Right from 1950s India has believed in planned economic development, even while trusting the market forces to determine prices, allocation of resources and otherwise decide about the pattern of economic development. There have been both market and government failures, but by and large the market economy has come to prevail. The 1991 dramatic shift of emphasis from disproportionate governmental control and intervention in the economy to easing up on them has to a very large degree enabled the trebling of the rate of growth in GDP from 2-3 per cent in the first few decades of development to 9-10 per cent currently, a rate that the 11th Plan envisages for the 2007-12 period during which the envisaged investment is Rs. 36,000 billion or about $900 billion. The Prime Minster complimented the people for historically high savings rate of 34% which would enable investments up to 35% or even more of GDP, depending upon the quantum of inflow of foreign direct investment (FDI.)
There is considerable slack built into the Plan model to allow states to promote more or less economic development. As it is, for a couple of decades they have been competing with each other for financial resources and for FDI. There is also a compelling demonstration effect brought on by the Internet Technology (IT) industry whose annual 30-40 rate of growth over the past fifteen years has been attributed in large part to the ‘virtually’ or almost entirely free setting it operates in as compared to other businesses that seem to run a three-legged race with the Government acting at times, as a difficult teammate.
As is common at the launching of the five year plans, egalitarian noise is heard such as reduction of poverty by ten percent. Equal opportunity is also emphasized and it is proposed to create 70 million new jobs over the 2007-12 plan period.
The 11th Five year Plan like its recent predecessors, is largely indicative of the areas that offer opportunities for rapid to moderate expansion. It has often served in the past as a map of the economy as it advances into the future.
Editor of Academic Resources