculture and allied sectors 58-9 57-3 54-2 45-6 (49-9) 46-3 45-2 41-6
2 Mining, Manufacturing and 14-9 15-9 17-7 22-0 (20-0) 21-2 21-6 22-5
construction
3 Electricity, Gas, Water supply, 3-9 4-2 4.9 6-1 6-4 6-8 7-4
transport. Storage and (5-4)
Communication
4 Services 22-3 22-6 23-2 26-3 (24-5) 26-1 26-4 28-5
total 100-0 100-0 100-0 100-0 100-0 100-0 100-0
Figures in brackets are for 1964-65 which may present a more correct picture since agricultural output in 1965-66 was badly affected by the
drought.
**The figures given are for the originally envisaged terminal year of the Fifth Plan.

Annexure 1.6 Industrial Structure

Sl. Sector Weights in the Index of Industrial Production* Value added in registered manufacturing
No.
1956 1960 1970 1970-71 1977-78
(0) 0) (2) (3) (4) (5) (6)
I Food ............ 15-7 14-2 9-5 9-3 9.9
2 Textiles ....... .... 47-0 31-9 21-5 20-1 19-4
3 Rubber, 11-7 12-9 18-2 17-3 19-9
Chemical and
Petroleum .......
4 Non-metallic 2-8 4-5 4-1 4-0 4-1
minerals .........
5 Basic metals 10-4 8-7 10-9 9.9 10-2
...........
6 Engineering 8-3 19-7 25-9 24-9 25-9
...........
7 All others ........... 4-1 8-1 9.9 14-5 10-6
total 100-0 100-0 100-0 100-0 100-0
*Excluding mining and quarrying and electricity.

Annexure 1.7 Technological Change in Agriculture

Sl.No. Item Pre-Plan End of End of Second End of 66-67 67-68 68-69 End of Fourth End of
1950-51 First Plan Plan 60-61 Third Plan Plan 73-74 Fifth Plan
55-56 65-66 78-79*
(0) (1) (2) (3) (4) (5) (6) (7) (8) (9) (10)
1 Percentage of gross 17-1 17-4 18-3 19-9 20-8 20-3 22-2 23-7 28-0
irrigated area to gross
sown area
2 Fertiliser consumption 0-5 0-9 1-6 5-1 7-0 9.4 11-0 10-7 29-5
(kg/ha)
3 Percentage of Rice and
Wheat area under HYV
(a) Rice .. 2-5 4-9 7-3 26-1 41-8
(b) Wheat .. .. .. .. 4-2 19-6 30-0 59-2 71-1
4 Average yield
(a) Rice (qtl/ha) . 6-7 8-7 10-1 8-6 8-6 10-3 10-8 11-5 13-3
(b) Wheat (qtl/ha) 6-6 7-1 8-5 8-3 8-9 11-0 11-7 11-7 15-7
*The figures given are for the originally envisaged terminal year of the Fifth Plan.

Annexure 1.8 Gross and net aid by Plan Periods

(Rs. crores)
Sl.No. Period Utilisation of External Amortisation and Interest Net Aid Net Aid as% of Plan Net Aid as% of
Assistance payment Expenditure Imports
(0) (1) (2) (3) (4) (5) (6)
1 First Plan 51-52 201-7 23-8 177-9 9-1 4.9
to 55-56 .........
2 Second Plan 56- 1430-4 119-4 1311-0 28-1 26-9
57 to 60-61 ........
3 Third Plan 61-62 2867-7 542-6 2325-1 27-2 37-5
to 65-66 . ........
4 Annual Plans 66- 3229-6 982-5 2247-1 33-9 37-5
67 to 68-69 ........
5 Fourth Plan 69- 4183-7 2445-0 1738-7 11-2 17-6
70 to 73-74 ........
6 Fifth Plan 74-75 7309-5 3770-4 3539-1 8-9* 12-8
to 78-79 ........
*0n actual expenditure for the first four years, anticipated expenditure for 1978-79.

Annexure 1.9 Import Substitution (Percentage share of imports in indigenous supplies)

Sl.No. Item Pre-Plan End of End of Second End of Third End of Annual End of Fourth 77-78
50-51 First Plan Plan 60-61 Plan 65-66 Plans 68-69 Plan
55-56
73-74
(0) (1) (2) (3) (4) (5) (6) (7) (8)
I Foodgrains 5-9 1-7 4-7 9-5 5-6 4-3 0-2
2 Iron & Steel . 25-2 39-9 35-7 16-7 9-3 ,18-5 1-1
3 Machinery* 68-9 41-0 40-7 27-8 24-6 17-0 15-3
4 Petroleum® . 92-5 93-8 94-6 76-6 66-2 70-8 63-1
5 Nitrogenous fertilisers 72-5+ 39-8 80-3 58-3 60-9 38-3 27-5
*Imports as a percentage of machinery component of gross investment. @ On calendar year basis. +For 1951-52.

Annexure 1.10: Growth in Exports (Annual growth rate in values at current dollars)

(Percentage)

Sl. No. Region First Plan Second Plan Third Plan Annual Plans Fourth Plan Fifth Plan
1951-56 1956-61 1961-66 1966-69 1969-74 1974-79*
(0) (1) (2) (3) (4) (5) (6) (7)
1 India ....... 1-8 0-7 4-8 1-5 10-7 17-3
2 All developing countries of 5-1 2-8 5-9 6-2 20-3 21-6
which
3 (a) Major Petroleum exporters 12-3 5-3 6-6 7-9 24-3 27-2
(b) Fast growing exporters of Nil 1-0 5-5 7-0 24-7 19-4
manufactures
4 All countries ...... 9-1 6-4 7-8 8-6 19-2 17-4
Note:—These compound growth rates are based on an end-to-end comparison of calendar year data reportedin 'Handbook on International Trade
and Development Statistics, UNCTAD, 1979'. * For the time period originally envisaged for the Fifth Plan.

Annexure 1.11: Distribution of Household Consumer Expenditure

(Percentages)

Sl. No. Category 1958-59 1961-62 1965-66 1970-71 1972-73 1977-78

(0) (1) (2) (3) (4) (5) (6) (7)
RURAL
1 Bottom 30 percent 13-1 14-7 15-1 15-4 15-4 15-0
2 Middle 40 percent 34-3 33-2 34-3 35-1 33-7 33-1
3 Top 30 percent 52-6 52-1 50-6 49-5 50-9 51-9
URBAN
4 Bottom 30 percent 13-2 12-9 13-6 13-7 13-8 13-6
5 Middle 40 percent 31-7 31-4 31-9 31-8 31-9 32-4
6 Top 30 percent 55-1 55-7 54-5 54-5 54-3 54-0
Annexure 1.12
Percentage of population below the poverty line by States separately for rural and urban areas, in 1977-78
Sl.No. State/U.T. Rural Urban Combined
(0) (1) (2) (3) (4)
1 Andhra Pradesh 43.89 35.68 42.18
2 Assam 52.65 37.37 51.10
3 Bihar 58.91 46.07 57.49
4 Gujarat 43.20 29.02 39.04
5 Haryana 23.25 31.74 24.84
6 Himachal Pradesh 28.12 16.56 27.23
7 Jammu & Kaslunir 32.75 39.33 34-06
8 Kamataka 49.88 43.97 48.34
9 Kerala 46.00 51.44 46.95
10 Madhya Pradesh 59.82 48.09 57.73
11 Maharashtra 55.85 31.62 47.71
12 Manipur 30.54 25.48 29.71
13 Meghalaya 53.87 18.16 48.03
14 Nagaland N.A. 4.11 4.11
15 Orissa 68.97 42.19 66.40
16 Punjab 11.87 24.66 15.13
17 Rajasthan 33.75 33.80 33.76
18 TamilNadu 55.68 44.79 52.12
19 Tripura 64.28 26.34 59.73
20 Uttar Pradesh 50.23 49.24 50.09
21 West Bengal 58'94 34.71 52.54
22 All Union Territories 34.32 17.96 21.69
All India (weighted) 50.82 38.19 48.13
Note: 1. The above estimates are derived by using the al 1-India poverty line of Rs. 65 per capita per month in 1977-78 prices corresponding
minimum daily calorie requirement of 2400 per person in rural areas and the poverty line ofRs.75 per month corresponding to daily calorie
requirement of 2100 in urban areas.

2. These results are based on the provisional and quick tabulation of the National Sample Survey (NSSO) on household consumer expenditure of
32nd round (July, 1977 to June, 1978).

3. The difference between the aggregate all India private consumption expenditure estimated by the Central Statistical Organisation in their
National Accounts Statistics and that derived from the NSSO data has been adjusted prorata among the different States and Union Territories in
the absence of any other information which could be used to allocate this difference among the States and Union Territories.

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