Foreword || A Review of the Economic Situation || The Perspective || Rate and Pattern of Growth || Financial Resources || Plan Outlays and Programmes of Development || Resolution of the National Development Council on Power and Irrigation Systems || Resolution of the National Development Council on the Fifth Five Year Plan || Annexures

FOREWORD*

The new economic programme launched last year served to focus attention on those elements in our Plan which had the twin objectives of increasing production and promoting social justice. The drive against economic offences and the general atmosphere of discipline and efficiency which national emergency helped to foster led to a significant and all-round improvement in economic performance. The results are now tangible. The production of foodgrains has touched an all-time record of over 118 million tonnes. Almost all parts of the country have contributed to this increase and all sections of the farming community have benefited. There was striking improvement in the operation of power plants and in the production of coal, steel and fertilisers. In some sectors of the economy we were faced with the problem of surpluses rather than shortages. We have achieved a major break-through on the oil front. The potential of Bombay High has been firmly established and commercial production has commenced. Our technologists can legitimately be proud of this achievement. The containment of domestic inflation and a well articulated export effort helped to increase our exports by over 18% in 1975-76 at a time when there was a general decline in the volume of international trade. Larger export earnings, together with a massive increase in inward remittances, have led to a welcome accretion to our foreign exchange reserves.

These encouraging trends have enabled us to finalise the Fifth Plan. The formulation and execution of developmental programmes can now take place within a longer time frame. The Deputy Chairman and his colleagues have worked hard to put together a coherent and feasible Plan. In essence, the Plan seeks to make up, to the maximum extent possible, for the loss of momentum suffered in the first year of the Plan.

We are glad that after a hesitant start we hava been able to finalise the Plan. However it would be quite wrong to allege that we have had a Plan holiday. Work has begun on most of the schemes included in the Plan. We have forged ahead particularly in key sectors like agriculture, irrigation and energy. The document which the Planning Commission has now presented to us is, in a sense, a mid-term review of the Plan. The Commission has taken this opportunity to assess the progress already made in crucial sectors and to allocate adequate funds, in the remaining two years of the Plan, for on-going programmes. At the same time, keeping the long-term perspective in view, reasonable provision has been made for new starts and for some projects with long gestation periods.

Our needs are so vast that a Plan, howsoever big, will always fall short of expectations. It is understandable that Central Ministries, State Governments and public enterprises should want larger provisions for their programmes. In the last two decades, we have acquired considerable capability in implementing irrigation, power and industrial projects. It has not always been possible to match these capabilities with the necessary physical and financial resources.

Even the Plan as it has emerged will call for the exercise of the utmost discipline in the management of our public finances. The effective enforcement of taxation laws, timely recovery of loans and other dues, avoidance of over-staffing and other forms of waste in public expenditure, the selection of projects on sound techno-economic considerations and close monitoring of programmes are some of the essential ingredients of sound fiscal management, without which no Plan can succeed. Public enterprises should be so managed as to yield a reasonable return on investments made. There is still considerable scope for improvement in the working of Electricity Boards. These are not charitable institutions or welfare organisations. Beneficiaries should pay a fair price for the benefits they receive.

We have to raise substantial resources in the next two years. But in view of our firm commitment to the Plan and its objectives I am confident that the target will be met.

The finalisation of the Fifth Plan should act as a morale-booster. It provides clinching evidence that the nation has overcome the manifold problems with which it was confronted in the last couple of years, and that it is now in a position to resume the process of growth on a confident note. But our difficulties are by no means over; inflation has been contained but not eradicated. Any relaxation will bring about a resurgence of inflationary pressures. Money supply is growing at a disconcertingly high rate and must be checked. This will not be possible unless the States and Centre exercise the strictest discipline on all spending programmes. The States should adhere to Plan outlays as approved and avoid recourse to overdrafts. If we allow prices to rise the real content of the Plan will suffer further erosion. The major objectives of the Plan, economic self-reliance and the eradication of poverty, will suffer irretrievably.

With larger buffer stock of foodgrains and another good harvest in the offing, the outlook for the economy in the medium term is good. Even the recent upward movement in prices can be reversed.

But the long-term problem of raising the rate of domestic savings and investment remains as intractable as ever. If the country is to maintain a steady rate of growth of 5-6%, it should aim at a significant increase in investment. This is the crux of the message emerging from successive Plan documents.

Our tasks may become slightly easier if we can explain to our people in simple terms what the Plan is about, how it is financed and what the consequences of economic stagnation will be for them, their families and the country as a whole. Planning cannot be an esoteric exercise confined to experts. All people at State, district and local levels must be fully involved in the process.

The participation of the people in the implementation of Plan programmes is vital. Why is it not possible to kindle the interest of local people so that a new thrust is imparted to programmes such as the construction of rural roads, minor irrigation works, farm forestry and the like ? If the people are convinced that the basic objective of the Plan is social justice, they will be interested in programmes and will extend their cooperation. No Plan can ignore the deep-seated urges of our people for greater equality. The reduction of disparities of all kinds— social, economic and regional—must always remain one of the central objectives of our developmental planning. The direction of our planning is to solve over a period of time the problems of the poor of all communities, espacially tribals, Harijans, backward communities and regions.

The provision of fuller employment is one of the surest means of promoting greater social justice. The Planning Commission's document has devoted some thought to this problem. Its study shows that a dent can be made on rural unemployment by augmenting agricultural productivity and vigorously implementing land reforms as envisaged in the 20-Point Programme. A disturbing finding in the Planning Commission's document is that only in 15% of the gross cropped area is the output per hectare about Rs. 1 500 per annum. Only 12%, of our districts have achieved a growth rate of more than 5% in agricultural production. Thus employment opportunities can be increased by improving agricultural productivity through irrigation, the adoption of improved technology and more equitable distribution of the gains of growth through land reforms. Employment programmes are not isolated but are organically linked with those of agricultural production. When the employment situation in rural areas improves, ihe drift into towns and cities will slow down. To that extent the problem of urban unemployment will also become more manageable and the strain on civic services will be relieved. We should also devote closer attention to household industries like handlooms and handicrafts, carpet-weaving, sericulture, etc. Employment in these industries has suffered in the last two years. This process has to be arrested. Programmes connected with these industries should receive high priority. Our country has immense opportunities for self-employment. Villagers need many services and in many areas are capable of paying for them. These needs should be identified and, through imaginative local planning, educated young people should be organised and given financial and other help from public financial institutions and other agencies.

Sometimes it is said that there is no longer the same enthusiasm about planning as in the fifties. An irrigation dam or powerhouse is more exciting while it is being built than when it is completed and operating. Planning has become an inseparable part of our national life. There can be no diminution of our commitment to it. The real irony is that those who were against planning have begun to pay lip sympathy to it, but those who professed to be supporters of planning have become unduly critical of some aspects of our performance. Whenever anything becomes a part of life, there is a danger of its becoming institutionalised. Our plans have, to some extent, been harmed by bureaucratisa-tion. I do not say this to disparage our civil servants. Many of them are devoted champions of planning. By bureaucratisation I mean the tendency to cling to the safe course, shying away from innovation, reluctance to try out bold alternatives. The essence of planning is to attempt more than what plain prudence dictates. This is where the element of faith and adventure comes in.

My father often said that planning is the application of science to national problems. Thanks to planned development our science itself has come a long way, compared to its state when we became free. Visiting many national laboratories and central research laboratories, which one by one have been celebrating their silver jubilees, I have been impressed by their progress and also by their direct contribution to development. The world has begun to take note of our science and its strides in the search for self-reliance. But I do notice some signs of complacency. Self-reliance does not mean, self-satisfaction. As we enter newer and more sophisticated areas of work there is greater compulsion for our scientists to be equal to the best. In the new list of citizens' duties, a clause points to the importance of striving for excellence. In no branch of life is this search for excellence as crucial or has such direct social consequences as in science.

Concentration on development should focus more pointed attention on its long-term effects. We must inculcate in our engineers and all our people a deep reverence for Nature. Forests must not be recklessly cut down, nor air and water polluted. Technology should work in resonance with natural forces.

Planning has a better chance now to succeed than at any time in the last 25 years. There is a realisation that our tolerance was taken for weakness, which some people exploited in order to obstruct national policies with impunity, either for the promotion of sectional interests or in the hope of gaining political advantage. The new points which we have been recently emphasising are but a part of the general programme of national development. We can and must take advantage of the new climate of improved discipline to take the Plan forward.

A meeting of the NDC to give final approval to a Plan is always an important occasion. A Plan is ultimately neither a mere catalogue of schemes nor a sophisticated exercise in numbers. It is a charter of the progress of a people who refuse to be overwhelmed by the magnitude and vast variety of their problems and difficulties but are courageously struggling to map out a programme of action which will step by step and year by year help to overcome them. Sometimes this programme may prove over-ambitious and cause stresses and strains. But this should not frighten us into settling for what some might mistakenly call a more 'realistic' Plan, one which does not call for any special effort or sacrifice. Progress is possible only when we stretch our efforts and abilities almost to the point of breaking. Experience shows that acually, far from breaking, such an endeavour gives greater strength, confidence and satisfaction.

* Address of the Prime Minister to the meeting of the National Development Council on September 24, 1976 has been reproduced as Foreword.