Monday, February 06, 2012

India's Development and the Five-Year Plans

Development economics tells us that the keys to a country's development are:
1. Agriculture
2. Education
3. Healthcare
4. Infrastructure

How has India fared in these four areas (in terms of inputs) since 1947? Let us look at the resource allocation for different sectors in our Five-Year Plans:

Resource Allocation (%)
PlanAgricultureIndustryInfrastructureSocial Services
1. 1951–56
37
5
34
24
2. 1956–61
21
24
37
18
3. 1961–66
21
23
40
17
A. 1966–69
24
25
36
15
4. 1969–74
24
20
38
19
5. 1974–79
22
24
36
17
6. 1980–85
24
15
44
16
7. 1985–90
22
13
45
16
8. 1992–97
22
11
46
18
9. 1997–02
21
5
48
21
10. 2002–07
20
4
43
27
11. 2007–12
19
4
41
30

a) "Agriculture" = Agriculture + Irrigation. From the Seventh Plan onward, it includes Rural Development also.

b) "Infrastructure" = Energy + Transport and Communications.

c) "Social Services" = Education + Healthcare + other services. Separate figures for Education and Healthcare are available only till the Sixth Plan. Till the Sixth Plan, allocations for Education and Healthcare averaged around 6% and 4% respectively – together about 50% of "Social Services".

d) Totals do not equal 100% due to rounding off. Also, the Seventh and later Plans have some minor sectors, which I have left out.
  • Agriculture and Industry were given equal importance till 1974-79. They received an average of 22% and 23% respectively of the total allocation (from 1956-61 to 1974-79). But we should have given more importance to Agriculture – like the East Asian countries.
  • Infrastructure was not neglected, contrary to popular opinion. It received the largest share of resources (average 40%). Then why is our infrastructure so poor?
  • Education and Healthcare were neglected – getting only around 6% and 4% respectively. This was our biggest mistake. Only in the last two Plans (2002-07 and 2007-12) did we allocate more resources for them – presumably around 9% and 6% respectively.
  • Finally, Industry was given importance till 1974-79: average 23%. This decreased with the "limited liberalisation" of the 1980s (1980-85 and 1985-90): average 14%. It decreased even more after the 1991 reforms (1997-2002 onwards): average 4%, with industry being left to the private sector.
In sum, our report card on the four key areas (on the input side) is:
1. Agriculture – Average
2. Education – Poor
3. Healthcare – Poor
4. Infrastructure – Good

Data from Indian Economy (2010) by S K Misra and V K Puri.

1 comment:

Anonymous said...

The Infra allocation allowed the maximum corruption at multiple levels that is why we have bridges on paper that were never built, road that are worn out..