7th Five Year Plan (Vol-1)
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Foreword || Preface || Planning Commission


The planning process is the precious gift of Pandit Jawaharlal Nehru to the people of India. Indiraji nursed this tender plant with great and loving care. As she once put it, planning in our country is a charter of orderly progress. It provides a framework of time and space that binds sectors, regions and States together and relates each year's effort to the succeeding years. By strengthening the social and economic fabric of the country as a whole and of the different regions and States, it makes a powerful contribution to the goal of national integration. The planning process has contributed a great deal to evolving a broad national consensus regarding the basic objectives, strategies and design of our development policies. This has helped to generate broad mass support for national economic policies which has added greatly to the cohesion and stability enjoyed by our polity.

2. Removal of poverty, the building of a modern society making maximum possible use of science and technology, and attainment of self-reliance are the basic objectives of planning in India. The previous Plans have made valuable contribution to the achievement of these national goals. I venture to think that the Seventh Plan consitutes yet another important milestone in the nation's quest to rid this country of the ancient scourges of poverty, ignorance and disease.

3. Effective planning must be based on a vision of the future. We need a long-term perspective to translate the vision into reality and to make it operational. The Seventh Plan is, therefore, set within a 15-year perspective. The aim is to create by the year 2000 the conditions necessary for self-sustaining growth and to provide the basic material requisites of well-being for all our people. This means that we have to sustain and accelerate the momentum of economic growth. Agriculture, industry, the infrastructure and social services have to function at progressively higher levels of efficiency and productivity. Full advantage must be taken of advances in science and technology to bring about the needed structural transformation of our economy. Simultaneously, measures designed to raise the productivity and incomes of the poorer sections of society and poorer regions must be pursued with greater vigour. The objectives and thrusts of the Seventh Plan have, therefore, been formulated as part of the longer term strategy which seeks, by the year 2000, to virtually eliminate poverty and illiteracy, achieve near full employment, secure satisfaction of the basic needs of food, clothing and shelter and provide health for all. The Plan thus seeks to assist in the establishment of an economy and polity which is modern, efficient, progressive, humane and is informed by equity and social justice.

4. India's growth performance has improved considerably in the last decade. The Seventh Plan seeks to take advantage of this favourable trend by aiming to stabilise the growth rate of the economy at an average annual rate of 5 per cent. The targetted growth rates for the economy as a whole, as well as for outputs of both agriculture (4 per cent) and industry (8 per cent), imply a significant improvement over past trends. As such, major efforts will be needed to achieve the growth targets of the Seventh Plan.

5. In formulating the Plan, the Planning Commission has kept in view the mandate given to it by the National Development Council when it approved the Approach Paper last year. Food, work and productivity have been the three basic priorities which guided the preparation of the Plan. Furthermore, because of their critical importance in sustaining the growth process, particular attention has been paid to raising the capability of the infrastructure and human resource development with substantial increases in the proportions of outlays for these two sectors as compared to the Sixth Plan.

6. The proposed pattern of resource allocation is designed to ensure that the country will remain self-sufficient in food and that significant progress will be made in increasing the production of vegetable oils, pulses, vegetables and horticulture. The objective is to build an expanded system of food security, at rising levels of per capita consumption. As part of the strategy of a more regionally balanced agricultural development and production, special emphasis has been laid on increasing the productivity of rice in the Eastern States and on the development of dryland agriculture. The Plan also lays considerable stress on enhancing the productivity and incomes of small and marginal farmers. The agricultural programmes of the plan would greatly benefit from the creation of an additional irrigation potential of about f3 million hectares. Since variations in the rate of growth of agriculture are a major factor accounting for regional differences in the pace of development, the agricultural strategy of the plan, with its emphasis on more even and balanced distribution of agricultural growth, will also help to reduce regional disparities.

7. In the field of employment, the major objective of the Plan is to ensure that the growth of employment opportunities is faster than the growth of the labour force. Rapid agricultural development (especially in areas agriculturally backward) expansion of irrigation facilities, more intensive cropping and continuation of the employment-oriented programmes such as the National Rural Employment Programme and the Rural Landless Employment Guarantee Programme, wouli contribute significantly to the generation of additional employment opportunities in rural areas. The faster rate of growtl of industry and a considerably expanded housing programme in the private sector—for which attempts would be madi to provide finance through institutional sources—would together generate a larger volume of employment in thi non-agricultural sector than in the past. The Seventh Plan is thus an employment-oriented Plan. Over the Plan perioc employment potential is expected to increase by 40 million standard person years against an addition to the labour fore of 39 million persons. The employment potential will go up by 4 per cent per year, well above the expected growth rat of labour force of about 2.5 to 2.6 per cent over the Seventh Plan.

8. Removal of poverty remains a central concern of planning in India. Consistent with this objective, the Sevent Plan's development strategy and the pattern of growth emerging from it are expected to lead to reduction in poverty at faster rate than in the past. The Plan envisages an expanded coverage under the various anti-poverty programme. Taking into account the highly comfortable position of food stocks with the public sector, it may be possible to expan the employment-oriented anti-poverty programmes at a still faster rate than envisaged in the Plan document. Evei effort will be made to plug various loopholes in the operation of anti-poverty programmes and to integrate these an various sectoral and area development programmes into a comprehensive design of integrated development of eac area. The Plan pays special attention to the problems faced by the more vulnerable sections of our society such t scheduled castes, scheduled tribes, women and children. The Plan recognises that in a situation where poverty pervasive, the perception of needs and priorities must not be a merely male perception but must take into acconi explicitly the special needs and problems of women. As a result of these measures, the poverty ratio will decline fro 37 per cent in 1984-85 to less than 26 per cent in 1989-90. In absolute terms, the number of poor persons expected to fall from 273 million in 1984-85 to 211 million in 1989-90.

9. Promotion of efficiency and higher productivity have been another major concern in the preparation of this Pla Increased and more efficient utilisation of existing assets both in agriculture and industry will contribute to increasing ti efficiency of resource use and also help in containing the rise in the capital output ratio. A coordinated approach irrigation, drainage and land use management will be adopted to realise the multiple cropping potential of the ne agricultural technology. In industry, emphasis is being placed on modernisation, investment in balancing equipment ai technology upgradation to a much greater degree than ever before. The policy framework for industrial growth in tl Seventh Five Year Plan lays special emphasis on setting up of plants of economic size and on the creation of an environment where business firms have an adequate incentive to modernise, reduce cost, improve the quality of th< products and upgrade their technology. New developments in micro-electronics, informatics, telematics, biotechnol gies, material sciences, oceanography, instrumentation and space technology offer exciting opportunities. A w conceived and coordinated approach to the introduction of these emerging technologies in our production process v further accelerate the pace of technical progress, structural change and growth of productivity, efficiency and qual consciousness.

10. In order that agriculture and industry may grow faster, increased emphasis has been placed on investments infrastructure so that shortages in power, transport and coal would not arise for the scale of activities envisaged in t Plan. The Plan envisages a significant increase in the share of energy in the public sector outlay. Nearly 31 per cent the total public sector outlay is meant for energy. The generation of power is expected to grow at an average annual rate of 12.2 per cent over the Plan period. The Plan pays considerable attention to meeting the energy needs of rural are, It seeks to extend the benefit of electricity to 1.18 lakh villages and to energise 23.9 lakh pumpsets for irrigation. T supply of fuelwood has been included as an additional component of the Minimum Needs Programme. The programi for the development and utilisation of biogas and for the installation of new smokeless 'chulas' will be expanded very substantially.

11. Another major thrust area in the Seventh Plan is human resource development. Public sector outlays for social services show a significant increase as compared to the Sixth Plan. The Plan seeks to facilitate development of 1 human potential in terms of self-respect, self-reliance and a life of dignity. Apart from expansion of the exist programmes in education, health, provision of clean drinking water and sanitation, new initiatives and innovat measures are contemplated in these areas. The Plan seeks to provide adequate drinking water facilities for the entire population both in urban and rural areas. By the end of the Plan period, the infrastructure for primary health care will be fully operational with regard to village health guides, sub-centres, primary health centres and multipurpose health workers. Thus, we would have a country-wide system of health care, with a balanced mix of preventive, promotive and curative services. Increased emphasis on protection and preservation of the ecological balance and environment is another distinctive feature of the Seventh Plan.

12. As regards the financing of the Plan, in broad macro terms, the Plan is eminently bankable and credible, as it projects only a modest increase in the rate of investment and domestic savings during the Plan period. The rate of investment is projected to go up from 24.5 per cent of GDP in 1984-85 to 25.9 per cent by 1989-90 and the rate of domestic savings is projected to go up from 23.3 per cent to 24.5 per cent over the same period. The financing pattern of the Plan seeks to limit recourse to deficit financing within limits of safety and prudence. In the same manner, the external financing of the Plan is expected to involve a deficit of not more than 1.6 per cent of GDP in the balance of payments on current account. The debt service ratio will not exceed 20 per cent of current receipts during the Plan period. Thus care has been taken to ensure that internal and external financing of the Plan does not involve assumption of unacceptable risks.

13. It is, however, to be recognised that financing of the Seventh Plan would require determined and more intense efforts for resource mobilisation. The ratio of taxation to GDP will have to increase by two percentage points over the Plan period. The success of the Plan is crucially dependent on the achievement of this target. Subsidies and other non-Plan expenditure will have to be firmly contained if excessive recourse to deficit financing is to be avoided. In the same manner, the public sector enterprises will have to generate larger resources if the requirements of additional investments are to be financed in a non-inflationary manner. To maintain the viability of external payments, it will be necessary to pay greater attention to export promotion and to containing the growth of imports. Our export performance still displays major structural weaknesses and in the interest of an orderly management of our balance of payment, there will have to be a substantial improvement in the competitiveness and quality of our exports. Simultaneously, we must adopt effective measures to curb the growth of imports of petroleum, vegetable oils and sugar.

14. In a truly moving foreword to the Sixth Five Year Plan, Indiraji reminded us that the measure of a Plan is not intention but achievement, not allocation but benefit. It is a statement of universal validity and it applies as much to the Seventh Plan as to the earlier Plans. Thus the impact of the Seventh Plan will depend on the earnestness and determination with which it is implemented. The Seventh Plan document lists several areas where we must improve upon past performance if we are to realise the objectives and goals of the Plan. This is not the place to discuss these problem areas at length. However, since devising effective solutions for some of these problems is crucial to the success of the Plan, a brief reference to some major problem areas is justified.

15. First of all, the rehabilitation and revitalisation of the agricultural credit system is essential for achieving the agricultural targets of the Plan. The mounting phenomenon of overdues must be firmly controlled if the agricultural credit system is to finance adequately the input requirements of agriculture.

16. Secondly, there must be a substantial improvement in the quality of agricultural and rural development administration. The technical knowledge and skills of the official grass-roots level administration need to be greatly improved if we are to impart a scientific temper to our agriculture. District and block level planning has yet to take firm roots. Without the introduction of effective block level/district level planning, the impact of large flows of money through the various anti-poverty programmes will remain limited.

17. Thirdly, we must take a fresh look at not only the basic strategy but also the programme content of the family welfare programme, so as to bring about a faster reduction in the rate of population growth.

18. Fourthly, there must be a major improvement in productivity, efficiency and internal resource generation of the public sector enterprises both of the Centre and of the States. Internal resource generation is particularly weak in capital-intensive enterprises in sectors such as power, coal, steel, transport and fertilisers. We need new admjnistrative structures and new concepts of management so as to enable the public sector to perform its dynamic role in the process of capital accumulation.

19. Finally, we must adopt effective measures to bring about meaningful participation of the people in all phases of national development. We need to tap fully the latent potential of the Panchayati Raj institutions for harnessing the people's energies for nation building activities. Simultaneously, we must also fully exploit the creative potential offered by voluntary organisations engaged in development work.

20. Planning in our country is an instrument for achieving the nation's basic goals and objectives. It was the dream of Mahatma Gandhi to wipe the tears from the eyes of each and every individual in our country.'We can be legitimately proud of the phenomenal progress made by the country since we embarked on the path ot planned development. However, there are still too many people with tears in their eyes. Our task is thus clear. We have to wage a still more intensive campaign against poverty. Recent experience suggests that by harnessing the forces of modern science and technology, it is possible, as never before, to ensure that chronic poverty need not be the inevitable lot of the majority of humankind. Poverty eradication is an attainable goal. However, it must not be assumed that development is like going to a free dinner party. The standard of living is a matter of high productivity, and there are no short cuts to it. Hard decisions will be necessary to mobilise the needed resources and to sustain the tempo of modernisation and social development. Simultaneously, we must evolve new structures, new attitudes, a new moral code, a new work ethic, a sort of cultural revolution, if you wish, which lays emphasis on dedication, commitment to national goals and pursuit of excellence so that we can make the best possible use of scarce national resources.

21. The task ahead is not easy. We face many challenges and uncertainties. But our country has a tremendous built-in resilience and strength. It has weathered many a storm in the past. The nation is firm in its resolve to work out an autonomous path of development suited to the genius and needs of our people.

22. The Seventh Plan represents a massive national endeavour to build a new India free from the fear of want and exploitation. Its objectives, strategies and programmes are designed to assist in the realisation of the nation's cherished goals. The Plan is an expression of the collective will of the Indian people to move forward at a still faster pace on the road to progress, prosperity, social justice and self-reliance. I am confident that, guided by the spirit of national unity and discipline, all our people will work earnestly for the successful implementation of this Plan.

(ManMohan Singh)
Dy. Chairman, Planning Commission

New Delhi
21 November 1985.

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