Mains Marathon

Approach :  Briefly introduce the concept of planned development in post-independence India. Explain planned development as a tool of transformation. Discuss how rigid central planning led to systemic issues. Balance both sides and conclude.

Introduction: 

After independence in 1947, India faced massive challenges: poverty (over 70% population below the poverty line), food insecurity, low literacy (18% in 1951), and underdeveloped infrastructure. To tackle these, India adopted a planned development model under the Planning Commission, with the First Five-Year Plan launched in 1951, influenced by the Soviet experience and Nehruvian socialism.

Body : 

Planned Development as a Tool of Transformation

• Industrialization: The Second Five-Year Plan (1956–61), based on the Mahalanobis model, prioritized heavy industries. 
  • Steel plants like Bhilai, Rourkela, and Durgapur were established with foreign assistance, forming the backbone of Indian industry.
• Green Revolution: During the Fourth Plan, India witnessed a breakthrough in food production due to HYV seeds, irrigation, and fertilizer subsidies.
  • Wheat production rose from 10 million tonnes in 1960 to over 55 million tonnes by 1990, making India self-sufficient in food.
• Infrastructure: Massive investments were made in multipurpose river valley projects like Bhakra-Nangal and Damodar Valley, and the expansion of road and rail networks.
• Social Goals: Land reforms (though uneven), community development programs, and schemes like the Integrated Rural Development Programme (1978) aimed to uplift the rural poor.
• Human Development: Life expectancy improved from 32 years in 1951 to 60 years by 1991, and literacy rose significantly, especially after the National Policy on Education (1986).
  

Planned Development as a Source of Structural Rigidity

• License-Permit-Quota Raj: By the 1970s, the private sector was heavily regulated. Industrial licensing stifled innovation and competition, creating monopolies and rent-seeking behavior.
• Inefficient PSUs: Many public sector undertakings became “white elephants.” For example, Air India and Hindustan Fertilizer Corporation ran at continuous losses.
• Neglect of Consumer Goods: The focus on capital goods overlooked consumer demand. The result was scarcity and poor-quality goods.
• Low Productivity and Trade Isolation: By 1990, India’s share in global trade was just 0.5%, reflecting the inefficiency and inward-looking nature of its economic model.
• Hindu Rate of Growth: From the 1950s to the 1980s, India’s GDP grew at an average of only 3.5% per annum, a rate termed the “Hindu rate of growth”. This sluggish growth contrasted sharply with the rapid rise of East Asian economies and was symptomatic of systemic inefficiencies and rigidities in planning.

Conclusion

As scholar Jagdish Bhagwati aptly observed, “India's planning system created islands of excellence in a sea of mediocrity.” While planned development provided the initial thrust for nation-building, its rigidities underscored the need for the 1991 economic reforms, which integrated planning with market mechanisms, ensuring a more adaptive and responsive growth model.