2ND FIVE YEAR PLAN (1956 – 61)

A BRIEF OVERVIEW

Rahil Alam

Shaishta Afroze

Malika Gupta

Rahil Alam

Shaishta Afroze

Malika Gupta

An economic plan may be described as a specific set of quantitative economic targets to be achieved in a given period of time.

Just as the goals of a political system are spelled out in a constitution, so the goals of an economy are spelled out in a Plan.

However, unlike the constitution the Plan is transitory.

National Planning Commission (1938)

British govt. set up an officer (1944)

Bombay Plan (15 years)

People’s Plan (10 years)

Gandhian Plan

Planning Commission

OBJECTIVES OF PLANNING

The resolution of the Planning Commission, singles out three principles as special terms of reference in the preparation of a Plan:

that the citizens, men and women, equally, have the right to an adequate means of livelihood;

that the ownership and control of the material resources of the community are distributed in a manner that best serves the common good; and

that the operation of the economic system does not result in the concentration of wealth and means of production to the common detriment.

Problem of poverty remained.

Investment during this period was not sufficient to absorb new entrants into labour market.

This added to backlog of unemployment and underemployment.

ACHIEVEMENTS OF FIRST FIVE YEAR PLAN

Increase in national income by 18%. Increase in national income by 18%.

Increase in per capita income by 11%

The rate of investment as a proportion of national income rose by 2.4%.

Important success of plan at agricultural front. (increase in food output by 20%)

FAILURES OF FIRST FIVE YEAR PLAN

OBJECTIVES OF 2ND FIVE YEAR PLAN

Shifting emphasis from agriculture to industrial growth and that too heavy industries.

Rapid industrialization with particular emphasis on development of basic and key industries (iron and steel)

Reduction of inequalities in income and wealth and more even distribution of economic power.

To increase country’s productive potential in a way that would make accelerated development in succeeding plan periods.

It aimed at an annual increase of 5% in national income and a multifold increase in employment.

IMPORTANT CHAPTERSRELATED TO INFRASTRUCTURE DEVELOPMENT

• DISTRICT DEVELOPMENT ADMINISTRATION

• IRRIGATION AND POWER

• PROGRAMME OF INDUSTRIAL DEVELOPMENT

• VILLAGE AND SMALL INDUSTRIES

• TRANSPORT

• COMMUNICATIONS AND BROADCASTING

• EDUCATION

• HOUSING

• SOCIAL WELFARE SERVICES

• DISTRICT DEVELOPMENT ADMINISTRATION

District PlansThe main constituents of a district plan are:

1.The community development and national extension programme, 2.Social welfare extension projects, 3.Agricultural production programme and allied activities in the field of rural development such as animal husbandry, soil conservation etc., 4.Village panchayats, 5.Village and small industries, 6.Schemes for utilising effectively resources developed through state projects for irrigation, electricity, communications, industrial development and expansion of training facilities, 7.Housing and urban development, 8.The programme of small savings, 9.Aiding construction projects through labour co-operatives and shramdan, 10.Programmes for the welfare of backward classes, 11.Programmes in rural and urban areas relating to social services, especially expansion of education at primary and secondary levels, health units, health education, sanitation, malarial control, family planning, etc. 12.Utilising and assisting voluntary organisations engaged in constructive social work, 13.Dissemination of information about programmes of national, state, regional and local development.

• DISTRICT DEVELOPMENT ADMINISTRATION

Village Planning- In national extension and community project areas, as programmes were carried to the village to be worked in cooperation with the people, the significance of village planning was increasingly realised. In the programme of local development works local communities had to propose schemes which they could undertake through their own labour with support from the Government

Village Panchayats- The main land management functions are:

•regulation of the use of common lands such as waste lands, forests, abadi sites, tanks, etc.;

•cultivation of lands set apart for the benefit of the village community, as in consolidation of holdings;

•adaptation of standards of good management and cultivation to local conditions and ttheir enforcement; and

•association with the work of maintenance of land records;

• PROGRAMME OF INDUSTRIAL DEVELOPMENTPRIVATE SECTORPUBLIC SECTOR

The overall magnitude of the planned expenditure on the programme of industrial development apprears to have been determined on the babsis of two objectives

1. To raise the national income by 25% in this period2. to provide enough new opportunities for enployement to absorb all the

new addition to the labour force during this periodWithin the framework of the policy set out above, the next phase in the expansion of industrial capacity has to be conceived in terms of the following priorities:—1.Increasea production of iron and steel and of heavy chemicals, including nitrogenous fertilizers, and development of the heavy engineering and machine building industries; 2.Expansion of capacity in respect of other developmental commodities and producer goods such as aluminium, cement, chemical pulp, dyestuffs and phosphatic fertilizers;and of essential drugs; 3.Modernisation and re-equipment of important national industries which have already come into existence, such as jute and cotton textiles and sugar; 4.Fuller utilisation of existing installed capacity in industries where there are wide gaps between capacity and production; and 5.Expansion of capacity for consumer goods keeping in view the requirements of common production programmes and the production targets for the decentralized sector of industry.

• VILLAGE AND SMALL INDUSTRIES

The primary object of developing small industries in rural areas is to extend work opportunities, raise incomes and standard of living and to bring about a more balanced and integrated rural economy.

In making its proposals the Committee kept three principal aims in view, namely, 1.To avoid as far as possible, during the period of the second plan, further technological unemployment such as occurs specially in the traditional village industries; 2.To provide for as large a measure of increased employment as possible during the plan period through different village and small industries; and 3.To provide the basis for the structure of an essentially decentralised society and also for progressive economic development at a fairly rapid rate

• HOUSING

It is proposed to take up three new programmes, namely, rural housing, slum clearance and sweepers housing and middle income group housing

RURAL HOUSING- A large proportion of the 54 million houses in rural areas need to be rebuilt or substantially improved. Sooner or later, every village should have a plan which provides for wide streets with drains, proper spacing of houses, the location of community buildings and a playground for children. SLUM CLEARANCE AND SWEEPERS' HOUSINg- For preventing the growth of slums there are two sets of measures to be taken. municipal by-laws must be enforced with the utmost strictness. In the enforcement of municipal by-laws the support of enlightened public opinion should be mobilised and potential slums should receive immediate attention. master plans should be approved for every town, beginning with towns which are already large or have expanded much in recent years or are likely to grow rapidly in the next few years. For enforcing master plans, local authorities should have the requisite powers to implement zoning schemes, control the use of land and prevent ribbon development. Where necessary, new authorities may be set up. In Delhi a special development authority has been recently constituted.

A15%

B16%

C13%

D2%

E4%

F26%

G24%

A12%

B9%

C10%

D4%

E20%

F27%

G18%

A->AGRICULTURE, B->IRRIGATION, C->POWER, D->RURAL SMALL SCALE INDS.,

E->INDUATRIES F-TRANSPORT&COMM,G->S.SERVICE

FIRST PLAN SECOND PLAN

COMPARISON:

Budget

Public outlay 46.7

Agriculture 5.5

Irrigation 4.3

Power 4.5

Village ,small industries 1.9

Organized industries, mining 9.4

Transport & communications 12.6

Other social services 8.6

Budgetary resources of which 25.6

Additional taxation 10.5

Internal private savings 14.1

External assistance 10.9

Deficit financing 9.5

Private Investment 31.0

Rs bn

HOUSING

The period of the first five year plan witnessed the first steps in a national housing programme ,included a subsidised industrial housing scheme and a low income group housing scheme - housing schemes for plantation labour and for labour in coal and mica mines.

These programmes are being substantially expanded during the second five year plan,three new programmes,

A)Rural Housing, B)Slum clearance and sweepers' housing C)Middle income group housing. • Total provision in the first plan of Rs. 38.5 crores, the second plan has allotted

a sum ofRs. 120 crores which is distributed as follows:—

HOUSING

Housing schemes for wokers in the coal industry are financed from the Coal Mines Labour Welfare Fund , Housing schemes for mica and coal mines are the responsibility of the Ministry of Labour, the other schemes being administered by the Ministry of Works, Housing and Supply.

For housing programmes to be undertaken during the second five year plan the following targtes have been adopted

SUBSIDISED INDUSTRIAL HOUSING SCHEME

Under the industrial housing scheme Loans and grants are given by the Central Government to State Governments and public authorities, to employers and to co-operatives of industrial workers.

A) For one-room tenements, the maximum cost prescribed is Rs. 4,500 for multi-storeyed

tenements in Bombay and Calcutta and Rs. 2,700 elsewhere. B) For two-roomed tenements the cor-.responding figures are Rs. 5,430 (now raised to Rs.

5,930) in Bombay and Calcutta and at other places Rs. 3,340 for single-storeyed tenements and Rs. 3,490 for double-storeyed tenements.

C) For State" Governments 50 per cent of the cost is given by way of loan and 50 per cent as

subsidy; for co-operatives 50 per cent as loan and 25 per cent as subsidy; and for employers 37% per, cent as loan and 25 per cent as subsidy. The period of repayment is 15 years in the case of employers and 25 years in other cases.

HOUSING

LOW INCOME GROUP HOUSING , 1954

• Provides for the grant of long-term house building loans at a reasonable rate of interest to persons whose income does not exceed Rs. 6,000 per annum.

Loans are given to individuals as well as to co-operatives whose members fulfil this condition. The assistance is restricted to 80 per cent. of the estimated cost ofconstruction, including land, and is subject to a maximum of Rs. 8,000.

• The scheme also provides for loans to State Governments interest repayable in three years for acquisition and development of land by local authorities and its allotment to prospective builders.

• A proportion of funds available under the scheme for low income housing might be used for land development on a planned basis, special attention being given to those towns where considerable congestion exists and to towns which are likely to develop more rapidly on account of development programmes to be undertaken during the second five year plan.

HOUSING

RURAL HOUSING

• A large proportion of the 54 million houses in rural areas need to be rebuilt or substantially improved. Sooner or later, every village should have a plan which provides for wide streets with drains, proper spacing of houses, the location of community buildings and a playground for children

• Larger scheme of rural reconstruction, which includes improvement of agricultural production, cooperative working in as many fields as possible, rural water supply, drainage, sanitation, village roads, welfare programmes for scheduled castes and other backward classes and programmes for providing more work and better living conditions for village artisans.

• During the second plan, resources have been allocated for these and other activities. As the rural community programme succeeds and village. communities assume larger responsibilities, improvements in village housing conditions are to be expected

HOUSING

SLUM CLEARANCE AND SWEEPERS' HOUSING

• During the past two or three years a fraction of slum dwellers have been moved out of their habitations as a result of the subsidised industrial housing scheme.

• For preventing the growth of slums there are two sets of measures to be taken-

1. In the first place, municipal by-laws must be enforced with the utmost

strictness. In the enforcement of municipal by-laws the support of enlightened public opinion should be mobilised and potential slums should receive immediate attention.

2. Secondly, master plans should be approved for every town, beginning

with towns which are already large or have expanded much in recent years or are likely to grow rapidly in the next few years. For enforcing master plans, local authorities should have the requisite powers to implement zoning schemes, control the use of land and prevent ribbon development. Where necessary, new authorities may be set up. In Delhi a special development authority has been recently constituted.

HOUSING

• State Governments and local bodies should provide slum dwellers with developed and demarcated plots of land vaying from 1000 to 1200 sq. ft.

• Standard costs of slum clearance and slum improvement projects have been worked out for the guidance of State Governments. The rehousing benefits to be provided under the scheme are intended for those slum families whose income does not exceed Rs. 250 per mensem in Bombay and Calcatta and Rs, 175 per mensem elsewhere.

• OTHER HOUSING SCHEME• In accordance with the provisions of the Plantation Labour Act, 1951, it

is obligatory for every residing in the plantations. While the larger plantations are able to fulfil this condition, for the smaller plantations Government assistance by way of loans is needed. During the second five year plan Rs. 2 crores are to be provided for this purpose. About 11,000 houses are expected to be built under this scheme. plantation to provide houses of prescribed standards for workers and their families

HOUSING

• A provision of Rs. 3 crores has been made in the second plan for a middle income group housing scheme. The scheme envisaged collaboration with insurance companies and, according to the terms originally proposed, each loan was to be jointly approved by Government and an insurance company.

HOUSING PROBLEMS

• in rapidly growing towns developed sites are not available to a sufficient extent,

• construction in the private sector tends to concentrate on expensive houses intended to fetch high rents and the needs of the lower middle and middle classes are not adequately catered for;

• apart from assistance which the Government now provides, adequate institutional arrangements for housing finance do not exist;

• cooperative housing has made comparatively little progress;

• there is considerable need for research in building materials, and techniques and for prescribing standards of construction with due regard to the availability of local materials and the economic use of scarce materials; and

• with a few exceptions. State Governments are not yet adequately organised for undertaking and assisting extensive housing programmes.

• If urban development and re-development and housing policies are viewed in the context of planned economic development and rapid industrialisation, three problems claim special study, namely,

• (a) methods of securing planned development in urban areas, (b) expansion of housing facilities, and (c) development of civic administrations along sound and progressive lines

INDUSTRIES

•After independence in 1947, the government took full control over the iron and steel sector and established a policy of restricting development of new integrated steel plants to the public sector.

• 1959 the government formally approved the setting up of privately owned mini plants

• From the main producers about 80% of production of the plants under the Steel Authority of India Limited (SAIL) and about 65% of the production of the private company (TISCO) were regulated by the JPC(Joint Plant Committee)

•Hydroelectric power projects and five steel mills at Bhilai, Durgapur, and Rourkela were established, their combined output of steel was only 0.6 million tons in 1960-61 as against the target of 2 million tons.

•The Atomic Energy Commission was formed in 1957 with Homi J. Bhabha as the first chairman.

ACHIEVEMENTS

1. A large no. of hydroelectric and thermal power plants were

constructed.

2. Industrial sector achieved remarkable progress and three huge cement

and fertilizers industries were set up.

3. Social services like health and education improved a lot.

4. It showed welcome reorientation in favors of heavy industry. FAILURES

1. Second plan was termed as crisis of ambitions. The plan was not

ambitious in relation to needs of the people. It failed in creating job

opportunities and unemployment was still prevailing.

2. Lack of realism in assumptions upon which second plan proposals.

(problem of inflation was grossly underestimated, prospects of

agriculture exaggerated)

3. Despite its double development expenditure than first plan it was a

failure with deterioration in living standards , economic inequalities

increased and agriculture remained more or less static.

4. Increase in national income proved to be only 20% as against the

target of 25%.