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 3:
OBJECTIVES AND STRATEGY OF THE SIXTH FIVE YEAR PLAN

Raw Cotton

Table 3.15 Supply-Demand Balance for Raw Cotton : 1984-85

Jute Manufactures

Table 3.16 Material Balance for Jute Manufactures: 1984-85
(Thousand Tonnes)

Included in column (4) ''Excluding 'other uses'

Coal

Table 3.17 Material Balance for Coal : 1979-80 and 1984-85
(Million Tonnes)

Indigenous raw coal equivalent of 0.94 mil lion tonnes of imported coal.

3.45 The domestic requirements of jute manufactures in 1984-85 are derived from the projected levels of output of commodities which need these as packaging materials. Packaging requirements for cement, sugar, fertilisers, foodgrains, textiles, flour and salt add up to 854 thousand tonnes of sacking and 127 thousand tonnes of hessian. After providing for the requirements of other sectors and the likely effect of substitution by synthetic packaging materials and bulk handling, the net domestic demand in 1984-85 is placed at 990 ithousand tonnes. Taking into account the projected level of exports of 510 to 550 thousand tonnes, the output target for jute manufactures in 1984-85 is placed at 1500 to 1540 thousand, tonnes.

3.46 To realise Plan targets in powsr generation, iron and steel and transportation and to meet the energy needs of other sectors, coal production will have to be raised from 104 million tonnes in 1979-80 to 165 million toii^es in 1984-85. Domestic production will be supplemented by 2 million'tonnes of imported Coking Coal in 1984-85. This is also neees-•sary keeping in view the need for conservation of the reserves and improvement in the quality of c'oal fed to steel plants^. Total consumption in 1984-85 would be 168 million tonnes. Consumption profile, based on the growth projections for consuming sectors is presented in Table 3.17. Expected variation ir the quality of raw coal has been wovided for' ir estimating the sectorwise requirements.

Petroleum Products

Table 3.18 Supply-Demand Balance for Petroleum Products : 1979-80 and 1984-85
(Milion Tonnes)

¹- Production plus changes in stocks.

3.47 During the Plan period the overall demand for petroleum products is projected to grow at around 9 per cent per annum compound, and would reach 45.5 million tonnes by 1984-85, consistent with the projected increase in the production of fertilizers and petro-chemicals, the targets in the different transportation sectors and the expected increase in household consumption. Product-wise, substantial deficits are foreseen in middle distillates and heavy ends. Domestic production of light distillates would be sufficient for meeting domestic demand and marginal surpluses are expected by 1984-85. Given the world oil situiltion, the possibility of meeting these demands is uncertain and hence ways and means will have to be found to restrain the rate of growth of demand for oil without affecting the overall rate of growth of the economy.

Crude Petroleum

Table 3.19 Supply-Demand Balance for Crude Petroleum: 1979-80 and 1984-85
(Million Tonnes)

* Excluding changes in stocks, ' Provisional

3.48 The installed capacity for refiing is anticipated at 45.55 million tonnes by 1984-85. However, installation of secondary processing facilities will not bs completed by then and hence the crude oil requirement is placed at 38 million tonnes in 1984-85. Of this, the supply from indigenous production is estimated at 21.6 million tonnes, while 16.4 million tonnes of erode oil is planned to be imported.

3.49 The principal reasons for the continued rise in consumption of petroleum products, inspite of the price rise, are the replacement of non-commercial energy as a consequence of mechanisation of agriculture and irrigation, expansion of rural link roads, substitution by kerosene of other fuels and the increased input of fertilizers in agriculture to realise the higher yield rates. Continued increase in motor-ised irter-city and intra-city transport is also one of the plincipal factors. A significant adjustment of economic activities to the energy scarcity will be realised only over a longer time horizon.

3.50 Given the international oil situation, a reduced dependence on imported oil has to be a key element of our development strategy for the years to come. The main features of such a strategy are described in the chapter on Energy and may be summarised as follows:

(i) Through the persuit of appropriate pricing policies and other related measures, the rate of growth of consumption of oil products must be curbed, particularly of diesel and kerosene which have shov/n unaccept-ably high rates of growth in recent years Utmost economy and maximum efficiency in the proper use of petrol, diesel and petro leum products should be effected and ipub lie should be made more aware o the nature of the oil crisis and v/hat it mean for the average citizen.

(ii) Efforts for the exploration and developmen of domestic resources of oil have to b greatly intensified.

(iii) Expansion in the production of coal and electricity and faster exploitation of India's considerable hydro-potential and further development of nuclear power have to be pursued with greater vigour.

(iv) In order to economise in the use of kerosene ;and diesel in rural areas, setting up of biogas plants and energy plantations under the intensive forestry development programme, using waste land, and appropriate timber species which grow rapidly, have to be pushed ahead.

(v) There is a considerable scope for conservation and economy in the use of several industrial processes. An energy audit should invariably become an annual feature of the activity of all major industrial enterprises in the public and private sectors.

(vi) Rese.arch on the devlopment of renewable sources of energy, particularly use of solar energy must receive greater attention than in the past. An Alternative Energies Commission has already been set "p.

Paper and Paper Board

Table 3.20 Supply-Demand Balance for Paper and Paper Board: 1979-80 and 1984-85
(Thousand Tonnes)

Provisional Estimate.

3.51 The demand for paper and paper board would increase from 1100 thousand tonnes in 1979-80 to 1540 thousand tonnes by 1984-85. This includes the requirements arising out of the National Adult Education Progromme. Barring marginal imports of .about 40 thousand tonnes of speciality paper, the entire domestic demand can be met from indigenous production, the target for which has been fixed at 1500 thousand Sonnes in 1984-85.

Newsprint

Table 3.21 Supply-Demand Balance for Newsprint: 1979-80 and 1984-85
(Thousand Tonnes)

'Provisional Estimate.

3.52 There has been a spurt in the consumption of newsprint in the recent past and the domestic production being confined to Nepa mills only, the gap had to be filled from imports. It appears that due to the sharp increase in demand which is likely to continue during 1980-85, a substantial rise in imports would be inescapable. By 1984-85, the output from two public sector projects being set up in Kerala and Karnataka and that of Nepa mills is not expected to be more than 180 thousand tonnes. Since domestic demand of newsprint in 1984-85 would be about 500 thousand tonnes, imports of about 320 thousand tonnes would be necessary.

Fertilisers

Table 3.22 Supply-Demand Balance for Fertiliser : 1979-80 and 1984-85
(Million Tonnes)

¹. Including changes in stocks.

3.53 The production of nitrogenous and phosphatic fertilisers in 1979-80 is estimated at 2.23 million tonnes (N) and 0.76 million tonnes PaOg respectively. It is expected that with the commissioning of new fertilizer plants and better utilisation of capacity of the exi'sing units, the production of nitrogen (N) and PaO, in 1984-85 would be 4.2 million tonnes and 1.4 million tonnes respectively. The demand for fertilisers in terms of nutrients is expected to rise to 9.6 million tonnes by the end of the Plan in line with the projected increase in agricultural production and the expected higher yield levels.

Inorganic Heavy Chemicals

Table 3.23 Demand for Sulphuric Acid: 1979-80 and 1984-85
(Thousand Tonnes)

Table 3.24 Demand for Caustic Soda: 1979-80 and 1984-85
(Thousand Tonnes)

Provisional

Table 3.25 Demand for soda Ash: 1979-80 and 1984-83
(Thousand Tonnes)

Provisional.

3.54 The demand in 1984-85 for major chemicals namely sulphuric acid, caustic soda and soda ash is estimated on the basis of the production targets of the major consuming industries. The requirements of these chemicals are given in Table 3.23, 3.24 and 3.25 respectively.

Man-made Fibres

Table 3.236 Demand for Man-made Fibres: 1984-85
(Thousand Tonnes)

Does not include Aerylio Fibres which is a substitute for wool.

3.55 The demand for man-made fibres has risen mainly to supplement natural fibres (cotton etc.) in textiles production. Corresponding to the production target of 1900 million metres of art silk fabrics and 2490 million metres of blended/mixed fabrics, and other use of these fibres, the demand for man-made fibres in 1984-85 is estimated at 351 thousand ton-nes. Table 3.26 shows the sector-wise requirements of man-made fibres in 1984-85. Fibre-wise distribution of demand, production and imports is given in Table 3.27.

Table 3.27 Supply-Demand Balance for Man-Made Fibres: 1984-85
('Thousand Tonnes)

Cement

Table 3.28 Supply-Demand Balance for Cement: 1979-80 and 1984-85
(Million Tonnes)

Provisional

3.56 The demand for cement is estimated to rise to 37 million tonnes in 1984-85 in view of the step up in the construction component of investment due to the large irrigation and power programmes, the Minimum Needs Programme and the works to be taken up under the NREP. Cement production was 17.68 million tonnes in 1979-80. Domestic capacity will be able to yield an output of 34 to 34.5 million tonnes by 1984-85 as a result of various incentives being given to manufacturers and the policy of encouraging mini and split-location plants. Thus imports of cement of 2 to 3 million tonnes would still be necessary. Constraints such as the shortage of railway wagons and the insufficient supply of coal and power which have impeded the growth of cement production in the past are expected to be removed during the Sixth Plan period. Hence the rate of capacity utilisation can be expected to improve.

Mild Steel

Table 3.29 Supply-Demand Balance for Mild Steel: 1979-80 and 1984-85
(Million Tonnes)

Note : @ Based on Gross Investment.

3.57 The Plan targets for production of transport equipment, electrical equipment, industrial machinery and metal products together with the projected requirements of steel as construction input, indicate that the demand for finished steel would rise from 8 million tonnes in 1979-80 to 12.9 million tonnes in 1984-85

(Table 3.29). Finished steel production would rise from 7.31 million tonnes in 1979-80 to 11.4 million tonnes in 1984-85, based upon the expected additions to capacity and the improvements in capacity utilisation of steel plants. Given the long gestation period of steel plants additional capacity for shaped steel products would materialise only in the Seventh Plan period although demand for these would increase considerably. Therefore, the deficit in domestic supply ot shaped steel products will be met by imports for which adequate provision has been made in the Plan besides marginal imports of other categories of steel.

Non-ferrous Metals

Table 3.30 Supply-Demand Balance for Non-ferrous Metals 1979-SO and 1984-85
(Thousand tonnes)

¹. Provisional; ^2. In addition 7.2.million tonnes of secondary reverts were toll smelted abroad and consumed in the country.

3.58 The production plan of non-ferrous metals during the Sixth Plan period is based largely on the capacity available from existing and on-going schemes. With the commissioning of a number of copper, lead and zinc mining projects and expansion schemes, there would not be any constraint on the supply of ores. Suitable balancing facilities have been provided for in copper ore concentration, smelting and refining capacities so as to maximise the production through improved capacity utilisation. The projected demand for aluminium and copper takes account of the electricity generation, transmission and distribution and rural electrification programmes, envisaged in the Plan. The demand for these metals in transport, construction, utensils and consumer durables has been estimated on the basis of the production plan of these sectors. The demand for lead and zinc has been determined on the basis of the growth of stsel galvanising, battery manufacture and production of cables and metal products,

Electricity

Table 3.31 Material Balance for Electricity: 1977-78 and 1981-85
(Billion Kwh.)

3.59 To meet the requirements of electrical energy for industry, transport, agriculture and other sectors of economy electricity generation will have to be raised from 112 billion units in 1979-80 to 191 billion units in 1984-85, that is, with an annual compound growth rate of 11.3 per cent during the Plan period. Requirement of electricity for major industries are estimated at 56.7 billion units in 1984-85 on the basis of the production targets of these industries Keeping in view the capacity growth in small scale industries and other industrial sectors their requirements of electricity are estimated to increase from 43 per cent of major industrial consumption in 1977-78to 62 per cent in 1984-85. The requirements for railway traction and irrigation pump sets have been worked out on the basis of the sectoral programmes. Household consumption of electricity has been estimated from the consumption model. The requirements for remaining sectors have been worked out on the basis of past trend. All India Consumption demand adds upto 145.87 billion units in 1984-85. Providing for losses in transmission and distribution and the auxiliary requirements, the generation target fo-1984-85 has been determined.

Railway Traffic

Table 3.32 Demand for Railway Traffic : 1979-80 and 1984-83
(Million tonnes of originating traffic)

3.60 Originating traffic for the Railways would increase from 217.8 million tonnes handled in 1979-80 to 309 million tonnes in 1984-85. The projection is ba'sed on the transportation requirements of bulk commodities such as steel, coal, cement, fertilisers and foodgrains. Location of coal based fertiliser plants near the coal pit-heads as also of the super thermal power stations, the planned movement of POL products in some regions through pipe-lines and the changes in geographical pattern of production have been taken into consideration in arriving at goods traffic to be handled by the Railways during the plan period. Sectorwise originating traffic for the Railways in 1984-85 is oresented in Table 3.32. The tot.al requirement of railway transport in 1984-85 is expected to be 309 million tonnes.

Table 3.33 Percentage of people below poverty-line

POVERTY AND EMPLOYMENT

Poverty

3.61. The economic development during the last three decades has enabled a perceptible increase in average per capita income from Rs. 466 in 1950-51 to Rs. 730 in 1978-79, both at 1970-71 prices. In spite of this increase, the incidence of poverty in the country is still very high. Thus determined measures are necessary to combat poverty. A substantial increase in the overall rate of growth of the economy will no doubt create favourable conditions for a reduction in poverty and unemployment. However, in the light of past experience, it will not be realistic to rely solely on the growth process to find a solution to this problem. Specific policy measures will be needed not only to influence the composition of output in favour of mass consumption goods but also to ensure a more even regional and class distribution of output, paying special attention to stimulating growth in more backward regions. In addition, the on-going poverty eradication programmes aimed at the specified target groups of population will also have to be improved and enlarged with regard to both content and coverage. The objectives of these programmes will be to improve the productivity and therefore income of the poor and also to ensure that employment opportunities .are enlarged at a fast enough pace. Labour-intensive village and small industries will need adequate encouragement to grow. Institutional reform designed to impart a greater redistributive bias to public policies in favour of the poorest sections will have to be pursued with greater vigour and effectiveness. Effective implementation of these programmes will demand the highest standard of devotion, efficiency and integrity from public services at all levels as well as active involvement and participation of the people in this vital national undertaking.

3.62 The Sixth Plan places a very high priority on the alleviation of poverty. For an assessment of the problem and for setting targets a quantitative index for poverty was formulated in the report of the "Task Force on Projections of Minimum Needs and Effective Consumption Demand" set up by the Planning Commission in 1977, where poverty line is defined as the mid-point of the monthly per capita expenditure class having a daily calorie intake of 2400 per person in rural areas and 2100 in urban areas. In 1979-80 prices, the mid-points are Rs. 76 in rural areas and Rs, 88 in urban areas.

3.63 Subsequently on the basis of an assessment of several rounds of National Sample Survey of household consumer expenditure it has been observed that nearly 50 per cent of our population has been living below the poverty line continuously over a long period (Table 3.33).

Table 3.33 Percentage of people below poverty-line

(a.) Indentification and measurement;
(b) Developing realistic targets; and
(c) Formulation of specific programmes to matcl the targe is.

3.65 The majority of the poor live in the rural area;and belong to the categories of landless labourers small and marginal farmers, rural artisans includin;fishermen, and backward classes and backward tribes These people have either no assets or assets will very low productivity, few relevant skills and no regu lar fulltime jobs or very low paid jobs.

3.66 The number of poor people as defined above and the distribution of the consumption expenditun as estimated from 32nd Round of National Samplf Survey are indicated in Table 3.34.

Table 3.34 Distribution of total private consumption expenditure by deciles: 1977-78
(Per cent)

*Rupees at 1977-78 prices as per total private consuraptio given in the National Accounts Statistics, Central Statistical Organisation, February, 1980.

3. and 7 Assuming tliat Uie consumption clistribuliuii in 1977-78 remains constant in future years, and taking account of tlis actual growth of the economy between 1977-78 and 1979-80 and the planned growth between1977-78 and 1984-85, the poverty prolile is estimated for both the years as given in the Tables 3.35 and 3.36.

Table 3.35 consumption Expenditure,1979-80

Table 3.36 Consumption Expenditure*, 1984-85 (without redistribution)

Table 3.37 Consumption Expenditure in 1981-83 (With redistribution)

*With same consumption distribution as in 1977-78. and • Figures in bracket are percentage of people below the poverty line.

3.68 The above calculation shows that assuming me distribution of consumption ol 197/-/8 remaining unchanged, the poverty percentage will be reduced from 46.44 per cent in me base year 1979-8U, to 38.93 per cent in i984-'»S. But the public sector outlay in the^ Sixth Plan provides tor many poverty alleviation programmes which operate maimy oy way 01: transforming assets and skuls and by providing employment in the slack seasons of the year. The Integrated Rural Development Programme (1RDP) belongs to the former category ana the National Rural hmployment Programme (iNRhP) to the latter. Besides, there are a large number of other public sector schemes which will contribute to the reduction oi unemployment and underemployment. In this context, mention may be made of the Special Component Plan for the uplift of scheduled castes for which a substantial provision has been made in the Sixth Plan by way of special Central assistance. The special programmes for drought prone areas, tribal areas and nill areas will also help to strengthen the redistribu-tive bias in public policies. If all these programmes are implemented effectively, the distribution of consumer expenditure in 1984-85 is not expected to be the same as in the year 1977-78. A rough calculation of the new distribution and the number of people below the poverty line in 1984-85 can be made by going into programme details.

3.69 The total number of households to be covered by IRDP during the Plan period is nearly 3,000 families per block. There are altogether 5,OOU¹ blocks in the country. This means that the programme intends to cover nearly 75 million people i.e. more than 13 per cent of the rural population. The total investment outlay set aside for this purpose is Rs. 1500 crores over the Sixth Plan period supplemented by Rs. 3000 crores from institutional finance. The target group for this purpose is located in the poorest of 'the rural population. The detailed estimates of income generation from this transfer of assets show that an income of Rs. 3000 crores per annum will be generated out of this transfer. This implicitly means a capital output ratio of 1.5. By making an independent study of the consumption distribution in the rural sectors of the economy it is found that this amount of income transfer will bring nearly 11 per cent of the rural population (61 million in 1984-85) above the poverty line covering about 12 million households in the rural sector, which will almost satisfy the Plan target. Besides, a provision for moving nearly 6.1 million of the poor in the urban sector above the poverty line has been made in the Plan in terms of -"roviding additional consumption benefits to these : xiple mainly through public redistributive services ike health, education and sanitation, housing and drinking water, and urban slum improvement programmes. Consumption expenditure in 1984-85 for the people below poverty line with redistribution of income as stipulated above would be as in Table 3.37.

3.70 Nearly 75 per cent of the farming population operate between them only a quarter of the cultivated area. Since wage employment from all sources may not make up, the deficiency in their consumption, it would be essential y- a. poverty alleviation programme to implement a limited measure of land re-uliiinoution. a reuisinouiion 01 3 per cent