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Indian Economy

Notes in quality of life comprising of life expectancy, literacy, infant mortality, etc. A little consideration
will show that all these displays of development are inter-related in the sense that expansion of
real national income is the foundation for increase in per capita income and also improvement
in the quality of life.

Did u know? For a poor country such as India with a large mass of people steeped in
poverty and misery, increase in national income by itself is not enough-instead, consistent
increase in per capita income over a period, along with improvement in quality of life is
the yardstick to judge the economic development of India.
You must understand that Indian planners intended at increasing national and per capita incomes
on the assumption that the constant increase in these incomes would decrease and finally remove
poverty and misery and raise the standard of living of the masses. However, when our planners
found that increase in national income was not supplemented by reduction of poverty in the
nation, the goal of planning from the Fourth Plan onwards was not just economic growth but
raising the standard of living of those who have been living in abject poverty for generations,
nay, for centuries. As per the Fourth Five-year Plan, “the basic goal is a rapid increase in the
standard of living of the people”, and again “emphasis is placed on the common man, the
weaker sections and the less privileged.” In fact, the slogans of “Garibi Hatao” (Removal of
poverty) and “growth with justice” were created during the early 1970’s to signify clearly that
the focus would be on removal of poverty and not merely on increase in national income.
It is important for you to note that unemployment and under-employment are essential causes
of poverty in India. Therefore, from the very beginning, removal of unemployment and
underemployment has been a significant objective of economic planning in the nation. The
Planning Commission has all along expected that increase in investment would be accompanied
by increase in employment as well as increase in national income of the nation. The Commission
argued explicitly in the Third Plan that as national income increased in response to investment
and development expenditure, the demand for labour would mechanically rise and more
employment would the generated.
Simultaneously, the removal of unemployment would lead to increase in gross national product
and standard of living of people on the other. Accordingly all the Five Year Plans had programmes
of economic growth, with increase in employment as integral in the development programmes.
Although employment has been mentioned as one of the goals of economic planning in all our
Five-Year Plans, it has never been rendered a high priority. In the absence of any plan, do we
find distinct employment plans framed for each one of the sectors and areas, so as to elevate
employment on the one side and national income on the other. This describes why unemployment
has increased over the years. For the first time, the Planning Commission admitted in the Janata
Party Sixth Plan (1978–83) the possibilities of real conflict between employment and economic
growth and accorded employment a pride of place in the Plan. Nevertheless, in the Sixth Plan
(1980–85) which was ultimately accepted and executed by the Congress Party, the main emphasis
reverted to the traditional growth approach, with the usual assumption that employment would
increase with rise in investment, regardless of choice of techniques. Therefore, not a single plan
has been framed keeping employment generation as a primary goal and only tip service was
paid to the attainment of full employment goal.
3.1.2 Economic Planning and Social Justice

You must understand that in an unplanned society, several kinds of retrogressive forces function,
such as inequalities of poverty, income, absence of equal opportunities for progress, etc. India’s
economic plans made conscious effort to remove all these retrogressive forces and foster social

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