MODULE 5

Economic Planning and

Development
Economic planning is the process through
which we can take the decisions of what
and how it is to be produced through
controlling and managing the economic
activity.
 It is an economic programme speculated
for the development of the regional
economic system.
“Economic Planning is essentially a way of
organizing and utilizing resources to
maximum advantage in terms of social
ends.”
(a) Economic Growth:
Attainment of higher rate of economic
growth received topmost priority in almost
all the Five Year Plans of the country.

Planning in India-objectives
b) Attaining Economic Equality and
Social Justice:
Reduction of economic inequalities and
eradication of poverty are the second
group of objective of almost all the Five
Year Plans of our country particularly since
the Fourth Plan.
As the economy of the country was
suffering from acute poverty thus by
attaining a higher rate of economic growth
eradication of poverty is possible and the
standard of living of our people can be
improved.
Due to the faulty approach followed in the
initial part of our planning, economic
inequality widened and poverty became
acute.
(c) Achieving Full Employment:
Five Year Plans of India gave importance
on the subject to employment generation
since the Third Plan.
The generation of more employment
opportunities was considered as an
objective of both the Third and Fourth
Plan of our country.
But up to the Fourth Plan employment
generation never received its due priority.
d) Attaining Economic Self-Reliance:
One of the very important objectives of
Indian Planning is to attain economic self-
reliance.
But this objective attained its importance
only since the Fourth Plan, when the plan
aimed at elimination of the import of
food-grains. The Fifth Plan also laid much
importance on the attainment of self-
reliance.
(e) Modernization of Various Sectors:
Another very important objective of Five
Year Plans of our country was the
modernization of various sectors and
more specifically the modernization of
agricultural and industrial sectors.
The Fourth Plan laid much emphasis on
the modernization of agricultural sector
and undertook a vigorous scheme for
modernization of agriculture in the name
of Green Revolution.
The successive plans also continued their
efforts in the same direction but at a
reduced rate.
f) Redressing Imbalances in the
Economy:
Regional disparities and imbalances in the
economy have become so acute in India
that it needed special attention in our Five
Year Plans.
Thus by regional development we mean
economic development of all the regions
by exploiting various natural and human
resources and by increasing their per
capita income and living standards.
Planning Commission, agency of the
government of India established in 1950
to oversee the country’s economic
and social development, chiefly through
the formulation of five-year plans.

Planning Commission
The commission’s original mandate was to
raise the standard of living of ordinary
Indians by efficiently exploiting the
country’s material and human resources,
boosting production, and creating
employment opportunities for all.
 It is today responsible for periodically
assessing the country’s resources;
developing five-year plans, along with
strategies for implementing them; and
monitoring the execution of the plans and
recommending adjustments of policy as
outcomes warrant. The country’s first five-
year plan was launched in 1951.
The commission is chaired by
India’s prime minister and includes a
deputy chairman and several full-time
members.
Each of the numerous divisions of the
commission, corresponding to sectors of
the national economy and society, is
headed by a senior officer.
The divisions include education, health,
infrastructure, science, financial
resources, industry, social welfare, rural
development, and water resources.
Green revolution can be defined as a
period of time in the human history
where advances in agricultural
technology allowed for the increase
in the production of global
agriculture.

GREEN REVOLUTION
This took place in the 1940s and
1960s. Norman Borlaug is considered as
the Father of the Green Revolution.
The specialty of the Green Revolution was that
it increased global agricultural production which
enabled the world to cater to the needs of more
consumers.
Also, it benefited the farmers greatly as they
were able to produce more with the same labor
cost.
However, this is not to deny the fact that the
Green Revolution was detrimental to the
environment as it increased pollution through
the usage of chemicals
Green Revolution is a unique event in the
agricultural history of Independent India.
This has saved us from the disasters of
hunger and starvation and made our
peasants more confident than ever before.
But it has its own inherent deficiency
segments.

Failures of Green Revolution

1. Inter-Crop Imbalances:
The effect of Green Revolution is primarily felt on
food-grains. Although all food-grains including
wheat, rice, jowar, bajra and maize have gained
from the Green Revolution, it is wheat which has
benefited the most.
 It has wrested areas from coarse cereals, pulses
and oilseeds. The HYV seeds in latter crops have
either not been developed so far at all, or they
are not good enough for farmers to risk their
adoption.
2. Regional Disparities:
Green Revolution technology has given birth to
growing disparities in economic development at
interred and intra regional levels.
 It has so far affected only 40 per cent of the
total cropped area and 60 per cent is still
untouched by it. The most affected areas are
Punjab, Haryana and western Uttar Pradesh in
the north and Andhra Pradesh and Tamil Nadu
in the south.
3. Increase in Inter-Personal
Inequalities:
It has been observed that it is the big
farmer having 10 hectares or more land,
who is benefited the most from Green
Revolution because he has the financial
resources to purchase farm implements,
better seeds, fertilizers and can arrange for
regular supply of irrigation water to the
crops.
4. Unemployment:
Except in Punjab, and to some extent in
Haryana, farm mechanization under Green
Revolution has created widespread
unemployment among agricultural
labourers in the rural areas. The worst hit
are the poor and the landless people.
5. Other Problems:
Agriculture under Green Revolution has
not grown at a rate which was expected in
the beginning. The differential rates of
growth of different crops and their
regional variations have already been
discussed. Some scholars have expressed
serious doubts about the capability of HYV
seeds itself.
 White revolution is also referred to as the
Operation Flood. This was a rural
development program that began in the
1970s in India. This was initiated by the
National Diary Development Board of India.
 The key feature of the white revolution was that
it enabled India to emerge as the largest
producer of milk in the entire world.
 The very name white revolution is associated
with it because the program relates to dairy
products most especially milk.

WHITE REVOLUTION
The objective of the program was to assist
rural dairy farmers to develop as it
created a grid where the farmers and
consumers from across the world were
connected directly.
 This was extremely advantageous to the
farmers as they were provided with a
better price for their products.
The Union Commerce Ministry,
Government of India announces the
integrated Foreign Trade Policy FTP in
every five year. This is also called EXIM
policy.
This policy is updated every year with
some modifications and new schemes.
New schemes come into effect on the first
day of financial year i.e. April every year.

What is Foreign Trade Policy?

The Foreign trade Policy which was
announced on Thursday August 28, 2009
is an integrated policy for the period
2009-14.
To arrest and reverse declining trend of
exports is the main aim of the policy. This
aim will be reviewed after two years. To
Double India’s exports
To Double India’s exports of goods and
services by 2014.
Recent FTP was announced on April 1st
2015 for the period of 2015-2020.
To double India’s share in global
merchandise trade by 2020 as a long term
aim of this policy
Simplification of the application procedure
for availing various benefits
To set in motion the strategies and policy
measures which catalyze the growth of
exports.
To encourage exports through a “mix of
measures including fiscal incentives,
institutional changes, procedural
rationalisation and efforts for
enhancement
Many developing nations are trying to
transform their economies by integrating
themselves into the global supply chain.
This means moving away from an import-
centric economy to one based on exports.

EXPORT PROCESSING ZONES

Countries in Asia, Africa, and Latin
America are creating export development
programs that encourage investments
from multinational companies.
One tool which is used by many nations is
Export Processing Zones (EPZ). These are
selected areas in a country that are
designed to do the following:
Attract foreign investment to create jobs
Expand the industrial base
Introduce technology
Create backward linkages between the
zones and the domestic economy
The EPZ will have some resources that
can attract investment such as natural
resources, cheap skilled labor,
or logistical advantages.
Nations can also encourage investment in
the EPZ by offering expedited licensing or
building permits, minimal customs
regulations, duty-free tax incentives, such
as a ten year tax holiday, and developing
infrastructure to investor's requirements.
What Is a Special Economic Zone (SEZ)?
A special economic zone is an area in a
country that is subject to unique economic
regulations that differ from other regions
of the same country.

SEZ..
The SEZ regulations tend to be conducive
to foreign direct investment (FDI).
Conducting business in an SEZ typically
implies that the company will receive tax
incentives and the opportunity to
pay lower tariffs.
SEZs are subject to unique economic
regulations that differ from other areas in
the same country.
SEZs are supposed to facilitate rapid
economic growth by leveraging tax
incentives to attract foreign investment
and spark technological advancement.

Key Features of SEZs..

 The Export Oriented Units (EOUs)
scheme, introduced in early 1981, is
complementary to the SEZ scheme.
It adopts the same production regime
but offers a wide option in locations
with reference to factors like source of
raw materials, ports of export,
hinterland facilities, availability of
technological skills, existence of an
industrial base and the need for a larger
EOUs..
area of land for the project.
As on 31st December 2005, 1924 units
are in operation under the EOU scheme.
The main objectives of the EOU scheme is
to increase exports, earn foreign
exchange to the country, transfer of latest
technologies stimulate direct foreign
investment and to generate additional
employment.
 GRANITE
 TEXTILES/ GARMENTS
 FOOD PROCESSING
 CHEMICALS
 COMPUTER SOFTWARE
 COFFEE
 PHARMACEUTICALS
 GEM & JEWELLERY
 ENGINEERING GOODS
 ELECTRICAL & ELECTRONICS
 AQUA & PEARL CULTURE

Major Sectors in EOUs:

A trading house is a business that
specializes in
facilitating transactions between a home
country and foreign countries.
A trading house is an exporter, importer
and also a trader that purchases and sells
products for other businesses. Trading
houses provide a service for businesses
that want international trade experts to
receive or deliver goods or services.

What is a Trading House?

A trading house may also refer to a firm
that buys and sells both
commodity futures and physical
commodities on behalf of customers and
for their own accounts. Prominent
commodity trading houses include Cargill,
Vitol and Glencore.
Trading houses are intermediaries used by
manufacturers to facilitate trade in a
foreign location. Within the context of
commodity trading, trading houses refer
to firms that buy and sell large-scale
futures for profits and on behalf of their
clients.

Key Features..
They offer a variety of services, from
serving as agents for the manufacturer in
the foreign market to easing the import-
export process through connections with
local liaisons.