Resource Allocation In The Indian Plans

Resource Allocation In The Indian Plans

   Resource Allocation In The Indian Plans

Resource Allocation In The Indian Plans: Investment pattern of Indian Plans reflects the objectives and implementation of actual planning strategy.

It is important to look at the resource allocation under Plans.

For a better view of resource allocation the economy divided into three main sector i.e., agriculture, industry and infrastructure.

Importance of agriculture is self-evident as majority of population in India still depends on it.

Economic development and modernization process inter related as no country can develop without giving due emphasis to the development of industry.

Similar, for sustaining the long term development of an economy infrastructure play a significant role.

Unless transport and communication facilities expanded no industry or business can flourish, unless power generation given.

Due attention the whole programme of industrialisation can suffer; and agricultural development cannot take place without expanding irrigation facilities. Resource Allocation In The Indian Plan

Resource Allocation In The Indian Plans

                     As mentioned earlier, the First Plan had the main objective of correcting the disequilibrium and initiating the process of all round development.

The investment pattern according worked out with due regard to immediate and long tam objectives.

The highest allocation provided for transport and communication followed by irrigation and flood control.

Since the First Plan did not visualize any large scale industrialisation programme; industries received only 3% of total resource allocation.

                    As noted earlier the Second Five Year Plan emphasized large scale industrialisation.

Consequently, following a strategy of development of heavy and capital goods industries, a substantial change in the investment pattern took place.

The share of industry and minerals raised to 20% of the total resource allocation, the second highest after transport and communication, which allocated 27% of the total resources.

The Second FYP also gave importance to village and small scale industries as compared to the First FYP and resource allocation doubled from 2% to 4% in this period.

Agriculture and allied sectors given less percentage of resources in the Second Plan compared to the First Plan (from 15% to 12%) because of the change in priority. Resource Allocation In The Indian Plan

Resource Allocation In The Indian Plans

                     The Third FYP was almost double the size of the Second FYP as the total expenditure increased from Rs. 4,672 crore in the Second Plan to Rs. 8,577 crore in Third Plan.

The expenditure on agriculture and allied activities also doubled in absolute terms.

The percentage of total expenditure allotted to transport and communication though declined slight from 27% to 24%.

It was still the highest in the Third Plan.

The resource allocation to industry and minerals were almost same at 20% of the total resources Power (energy) received a comparative higher percentage of resources (15%) in the Third Plan as against 9% in the Second Plan.

                    As mentioned earlier, subsequent to the Third FYP, there was a plan holiday and three annual plans during 1966- 1969 adopted.

The total expenditure under the three annual plans was Rs. 6,625 crore.

Almost one-fourth (23%) of the total resources went to industry and minerals; 18% went to transport, communication and power sectors while 17% allocated to agriculture and allied sectors. Resource Allocation In The Indian Plan

Resource Allocation In The Indian Plans

The growing importance of energy or power sector in the Indian planning was evident as the resources accorded to the development of power continuous increased from 7.6% in the First Plan to 18% in the three annual plans.

This  Planning in India necessary under the condition of power shortages and its adverse effect on, I industrial production in the country.

                    The actual expenditure under the Fourth Plan was Rs. 15,779 crore as against the plan outlay of Rs. 15,902 crore.

In view of the growing concern of the planners towards emerging bottlenecks in the transport and communication sectors, it allocated the highest percentage of resources (19.5%).

The second highest allocation of resources (18.6%) given to the power sector in the Fourth Plan.

This was in view of the realization that future demand for power going to increase.

‘Moreover, it was important not only to generate more capacity but the transmission and distribution of power also required to expanded.

Industrial sector continued to receive high priority. Resource Allocation In The Indian Plan

Resource allocation under the Fourth

Resource allocation under the Fourth Plan to this sector was 18%; marginal lower than the transport and communication sector as well as the power sector.

Since the Third and annual Plans period observed slow and erratic industrial growth, it was imperative in the Fourth Plan to adopt such policies.

Moreover, despite recognizing the importance of village and small scale industries in generating employment, this sector still getting less and less proportion of resources.

Agriculture and allied sectors given higher proportion of resource allocation during the Fourth Plan because of the high investment demands of the green revolution strategy adopted since 196667.

Thus the planners right increased the resource allocation for agriculture as compared to previous Plans.

                    The Fifth FYP (1 974-79) once again allocated the highest percentage of resources to industry and minerals at 23% followed by power at 19% of the total resources.

The transport and communication sector received 17% of total expenditure in the Fifth Plan.

Agricultural sector received lesser resources (12%) & compared to previous Plans. Resource Allocation In The Indian Plan

The thrust was on plant development

The thrust was on plant development, horticulture and livestock practices.

Programmes like Minimum Needs Programme (MNP), Drought Prone Area Programme (DPAP), the small farmers and agricultural laborer development programme (SFAL), elementary education, drinking water, rural electrification and slum clearance also given importance.

With the global increase in the prices of crude oil in 1979 the government realized the increasing pressure on the resources and according enunciated a’ new energy strategy,

Not only conventional sources of energy expected to tapped but also renewable energy sources to exploited.

Consequently, the Sixth FYP (1980-85) gave priority to the power and energy sector and 28% of the total resources allocated to this sector.

Transport and communication received 16%, the second highest share.

                     The Seventh FYP (1985-90) also followed the same trend and the largest allocation of the resources went to the energy sector. Resource Allocation In The Indian Plan

Agriculture and allied activities including

Agriculture and allied activities including irrigation and flood control received the second highest (22%) allocation of the resources followed by transport and communication (18%) and industry and minerals (13%).

Thus in the Seventh Plan a shift in the strategy towards power, agriculture and rural development observed.

In doing so the Seventh Plan sought a balance among the infrastructure sector, production sector and human resource development sector.

The Eighth, Ninth and Tenth Plans conformed with the same pattern in the allocation of resources.

A consistent decline in the resource allocation on agriculture and allied activities is obvious in these Plans.

While the share of irrigation was stable, a growing proportion allocated towards rural development and special programmes. Resource Allocation In The Indian Plan

The share of resources allocated

The share of resources allocated to industry also declining and in the Tenth Plan a clear picture emerged in favor of energy and transport and communications sectors.

                    Eleventh plan (2007-12) recognized that overall financial systems need to strengthened and developed through improved regulatory mechanisms.

Thus the plan envisaged the growing role of private sector banks and foreign financial institutions, Priorities shifted to agriculture and industry compared to services sector.

However, in both agriculture and industry many new areas focused keeping in mind the objective of inclusive growth and social justice to the poor and marginalized sections of society. Resource Allocation In The Indian Plan

In doing so, the significance of public-private sector partnership impressed upon.