Introduction || APPENDIX (CH-4) || APPENDIX (CH-9) || ANNEXURE (CH-12) || APPENDIX (CH-14) || APPENDIX (CH-24) || APPENDIX (CH-29) || Conclusion
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 || 29 || 30 || 31 || 32 || 33 || 34 || 35 || 36 || 37 || 38 || 39

Chapter 4:
THE FIVE YEAR PLAN IN OUTLINE

The Five Year Plan involves an outlay on development by public authorities of Rs. 2069 crores over the period of 1951—56. In determining this target of expenditure, the main considerations that have been taken into account are :

1. the need for initiating a process of development that will form the basis of the much larger effort needed in the future ;
2. the total resources likely to be available to the country for the purpose of development ;
   
3. the close relationship between the rates of development and the requirements of resources in the public and in the private sectors
4. the necessity of completing the schemes of development initiated by the Central and State Governments prior to the commencement of the Plan ; and
   
5. the need to correct the maladjustments in the economy caused by the war and the partition.

2. Our approach to planning and the long-term targets of investment and income to be aimed at have been set forth in the earlier chapters. The vast and complex problems of structural and institutional re-organisation that an effort of the required magnitude will raise have also been touched upon. Viewed against this background, the Five Year Plan is essentially a plan of preparation for laying the foundation for more rapid development in the future. The targets of investment which the Plan sets, as well as the increases in production which are expected to be achieved thereby, are modest when compared to what has to be achieved within the next twenty years or so but, it must be emphasised, both are high compared to past trends.

Priorities And The Pattern Of Outlay

3. The distribution of expenditure in the development programme of the public sector is summarised in the following Table :

This distribution reflects the priorities discussed in Chapter II. In the present Plan period, agricultural development receives the highest precedence, which necessitates an extensive programme of irrigation covering minor as well as major projects. Generation of electric power, which is linked in most cases with the major irrigation projects, has also a high priority in its own right. Production and extensive distribution of electrical energy on a large scale is essential not only for the growth of small scale enterprises and for rural development in the larger sense of the term but for industrial expansion. In regard to transport, public authorities have a special responsibility. The railways are a nationalised enterprise which has to respond to the needs of development in both argiculture and industry. The State has further to take the initiative in linking up the whole country through a system of roads reaching down to the village, and in promoting development in new lines like shipping and aviation.

4. The high priority given to agriculture (which as mentioned above, involves large scale investment in irrigation) as well as to basic services like power and transportation limits inevitably the investment which the public sector can itself undertake in industries. Industrial expansion in this five year period will rest largely on private initiative and resources, but they will be supplemented at certain points by the resources of the public sector as well as by foreign investment; programmes of the public and the private sectors together will not therefore be inconsiderable. In the sphere of social services, the needs are so large that what can be achieved through financial investment by public authorities is limited. In the present Plan, the rehabilitation of displaced persons absorbs a considerable proportion of the additional resources available for expansion of social services. The financial investment in social services has to be supplemented by direct community effort on a large scale for the liquidation of illiteracy, improvement of sanitation and hygiene, development of civic services, imparting of elementary technical training, etc. The lump-sum provisions in the Plan for the community development programme and for local works are designed, among other things, to evoke such community effort.

5. The significance of the outlay of Rs. 2,069 crores from the point of view of the additions it will make to productive equipment in the public and private sectors, and to the production potential of the community in the larger sense of the term, will perhaps be clearer from the following rough classification :

(Rs. crores)

It will be seen that nearly 60 per cent. of the planned outlay will result directly in the creation of productive capital in the ownership of the Central and State Governments ; this will be mainly under irrigation and power, transport and communications, and industry. The remaining 40 per cent will partly add to productive equipment in the private sector, partly provide assistance in the form of working capital or of advisory and administrative services, partly help to maintain and expand social services, and partly act as an incentive for community effort in development.

Distribution And Phasing Of Expenditure

6. A break-up of the development expenditure of the Central and State Governments by major categories is given in the statements attached at the end of this Chapter. The distribution of the total outlay as between the Central and the State Governments is summarised below :—

(Rs. crores)

7. According to the above classification, the outlay of the Central Government (including the railways) works out to almost 60 per cent. of the total. It must be emphasised that this distribution of outlay is not an indication of the schemes which fall within the respective spheres of the Centre and the States. The 'central' multi-purpose river valley schemes (i.e., the Damodar Valley, Bhakra-Nangal, Hirakud, and Harike projects) are really the schemes of the State Governments, but in view of the fact that the territorial coverage of these projects extends in some cases over two or three States, the exact distribution of the financial liability as between them cannot be foreseen at this stage. The responsibility of finding the necessary finance for these schemes in the form of loans to State Governments also rests initially on the Centre. In regard to certain other schemes, the sharing of the financial responsibility has yet to be finally determined. For these and similar reasons the provisions in the Plan for community projects, minor irrigation and other local works, the five new major irrigation and power projects, scarcity affected areas, rehabilitation of displaced persons, basic and social education, industrial housing, etc., are shown as part of the Central Government's development programme, though they belong primarily to the States.

8. It is in the light of these observations that the distribution of the total planned outlay as between the Centre and tlie States, and the allocation of this outlay as between the major developmental heads, has to be seen. The following table summarises tlic outlay of the Centre and of the States (excluding Jammu and Kashmir) under various heads :

(Rs. crores)

9. The outlay proposed in the development programmes of States other than Jammu and Kashmir is shown below :

These State Plans were drawn up initially over a year ago in consultation with the State Governments concerned and on the basis of forecasts supplied by them regarding their likely revenues and expenditures in the period of the Plan. In cases where the State Governments made proposals subsequent!/ to raise the size of their State Plans, the upward revisions have been accepted provisionally subject to the resources corresponding to them being raised by the governments concerned.

10. The financial basis of the Plan has been discussed in detail in Chapter III. A rough picture of the estimates in relation to the development programmes can be had from the following summary table :

(Rs. crores)

As brought out in the assessment of financial resources for the Plan, the balance of Rs. 655 crores necessary for the public development programme will have to be found from further external resources that may be forthcoming or from internal taxation and borrowing as far as possible and by deficit-financing.

II. In the phasing of development expenditures originally proposed by many of the States there was on the whole a somewhat excessive concentration of outlay in the first two years of the Plan. This was in some cases inevitable in that it only reflected the rising tempo of expenditures towards the culminating stages of certain schemes already under implementation. The actual progress of expenditure (as indicated by the revised budgets for 1951-52 and the budget estimates for 1952-53) shows that the concentration of expenditures in the first two years originally proposed has already been corrected to a great extent. It is, however, clear that in 1953-54 expenditures on a number of schemes under implementation will reach their peak levels and that there would be in consequense a heavy pressure on resources both at the Centre and at the States. New schemes which can be postponed without detriment should not therefore be taken up in this year. In so far as can be foreseen at this stage, there will be scope for starting work on new schemes, which involve large expenditures once they are undertaken, only towards 1954-55 and in 1955-56.

* Includes Rs. 4 crores by way of statutory grants for scheduled tribes which will be available for part of the development expenditure on scheduled tribes in the Assam State Plan.

Appraisal Of The Programme In The Plan

12. In appraising the results of the Plan, the development programme in the public sector cannot be taken by itself. This progamme, as mentioned earlier, is based on an appraisal of the needs of the economy as a whole and is related to an assessment of the effort that is likely to be forthcoming from the private sector. In the case of agriculture, where the problem is primarily one of providing irrigation, fertilisers and manures, better seeds, as well as extension services which will carry to the farmer the know-how ofti-chnical improvements, the supplemental investment required would to a great extent be in the form of direct contributions of labour by the farmers themselves. In the sphere of industrial development, we have taken into account the working plans of 40 large and medium scale industries which cover about two-thirds of the total output of factory enterprises in the country. Approximate estimates regarding the likely requirements of manufacturing industries and of the likely sources of finance are shown elsewhere in this Report. The results of the Plan can thus be viewed within a wider setting as far as agriculture and manufacturing industry are concerned. In other spheres of development, particularly in respect of professions and services and small-scale enterprises in transport and industry, only broad judgements can be made at this stage. The contribution that community effort may make to extension of education, sanitation, communications, etc. cannot also be assessed in advance in precise terms. In the paragraphs that follow are outlined the salient features of the development programmes in the public and private sectors ; their results in terms of certain select targets and indices are shown in the statement below :—

* Including gram and pulses. Output in 1949-50 (used as the hire tor fixing the target for 1955-56) was 54.0 million tons.

These estimates do not cover (except in respect of industrial schools), Hyderabad, Rajasthan, Ajmer and Vindhya Pradesh. In so.-ne cas.:s, data for a few States (e. Uttar Praiesh in respect of primary schools and Madhya Pradesh in the case of junior basic, and secondary schools) are also not covered in these estimates.

Agriculture And Community Development

13. Agriculture and community development is a comprehensive description for several items of reconstruction which include, besides agricultural production, livestock improvement and dairying, forests and soil conservation, co-operation and village panchayats. The Plan makes a total provision of about Rs. 361 crores of which Rs. 184 crores is for agriculture, a little over Rs. 100 crores for community projects and rural development, Rs. 22 crores for animal husbandry and dairying, Rs. 15 crores for stimulating local development through the agency of local authorities, another Rs. 15 crores for development programmes in scarcity-affected areas, and Rs. 12 crores for forests and soil conservation. The role of the Central Government is to co-ordinate the programmes of the States and also to assist them in certain important respects. The Central Government's plan provides for the establishment of a national extension organisation, completion of the present programmes of the Central Tractor Organisation, schemes for the improvement of livestock, measures for soil conservation as well as for co-operative training, for experiments in co-operative farming and other aspects of co-operative organisation. The Technical Co-operation Programme initiated this year has strengthened considerably the programmes for tubewell development, marine fisheries, locust control and the training of extension workers.

14. The programme for increasing agricultural production covers foodgrains as well as cotton, jute, sugar-cane, and oilseeds. In foodgrains, the target for 1955-56 represents an increase of about 14 per cent over the level in 1949-50.! In the case of cotton and jute, production is expected to go up by over 42 per cent and 63 per cent respectively above the level in 1950-51, while the increases in sugar-cane and oilseeds are estimated at about 13 per cent and 8 per cent respectively. It might be mentioned here that, in 1951-52, the production of cotton was 33 lakh bales as compared to 29 -7 lakh bales in 1950-51 and the target of 42 -3 lakh bales by 1955-56. Jute production in 1951-52 v.'as 47 lakh bales—an increase of 14 lakh bales over 1950-51; the additional production now to be secured in terms of the target works out therefore at only 7 lakh bales. Foodgrains production for 1951-52, as shown by official figures was about the same as in the previous year and it is here that special effort is now called for. The detailed programmes for achieving the food targets, formulated initially in 1950-51 in consultation with the State Governments, were reappraised in early 1952. Following this reappraisal the original target of 7 -2 million tons in the State Plans had to be lowered to 6-0 million tons. The programmes have therefore been strengthened by an additional lump-sum provision of Rs. 30 erodes for minor irrigation.

15. The community development projects, which are conceived primarily as a programme of intensive development of selected areas, would also contribute to raising the level of agricultural production. A beginning has been made this year with 55 projects. The central object of the community development programme is to mobilise local manpower for a concerted and co-ordinated effort at raising the whole level of rural life. The emphasis is inevitably on improving the level of agricultural productivity. Trys is reflected in the fact that the bulk of the projected expenditure is devoted to the provision of irrigation, land development and extension services. The community development projects represent in content a synthesis of ideas gathered from rural development work in various parts of the country. As further experience is gathered, changes in structure and emphasis may be 'essary, but the intention is to cover the entire country with schemes designed to promote ;ntensive development through increased agricultural productivity. The Five Year Plan makes a lump-sum provision ofRs. 90 crores for such development. There is, in addition about Rs. locroresinthe State Plans for other programmes of rural development, including schemes designed to promote and strengthen village panchayats.

16. Elsewhere in this Report is also a scheme for a national extension service for agricultural development ; there is provision ofRs. 3 crores for this in the Plan. This organisation, together with community development projects and the additional minor irrigation visualised, will help to step up the production offoodgrains in the country by 7-6 million tons compared to the level in 1949-50.

17. In the period of this Plan, some parts of the country may not stand to benefit directly from the various development schemes taken up. In order that the Plan creates interest on the part of as wide a section of the community as possible, and in order to draw forth local initiative and resources, a lump-sum provision ofRs. 15 crores is being made in the Plan for local development works. It is hoped that schemes will be forthcoming from municipalities, district and taluka boards and other local bodies for which financial assistance can be given out of this lump-sum provision to attract and organise local resources on a multiplied scale. There is also a special provision ofRs. 15 crores in the Plan for organising relief activities in scarcity-affected areas on developmental lines.

Irrigation And Power Programmes

18. The programme for irrigation and power is based primarily on projects initiated in the period prior to the Plan. The total cost on the projects thus taken over into the Plan has been estimated at Rs. 765 crores, of which an expenditure ofRs. 153 crores had already been incurred up to the end of 1950-51. The provision for these projects in the period of the Plan is Rs. 518 crores, leaving only a little under Rs. 100 crores to be spent in the subsequent years. The progress made on these projects will help, within the period of the Plan, to bring an additional area of 8 • 5 million acres under irrigation and to generate i • i million kws of additional power. On the completion and full development of these projects, the total addition to the area irrigated will be 16-9 million acres and to power i -4 million kws.

19. In view of the high priority given to agriculture, the construction of the projects in hand has been so adjusted as to facilitate the maximum extension of irrigation in this period. The generation of power has been related to the demand that already exists or is likely to grow in the near future. Provision is however being made in the design of dams and other works for installing additional units as and when additional demands rise.

20. Of the provision ofRs. 518 crores in the Plan on projects in progress, well over half will fall in the first three years of the Plan. During this period the pressure on financial as well as technical resources will prevent work being started on new projects. There will be scope for such additions only as from 1954-55. The five new irrigation and power projects which are proposed to be taken up towards the later stages of the Plan are the following: Kosi (Stage I), Koyna (Stage I), Krishna (the scope of which is not yet defined), Chambal (Stage I) and Rihand. The total cost of these projects will be well over Rs. 200 crores, out of which it is expected that it might be possible to spend Rs. 40 crores during the period of the Plan.

21. The programme for irrigation and power in the Plan,* taking projects in progress as well as the new projects proposed, has to be viewed as part of a more long-term programme intended to add, within the next two decades, 40-45 million acres to the area now under irrigation and 7 million kws. to the existing power generating capacity.

22. The irrigation and power benefits from the major projects in the period of the Plan will be supplemented by the results of the minor irrigation programme and by the extension schemes of private electricity undertakings. The minor irrigation programme in the Plan, involving an expenditure of Rs. 77 crores, is as follows:—

*The Plan includes, in addition to the items mentioned, ;i provr-'on of Rs. 2 crores for carrying out investigations into development possibilities in irrigation and power.

As regards power, the extension projects of private electricity undertakings will add 176.,00 kws of installed capacity in the period of the Plan.

23. There are parts of the country in which scope exists for large irrigation projects and there are others in which only smaller projects are possible. Each area has to be served by the kind of schemes for which it offers the best facilities. Large and small projects are thus complementary and not competitive. The Plan includes eight irrigation projects (including multi-purpose projects but excluding new major irrigation projects mentioned in para 20) costing above Rs. 5 crores each, sixteen costing between Rs. crore and Rs. 5 crores, twenty-one costing between Rs. 50 lakhs and Rs. i crore, and twenty-seven schemes costing between Rs. 10 lakhs and Rs. 50 lakhs.

24. Rural electrification has so far made little progress in the country, only i in about 200 villages being served with electricity. The Plan makes a provision of Rs. 27 crores for extending rural electrification. This programme is mainly confined to the Southern States of Madras, Mysore and Travancore-Cochin, but the scope for rural electrification will undoubtedly grow as more power becomes available in other areas of the country. Electricity will be useful not only for agricultural operations like pumping, but also for the processing of agricultural produce and for other cottage and small-scale industries in the villages. There is also a special advantage in the encouragement of agricultural load since utilization of power in agriculture is estimated to require only about one-third the investment required in industry. Moreover, most of the equipment required for utilization of power in agriculture can be produced in the country and its operation does not require technical skill of a high order.

Industrial Development

25. The expenditure on Industry, as shown in the development programmes of the public sector, is Rs. 173 crores ; this covers Rs. 140 crores to be spent on large-scale industries and ancillary transport expansion, Rs. 27 crores on cottage and small-scale industries, and about Rs. 6 crores on mineral development and scientific and industrial research. Some of the industrial schemes in the public sector are, however, shown under other heads. For instance, the Chittaranjan locomotive factory and the all-steel coach factory are part of the development plan for railways. The net investment in manufacturing industries figuring in the public development programme taken as a whole, but excluding a lump-sum provision of Rs. 50 crores for basic industries and transport (about which more will be said below), is Rs. 94 crores over the five years. Investment in the private sector on expansion of industries and on modernisation and replacement is likely to be of the order of Rs. 383 crores. The total investment on industrial development in this period can thus be placed at Rs. 477 crores.

26. The development programme in the public sector provides for a new iron and steel project estimated to cost Rs. 80 crores over a period of six years from the date of commencement ; the expenditure in the period of the Plan, estimated at Rs. 30 crores, is to be financed partly by Government and partly by private enterprise. Most of the industrial projects in hand in the public sector will be completed by 1953-54. The Sindri fertiliser factory has commenced production and it is expected that it will shortly reach a monthly rate of output of 1,000 tons of ammonium sulphate. With the estimated production of 120 locomotives a year in the Chittaranjan locomotive factory by 1957 (production in 1955-56 will be 100 locomotives) and the estimated output of 50 locomotives at the Tata Locomotive and Engineering Company, the railways will be able to secure their normal annual replacement requirements of locomotives almost entirely from domestic production. The production of high precision machine-tools, telephone equipment, dry core cables, and newsprint envisaged in the Plan will also strengthen the industrial structure.

27. The rate of investment, and therefore of development in this sector as a whole, will depend however primarily on the implementation of the working plans of private industries outlined in this Report.* These plans, drawn up in consultation with the representatives of the industries concerned, aim at expanding the installed capacity of several capital and producer goods industries and, in the case of consumer goods industries, primarily at utilising more fully the existing capacity. Over the five-year period, the production of heavy chemicals is expected to go up by 156,000 tons, of fertilisers by 528,600 tons, of pig iron by 310,000 tons, of steel by 394,000 tons, and of cement by 2 • i million tons. The output of consumer goods industries is also estimated to increase considerably; the production of cloth is scheduled to go up by 1,872 million yards, of sugar by 384,000 tons', of salt by 429,000 tons and of vegetable oils by 182,000 tons. The output of a number of light engineering industries is also expected to register substantial improvement. It will be the objective of Government policy to assist the private sector to the extent possible in the creation and maintenance cf conditions favourable to the attainment of the targets proposed.

28. As the development programme gets into swing and the emphasis is shifted increasingly towards industrialisation, it will become necessary to expand basic industries like iron and steel, heavy chemicals, manufacture of electrical equipment and the like. In these fields, as emphasised in Chapter II, it is necessary to anticipate to some extent the nature of the demands that will develop and make a beginning from the very start. The Plan therefore has a lump-sum provision of Rs. 50 crores for the development of basic industries and ancillary transport. This includes a provision for organising mineral exports. Part of the lu;ip-sum provision ofRs. 50 crores, it is expected, will be available for initiating the construction of a unit for the'manufacture of electrical equipment to meet the needs of power development in the country.

29. An extensive programme for village industries prepared primarily with the object of increasing rural employment has been included in the Plan. The programme includes, amongst others, the following industries: khadi, coir, village oil, matches, leather, hand-made paper, gur and khandsari, palm gur, woollen blankets ind bee-keeping. The khadi programme is to be financed by means of a small cess on mill-made cloth. A small cess lias also been proposed on mill oil for the benefit of the village oil industry. Common production programmes have been proposed for a number of cottage and small scale industries along with the related large scale industries. For instance, as part of the programme for the textile industry the output of the handloom industry is expected to be doubled. The establishment of a Khadi and Village Industries Development Board by the Central Government is being recommended. The Board which will have large executive functions, is to be responsible for initiating village industry programmes in co-operation with State Governments and other organisations engaged in the field of village industries. The total provision in the Plan for cottage and small scale industries is Rs. 27 crores.

Transport And Communications

30. In the programme for Transport and Communications, a little more than half of the total outlay is on railways. This outlay is designed to meet the arrears in replacement accumulated over a long period (particularly during the War) and to equip the railways with the minimum equipment and installations necessary to carry the additional load which will be placed on it as a result of development in other sectors of the economy. At the beginning of 1951-52, about 12 per cent of the locomotives, 28 per cent of the coaches and over 10 per cent of the wagons in use were due for renewal'; to meet the existing level of traffic these had to be retained in service. Considerable lengths of the track were also in need of repair and restoration. The Plan provides for an expenditure ofRs. 50 crores per annum on railways in addition to Rs. 30 crores per annum estimated as required for meeting the current depreciation of railway installations and equipment. This will enable a few of the more urgent extensions to be undertaken, but the total provision for new lines over the five years is only about Rs. 20 crores and so the programme for railways must be regarded primarily as one of rehabilitation.

31. The total provision for road development in the Centre and the States together amounts to over Rs. 100 crores. Of this, about a quarter will be on the development of national highways, and the rest mainly on State roads. The provision for-road development includes also a sum ofRs.2 crores for the construction of the Ganga Bridge which will provide a needed link between North and South Bihar. Road development is a sphere which offers considerable scope for mobilisation of local manpower and local materials. In certain States, village roads are already being developed with the active co-operation of villagers who contribute a portion of the cost of construction by way of free labour, free gift of land or money, with the balance being contributed by State Governments or District Boards. With the projects for local and intensive development visualised in the Plan, it is estimated that approximately 16,000 to 17,000 miles of village roads could be constructed through community effort within this period. This mode of development has to be extended as rapidly as possible to cover the entire country.

32. As in the case of railways, ports are in need of attention to meet the immediate needs of expansion in other sectors of the economy. Apart from the fact that there is at present no reserve capacity in the five major ports of the country for handling normal increases in seaborne trade, port development is necessary to meet the following needs : (a) for rectifying the consequences of Partition and for providing a natural outlet for the traffic previously catered for by Karachi; (b) for the renovation and modernisation of equipment in the existing ports, and (c) for providing facilities for the petroleum refineries which are proposed to be set up. The Plan provides for Rs. 12 crores for the construction of a new port at Kandia, Rs. 8 crores for the creation of port facilities for oil refineries, and another Rs. 12 crores as loans to port authorities for carrying out a programme of rehabilitation and modernisation.

33. The Plan also visualises development in certain relatively new lines of transport, of which shipping is the most important. The programme for the development of shipping is designed primarily to enable the coastal trade of the country to be reserved for Indian vessels and to ensure their fuller participation in overseas trade. With these in view, the Plan makes provision for construction of additional berths in the Visakhapatnam shipyard, which will not only make available about 100,000 G.R.T. for coastal shipping during this period, but also help to reduce the costs of construction. In addition, there is provision in the Plan for loans to shipping companies for acquiring additional tonnage for overseas trade.

34. Civil aviation is another new line of development. It has been found that under the present conditions of traffic loads and intensity of operations, the existing air transport companies cannot work on an economic basis, and that to ensure such working they should merge into a single unit owned and operated by the Central Government. Integration of existing airlines along these lines has been decided upon and a State Corporation is to be set up for the purpose. It is proposed to give the shareholders of existing companies stock with guaranteed interest in return for their present holdings. The necessary legislation will be undertaken shortly. The Plan provides for a sum of Rs. 9-5 crores for purchase of new aircraft and for payment of compensation to existing air companies.

35. In the field of broadcasting, the new installations which are proposed to be taken up under the Plan would increase the area covered by medium wave broadcasts from 117,000 to 370,000 sq. miles. This would double the population covered by the broadcasting services, the population expected to be served by 1955-56 being of the order of 170 million people. Further, the development programme would also augment to a considerable extent the national and international services on shortwaves.

Social Services And Rehabilitation

36. The Plan provides for a total expenditure ofRs. 340 crores on social services of which Rs. 152 crores are for education, about Rs. 100 crores for medical and public health services, Rs. 49 crores for housing, Rs. 29 crores for backward classes (including scheduled castes and tribes), and nearly Rs. 7 crores for labour and labour welfare. There is a further provision of Rs. 4 crores for assistance to voluntary social welfare prganisations so that their work can be expanded and dovetailed into the national development programme. In the States, the Plan contemplates only a limited measure of expansion in social services. At the Centre there is a provision of Rs. 20 crores for further development in the field of pre-university education. The average annual expenditure proposed under education represents an increase of nearly 55 per cent over the development expenditure in 1950-51. This would lead to a certain amount of expansion of educational facilities in the States' sector. The number of pupils attending primary, junior basic, secondary and technical and vocational (other than industrial) schools is expected to increase by 25, 8i, 32 and 63 per cent respectively as compared to 1950-51. In the sphere of health, the Centre has a programme for malaria control which will be co-ordinated with the programmes of the States ; the programme is intended to protect about 200 milion people in rural areas through insecticidal spraying measures. The Plan provides also for the construction of two D. D. T. plants in order to ensure sufficient supply of D. D. T. at reduced costs to meet the needs of the country. The State Plans provide for an expenditure on public health of Rs. 39 crores ; this expenditure, which will be mainly on provision of water supply and drainage, will involve almost a trebl-ing of the existing rate of expenditure under this head. With the introduction of the scheme of provident funds for industrial workers in six industries, it has been possible to frame a programme for the construction of about 150,000 houses for industrial workers at a cost of about Rs. 38-5 crores. In addition, some States have their own housing schemes for low income groups ; the total cost of the housing programme is about Rs. 49 crores. The Plan has also a programme of amelioration for backward classes. In addition to the provision of Rs. 29 crores shown in the Plan, the Central Government is estimated to provide in the form of statutory grants a further sum of about Rs. 9 crores for the development of scheduled tribes. The programme for the rehabilitation of displaced persons, for which a provision of Rs. 85 crores has been made in the Plan, covers a period of three years ending ¹953-54. The position regarding migrants across the eastern border is still somewhat fluid. For some time to come the problem of relief of those who have newly arrived may therefore continue ro be a major concern of the Government.

Assessment Of The Plan In Terms Of Income And Employment

37. A programme of development will, in the last analysis, be judged in tern-is of the improvement it is able to make to the welfare of the community. The usual indices of welfare are income, consumption and employment. With the available data only a broad assessment of the Plan in these terms is possible. There are large gaps in the information available even on the existing position. National income statistics are still in their infancy. Little is known about the distribution of income and wealth in the country. Apart from a general picture derived from the Census returns, the data available on the occupational pattern are meagre. We do not also have sufficient knowledge of the relationships between the different sectors of the economy and how they interact on each other. In a period of development, the changes in all these are likely to be of great significance.

38. The national income of India in 1950-51 has been roughly estimated at Rs. 9,000 crores. As a result of the increases in production expected to materialise by the end of the Plan, the national income (at constant prices) is expected to go up to Rs. 10,000 crores, that is, by 11 per cent. The benefits of the investment outlays undertaken during the period of the Plan will not be fully realised in this period. For instance, a. considerable part of the additional irrigation and power facilities on account of schemes included in the Plan will appear only in the following quinquennium, though the greater part of the investment necessary will have taken place in the present Plan period.

39. To the extent that the community development projects, and the other schemes in the Plan designed to stimulate local initiative and resources, succeed in evoking community effort on a large scale, the increase in national income can be expected to be larger. In specific areas, direct application of manpower and other resources and concentrated efforts for increasing product vity could raise incomes by 25 per cent or more. The scale on which such effort can be organised will determine to a considerable degree, particularly in the countryside, the rate of development that will be achieved and the contribution it makes to the welfare of the community at large.

40. Out of the annual rate of increase of about 2 per cent in national income, about one-fifth will have to be, so to say, ploughed back into investment year after year in irder to sustain the development programme at the rate visualised in the Plan. The aggregate consumption expenditure will therefore rise at a somewhat lower rate than the nationa income. Although the Plan will meet in this period only the most urgent needs of the people, for instance in the matter of food and clothing, it will have made a substantial addition to the production potential of the country.

41. In judging the likely effects of the Plan on employment, it is necessary to bear in mind that the problem in India is more one of underemployment rather than of unemployment as such. Underemployment is another facet of low productivity, which in turn is due to shortage, of capital equipment and technical skill. The problem of removing under employment and of opening up employment opportunities for all at rising levels of real income is, therefore, in a sense, synonymous with the problem of development itself. The contribution that the Plan will make to the solution of the problem will be two-fold : firstly, in the process of stepping up the rate of investment it will create more employment for those engaged on construction activity, and, secondly, by building up capital at key points in the system, it will, at the next stage, enable a growing number of people to be absorbed into the productive system.

42. The Plan involves doubling -the development expenditure of public authorities, from Rs. 232 crores in 1950-51 to nearly Rs. 500 crores by 1955-56 , on a broad estimate about a half of this increase might be expected to be paid as so much additional wages and salaries. In the private sector, the largest investment activity is in residential construction. There are no data available on the volume of building activity in the country, but certain rough estimates, based on the allocations of materials like cement and steel and the cost of building covered by them, suggest that net private investment on constructions using these materials was probably of the order of Rs. 100 crores in 1950-51. Over the period of the Plan, the output of cement and steel is expected to go up by about 80 per cent and 40 percent respectively. No doubt, some of these increases will be absorbed by the development outlay of public authorities, but the additions to construction activity in the private sector which the larger output of cement and steel can sustain may still be considerable.

43. The secondary effects of investment on employment would take more time to show, but they are likely to be more impressive. This is particularly true in the earlier stages of industrialisation. In large scale industry, the emphasis in the Plan is on producer goods industries as far as expansion of installed capacity is concerned. Producer goods industries are highly capital-intensive, and the additional direct employment which the programme of industrialisation offers in this period would be correspondingly small. In agriculture, according to the Plan, benefits of irrigation will accrue to about 20 million acres of cultivable land in this period. Where perennial irrigation is provided, opportunities will develop for double cropping and this will help to reduce seasonal unemployment. In the rest of the agricultural sector, the provision of irrigation facilities, manures and seeds will raise productivity and increase incomes. The immediate employment effect of the higher incomes is not likely to be very pronounced, but as the trend of rising incomes establishes itself, effective demand will grow in the. rural sector and widen employment opportunities in small scale industries as well as in services ancillary to commodity production. As mentioned in an earlier paragraph, the Plan incorporates several measures for the protection and expansion of small scale industries. These industries at present suffer from a variety of handicaps : inefficient techniques, lack of finance, difficulties in getting the necessary raw materials, inadequate marketing organisation, insufficient co-ordination with expansion in other sectors of industry, etc. Recommendations for improving these have been made in the relevant chapters in this Report. The principle of giving direct assistance to cottage and small-scale industries and, in suitable cases, of assuring them a field of operation sheltered from excessive competition in the period of transition has also been accepted.

44. The problem of increasing income and employment in an underdeveloped country is, in the last analysis, tied up with the larger problem of capital accumulation. The present Plan aims at raising domestic investible surpluses from the estimated level of Rs. 450 crores in 1950-51 to about Rs. 675 crores by 1955-56. It is the same factors which prevent the rate of capital accumulation from being stepped up further that also stand in the way of more rapid increases in income and employment. Basically, the solution lies in tapping the large investment potential which lies in the unutilised manpower and other resources in the country, this is a question of organisation. Changes in the institutional framework and the organisational measures recommended in this Report have from this point of view a vital significancecent respectively. No doubt, some of these increases will be absorbed by the development outlay of public authorities, but the additions to construction activity in the private sector which the larger output of cement and steel can sustain may still be considerable.

Statement I Development Expenditure Under the Plan: Centre and States
(Rs. lakhs)

* The outlay of Rs. 250 crores is additional to the estimated expenditure of Rs. 150 crores to cover the cunent depreciation of assets in the period of the Plan.

Statement I Development Expenditure Under the Plan; Centre and States—Contd.
(Rs. lakhs)

"'Includes lumpsum provision of Rs. 50 crores for basic industries and transport and programme tor mineral exports.
+This includes Central grants amounting to Rs. 3 crores; in addition, about Rs. 9 crores are likely to be available by way of grants from the Central Government under Article 275 (i) of the Constitution.

Statement II Development Expenditure Under the Plan : Part 'A' States
(Rs. lakhs)

Statement II Development Expenditure Under the Plan : Part 'A' States—Contd.
(Rs. lakhs)

Statement III Development Expenditure Under the Plan : Part '5' States and Jammu and Kashmir
(Rs. lakhs)

Statement III Development Expenditure Under the Plan: Part 'B' States and Jammu and Kashmir—Contd.
(Rs. lakhs)

Statement IV Development Expenditure Under the Plan : Part 'C' States
(Rs. lakhs)

Statement IV Development Expenditure Under the Plan : Part 'C' States—Contd.
(Rs. lakhs)

Statement V Progress of Development Expenditure : Central Government
(Rs. lakhs)

*Inclucles additional provision for the period 1953-56 for minor irrigation—Rs. 30 crores; medium and long term loans to agriculturists—Rs. 10 crores; national extension organization—Rs. 3 crores, forests and soil conservation—Rs. 2 crores; Resettlement of landless agricultural workers—Rs. 2 croresDetails of expenditure incurred are not available.

Includes Rs. 40 crores for new irrigation and power projects for the period 1953-56. % Includes lump-sum provision of Rs. 50 crores for basic industries and transport for the period 1953-56.

Statement V Progress of Development Expenditure '. Central Government—Contd.
(Rs. lakhs)

•Includes Rs. 4 crores for voluntary welfare organisations for the period 1953-56.
!In addition, about Rs. 9 crores are likely to be available by way of Central grants under Article 275 (l) of the Constitution.

Statement VI Progress of Development Expenditure in States by Heads of Development
(Rs. lakhs)

Statement VII Progress of Development Expenditure by States
(Rs. lakhs)