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Published online by Cambridge University Press: 18 July 2011
It is becoming increasingly apparent that the rate of economic growth in India will have to be increased if the standard of living is to rise significantly within the foreseeable future. At the moment India is completing her Second Five-Year Plan. The objectives of the plan are indeed very modest. They provide for a 25 per cent increase in the national income and an 18 per cent increase in the per capita income over a five-year period. To reach these objectives, investment in the private and public sectors was to be increased to a rate of 10.68 per cent of the national income by 1961. An 18 per cent increase would raise the per capita income of India to only Rs 331 ($69.50) and the investment rate of 10.68 per cent may be just about sufficient for a take-off into economic development. Nevertheless, almost immediately after these targets were approved, doubts appeared whether the necessary funds for investment would become available. Although more foreign aid was provided than was originally expected, this was more than offset by the difficulties faced in mobilizing domestic resources. By 1958 the total objectives were revised downward by about 12 per cent.
1 Government of India, Planning Commission, Second Five Year Plan, New Delhi, 1956Google Scholar (hereafter cited as Second Five Year Plan), p. 74; and Deshmukh, C. D., Economic Developments in India—1946–1956, New York, 1957, pp. 101–2.Google Scholar
2 Second Five Year Plan, p. 11.
3 Ibid.
4 Rostow, W. W., The Stages of Economic Growth, Cambridge, Eng., 1960, pp. 20, 45.Google Scholar
5 See budget speech of Shri T. T. Krishnamachari, Finance Minister in 1957 (Indian Parliament, Lok Sabha Debates, Series 2, May 10–22, 1957, 1, p. 474). See also comments in Times of India (Bombay), June 9, 1957, p. 1; June 18, 1957, p. 6; July 25, 1957, p. 6.
6 The Five-Year Plan estimated the expected foreign aid at $1.6 billion (Rs 800 crores). During the first two years of the Plan alone, the United States and other Western powers committed $1.4 billion and Soviet aid approximated $0.3 billion. U.S. Senate, Committee on Foreign Relations, United States Foreign Policy: Asia, Study No. 5, prepared by Conlon Associates, Ltd., Washington, D.C., 1959 (hereafter cited as Conlon Report), pp. 38–39.
7 Times of India, May 5, 1958, p. 1.
8 Conlon Report, p. 39; and Mason, Edward S., Economic Planning in Underdeveloped Areas, New York, 1957, p. 76.Google Scholar
9 Conlon Report, p. 39.
10 Ministry of Food and Agriculture and Ministry of Community Development and Cooperation, Report on India's Food Crisis and Steps to Meet It, Delhi, National Printing Works, 1959, pp. 3–4.Google Scholar
11 Cf. Leibenstein, Harvey, Economic Backwardness and Economic Growth, New York, 1957, p. 16.Google Scholar
12 For a model of the relationship between the rise of income level and population growth, see Hagen, Everett E., “Population and Economic Growth,” American Economic Review, XLIX (June 1959), pp. 310–27.Google Scholar See also comment on model by H. H. Villard and reply by Professor Hagen in ibid., L (June 1960), pp. 438–41.
13 Recent rates of population growth in India have been as follows: 1921–1931—11.04%; 1931–1941—13.53%; 1941–1951—14.06%; 1951–1961 (projected)—17.60%-18.80%. During the period 1921–1955, the birth rate in India declined from 46.4 to 27, or 41.81%. During the same interval, the death rate dropped from 36.3 to 11.7, or 67.76%. (Coale, Ansley J. and Hoover, Edgar M., Population Growth and Economic Development in Low-Income Countries, Princeton, N.J., 1958, pp. 30, 35–36Google Scholar; and United Nations, Demographic Yearbook, 1957, New York, 1957, pp. 168–69, 192–93.)Google Scholar
14 The Planning Commission estimated a capital/output ratio of 2.3/1. Other sources, however, suggest a higher estimate. Second Five Year Plan, p. 9; Tinbergen, Jan, The Design of Development, Washington, D.C., 1956, pp. 7–8Google Scholar; Kindleberger, Charles P., Economic Development, New York, 1958, pp. 42–47Google Scholar; and Lewis, W. Arthur, The Theory of Economic Growth, Homewood, Ill., 1955, pp. 201–8.Google Scholar
15 The Second Five-Year Plan estimates the investment rate at the beginning of the Plan to be 7.31% and projects it to reach 10.68% at the end. The average rate during the five years of 1956–1961, if the Plan expectations were fulfilled, would therefore be 8.9%. (Second Five Year Plan, p. 74.)
16 Rostow, , op.cit., p. 26.Google Scholar
17 The Second Five-Year Plan estimates that at the end of the Fifth Plan (1976) the per capita income will have risen to Rs 546. Even if this estimate is correct, this amounts to little more than $100 a year. (Second Five Year Plan, p. 11.)
18 We assume here that there is no substantial difference in the annual increments to national income of a Western advanced country and of India. As a matter of fact, the net national income of the United States increased from $384.8 billion in 1956 to an annual rate of $448.3 billion in the first quarter of 1960, or 19.1%. This is about the rate of planned increase, and more than the actual increase in India. (Federal Reserve Bulletin, XLVI, May 1960, p. 561.)
19 Cf. Krech, David and Crutchfield, Richard S., Theory and Problems of Social Psychology, New York, 1948, pp. 408ff.CrossRefGoogle Scholar
20 Thompson, Warren S., Population and Progress in the Far East, Chicago, pp. 144–45.Google Scholar
21 Taeuber, Irene B., The Population of Japan, Princeton, N.J., 1958, pp. 311, 373, 378Google Scholar; and Brand, Willem, The Struggle for a Higher Standard of Living, Glencoe, Ill., 1958, p. 102.Google Scholar
22 Morrison, William A., “Attitudes of Males Toward Family Planning in a Western Indian Village,” Milbank Memorial Fund Quarterly, XXXIV (July 1956), pp. 262–86.CrossRefGoogle Scholar
23 Chandrasekhar, S., Population and Planned Parenthood in India, London, 1955, pp. 50–51.Google Scholar
24 Thompson, Warren S., “The Population Barrier,” in Wiggins, James W. and Schoeck, Helmuth, eds., Foreign Aid Re-examined, Washington, D.C., 1958, pp. 160–61.Google Scholar
25 Hill, Reuben, Stycos, Mayone J., and Back, Kurt W., The Family and Population Control, Chapel Hill, N.C., 1959, pp. 172–75.Google Scholar
26 The Second Five-Year Plan allocated Rs 4 crores for a family-planning program. Official estimates call for the establishment of 300 urban and 2,000 rural clinics. Even if each clinic could serve ten villages, the total served by 1961 would be only 20,000. There are, however, approximately 600,000 villages in India. Assuming that the expenditure of Rs 4 crores provides for 3.3% of the total need, an effort to provide a clinic within reach of each person would require an appropriation of Rs 132 crores.
27 Rosenberg, Nathan, “Capital Formation in Underdeveloped Countries,” American Economic Review, L (September 1960), pp. 706–15.Google Scholar
28 Vorys, Karl von, “Some Political Incentives for Economic Development in India, Pakistan, Burma and Ceylon,” Western Political Quarterly, XII (December 1959), pp. 1006ff.Google Scholar
29 Hajnal, John, “The Prospect for Population Forecasts,” Proceedings of the World Population Conference, 1914, 111 (Rome, August 31-September 10, 1954), pp. 43–51.Google Scholar
30 Hagen, , op.cit., p. 315Google Scholar; Notestein, F. W., “Economic Problems of Population Change,” Proceedings of the Eighth International Conference of Agricultural Economists, London, 1953Google Scholar; and Lewis, , op.cit., p. 312.Google Scholar
31 Barclay, George W., Techniques of population Analysis, New York, 1958, p. 226.Google Scholar
32 Coale, and Hoover, , op.cit., pp. 35–37Google Scholar; United Nations, Bureau of Social Affairs, The Population of Asia and the Far East, 1950–1980, Population Studies No. 31, Report IV, New York, 1959, pp. 100–2Google Scholar; and Sinha, J. N., “Population Growth and Balance in Economic Development,” Economic Development and Cultural Change, VII (April 1959), pp. 224–27.Google Scholar
33 Admittedly, it is hazardous to project such general trends. There are, however, some studies which might be interpreted to support such a contention. See, for example, Kuhlen, Raymond G., “Changing Personal Adjustment During Adult Years,” in Anderson, John E., ed., Psychological Aspects of Aging, Washington, D.C., 1956, pp. 21–29CrossRefGoogle Scholar; and Pinner, Frank, Jacobs, Paul, and Selznick, Philip, Old Age and Political Behavior, Berkeley, Calif., 1959.Google Scholar
34 See, among others, Brzezinski, Zbigniew, “The Politics of Underdevelopment,” World Politics, IX (October 1956), pp. 55–75CrossRefGoogle Scholar; Guy J. Pauker, “Southeast Asia as a Problem Area in the Next Decade,” ibid., XI (April 1959), pp. 342–45; and Badgley, John H., “Burma's Political Crisis,” Pacific Affairs, XXXI (December 1958), pp. 350–51.Google Scholar
35 Tinker, Hugh, The Foundations of Local Government in India, Pakistan and Burma, London, 1954, p. 339Google Scholar; and Park, Richard L., “District Administration and Local Self-Government,” in Park, Richard and Tinker, Irene, Leadership and Political Institutions in India, Princeton, N.J., 1959, pp. 337ff.Google Scholar
36 Times of India, May 13, 1958, p. 9.
37 Malenbaum, Wilfred, “Some Political Aspects of Economic Development in India,” World Politics, X (April 1958), p. 381.Google Scholar
38 Chanda, Asok, Indian Administration, London, 1958, p. 188.Google Scholar
39 See exchange between the Speaker and Imam, Mohamed in Lok Sabha (Lok Sabha Debates, Series 2, May 10–22, 1957, 1, pp. 934–35).Google Scholar
40 Chanda, , op cit., p. 216.Google Scholar During the first Lok Sabha, the total debate on the budget lasted between 15 and 21 hours. (Morris-Jones, W. H., Parliament of India, Philadelphia, Pa., 1957, p. 321.)Google Scholar It is not surprising therefore that there is very substantial difference between sums allocated and sums spent. In 1954–1955, for example, the capital budget savings amounted to Rs 184 crores, or 41.5% of the allocations. The corresponding figures for 1955–1956 were Rs 147 crores, or 41.2% of the total budgeted. (Ibid., p. 226.)
41 Galbraith, John Kenneth, Studies Relating to Planning for National Development, Calcutta, Indian Statistical Institute, 1956, p. 11.Google Scholar
42 Chanda, , op.cit., p. 172.Google Scholar
43 Appleby, Paul H., Re-examination of India's Administrative System with Special Reference to Administration of Government's Industrial and Commercial Enterprises, New Delhi, Government of India, 1956, pp. 27–29Google Scholar; and Chanda, , op.cit., pp. 247–50.Google Scholar
44 Park, and Tinker, , op.cit., pp. 29–30.Google Scholar
45 Ibid., pp. 301–28.
46 Lok Sabha Debates, Part 2, May 9–30, 1956, V, p. 8362.
47 Ibid., V, p. 9421.
48 The Second Five-Year Plan was debated by Parliament on May 23, 25, and 26 and September 8, 11, 12, 13, 1956. The Committee reports were presented to the Lok Sabha late in July and early in August.
49 Ibid., Part 2, August 27-September 13, 1956, VIII, pp. 7144–48.
50 For a discussion of the budgetary system of the United Kingdom, see Taylor, Eric, The House of Commons at Work, Harmondsworth, Eng., Penguin, 1951, pp. 189–225Google Scholar; and SirBrittain, Herbert, The British Budgetary System, London, Allen and Unwin, 1959, pp. 230–71.Google Scholar
51 This is true of both the national and the provincial legislatures.
52 Cf. Kaldor, Nicholas, Indian Tax Reform, New Delhi, Ministry of Finance, 1956.Google Scholar
53 Wald, Haskell P., Taxation of Agricultural Land in Underdeveloped Economies, Cambridge, Mass., 1959, p. 62.CrossRefGoogle Scholar
54 There is, however, considerably less popular identification with the bureaucracy. Dwarkas, R., The Role of Higher Civil Service in India, Bombay, Popular Book Depot, 1958, pp. 185–95.Google Scholar
55 Cf. Lewin, Kurt, “Group Decision and Social Change,” in Maccoby, Eleanor E., Newcomb, Theodore M., and Hartley, Eugene L., eds., Readings in Social Psychology, New York, 1958, pp. 197–211.Google Scholar See also Mannheim, Kurt, Freedom, Power and Democratic Planning, New York, 1950, pp. 149–53.Google Scholar
56 Friedman, Harry J., “Pakistan's Experiment in Basic Democracies,” Pacific Affairs, XXXIII (June 1960), p. 109.Google Scholar
57 For estimates and a discussion of current tax evasion and hoarding in India, see Kaldor, , op.cit., pp. 103–20.Google Scholar