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Failures of Economic Planning in India Explained

DRAWBACKS OR FAILURES OF PLANNING

Besides the achievements as told above, there are many unfulfilled tasks which the planning in India is yet to achieve completely.

1. Failure to Remove Poverty and Inequality completely

  • Even after more than sixty years of planning, India has not been able to remove poverty completely. More than 240 million people are still under absolute poverty according to official estimates. The situation is worse in rural area. The government has introduced many antipoverty measures. But they have not been very successful so far.
  • Similarly, there is no significant improvement in the distribution of income and asset holding resulting in existence of inequality. The number of landless agricultural labourers is very high as compared to the land holding population. The process of industrialization has helped some big industrial houses. This has resulted in concentration of economic wealth and power in few hands. This trend must be reversed if India wants to achieve equity and social justice.

2. Problem of Unemployment Persists

  • Inspite of growth in income and output, India’s employment situation has not improved much. Due to faster growth of population and labour force the situation has worsened further. According to official estimates India’s unemployment rate is 6.6%. There is also huge backlog of unemployment due to lack of creation of required amount of jobs every year.

3. Failure to Curtail Corruption and Black Money

  • Existence of rampant corruption in various public offices is a matter of grave concern in India. Common person faces a lot of problem in getting things done without giving bribe. Infact corruption has become a major political issue in elections. Various forms of corruption include paying or accepting bribe, nonpayment of tax to government, political influence to get contract, secret understanding among sellers to increase price etc. Corruption has given rise to black money which is not accounted anywhere but very much in circulation. A sizeable portion of India’s GDP is unaccounted. Black money creates inflation

What You Have Learnt

  • To solve its various economic problems, India adopted Five-Year Plans starting from 1951.
  • The objectives of planning include economic growth, increase in employment, removal of inequality and poverty, and achieving social justice and equity.
  • India adopted the strategy of industrialization with emphasis on basic and heavy industries to achieve these objectives.
  • Even though national income and per capita income have recorded growth during the planning period, the growth rates were often below the targets.
  • India’s progress in infrastructure, education, science and technology, and foreign trade has been noteworthy.
  • Significant drawbacks of planning include the inability to completely eradicate poverty, inequality, and unemployment.
  • Corruption in public offices and the prevalence of black money are major threats to development in India.
  • In 1991, the government adopted the New Economic Policy to address problems of the public sector, promote industrialization, and achieve faster growth.
  • The New Economic Policy is called the LPG model — Liberalization, Privatization, and Globalization.
  • The LPG policy aims at removing licensing policies, promoting market competition, and encouraging free trade globally.

 Starts @ April 6th

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