Planned Development: Retrospect and Prospect || Development Perspective: Towards the year 2000 || Objectives, Strategies and Pattern of Growth in Seventh Plan || Financing the Plan || Balance of Payments || Framework of Economic Policy

DEVELOPMENT PERSPECTIVE:TOWARDS THE YEAR 2000

2.1. The programme of development during the Seventh Plan must be set against the perspective of the next 15 years: 1985-2000. The investment programmes and the policy initiatives for the Seventh and subsequent Plans must be related to the goals that the nation has for the year 2000, as it emerges into the 21 st century. In more concrete terms this means the elimination of poverty and creating conditions of near full employment, the satisfaction of the basic needs of the people in terms of food, clothing and shelter, attainment of universal elementary education, and access to health facilities for all. It should be the aim to create, by the year 2000, the conditions for self-sustaining growth in terms of both the capacity to finance growth internally and the development of technology. In the sphere of industry, efficiency must be progressively improved so as to attain international competitiveness in major products. The aim should be to make India a modern, technologically progressive economy with expanding capacity to provide the basic material and cultural requisites of well-being for all people.

2.2 The attainment of these goals requires:

1. action to sustain and enhance the momentum of economic expansion and technological development;
2. adoption of effective promotional measures to raise the productivity and incomes of the poorer sections of the population, poorer regions and poorer States;
3. expansion and qualitative improvement in facilities for health, education and other basic civic amenities;
4. measures for bringing about a sharp reduction in the rate of population growth.

LONG-TERM DEVELOPMENT STRATEGY

2.3 The long-term strategy should take into account the objective conditions in the economy and the likely developments over the planning horizon. The major aspects relevant to the formulation of the strategy and the associated policy thrusts are spelt out in what follows.

2.4 The demographic perspective provides the starting point for determining a long-term development strategy. The persons who will join the labour force in the next 15 years have already been born. In absolute terms, around 120 million persons will be added to the labour force over the next 15 years. Thus, creation of opportunities for productive employment of a growing labour force assumes top priority. Given the present distribution of population and labour force and the substantial investments in social and economic overhead capital required for the absorption of labour in urban areas, it is necessary to create productive and satisfying job opportunities in rural areas through development of agriculture, irrigation, rural infrastructure and promotion of village and cottage industries. This would both reduce the disparities between the urban and rural areas and moderate rural-urban migration.

2.5 The importance of agriculture in the Indian economy, the increasing demand for food in the proccess of growth, the favourable income and employment implication of more intensive agricultural development and the severity of the balance of payments constraint require that continued fast agricultural growth and self-sufficiency in food must remain a top priority concern of planning in India. In planning for food self-sufficiency, adequate and balanced attention must be paid to cereals, oilseeds, pulses, fruits and vegetables and protective foods like milk, eggs, meat and fish.

2.6 The demographic perspective also implies a progressive decline in the size of holdings. Hence the challenge on the agricultural front can be met only if obstacles to increased productivity of small farms are removed. Experience shows that small farmers when given the necessary inputs and facilities are able to achieve substantial increases in production. Therefore, every effort has to be made to enable small farmers to realise their growth potential. Properly organised extension services can play a major role in this matter. However, given the small size and fragmented nature of holdings, individual initiative will need to be supplemented by appropriate group action so as to enable small farmers to make effective and economical use of facilities like irrigation, credit, marketing and storage. The cooperative movement offers considerable potential for the organisation of these activities but the realisation of this potential depends vitally on the successful implementation of reforms designed to overcome the many weaknesses of the movement. (The issues relating to the cooperative movement are further discussed in Vol II, Chapter 1)

2.7 The fairly high rate of growth of population neutralises to a significant extent the fruits of economic growth and uses up part of the potential savings which could otherwise be used to raise capital per head and the productivity of the labour force at a faster pace. Effective measures to reduce the rate of growth of population are imperative and must command priority of action. Apart from the expansion of family welfare services, sustained improvement in education (particularly of girls), and health care facilities (designed particularly to reduce the rate of infant mortality) and improved status of women in social and economic life are essential for the success of the family welfare programme and voluntary acceptance of the small family norm.

2.8 A sustained improvement in the quality of life will involve increased public expenditure on health, education and culture. The requirements for housing and urban infrastructure are as pressing, since nearly 60 per cent of the addition to population between now and the year 2000 will be in urban areas. There is already a growing dissatisfaction regarding the availability and quality of basic civic amenities in urban areas. The growth in population will further aggravate this and new and innovative strategies will be needed to raise resources for meeting the requirements of urban development and infrastructure.

2.9 The demographic perspective implies a substantial increase in the requirements of capital for the provision of social infrastructure and for maintaining the tempo of economic growth. Notwithstanding the considerable scope that undoubtedly exists for improving the utilisation and productivity of capital, it must be recognised that India is passing through a fairly capital-intensive phase of development. This is valid both for agriculture and industry, particularly when one takes into account the capital-intensity of supporting investments in infrastructure. To sustain the growth momentum, it is therefore necessary to raise the domestic savings rate, and public policies should be supportive of increased savings effort.

2.10 Effective energy planning must form an important constituent of long-term strategy. The demand for commercial energy is bound to increase in the course of development because of both increase in output and substitution of non-commercial energy by commercial energy. Effective measures to moderate the growth of demand for commercial energy and energy saving technologies for conservation will be needed. Dependence on imported energy will have to be contained within safe limits. Coal should remain the king-pin of India's energy policy and it should replace oil wherever possible. A long-term policy in regard to higher production of soft coke, its transportation and pricing relative to other forms of fuel needs to be pursued for greater use of coke in the household sector. Likewise, higher production of hard coke and better design of boilers would be necessary for higher usage of coal in industry. The presently known and prognosticated reserves of natural gas can help in the task of restraining the demand for petroleum. Energy planning must also pay attention to finding cost-effective solutions to meeting the energy requirements of rural areas.

2.11 In spite of all the measures suggested above, it is likely that India's imports of crude oil and petroleum products will increase over time. The dependence on imported oil implies that orderly management of India's balance of payments will require vigorous export promotion measures as well as efficient import substitution policies (designed, for example, to reduce dependence on imported vegetable oils).

2.12 The most important structural change to be brought about in the perspective period will be the accelerated rate of growth of industry and its much greater relative contribution to national output and employment. Indian industry would have to grow at 8-9 per cent per annum during this period. An efficient and flexible industrial structure is needed to sustain the country's export drive as well as to meet the input requirements of agriculture and the increasing demand for articles of mass consumption. Through a reform of management system as well as the generation of pressure for increased domestic competition, a climate must be created which is more conducive to growth, reduction of cost and improvement in quality. The modernisation of industry and its technological upgradation will call forstrong linkages with the existing large infrastructure for science and technology.

2.13 During the past four decades, rapid advances in electronics have brought about great changes in several fields such as development in solid state electronics, lasers, irftegral optics and tele-communication systems based on digital .electronics. These developments are expected to continue. Other new frontier technologies are emerging such as bio-technology, robotics and new materials. India, as it enters the 21st century, will have to keep abreast of these developments.

2.14 The future development of both agriculture and industry will require increasing application of science and technology so as to increase factor productivity. The management of science and technology development will need to be reviewed on a continuing basis for ensuring that the pace of technical progress is enhanced. Arrangements for access to technology need to be improved. Adaptation and absorption of foreign technologies will have to be interlinked with facilities for research and development so as to promote technological self-reliance to the maximum extent possible. Simultaneously, the quality of education will need to be upgraded so that the knowledge and skills of the labour force can be improved in order to facilitate faster introduction of new science and technology based processes.

2.15 Planning for accelerated growth in a country of India's size and diversity must have built-in flexibility to cope with the many sources of uncertainity which characterise modern economic life. To add to the effectiveness of the planning process, there must be adequate emphasis on decentralisation to provide the needed element of built-in flexibility as well as greater involvement of people at all levels. This will ensure that our development programmes, particularly those relating to agriculture and rural development, will take adequate account of regional diversities in resource endowment, needs and development potential.

2.16 Development has to be based on the use of resources like land, water, minerals, etc. If it is to be sustainable over the long run, it must be based on a pattern of resource use that shows concern for conservation and the preservation of the environment. Hence a judicious blend of economic and environmental concerns should inform all our development programmes in future.

The Resource Base

2.17 The resource base of the country consists of:(i) human resources; (ii) non-renewable resources which are an endowment of nature and whose total size gets depleted with time; and (iii) renewable resources which can be continuously created and whose base can be expanded through human efforts.

Human Resources

2.18 Later in this chapter, human resources in terms of demographic trends upto 2000 AD and beyond are dealt with, as also the development of human resources through programmes in education, health, social welfare and science and technology. In the long run, the improvement in the standard of living of a country depends largely on the nature of technology which it adopts. It is advanced technology which can create sufficient surplus to generate resources for accelerated growth. However, the avoidance of a mismatch between the technology adopted and the institutional structure, including the organisation and distribution system of a country, is very important. Thus, the technology revolution in India and the associated necessary changes in the social strata and the growth of human capital and communication have to keep pace with each other over this long term horizon.

Land Resources

2.19 The total geographical area of India is 329 million hectares. The net area sown is about 143 million hectares, which is about 43.5 per cent of the total geographical area. The area under forests is 75 million hectares which is about 23 per cent of the total area. The uncultivable and fallow lands amount to 100.45 million hectares.

2.20 The non-expandable land resources have to accommodate the competing demands for production of food, fodder, fibre and fuel, minerals, urbanisation, non-agricultural land use, etc., for the increasing human and animal population. It is estimated that in the year 2000 the human population will be a little less than the 1 billion mark and the animal population will also have increased considerably. The per capita availability of land which was about 0.94 hectare in 1951 will decline to 0.33 hectare in the year 2000. Thus the decreasing land: man ratio poses a great challenge for optimising the use of land resources for different purposes.

2.21 At present about 17.8 million hectares are reported to be under various urban and rural settlements including space used by roads, railways, water bodies, mines, defence and industrial installations. By the year 2000 it is estimated that an additional 6 million hectares will be required for these non-agricultural purposes.

2.22 The research activities for optimising production from rain-fed farming, irrigated agriculture, and non-farm land put to other uses including fodder and fuel will have to keep pace with the changing requirements of land use. Proper dovetailing of national research programmes and land development strategies will have to be ensured.

2.23 About 105 million hectares of cultivable lands and 8 million hectares of non-forests and non-agricultural lands are subject to widespread soil erosion. In addition, 43 million hectares of area has been degraded through water-logging, alkalinity, ravines and shifting cultivation. An estimated six thousand million tonnes of soil are lost annually through erosion and degradation, along with plant nutrients ranging between 5.37 and 8.4 million tonnes. A primary concern of development will have to be to arrest further degradation by proper land use and soil conservation and to also nurse back to health the degraded soil to stock a highly productive agriculture.

Water Resources

2.24 India is endowed with substantial water resources. The country's average annual rainfall is about 119.4 cm which, when considered over the geographical area of 329 million hectares amounts to 393 million hectare-metres. The total surface flows in India are assessed at 178 million hectare-metres. However, on account of limitation of physiography, topography, geology, dependability, quantity and the present state of technology, only a part of this can be developed for irrigation. It has been assessed that about 67 million hectare-metres of surface water and 26.5 million hectare-metres of ground water can be developed and utilised. The gross cropped area that can utiimately be irrigated has been assessed to be 113 million hectares as against the possible total cropped area of 200 million-hectares on full development of irrigation potential. Available data, however, indicate that the ultimate gross area irrigated can be much higher than 113 million hectares, if a national view is taken on the utilisation of water resources and consequent policy measures are adopted and full use is made of the technological advances such as inter-basin transfers of water, large-scale lifting of water from steams and rivers through pumping, and modernisation of irrigation systems.

2.25 The massive development of irrigation in India after Independence has been recognised as one of the major factors which have contributed to the spectacular rise in the production of food and fibre. The aggregate irrigation potential at the end of 1979-80, the beginning of the Sixth Plan, was 56.6 million hectares. During the Sixth Plan an additional potential of about 11 million hectares was created, thus making a total of about 68 million hectares by the year 1984-85. It is necessary to develop the entire irrigation potential of 113 million hectares by the year 2010.

Demographic Perspective

2.26 The population recorded an annual rate of growth of 2.25 per cent in the decade 1971-1981. This is to be compared with the growth rate of 2.22 per cent between 1961 and 1971. In the two decades between 1951 and 1971, there was an almost constant fertility rate and a perceptible decline in mortality rate; but in the decade 1971-81, there was decline both in fertility and in mortality. On the basis of the projected birth and death rates of 23.7 and 8.4 per thousand, respectively, during 1996-2001 from the level of 33.2 and 12.2 during 1981-86, the population in the year 2000 has been estimated to reach 972 million. The annual growth rate of population would be reduced from 2.10 per cent during 1981 -86 to 1.53 per cent during 1996-2001 as shown in Table 2.1. The population in the year 2000 would have been higher by nearly 78 million if the past trend had been simply extrapolated. The projection made here takes into account the effects of a well-organised family planning programme that would be put into operation during the perspective plan period.* On the basis of present reckoning, the net reproduction rate (NRR) will be reduced to 1 * * only by the period 2006-2011.

Age Structure

2.27 Nearly 40 per cent of the Indian population was below 15 years of age in 1980, whereas only 6 per cent of

* Consisting of the Seventh Plan period and the projected 10-year period 1990-2000.
**Anet reproduction rate of 1.00 broadly means that each generation of mothers is having exactly enough daughters to replace itself in the population.

TABLE 2.1

Assumptions Underlying Population Projections 1981-2001

Note: The projections relate to the mid-year of the period, except Cols. (2) and (3), which relate to the end of the period (as on first March). Birthrate, death rate and growth rate are per thousand of population.

the population was over 60 years of age. However, due to the expected decline in fertility and mortality, the age structure of the population will change in the future, as is shown in Table 2.2. The proportion of persons below 15 years of age would come down from 39.7 per cent of the total population in 1980 to 36 per cent in 1990 and further to 31.6 per cent in the year 2000. This will mean that the dependency ratio* will come down from 0.66 in 1980 to 0.46 by the year 2000.

'Defined as the ratio of children below 15 years to population above 15 years of age.

TABLE 2.2

Age Structure of the Population 1980-2000 (as on 1st March)
(Per cent of total population)

Labour Force

2.29 Labour force projections, based on the usual status participation rates, provided by the National Sample Survey Organisation (NSSO), 32nd round (1977-78), by age, sex and place of residence, are given in Table 2.4. Surviving children born in the last fifteen years will be entering the labour force during the period 1985-2000. The labour force would be increasing at the annual rate of 2.56 per cent during 1985-90 and at 2.24 per cent during 1990-2000 as against the annual rate of growth of population of 1.96 per cent and 1.69 per cent respectively. The absolute magnitude of addition to the labour force works out to 39 million and 81 million during these two periods. Taking into account the estimated backlog of unemployment as of 1985, the overall magnitude of additional employment to be generated by the year 2000 would be around 130 million. In the 15-year perspective, therefore, a major challenge would be to create this volume of additional employment. The projected scenario of a continued GDP growth rate of 5 per cent perannum,afast rate of growth of agriculture combined with an even faster rate of growth of industry together with specific employment generation programmes would, it is expected, make possible the provision of jobs to all in the labour force by the year 2000.

2.28 It is expected that the number of females in the re-productive age group 15-44 will go up from 141 million in 1980 to 228 million in 2000. The proportion of females in this age group to the total female population would also rise during the period (Table 2.3)

TABLE 2.3

Women in the Reproductive Age Group 1980-2000 (As on 1st March)
(Millions)

Urbanisation

2.30 The urban population in the year 2000 is estimated at nearly 315-million, indicating a share of 32 per cent in the total population. This is roughly 54 per cent of the total addition to population in India between 1981 and the year 2000. The historical record of urbanisation since the beginning of the century reveals that whereas the urban population increased by 500 per cent, the number of settlements increased by only 77 per cent (between 1901 and 1981). This brings out the fact that most of the growth occurred through the enlargement of the existing towns at every level, and not because of the addition of new towns.

2.31 The envisaged urbanisation trends will result in an increase in the urban labour force by nearly 3 to 4 million per annum during 1985-2000. This, added to the existing magnitude of unemployed in the urban areas, gives us a broad dimension of the problem of urban employment demand.

2.32 The latest population census reveals that nearly 60 percent of the urban population resided in Class I cities, i.e., in cities with a population of one lakh or more. Another 26 per cent resided in Class II and Class III towns (i.e., 20,000 to one lakh population). The balance of towns accounted for only 14 per cent of the urban population.

TABLE 2.4

Labour Force Projections by Age, Sex and Place of Residence [NSS 32 Round
(usual status) participation rates] for the years 1980, 1985, 799( and 200 (as on 1st March)
(Millions)

2.33 Given the severe over-crowding, the physical limitations to further expansion and the high cost of investment in the metropolitan cities, the policy thrust in the perspective period would have to be to moderate the growth of the cities with million-plus population through a well-defined policy of diversion of the migrant population towards smaller towns and cities. Towards this end, employment promotion policies, policies of urbanisation, urban financing and industrial and transport policies would have to be coordinated. Considering the complexity and magnitude of the problems generated by rapid urbanisation against the background of extreme inadequacies in the existing infrastructure, innovative strategies will have to be evolved to raise resources on the scale needed to finance urban infrastructure. Part of the action programme would be to revitalise the municipal bodies and improve their own finances. This would have to be supplemented by the mobilisation of a larger proportion of resources from the capital market. Considerably more emphasis would also have to be given to development of land and of house construction so that by the end of the perspective Plan, a major dent would have been made in the problem of urban housing shortage.

Development Perspective

2.34 Taking into account the basic goals to be achie' by the year 2000 and the resources base, alternal development scenarios were simulated, using a mat matical model, with a view to optimising the attainmen the mix of objectives. From the alternative developm scenarios, a profile of development has been chosen which would enable the economy to reach and maintai high and steady growth path. The simulation exerc clearly brought out that for fulfilling this objective, m ernisation and the adoption of advanced technology we require priority attention so that an optimum use resources can be brought about.

2.35 The gross domestic product at factor cost postulated to grow at an average rate of 5 per cent o the 15 year period 1985-2000. Table 2.5 gives macro-economic aggregates of the perspective F 1990-2000 and for the base year 1984-85. The rat< capital formation has been projected to increase from 2 per cent of GDP to 26.4 per cent and that of dome savings from 23.3 per cent to 25.8 per cent. contribution of foreign savings (current account balan has been stipulated to decline from 1.4 per cent of GDI 1989-90 to 0.6 per cent in 1999-2000.

TABLE 2.5

Macro Economic Aggregates
(Rs.crores at 1984-85 prices)

2.36 Table 2.6 gives the projected growth rates of sectoral value added over the period 1989-90 to 1999-2000. In terms of value added, the highest growth rate will be recorded by manufacturing followed by electricity, gas and water supply.

TABLE 2.6

Projected Sectoral Annual Rates of Growth in Terms of Gross Value Added at Factor Cost
(Per cent per annum compound)

2.37 Table 2.7 gives the sectoral composition of gross value added at factor cost in the perspective plan period. The figures indicate that a major structural change has been built into the development over the perspective plan period. Because of the fast pace of industrialisation, the share of manufacturing is expected to increase from a level below 15 per cent of the total in 1984-85 to around 20 per cent in 1999-2000. It is also significant that the share of infrastructure sectors including electricity, gas, water supply and transport will be increasing. The share of services will increase from around 31 per cent to 35.5 per cent. Correspondingly, the share ot agriculture is expected to alter from around 37 per cent to 25.5 per cent. These structural changes are in line with the experience of many of the now industrialised nations.

TABLE 2.7

Sectoral Composition of Gross Value Added at
Factor Cost 1984-85, 1989-90 and 1999-2000

Agricultural Perspective

2.38 While India's agriculture has taken massive strides during three and a half decades of planning, its growth and development has not been uniform all over the country. The differential pattern and pace of agricultural development, particularly the growth of foodgrains production, has led to regional disparities. Again, among the principal crops, the production of pulses and oilseeds is not sufficient to meet the needs of the growing population.

2.39 The perspective plan for agriculture development aims at maintaining self-sufficiency in foodgrains and attaining self-sufficiency in respect of pulses, oilseeds, and fibre. Its other objectives are to maximise employment opportunities and to promote conservation and environmental protection measures so as to arrest the degradation of the natural endowments of soil, water and other resources.

2.40 By the turn of the century, the total population of the country is expected to be 972 million. As stated, the gross domestic product is stipulated to rise at 5 per cent per annum over the period 1985-2000. Given these developments, the foodgrains requirement by the year 2000 has been estimated around 240 million tonnes (see Table 2.8) The achievement of this target will be made possible by increased use of fertiliser and irrigated area, and by improvement in technology. For achieving the target of foodgrains and other crops, the requirment of fertiliser by 1999-2000 has been estimated at around 20 million tonnes, and that of irrigation around 100 million hectares.

2.41 While the required production of cereals appeard to be attainable, more intractable problems are likely to be

Table 2.8
Projection of Output of Principal Commodities and Services;  1989-90 and 1999-2000

encountered in the case of pulses and oilseeds. Keeping in view the importance of attaining self-sufficiency in the latter two crops, it would be necessary to undertake special measures to increase their output. New high yielding varieties which at the same time are sufficiently drought resistant, will need to be evolved and brought into production.

2.42 By the close of this century the process of transformation implicit in the perspective plan should take agriculture to a level where it will be far more science-based and industry-linked than it is now. Emerging areas like bio-technology, genetic engineering, photosynthesis, tissue culture, bio-insecticides and pheromones would be the new fields of research for aiding the growth of agricultural productivity.

2.46 The direct consumption demand for animal husbandry products in year 2000 is estimated to be: milk 64 million tonnes; eggs 28,500 million; and meat 2 million tonnes. The programme of development envisaged is designed to provide self-sufficiency in regard to milk, eggs, meat and wool by the turn of the century.

2.47 The fishery industry has a considerable potential as an income and employment generator. Besides providing the needed protein food to the population, it also has a potential as a foreign exchange earner. Thus, the growth of this sector could make a sizeable impact on the economy and the life of the people. The target of fish production is expected to reach 6 million tonnes by the year 2000; out of this, about 2 million tonnes are expected to be contributed by the inland sector. This scale of production would benefit 25 lakh active fishermen in the country. Along with increased production, the per-capita consumption of fish is expected to go up from the present level of 3.5 kg. to over 6 kg. by the turn of the century.

2.48 In bringing about the envisaged increase in the output of fishery products, the major thrust during the coming years would have to be the use of sophisticated technology in the capture and culture of fish and the development of post-harvest technologies. Adoption of new bio-technologies, algae culture in oxidation ponds, production of bio-gas, recycling of water for land and water management would lead to high productivity.

Forestry

2.49 The National Forest Policy of 1952 stipulated that the country should have a coverage of at least one-third of its total geographical area under forest-60 per cent in the hilly tracts and 20 per cent in the plains. Against this, there are varying figures given of the forest cover of the country. The estimates of State Forest Departments add up to a forest cover of 75 million hectares which is equal to 23 per cent of,the total geographical area. However, according to estimates of the National Remote Sensing Agency, the area under forests was 55 million hectares in 1972-75 and it came down to 46 million hectares in 1980-82. According to the latter estimate one and a half million hectares of forest cover seem to have been lost annually. Equally alarming is the fact that nearly half of the forest area is either degraded or under-stocked. This rapid decrease in forest cover and deterioration in its quality is due to the growth of human and animal population, the increasing demand for fuel wood for meeting domestic energy needs and the rising industrial demand for forest products, e.g., for paper, pulp and construction. The reduction in forest cover has resulted in serious soil erosion and ecological damage on a scale leading to desertification, with serious repercussions on society, particularly in vulnerable regions such as the hill areas.

The task of bringing one-third of the geographical area under tree cover, therefore, becomes a vital objective for 2000.

Industrial Perspective

2.50 Since the inception of planning at the beginning of the fifties, the country has established a well diversified industrial structure replacing a wide range of manufacured imports and undertaken massive investments to build up a sizeable capacity in basic and heavy industry. With the changing economic and industrial scene in India and abroad a new phase of industrialisation has now commenced, a phase which is marked by greater emphasis on technical progress and productive efficiency. The protection from international competition of the earlier semi-insular phase has given rise to high-cost manufacturing, which is inhibiting both the expansion of the domestic market and more rapid development of exports. Manifestly, an appropriate environment has to be created so as to encourage and promote greater efficiency, higher productivity and faster industrial growth in desired directions through a well co-ordinated system of incentives and in consonance with the objective of self-reliance. Accelerated growth of manufacturing, accompanied by radical restructuring and induction of 'sunrise' industries within a suitably modified policy frame would bring about a significant transformation of India's industrial economy.

2.51 This transformation in response to appropriate stimuli would enable Indian industry not just to readjust, re-equip and retool for accelerated growth, but also to fan out into new areas. To facilitate this process, industry will have to upgrade technology and management, attain economies of scale, pursue greater value-adding activities and selectively launch an export drive. Small-scale industry will remain an integral segment of manufacturing; and policy re-orientation combined with development programmes will ensure steady growth of small-scale and village industries. The programme of industrialisation initiated in the Seventh Plan will continue and gain momentum in the Eighth and Ninth Plans. State intervention will undergo a qualitative change that will emphasise its developmental role, greater interaction with industry and forge closer links between industry trade and finance. Annual industrial growth during the period 1985-2000 can be expected to average 8-9 per cent.

2.52 The manufacturing scene in the year 2000 would be qualitatively quite different from what it is today. This sector, besides, will make up a much larger proportion of GDP. The contribution of manufacturing to the gross value added would go up from about 15 per cent in 1984-85 to around 20 per cent by 1999-2000. This growth will be attributable largely to a rapid increase in the output of petro-chemicals and plastics, fertilisers, aluminium, elecironies, telecommunication equipment and computers. The output of plastics will grow five-fold, followed by a near trebling of fertiliser and aluminium production. The gross output of electronics is expected to reach Rs. 50,000 crores or, say, nearly 25 times the level attained in 1984-85.

2.53 Apart from basic industries, the major thrust in the programme of accelerated industrialisation would be towards mass consumption goods and export-oriented industries. The programme itself is intended to provide by the year 2000 plentiful mass consumption goods at reasonable prices, create a substantial employment potential and increase foreign exchange earnings. These industries would also steadily strengthen linkages with agriculture and bring about better integration of rural and urban economies.

2.54 For India to keep pace with developments abroad, as the country enters the 21 st century, attempts will have to be made during the perspective plan period to start and develop a number of high technology industries, such as advanced machine tools, electronics, fibre optics and lasers, and bio-technology. This will open up new vistas and opportunities for our large pool of skilled manpower.

2.55 The public sector will continue to play an important role in the core sector of the economy. It will also be a pace-setter and encourage emerging new high technology industries. Besides, contributing in no small measure to industrial growth, it will generate sizeable resources for investment. A major employer of the country's engineering manpower, the public sector will play a leading role in stimulating development of efficient ancillary manufacturing; and will strengthen the sinews of industry.

Energy Perspective

2.56 The commercial and non-commercial energy requirements in the year 1999-2000 have been estimated for major categories of consumption, and are given in Table 2.9.

2.57 The crucial issues in the management of energy sector are the containment of the consumption of oil and the management of energy transition in rural areas. The levels of oil demand projected for the year 2000 may mean a rise in import dependence of an order that could pose balance of payments problems. Hence measures to replace oil by other domestically available energy sources need to be pursued with vigour.

Energy Supply Options

2.58 A total consumption requirement of 424-465 billion kwh of electricity has ben estimated for the year 2000. After providing for auxiliary consumption and transmission and distribution losses, the total generation requirements works out to 558-600 billion kwh. The generation of electricity from captive power plants is estimated to be about 25 billion kwh in 1999-2000. The total generation requirement from utilities thus becomes 533-575 billion kwh. As to the mode of generation, hydel and nuclear power units would have to have increased shares in the total generation which is at present predominantly thermal. However, both these modes have a very long gestation period at present. These have to be shortened. It is expected that nuclear power generation should reach upto 10,000 MWs within the next two decades. Hydel potential has been estimated at 89530 MW excludng 5000 MW for small hydels, very little of which has been exploited so far. Environmental considerations will, however, be a constraint. The potential offered by international cooperation for implementation of hydro-projects of mutual benefit with neighbouring countries would need to be harnessed.

Coal

2.59 Coal will continue to be the key source of energy. The production requirement of coal in the year 1999-2000 works out to 417 million tonnes keeping in view the anticipated increase in demand. The long-term strategy in the coal sector should include special efforts to increase the proportion of proven reserves of non-coking coal. Exploration activity will need to be concentrated in regions closer to consumption centres. Other aspects of strategy

TABLE 2.9
Estimates of Commercial and Non-Commercial Energy Requirements in 1999-2000.

*Net of coal consumed in the power sector.

to be continued in the long-term are upgradation of technologies for de-pillaring of coal, modernisation of coal exploration, improvements in flow sheets and equipment designs of washeries. Also, underground gasification and slurry transport of coal need to be experimented and developed.

Hydrocarbons

2.60 A requirement of 72.7 million tonnes of oil products has been worked out for direct energy use in the year 1999-2000. Another 15 million tonnes of oil products like naphtha, Fuel oil, LSHS, bitumen, petroleum coke, etc. would be required for non-energy purposes. Thus, the total requirement of oil products is placed at 87.7 million tonnes. Assuming 7 per cent refinery losses, the requirement of crude oil works out to 94.3 million tonnes.

2.61 The domestic production of crude oil in 1984-85 was a little more than 29 million tonnes. It is expected to go upto around 35 million tonnes in 1989-90. The 'Revised 20-year Perspective Plan' of ONGC indicates that the total domestic production of crude oil may be around 50 million tonnes in 2004-05. This means that in the year 1999-2000, the indigenous production of crude oil will be between 40 to 50 million tonnes, thereby implying an import requirement of 44.3-54.3 million tonnes of crude oil. This will place a great burden on the economy, particularly on the balance of payments. Therefore, conscious and vigorous efforts would need to be made towards economising on oil consumption and for maximising domestic production of crude oil.

Renewable Energy Sources

2.62 A major challenge ahead is to meet more adequately the growing requirements of energy in the rural areas. Rural electrification is of great importance in securing a more balanced structure of energy supplies in the rural areas and this programme will need to be pursued vigorously so as to provide electricity to all villages before the end of the present century. However, it will also be necessary to make an increasing use of new renewable sources of energy. At present, a large part of the energy used in rural India is non-commercial e.g., fuel wood, agricultural wastes and animal residues. While the percentage of non-commercial energy in terms of total energy used in the country has gone down, its actual magnitude has been increasing with the growing population. This has led to large-scale deforestation. Besides, the growing pressure of demand has resulted in increasing scarcity and rise in prices of fuel wood, thereby causing considerable hardship to poorer households in meeting their requirements of energy for cooking purposes. The long-term objective over the next fifteen years, therefore, would be to achieve a transition to an economy in which an intensified programme of rural electrification and a viable renewable energy programme together make a significant contribution to meeting energy needs in rural areas.

2.63 The principal sources of renewable energy are solar (thermal and photovoltaic), wind and bioenergy (including bio-gas and biomass). Decentralised micro and mini-hydel plants also have a vast untapped potential. Utilisation of urban waste through cost effective processes holds promise not only for reducing environmental pollution, but also of producing energy for domestic and other productive uses. Ocean energy and geothermal energy could also be developed in selected regions of the country. In the longer range horizon, there are possibilities for use of hydrogen as a mobile energy source.

2.64 In the case of renewable energy sources, ensuring adequate supply of fuel-wood to rural areas seem to be the most important. A massive energy plantation programme based on the selection of fast growing species and using modern silvicultural practices in waste lands would greatly help in improving the fule-wood availability. The programmes for the development and utilisation of bio-gas and bio-mass for generation of energy would also make a significant contribution to meeting the energy requirements of rural areas.

Mineral resources

2.65 The estimates of recoverable reserve of sixteen minerals and their life expectancy are given in Table 2.10. It may be noted that the life of copper, gold, high grade iron ore, presently useable magnetite, kyanite, lead, presently mineable chromite, magnesite, manganese ore, high grade rock phosphate, massive sillimanite and zinc is less than 50 years and that for presently useable rock phosphate, SMS grade lime stone and coking coal more than 50 years but below 100 years. The prospective demand-supply balance for several minerals is a cause of concern, and it calls for more vigorous and sustained efforts for the discovery and exploration of mineral deposits and scientifically planned management of mineral resources.

2.66 The strategy for exploration during the perspective plan would include:

1. Speedy completion of geological mapping of the country;
2. adoption of. modern exploration techniques to discover new deposits and new basins at shallow depths as well as to decipher concealed deposits under the alluvial plains of north and coastal areas, and the great mass of Deccan Traps covering a large chunk of the Peninsular shield;
3. Intensification of exploration in the known mining fields to delineate extension of ore bodies both laterally and at depth wherever such extensions can
   1. Recoverable reserves under the existing technology and price. The reserves are estimated as on 1-1-80 including subsequent significant estimates. In the case of coal, the total resources of all varieties of coal in India in seams of 0.5 metres and above in thickness and down to adepth of 1200 metres are estimated. The recoverable reserves estimated are as on 1-2-1983 and depletion estimated for the period 1983-94.
   2. Although the bauxite reserves are large, the refractory, chemical and abrasive grades are limited and the known reserves will last only for 30 years at the current level of consumption.
   3. Although the reserves of chromite are quite sizeable, the refractory manufacturers are facing difficulties in obtaining supplies of refractory grade ore, the reserves of which have not yet been adequately delineated.
   4. It is to be borne in mind that out of the above mentioned reserves of coking coal, the reserves of prime-coking coal is limited to 1913 million tonnes only, which certainly is not a satisfactory situation.
   5. This is the general picture, the supplies of low silica dolomite continue to be difficult.
   6. This is the general picture; the supplies of low silica limestone continue to be difficult be envisaged from the study of geology of the area;
4. strengthening of multi-disciplinary approach to mineral exploration using photogeology, satellite imagery, geophysics, geochemistry and drilling;and
5. improvements in the preparation of geologic models which would lead to a better understanding of the genesis of the mineral deposits.

TABLE 2.10
Life Indices of Known Mineral Reserves at the Projected Rates of Depletion

2.67 The policy in regard to trade in minerals should be formulated keeping in view the mineral inventory position. In regard to minerals in which the situation is more than comfortable, a more liberal policy for exports can be formulated, but in regard to minerals such as high grade manganese and high grade iron ores, kyanite, sillimanite, and chromite, a somewhat restricted policy should be adopted with a review, from time to time, of the reserve situation.

2.68 Whenever the foreign exchange resources are comfortable and import prices and foreign supply position are relatively favourable, larger imports and a lower rate of depletion should be preferred in order to extend the life of scarce mineral reserves.

Ocean Development

2.69 India has an extensive coast line of about 6,000 kilometers, and an exclusive economic zone of more than 2 million square kilometers in area. There is enormous potential for exploration and utilisation of oceanographic resources for economic and social purposes. A large number of estuaries, backwaters, mangroves, islands, and coral reefs are important marine sanctuaries.

2.70 More than 1,800 species of fish exist in Indian seas. As against the production of 1.7 million tonnes in 1984-85, the production potential is estimated at 5 million tonnes. Other marine resources would also need to be optimally developed and utilised. During the last few years, scientific exploration of living and non-living resources has acquired new thrusts with inputs of modern science and technology. The major areas which would receive increased emphasis include survey, Antarctic research; exploration of poly-metallic nodules from the deep sea-bed; manpower development; prevention and control of marine pollution; development of ocean energy;and development of techniques to optimally utilize the living and non-living resources.

Transport

2.71 With the anticipated increase in population and the long-term development profile that is envisaged, the transport infrastructure would be radically different by 2000. A well-integrated, multi-modal system relying increasingly on emerging technologies will be an essential element of the transport scenario. The magnitude of the demand for other modes of transport would be substantially increased.

2.72 While railways and roads would continue to be the dominant modes of transport, supplementary modes of transport such as civil aviation, coastal shipping, inland waterways and product pipelines would play an increasing role in the country's transport systems in the future. Given the country's size, the variety of terrain and climatic conditions and the vast distances between the major industrial and commercial centres and in order to save time it would be necessary to expand the network of air transport services. India has a long coast line of 5560 kms and coastal shipping, being a highly energy efficient and a cheaper mode of transport for carriage of bulk traffic over long hauls along the coastal locations, has also to be assigned an expanded role in the operation of an integrated transport network. Similarly, taking into account the energy efficiency of the inland water transport, greater attention would need to be paid to the utilisation of very considerable potential offered by this mode of transport.

2.73 The accessibility to the villages would be improved and 60 per cent of the villages would become accessible throughout the year as against 35 per cent at present. The road density in the country as a whole would increase from 46 km to 60 km per 100 s'q. km.

2.74 Railways would carry around 520 million tonnes of freight traffic, almost doubling the transport output in the next 15 years. The rail network would increase by about 3,000 km bringing the total length to 65,000 km.

2.75 In large metropolitan towns, grade separated mass transit systems would be set up to improve the mobility of intra-city commuter traffic.

2.76 In view of the huge costs entailed in the construction and maintenance of an efficient transport system, cooperation and coordination between the public and private sectors would be encouraged and improved. Reduction in costs would be effected through improved construction methods and practices.

Communications

2.77 Recent developments in electronics, computers and space technology have brought forth immense new possibilities in the field of telecommunications. From the earlier manual and electro-mechanical systems, telecommunications are moving to electronic systems, and within this from analog to digital format. With the hook-up of telecommunications with computer systems, new modes of communications like telematics and informatics are emerging. These developments, and the advent of satellite communication, which obviates the need to go through extensive long-haul ground-based telecommunication. networks (for long distance or emergency communication) should enable the country to leap-frog into a new era of telecommunications. Much of the technology for this exists or can be developed easily.

2.78 While the above longer-range objectives will be worked out during the Seventh Plan so as to be implemented on a significant basis during the 1990s, the programmes over the next 15-year period will be to increase the number of telephone connections from 29 lakh lines at the end of the Sixth Plan to 300 lakh lines by 2000. About 90 per cent of the telecommunication network is proposed to be brought under the Integrated Digital Network (IDN) by 2000. Optical fibres will be progressively .used for underground transmission cables.

2.79 The modern media of communication would be used extensively for the education of the masses and for promoting programmes of health, family planning, education and culture.

Environment and Ecology

2.80 The environment, with its component living and non-living resources, represents the most fundamental building block for national development and social well-being. The environment is today under severe threat from the pressure generated by population growth, poverty and the misuse/unplanned use of natural resources. While many of the country's environmental ills could be corrected by rapid economic growth with social justice, utmost care must be exercised to ensure that the developmental activities which bring about such changes are designed so as not to leave adverse environmental effects. Environmental factors and ecological imperatives will have to be incorporated into the design of all developmental projects from the very commencement of their plans.

2.81 By the year 2000, industrialisation of the country will have reached a stage where in the absence of effective remedial measures, severe problems of air, water and land pollution will assume serious proportions. Effluents will have to be disposed of carefully not only at the product level, but also at the intermediate levels. Also storage, preservation and transportation of such materials will have to be carefully planned. Our decision making processes will have to recognise explicitly that the environment is not to be taken as a free resource, and, like other natural resources, it is to be considered as an input which has to be paid for. The modalities for this will have to be worked out carefully. In project planning, besides the availability of raw materials, manpower and funds, decisions regarding the use of the environment will have to be taken, and investments built-in for minimising environmental damage or degradation. This will apply equally to the public and the private sectors. A new type of expertise in environmental impact analysis will have to be developed and applied for deciding the optimum location of any project.

2.82 Environmental education and creation of awareness at all the levels would have to be an integral part of the perspecitve plan. Use of modern media, training, dissemination of information and involvement of people in all environmental 'programmes would form the various components of an integrated approach. Also, environmental and ecological research on all aspects including conservation, eco-development, pollution control, etc., would be necessary.

Quality of Life and Social Development

2.83 As stated at the outset, the growth of the economy and development of human resources over the remaining fifteen years of this century should result in the establishment of a modern, self-reliant economy and a substantial improvement in the levels of living of our people. The implications of the development scenario in terms of improving the quality of the life of the people by the year 2000 are brought out in Table 2.11, which shows changes in levels and shares of crucial variables.

TABLE 2.11
Socio-Economic Indicators of Change (1985-2000)

2.84 The per capita consumption of foodgrains is expected to increase from 178 kg. in 1984-85 to 215 kg. in 1999-2000, giving an average rate of increase of around 1.3 per cent per annum as compared to a stagnant level over the last two decades. The per capita consumption of cloth would increase from 16.16 metres to 22.36 metres, giving an increase of over 2 per cent per annum. The per capita generation of electricity in 1999-2000 will be more than double than that in 1984-85. The most significant impact will be on the extent of poverty: the percentage of people below the poverty line is expected to decline to a level of 5 per cent in the year 2000. As regards the provision of employment, against the estimated addition to labour force of about 39 million, additional employment generation in Seventh Plan has been estimated at 40.36 million standard person years. Thus the absolute number of the unemployed at the end of the plan will be lower than at its beginning. There would be a continuous reduction in the magnitude of unemployment during 1985-2000, at the end of which employment is expected to reach the level of 318 million standard person years. This would represent the attainment of near full employment.

2.85 Increased consumption, better sanitation and health facilities, assured drinking water supply and the provision of other amenities are expected to increase the life expectancy to 63.3 years for males and 64.7 years for females in the year 2000. Similarly, the infant mortality rate is expected to go down below 60 per 1000 births by the turn of the century. While the death rate will fall to 8.2 per thousand from 11.9 at the beginning of the Seventh Plan, the birth rate is expected to fall more steeply to 23.1 per thousand from 32.6. However, the population would still be growing at about 1.5 per cent by the turn of the century. This is on the assumption of a fall in the fertility rate to 99 per thousand in the year 2000 as compared to 152 in 1985. It is obvious that much greater efforts at family planning would be required to stabilise the level of population in the early years of the 21st century.

Health and Education

2.86 There is a commitment to attain the goal of Health for All by the year 2000. The main instrument for achieving this goal will be the comprehensive primary health care. The attainment of this goal requires a thorough overhauling of the existing approaches to the education and training of medical and health personnel, the reorganisation of the health services infrastructure and making qualitative improvements in the health care services.

2.87 By the year 2000, illiteracy would be eliminated and universal elementary education would have been provided for all children upto the age of 14. It is expected that drop-outs in the age group 6-14 would be reduced to negligible levels. Extensive provision would be made for continuing and recurrent education and use of modern communication technology. There will be substantial vocationalisation of secondary education by the turn of the century. Non-formal education using a variety of means and methods, including video technology and computers, would play a significant role.

Self-sustaining Growth

2.88 The attainment of a domestic rate of savings around 26 per cent of GDP with a marginal rate of savings above 27 per cent, and the reduction in the degree of dependence on foreign savings to a small magnitude by the year 2000, would imply that the Indian economy could maintain a fast rate of growth on its own in the next century. Also, since the percentage of population below the poverty line would have been reduced to 5 per cent, there would be near full employment and per capita consumption of food and clothing would have registered substantial increases. There would be a discernible improvement in the quality of life for the people as a whole and a great majority of the population would have been enabled to satisfy the basic needs of living.