Emerging Crises in Planning in India | Economic Planning | Economics

Quite recently various crises have been emerging in planning for a developing economy like India. These are the following: 1. Deceleration in Agricultural Growth 2. Income Disparities 3. Gaps in the Provision of Essential Public Services for the Poor 4. Infrastructural Deficiency 5. Shortage of Human Resource 6. Deterioration of the Physical Environment and a few more.

Crises # 1. Deceleration in Agricultural Growth:

Economic reforms in developing countries have completely neglected agriculture. Public investment in irrigation has not increased much. Agricultural growth rate has fallen in recent years due to inadequate productivity growth. As a result, farm incomes have fallen. Low farm incomes combined with lower prices of output and lack of credit at reasonable interest rates pushed many farmers into crippling debt.

Moreover uncertainties (regarding prices, quality of inputs as also weather and pests) have increased. These, coupled with unavailability of proper farm extension services and crop insurance, have led the different farmers to despair. This has also led to widespread distress migration, a rise in the number of female-headed households in rural areas, and a general increase in women’s work burden and vulnerability.

The fall in agriculture productivity is posing a threat to food security and is likely to create BOT crises.

It is of paramount importance to increase agricultural incomes as this sector still employs about 60% of the labour force in LDCs. A second Green Revolution is urgently needed to raise the growth rate of agricultural sector, for ensuring food security, and for increasing per capita availability of essential commodities.

Crises # 2. Income Disparities:

In spite of high overall growth, income disparity between agricultural and non-agricultural households has increased since the surplus labour force in the rural sector is not finding non- agricultural employment. The inadequacy of widely dispersed and sustainable off-term employment opportunities is the basic cause of most divides and disparities. Jobless growth can neither be inclusive nor can it bridge divides.

Crises # 3. Gaps in the Provision of Essential Public Services for the Poor:

In spite of planning, the literacy rate is less than 70% in most LDCs. In the matter of health also there are large gaps in the availability of health care and in related services such as maternal and child care, clean drinking water, and access to basic sanitation facilities for the masses, especially the poor who do not have even the minimum access.

Crises # 4. Infrastructural Deficiency:

Perhaps the most important constraint in achieving a faster growth of manufacturing in LDCs is that infrastructure, consisting of roads, railways, ports, airports, communication and electric power, is not up to the standards prevalent in industrially developed countries. Shortage of electric power and the unreliability of power supply are universally recognised as a drag on the pace of development of LDCs. For these reasons LDCs cannot compete with their developed counterparts.

Crises # 5. Shortage of Human Resource:

Rapid growth has resulted in shortage of high quality skills needed in knowledge-intensive industries.

There is shortage of quality manpower for two reasons:

(i) Brain drain, and

(ii) Inadequate public investment on higher learning (which hampers skill formation).

Crises # 6. Deterioration of the Physical Environment:

Neglect of environmental considerations as, for example, in profligate (limitless) use of water or deforestation has led to adverse effects. Planners have failed to strike a balance between economic growth and environmental sustainability. They have missed the point that in the long run, there is no conflict between environmental sustainability and human well-being.

Crises # 7. Deficiency of Rehabilitation and Resettlement Practices:

The practices of LDCs regarding rehabilitation of those displaced from their land because of development projects, conflicts or calamities are very deficient. These have caused many people to feel vulnerable and there is anger because of forced exclusion and marginalization. This discontent is likely to grow exponentially if the benefits from enforced land acquisition accrue to private interests—or even to the State—at the cost of those displaced.

Crises # 8. Poor Governance:

Most efforts to achieve rapid and inclusive development has failed since planners could not ensure good governance both in the manner pubic programmes were implemented in the past and, equally important, in the way the government had interacted with the ordinary citizen.

Corruption has become endemic in all spheres. Better design of projects and implementation mechanisms and procedures can reduce the scope for corruption. Much more needs to be done to reduce the discretionary power of the government, ensure greater transparency and accountability, and create awareness among citizens.

Crises # 9. Disparities and Divides:

Planned development has not only failed to bridge the divides that afflict LDCs, it may even have sharpened some of them. There are many divides. The foremost among these is the divide between the rich and the poor. Absolute poverty has declined but not to the desired extent. But relative poverty (inequality) has increased. So growth has not been inclusive. This implies that planning has failed to ensure distributive justice.

There is also a divide between those who have access to essential services and those who do not. This has led to large disparities in health and nutritional status, in education and skills, as also in availability of clean water and sanitation.

Another important divide is gender discrimination. It begins with the declining sex ratio and goes on to literacy differential between girls and boys, plus the high rate of maternal mortality. Differences in educational status and economic empowerment are heavily biased against women.

Regional backwardness is another issue of concern, particularly in countries like India. While the differences across states have been a cause of concern, there is also increasing recognition of the problem of source imbalances within states. Backward districts of otherwise well performing states prevent a dismal picture of intra-state imbalance and neglect.

Crises # 10. Contagion Effect:

The integration of the domestic with the world’s financial markets and greater economic openness have generated a series of financial crises. Now any adverse development anywhere in the world gets transmitted to LDCs in no time.

The recent collapse of most of Asia’s capital markets is largely attributable to US sub-prime crisis and fall of European markets. In a number of Asian countries the free flow of capital caused destabilising currency crises. This is why J. N. Bhagwati has advised against full convertibility on the capital account for developing countries.

Crises # 11. External Debt Problem:

Many LDCs have faced external debt crisis since they have lived beyond the means. Some of the countries had to borrow from new sources to repay old debt and have fallen in a debt trap.

Crises # 12. Internal Debt Problem:

Some LDCs like India have also fallen in an internal debt problem—mainly due to mounting deficits of public sector units. This is why they have introduced public sector reforms, mainly in the form of disinvestments of public sector units (PSUs) as also fiscal reforms since fiscal deficit has gone up mainly because a huge budgetary support had to be given to losing PSUs.