Page 37 - DMGT401Business Environment

Business Environment

Notes Threats

1. Global economy recession/slowdown
2. High fiscal deficit
3. Threat of government intervention in some states
4. Volatility in crude oil prices across the world
5. Growing import bill

6. Population explosion, rate of growth of population still high
7. Agriculture excessively dependent on monsoons
1.5 Planning in India

Planning in India dates back to the 1930s. Even before independence, the colonial government
had established a planning board that lasted from 1944 to 1946. Private industrialists and
economists published three development plans in 1944. Thus, even before independence, planning
was not totally new to the economy.

Notes A 'Bombay Plan' was formulated by J.R.D. Tata and some others as a blueprint for
rapid industrialisation. Jawaharlal Nehru visualised planning as a means of "avoiding the
unnecessary rigours of an industrial transition in so far as it affected the masses resident in
India's villages" as well as a "positive instrument for resolving conflict in a large and
heterogeneous subcontinent". It was Nehru who persuaded P.C. Mahalanobis to evolve
the basic strategy for the Second Five-Year Plan, while Nehru himself was involved in
drafting the introduction to its third edition.
India's leaders adopted the principle of formal economic planning soon after independence as
an effective way to intervene in the economy to foster growth and social justice. The Planning
Commission was established in 1950. Responsible only to the Prime Minister, the commission
is independent of the cabinet. The Prime Minister is the chairperson of the commission, and the
Minister of State with independent charge for planning and program implementation serves as
its Deputy Chairperson.
A staff drafts national plans under the guidance of the commission; draft plans are presented for
approval to the National Development Council, which consists of the Planning Commission
and the Chief Ministers of the States. The council can make changes to the draft plan. After the
council's approval, the draft is presented to the cabinet and subsequently to Parliament, whose
approval makes the plan an operating document for Central and State Governments.

1.5.1 Brief View of Five Year Plans

1. First Five-Year Plan (FY 1951-55) attempted to stimulate balanced economic development
while correcting imbalances caused by the World War II and India's partition. Agriculture,
including projects that combined irrigation and power generation, received priority.

2. Second Five-Year Plan (FY 1956-60) emphasised industrialisation, particularly of basic,
heavy industries in the public sector, and improvement of the economic infrastructure.
The plan also stressed social goals, such as more equal distribution of income and extension
of the benefits of economic development to the large number of disadvantaged people.

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