towards an industrial policy 2000 a.d

8/6/2019 Towards an Industrial Policy 2000 a.d

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TOWARDSAtuINDUSTRIAT POTICY2000 A.D.


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I0I|,ARDS Al{ [{Dt|$RrAt P0ilCI2000 A.D.

P, D. MALGAVKARV. A. PAI PANANDIKER

CENTRE FOR POLICY RESEARCHNEW DELHI.11OO57


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@ CENTRE FoR POLICY RESEARCH 1977

All rights reserved. No part of this publication may be reproducedor transmitted, in any form or by any means without the priorpermission of the Publishers.

Price :Inland Rs. 251-Foreign $ 5

Published by the Director, Centre for Policy ResearchC-6, Commercial Area, Paschimi Marg.Vasant Vihar, New Delhi-1 10057andPrinted at PRINTOX, A-10, Jangpura ExtensionNew Delhi-14 (lndia)


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ForewordIn the panorama of .development policies in most of ths lessdeveloped countries, the pride ol place has always been givento tho industrial policy. The rgtsons are simpla enough and arewell known. But what should the key policy objectirts ot

industlial developrnent be ? Are fhe existing frameworksadequate or shou ld the industril policy frameworks be re-examined and be ma& subservient to the basic socio-economicpolicies so that the directioffi of the national movement are clearas we move towards the 21st ceniuly.

The present study place3 at the very core of industrialpolicy the four key socio-economic objectives of meeting (a)the minimum needs of the masses, (b) the strategic requirementsof the nation, (c) the export objectives, and (d) the R I D goalsto be abreast of the developed nations by the 21st centuly.

Two factors which loom large and which, in one way. formthe prerequisites of effective industrial policy are (1 ) populationcontrol. and (2) food production.The study estimates the policy implications of the four policyobjectives and the feasibility of their achievement by the year2000 A. D., and suggests several measures including thoserelating to the industrial structure. lt does not deliberately workout the micro implications for each of the industrial sectors forthe simple reason that unless the overall policy objectives are

acceptable, the details would be too premature.We hope the study will encourage a debate on the overallindustIial policy to enaple us meet the needs of the Indiansociety by the year 2000 A.D.

Centre for Policy RescarchNew DelhiSeptember, 1977

.V. A. Pai PanandikerDirector


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PrefaceThe study is an outcome of intensive debate between severalof our friends as regards the nature of lndia's Industrial Policy'

In selecting fhe problem our objective was not so much to studyas to who should produce what but rather what the countryshould produce and the policy and objectives governing suchproduction Programme.

Towards the preparation of this paper. we had intensivediscussions amongst ourselves. "Ourselves" included more thanthe two of us. Dr. N.C, Mehta, the then Director of the Nationallnstitute of Bank Management, Bombay was an integral part ofthe debating group and played a most invaluable role in seeingthis project to the Present stage.

We also had the benefit of close interaction with Shri T. A'Pai, the then Minister for Industries I Civil Supplies, ShriB,Sivaraman, Member, Flanning Commission, Shri V. G' Rala-dhyaksha, then Chief Consultant and now a member of thePlanning Commission, Shri M' Narasimham. former Secretary,Department of Banking and cutrently the Governor, Reserve Bankof lndia and a host of academic and policy personnel. We alsohad an opportunity to discuss the paper with a distjnguishedgroup of scholars and administrators in September, 'l 976.

We are grateful to all these persons for their indulgence. Weare also grateful to the National lnstitute of Bank Managementand to several members of its staff for help given in this project.Finally we record our appreciation of the fine assistancerendered by Shri Y. L. Nangia, Shri Kamal Jit Kumar. ShriTrimbak Rao and Shri P. K. Yegneswaran in preparing the textfor publication.

Needless to add the views expre ssed in this study are purelyof the authors.P. D. MalgavkarV. A, Pai PanandikerSeptember 1977


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ForewardPrefaceChapter IChapter llChapter lllChapter lVChapter VChapter VlChapter VllChapter VlllChapter lXChapter XChapter XlChapter XllChapter XlllReferences

CO NTENTS

lntroductionPopulationFoodLabour Forcelndustry-A ReviewEnergy, Water & Raw MateriallntensivenessResources AssessmentConsumption Pattern and Life Styleof Weaker Sections in 2000-1 A.D.Growth RateStructure : Economic and IndustrialEmployment and Urban DevelopmentAssessment of the Industrial PolicyObjectives 55Towards Industrial Policy 2000 A.D. 66

69

VVI

138

1114182431373951


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Chapter I

Introduction_ Urgent issues likely to have a decisive influence on thefuture development of the world are emerging simultaneously:the Enelgy crisis with the spectre of exhaustion of resources andthe ecological imbalances which threaten the so_called freegifts of nature such as air, water, etc. are the latest entrants inthis field. Both have shown the monster lurking behind themthreatening the human society.. The problems of poprllation growth and food scarcity havebeen hatrnting us since Malthus brought out their implications.The control of population growth and the improvement in agri_cultural productivity pushed this problem into the background forthe Developed World. Brjt the rapid rise in population in theDeveloping worrd and the impact of the vagaries of the rains onfood production have re-emphasised the need to assess theirlong range impact on the human society.

The problem of overcoming the economic imbalances bet_ween nations and the more equitable distribution of Nationallncome-within the country have eluded satisfactory solution. Infact. the gap between the Developed and Developing World isincreasing whilst within the country, the lot of the lowest 30 to40 per cent has not improved though the highest 10 per centhave become more affluent.

A conscious programme of industrial development was under_taken in India almost immediately after independence so that thecountry may utilise and process its resources, improve the tech_nical and human skills. provide employment to the growing


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2 TOWARDS AN INDUSTRIAL POLICY-2OOO A.D.population and boost the economy cf the country' The unem-ployment in the country has, howeve r, steadily grown whilst theindustry sector wh;ch had shown about 9 per cent growth bet-ween 1961-1 965, is languishing since then.

The objectives of our industrial policy are expected to dove-tail into the overall objectives of the national policy which are"removal of poverty and attainment of self reliance" The acti-vities that are necessary to meet these objectives may bestated as:

1. ensuring the minimum needs of the people, specially ofthe lowest 30 per cent in cosumption, health, self deve-lopment (education and training) and shelter;2. developing production facilities and capacity in areasessential for national security and defence, so that the

nation is not unduly dependent on outside countries innational security matters;3. expoiting goods and services to meet our import require-

ments and debt servicing charges;4. creating a Technological Research and Developnlent baseto ensure --

a. that we are on par with neigl'rbotlring countries indefence technology and production,b. location of growth areas in whlch technology willhave a breakthrough in ihe first quarter of 21st cen'tury so that we may bridge the technoiogical gapbetween us and the developed world and be on parwith them in growth industries and development,c, Resources optimization-.human, agiicultural. mineral,forests-so that the industry is geared to develop-ment of local resources for optimum value, bothsocial and economic.


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4 TOWARDS AN INDUSTRIAL POLICY 2OOO A,D.that the present mortality rate of 15.2 per thousand would comedown to between 9.4 and 9.8 per thousand by 2000 A.D (Table2.1 ). The birth rate however is assumed to f luctuate between30.4 and 20.9 against the present rate of 3b.4. For the meditrmzprojection the Registrar General assumes a 10 per cent decli.ning general fertility rate till 1991 and thereafter at E per centand estimates a population of 945 million in 2000 A.D. Wefeel the Registrar General's H2 estimate is too pessimistic as itexpects the birth rate in 2000-1 to drop down only to 30.4. Onthe other hand, his Lr estimates are too optimistic as the birthrate is still hovering round 3S.4 and there are various lacunasin his assumptions that lead to a population estimate of g3Om illion.


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POPULATION 5

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6 TOWARDS AN INDUSTRIAL POLICY.2OOO A.D.To reduce fertility to a level that corresponds to an NRR of

1 about 60 per cent of the complex in reproductive ages willhave to be protectod against the risks of pregnancy. By the endof the Fourth Plan, it is estimated that 1 6.3 million coupres cons-tituting 15.6 per cent of the couples in reproductive age groupwere covered by one or the other method of contraceotion andit is most unlikely that this percentage would rise to 60 by theend of this century, considering the fact that the Family planningProgramme has now to reach the poor and the less educatedtural population. Ambannavar avers that only in the year 2021the fettility would decline to a level corresponding to an NRR of 1.We are led to accept ful2 estimate of the Registrar General(945 million population) by20C0-1 for rhe purpose cf our study.The revised Fifth Plan expects however the population to be744.8 million by 1991, or about 840.4 miilion by 2001.The decline in mortality was largely achieved through lhecontrol of famines and epidemics through mass immunizationprogrammes and public health medical services. But the spectreof ntrtritional deficiency with consequent vulnerability to dis-eases remains. Nearly one-third of the population suffers framunder-nutrition and another one third from malnutrition. Theguantitative problem is one of achiev!ng a steady rise in the

production of cereals and pulses and the qualitative problem isone of raising the production of nutritive foods such as milk,eggs, fish. meat, sugar, vegetables, fruit, etc. Sixty per cent oflndia's population living mostly in rtjral areas does not even getsafe drinking water.Ambannavar has referred to advances being made In contra-ceptive technology such as:1. a vaccine which can prevent pregnancy for two or threeyears (by a team of scientists headed by G.p. Talwar atthe All lndia Institute of Medical Sciences)2. a steroid tube \,/hich when implanted under the skinprevents pregrancy for a year or so (All lndia Instituteof Medical Sciences)


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POPULATION 73. a safe vasectomy device that can be switched on or off

depending upon whether a child is desired or not (desi-gned by two New York Pharmaco log ists).It is not however the development of new birth controldevices that will hold down the population but the motivationtowards smaller family and translation thereof into a birth preven-tion programme supported by an infrastructure of family planningclinics and doctors.There is all the more reason therefore to be concerned withthe birth rate as, if there are 830 million people in 2000 A.D.instead of 1035 million, the per capita income will go up by 25per cent, thus increasing not only the disposable income of theindividual, but also his savings rate and the taxable capacity.It will have a strong cumulative effect spread over the 25years period upto 2000 A. D. which may radically change theultimate picture o{ India with the accumulated higher savingsand investment, better nutritional standard, lower incidence offood scarcity etc.The concern over birth rate is allthe more urgent because ofthe vagaries of food production. To meet the requirement of830 million population, India will have to produce 20 per cent

less food than for a population of 1035 million.Population control will mean giving Family Planning a lea-ding role in aur development policies. Japan has shown that itcould bring down its birth rate from 33.6 to 16.9 per thousandbetween 1947 and 1957; South Koi'ea has shown that it couldbring down the birth rate from 42 to 29 per thousand in adecade; and Taiwan has shown that it could bring the rate downto 19.4 per thousand by 1972. There is therefore no reason whylndia cannot achieve a major breakthrough provided there is anationai rruill to do so.


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FoodWe tabutate below thelndia estimated by differentV. M. RaoTata Economic consul-tancy Services ITECSIOperaiions ResearchGroup IORGI

Chapter lll

low and high food requirements ofscholars;184 million to 261 million tonnes274 million tonnes

189 to 198 million tonnes (revised)Rao'5 s1g6y on Indian prospect for food assumes the Regis_trar General's poprrlation estimates under Lr (g30 million), lllz(945 million) ar:d H2 (1032 milrion), and refers to NationalSample Survey f NSSI Reports rrpro 1966_67. lt stuclies the class-w{se consumption of food, assumes three different classificationsof population in 2000-1 A.D. (the lower poor disappear in altclasslfications whilst the percentage of poor and rich alternatebetween 20 and 4O) and comes to aggregate requirement offoodgrains in 2000-1 A. D. varying tram igq million ronnes to261 milfion tonnes and other foods* tram 2.g4 times to b.4Otimes the base year.The TECS assumes a population of 94b million (Mr) andsuggests production of 274 milion tonnes of foodgrains @ 2g0kg of foodgrains per capita against 196 kg for the y-ear 1gr3-74.The ORG takes NSS data for 1964_6b.data is about 21 per cent higher than the estimates that NSSoff icia I estimates of* Rao includes in ,,ottur food& fish, fruits, vegetables, ed ible oils, beverages and refreshments.


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10 TOWARDS AN INDUSTRIAL POLICY.2OOO A.D.population and food policy progtamme so that we are not only ina position to give a lie to these gloomy forebodings but also bein a position to help the needy countries. Food production willhave to be given priority if we are to come out of our continueddependence on outside world.

We have to view our food requirements against the worldfood shortage in the coming decades. ensure adequate- bufferstock for seeds and lean years, and be able to meet the needsof hungry nations. We shall therefore have to plan for a minimumfoodgrains production of 210 million tonnes by 2000 A.D. so thatthe per capita per day consumption of cereals will be 500 gramsand of pulses 75 grams. Studies indicate the availability oftechniques, skills. fertilizers, water, land, seeds, etc. to achievethis target. The revised Fifth Five Year Plan expects the popula-tion to be 744.8 million by 1991, or about 840.4 million by 2001.This projection is midway between the lowl and lowz pupulationestimate of the Heg istrar- G eneral. On this basis, the foodrequirements would be 194 million tonnes in 2001 A. D. toensure 500 grams of cereal and 75 grams of pulses plus '10 percent reselve for sowing and emergency.


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Chapter lV

Labour ForceAmbannavar noted that the average annuat death rate isBteadily declining whilst the life expectancy at birth is going up,which makes for a greater proportion of people in the workingage group,

TABLE 4.1TRENDS IN LIFE EXPEETANCY AT BIRTH AND AVERAGEDEATH RATE i IND|A ; 1881 " 1971(Table from Ambannavar,s study supplemented by FlegistrarGeneral's figures)Life Expeclancyat B irth Average ann ualdeath rate

R egistra rGenerd i'sfigures

1881-18911891-19011901- 1g 111911 - 19211921- 19311931- 194i1941-19511951- 19611961- 197119711966-19701966-1970

25.0z5.o22.920.126.831.8.tJ.539.045.548.75Mafe ,48.52Female 46.55

4't.344,442.647.236.3?1 .'29.224.118.6lA t16.9

Ambannavar estimates that labour force wili go up from 1g0million in 1961 to 420 million in 2O0O AD. We feel Anlbanna.var's estimates are very much on the high side. He estimated thelaboUr foicd in 1971 at Z2j million, whilst as oer 1971 censrJs thelabour force was 170 million (excluding workers below the agc


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12 TOWARDS AN INDUSTRiAL POLICY.2OOO A.D.of 14 years. With increasing spread of education. the ptacticeof child labour may be expected to die out by 2OO0 A.D.).The Draft Fifth plan has projected the labour force upto1986. As the entrants to labour force in the next twelve yearsare already born, we may accept this projection, though we feelthat the Planning Commission is somewhat optimistic in pro-jecting the size of the population (The Registrar General,sestimate of population in 1986 is 734 million under M2 estimateagainst the Planning Commission's estimate of 70b million).TECS have projected the labour force beyond 1986 upto2001 A. D. The 1986 projection of TECS is 251 miilion labourforce against the Planning Commission's estimate of 247.9million, whilst the participation rate of lobour force to totalpoptrlation is 34.2 as per TECS and 3b.2 as per Planning Commi-ssion (This may be due to the fact that the planning Commissionhave under-estimated the size of the population whilst thelabour force for 1 986 is already born). We are inclined to acceptthe labour force projection of TECS lor 2001 A.D. as agarnsrAmbannavar's first by because TECS projection is on RegistrarGeneral's M2 population projection, secondly because they followthe Planning Commission's definition oJ workers as excludingthose in the age group 0-14. and thirdly because their assumptionfor projection of the labour force seems realistic.

We give below the Planning Commission's and TECS pro-jections of labour force.TABLE 4.2Labour force till 2001 A.D"

Year Total Population Labour Force(million) (mittion) Participationnle3asyool219711986 (PlanningCommission)1986 TECS1991 TECS1996 TECS200r TEcs

E/l Q705734801873945

170247 .g251ta1325364

31 (actual)?5.2?4.235.837 .238.5

?o7 194otal increaseover 1971


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LABOUR FORCE 13The labour force will .cjrow at a faster pace than the popula-

tion due to changes in the age structure of populatron, increasingurbanization and decreasing proportion of youngsters in thelabour force.

The growing population with a faster increase in the labourtorce, added 'to the backlog of 9 million unemployed and another9.7 million under-employed in 1971 (Bhagwati CommitteeReport) necessitates a specific strategy for employment. asemployment means dignity and self respecl to the people.

Even for the revised Fifth Plan population estimates. thelabour force in 2001 would be 323.5 million. The labour forcetill 1990, however, is already born and so the urgency of theunemployment problem will not be reduced. Nearly 150 millionnew jobs will have to be created between now and the turn dfthe century-a task of gigantic propositions.


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Chapter V

Industry-a review. lndian economic development rill 1965 moved Very well,The industrial prodtrction wdnt Up by almost g per cent a yearbetween 1 961 and 1965. The Fouith Plan projected rhe large sbalemanufacture growth rate @ 9.3 per cent and of the 6ma|l scalemanufactures at 5.2 per cent. But the countrv has not been ableto achieve the 9 per cent growth rate since 1965. The sectbralcontribUtion which showed dynamic changes from 1954-55 ts1965"66 has remained static since then (Table 6.1),TABLE 5.1

NET DOMESTIC PRODUCT : 1954"55 TO 1971-12( at constant 1960-61 prices )Sectol 1954/55 1960/61 1965/66 1967/68 1970!71 1971172 1973174

Percenlage1. Agriculture 55.8 51,02. fndustrv 13.2 16.03. Electricitv 0.3 0.54. Construction 3,6 4.65. Transport 3.5 4.36. Other Services 23.6 24"642.6 44,818.2 17.00.9 0.94.7 4.8F I FA28.5 27.5

43.9 42.51 6,9 17 .11,1 1,15,5 5.6|Ft E^27.4 28.4

45.7415.391.135.624.4227.70Source : Estimatee of National Product, C.S.O,Dra{t Fifth Plan

Table 5.2 gives an international comparison aboUt distribU,tion of manufacturing establishments according to size. Establish.ments with employinent of less than 10 persons constitute 93per cent of all the manufacturing establishments in lndia, whilstthese constitute only 73.9 per cent in Japan, 54.3 per cent inU.S.A., 71.8 per cent in Great Btitain, 43.4 per cent in WestGermany and 80.4 per cent in France. Masanori Koga11 thereforeconclt-rdes that "one of the conspicuous features of the struclureof Indian industry lies in the fact that small scale industrialestablishnrents are overwhelmingly dominant in lndian Industry",


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INDUSTRY_A REVIEW 15

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Cq q\ ':l co cJ o?\ NQ -qEE RP &R d: FF ot-'o@99 qr aq eq qn aq qqEP 3= p: .lg NR d- oSqq 9q of -


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Chapter Vl

EnergY, water and raw materialintensivenessAvailability of power is one o{ the crucial factors for indus'trial development.The final uses of energy are indus y' agriculture' transpoltand domestic. Industry uses energy as process heat' steam and

motive power.Besides, industry requires some of th6 fuels like coal' and

coke for riretallurgical purpose in steel industry' The productionof fertitizer is based on coal, naptha' fuel oil or on electrolysisprocess.

RuraIeIectrificationforagricuIturaIsectorrequireslargeinvestments in distribution system'

Life styles affect energy needs' Public transport andregional development through growth centres wotrld redt'rce boththe demand on energy and its distribution cost' As Indiag"n"rufft has warm climate, the demand for heating residencesina ro* places will be negligible' With improved standards'p"opt" tuy go in for {ans, room coolers and air-conditioners forcoofer environmet in summer' ln USA' 17 '9 per cent of totalenergy consumption goes for space heating and another 24'9p", ."nt for transportation (year 1968)'

The second tndia Studies Energy (Kirit S Patikh) considerstwo scenarios as follows :


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20 TOWARDS AN INDUSTRIAL POLICY.2OOO A.D.gasoline (petrol) used for automobiles, scooters and three-wheelers accounts for 7 per cent of the totat oil demano.

There is considerable uncertainty about the domestic energyrequirements. The National Council of Applied EconomicResearch survey (1962-63) estimated an urban limit of 0.44tonne of coal replacement per person per annum.The Energy study states that lndia is well endowed withcoal, and has sizeable hydel potential as well as large thoriumdeposits. . Recent off-shore discoveries lead one to expect self-sufficiency in oil in the coming years. especially as only about4 per cent of the potential oil bearing sedimentary arda has beenexplored so far.Uranium*nd thorium (assured resources of 22000 tonnesand estimated resources of 450.000 tonnes respectively) willmeet the potential need of fast breeder reactors.The development in solar energy for a tropical countryshould be most promising. especially for water and spaceheating, a ir-condition ing and refrigeration.The Energy study estimates that the 230 million cattlepopulation (1966 cattle census) may not materially increase innumber. (But their health, maintenance and milk yield may

improve considerably.) Assuming each animal gives 10 kg ofwet dung (2 kg dry) per day, the annual yield would be about170 million tonnes oJ dry dung. During the nights the animals arein shade under shelter and therefore 50 per cent collection ofdung could come from cattle sheds. With better animal hus_bandry and dairying, one can expect 50 per cent of the balancecow dung to be collected. This would mean a total collectionof 127.5 million tonnes of dry dung, which if it is processedthrough bio gas plants will give energy equivalent to 1OO miltiontonnes of coal replacement.

Bio gas plants will also improve village sanitation and healthnot only by utilising cow dung but also night soil. (ln Suratdistrict the latrines are joined to gas plants.)These plants further help eliminate flies and mosquitoes as


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ENERGY, WATER AND RAW MATERIAL INTENSIVENESS 21the discharge from the plants is not attractive and conduciveto them.

Assuming 2 per cent nitrogen content in the manure comingout of the plants one can expect 2.S million tonnes of nitrogenas fertilizer input to agriculture.After considering the cost benefit of the bio gas plants (100cubic ft size for the family and 5000 cubic ft for community) theEnergy study considers them well worth the investment, whatwith their output of energy and manure.The Energy study estimates the energy requirements in 2000A.D. (on the assumption that oil will be substituted by coal andelectricity thus bringing down the requirements of oil by 4gmillion tonnes) @ 650 million tonnes of coal. 97 million tonnesof oil and 700 billion KWH of electricity or 1O times, 6 timesand 13 times as large as in 19j1 respecrively. (TECS on theother hand project coal production at 1O7O million tonnes andoil at 39 million tonnes.) The generation and transmission ofelectricity alone will demand an investment of about Rs. 25,000crores. The dovelopment of coal mines including explorationcosts, development of mines, and establishment of washerieswould come to about Rs. 5,500 crores. Another Rs.2,31S crores

would be required for transport of coal.The study envisages 103 million tonnes of crude oil require_ments (including refining losses) by 2000-l which at currentprices of Rs.600 per tonne would mean Rs. 37g0 crores inforeign exchange assuming domestic production to be 40 mifliontonnes and import of crude 63 million tonnes. (The M inister forPetroleum and Mines expects the country to be self_sufficientin oil needs by 1980.)India's limited uranium reserves necessitate reliance on fastbreeder reactors, which may demand transport of spent fuel tofuel reprocessing plants almost once a month from every ptant.Energy may not be a constraint for development of India,what with better prospects of oil, large defosits ol coat and the


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ENERGY, WATER AND RAW MATERIAL INTENSIVENESS 23of taw materials and services (such as fuel energy) that may berequired to sustain the anticipated prodtrction in India, As perthe study under reference, between 1954 and 1968 theindustrial production in Japan went up five times. During thesame period the expenditure on commodities per unit of produc'tion for the final production came down by 52 per cent. Wemay alternatively state that the raw material intensity in Japancame down by 52 per cent whilst production rose five times'

This savings in raw materials consumption has been achievedby technical and technological advances, material saving,restructuring of economy, energy fuel-commcdity compositionbalances, organizational and management improvements, incen-tives, upgrading skills, zero deficit movement etc. Concretely,improvements in the initial raw material and processing, intro-duction of substitutes, reduction in non productive losses, useof secondary raw materials and scrap were systematicallyresorted to, For instance, in non-ferrous metallurgy, besidesbasic metal, rare metals stlch as indium, germanium, selenium,tellurium, thorium are obtained from the same raw materials.Because of sulphur dioxide extracted from oil relining half themines fot sulphur dioxide were closed in 1970,

Moreover, as most of the raw material has to be importedinto Japan, shipping costs constitute a sizeable proportion ofthe total cost, Changing geography of raw materials imports,siting users of imported raw materials on coast, going forlarge cargo and specialised ships, modernising ports and ware-houses, helped in reducing the overall raw material cost.Between 1960-66 use of large cargo ships alone brought downpetroleum costs by 11.9 per ceht and sreel by 3.1 per cenl.

Technological developments and optimum size plantsreduced the coke consumption per tonne of pig iron from 901 kgin 1950 to 474 kg in 1970. In ship-building, improved hulldesign reduced steel requirements per tonne of ship by 5 to 6Der cent,

A conscious policy support to reduce raw materials intensitymay help lndia to reduce raw materials intensity on the samescale as the one achieved in Japan,


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Chapter Vll

Resources AssessmentWe have dwelt at length with the major resoutces necessatyfor development viz, population, food, labour force, energy andwater. OtJr asGessment indicated adequate provision of theseresources even for the most optimistic scenario in 2000 A,D,We wilt now take a look at some of the non.renewable

tesources, The Fifth Five Year Plan has tabtrlated balance life oJknown reserves at 1988-89 consumption leVels as follows :Mineral Balance lile at ,|968-89Consumption levelg in YeaJs

1.2.

Coking coalNon-coking coal(a) indegenouS(b). plu3 exportslron ore- hematite(a) indegenoug(b) plirs exportslton ore- rriagnetitsManganege ote(a) indegenous(b) plus exporlgChroftite(8) indegenooe(b) plus exportsEauxite(a) indegenous(b) plg$ exporrt

441681591656284

10124713

4.

6.

1.oo46


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hESOURCES ASSESsMENT 25Mineral Balance life at 1988-89Consumption levels in years

L9.

11.

10.

We will confine ourselves to iron ore, copper and ahrminiums these are required in large quantities for industrial develop-ment, though we realise that a host of dther metals like manga_nese, rnolybdenum, nickel, ttjngsten, antimony, cadmium, lead,zinc, mercury, tin, beryl, titanium, niobium, tantalum. strontum.thorium, zirconitrm, uranium, gold, silver, platinum, besidesceramic and refractory materials, chemical and fertilizerminerals and other industril minerals like asbestos, bentonite,ftrller's earth, calcite, graphite, limestone, mica, ocres, talc,Vermiculite" preciotrs stones and mineral fuel are equallynecessary for industrial development,

India has known reserves of over 21,000 million tonnes oflron ore, As per Zimmermann 2000 lbs. of ingot steel require:

Zlnc(a) indegenoUs(b) plus imporrsCopper(a) indegenoUs(b) plus imports'Lead(a). indegenous(b) plus imponsRock phosphate(a) indegenor.lg(b) ptus importsLiilleston

tt!7362946

12475

2,13A lbs.50O lbs.1,.48O lbs.1,150 lbs,30 tbs.It is not the strpply of iron ore but of scrap that mav be acritical factor in the production of steel for 2,O00 A.D. as besides

of iron oreof lirnestoneoY coelof scraB" etc,of fero alloys etc,


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26 TOWARDS AN INDUSTRIAL POLICY.2OOO A.D.the known reserves of iron ore, there is strong possibility offurther discoveries on the subcontinent.

Copper has been a source of concern for the Indian economy,especially as the ore is of poor quality ranging from 0.8 to 3.0percent of cuprune converted into copper metal. India has provedfeserves of about 3 million tonnes and further orobable reservesof another 2.7 million tonnes. Against this, copper productionin the country was estimated at 12,700 tonnes in 1973-74 andthe Fifth Plan envisages its being stepped up to 37,000 tonnesby 1979. The Planning Commission visualises thal the copperreserves at best can meet the country's requirements folanother 17 years.Bauxite reserves are placed at 200 million tonnes of which83 million tonnes are of high grade analysing 45 per aent or

above AlzOs. The aluminium production in the country wasestimated at 190,000 tonnes for 1973-74 which is to be steppedup to 370,000 tonnes by the end of the Fifth Plan' lndia can beconsidered self-sufficient in respect of bauxite for many Yearsto come.

The ore reserves are likely to be considerably augmented bythe explorations now going on under the seas.* Nations, there-fore, are vying with one another to extend their claims on theseas. the claims increasing in a short span of time frorn 3 milesto 12 miles, to 200 miles to mid-ocean. Besides under-waterexoloration and fuller and deeper exploration on land and under-ground, benefication of low grade ores, improvements in explo-ration, mining and processing technology, advances in recycling'etc., would stretch our resources cosiderably.,As William Pageputs it, the earth's resources are finite but not fixed and whatis available in the earth's crust is infinitely greater than what isin fact assumed.

i Savs William Page : Seawater has been estimaled to contain 1'000millionyearssupplyofsodiumchloride,magnesiumandbromine;100millionyears supply of sulphur, borax and potassium chloride; more than onemillion of molvbdenum, uranium, tin and cobalt; more than 1'000 of nickeland copper.-Thinking about future-A ctitique of Limits to Glowth' Editedby HSD Cole, Christopher Freeman, etc.-Sussex University Press-1973'


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RESOURCES ASSESSMENT 27We have to acknowledge that tfue conservation is nothoarding, but ,efficient and intelligent use of our resources..

The development of alloy steels enabling a five to ten times theperformance of ordinary steels, the basic oxygen process (Linz-Donawitz) reducing the steel conversion cycle from hours tominutes, continuous casting are all revolutionising the steelmanufacturing process. powder metallurgyi ferrous pressurecasting show fresh avenues of economising the use of steels asmost of the steel ingots have to be scraped, cut, bored, ground,honed, etc., to make the Jinished components. These operationscan be eliminated if one succeeds in ferrous pressure casting.Material substitution-aluminium for copper, etc.,_or develop_ment of synthetics is another way of or.,ercoming materialsconstraint.One of the critical resources required for growth is invest_ment. A perusal of the Annual Survey of Industries for the last

few years gives us quite an encouraging picture as fo ows:Capital required per unit of production

Year Census SectorI Productive capital Invested CapitalValue added Value added

Census and sample sector*PRODUCTIVE INVESTEDValue added Value added

1 966196919701970-711971-721972-731973-74

4.194.025J. OC

4.534.454.27

3.96

3.7493.6873.318

4;1614.1433.706* productive capital : lixed capital + *orfing;upiil

Successively, the capital investmentunit value is coming down. The reasons required to producemay be fu ller capacityutilization, better productivity, higher value of production,greater development of infrastructure, etc. With 'greateremphasis on productivity and raw materials intensity, we shouldlook forward to the Census and Sample sector yielding a rarioby 2,000 A.D. of invested capiral to value added of.3.1" thirs


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28 TOWARDS AN INDUSTRIAL POLICY-2OOO A.D.ensuring greater productivity and effeciency for capital invested.By another calculation, we come to the same figure of 3.1"Here, we project the Census Sector to come down to a ratio of3.5 from the present tatio ol 4.27. On the other hand. weexpect the sample sector ratio to go up trom the present 2.c6to 2.5, as it would be necessary to invest more in fixed assetsin the sample sector. We expect the ratio between the censusand the sample sector industry to be 80:20, thus giving a ratioof 3.1:1 between investments and value added.. The Yearly incremental industriaI production in the last fiveyears, viz. 1996-2001 will be Rs. 5,434 crores at 4% GDPgrowth rate, Rs. 16,194 crores at 6% growth and Rs. 39,708 at8f growth rate requiring 3.1 times investment in industry, i.e.Rs. 16,845 crores. Rs. 50,200 crores and Rs. 123,095 crores for4,6 ancl B per cent GDP growih rate at 1973-74 prices. Thesesums would constitute industrial investment of 2.81 ,5.175 and7.93 per cent of ihe respective GDP in the last five years of theCentury. As per Chenery's table, the gross domestic investmentfor the year 2,C01 would be 18.2 per cent at 4 per cent scenario.19.7 per cent at 6 per cent scenario and 21 .5 per cent at 8 percent scenario. The investment in industry would thus constitute15.4,26.26 and 36.8 per cent of the total investment at 4, 6 and8 per cent growth scenario.

The investment ratio tocountrles was as follows :CountryJapanWest GermanyFranceSwedenU. K.u. s. A.

GDP in some of the developedPer cent ratio34.426.326.322.O18.217.O

f nvestment in plant and machinery constituted 44.75 perc nt of the total investment in Western Germany, 44.6 per centin France. 37,84 per cent in Sweden, 51.43 per cent in U, K,


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RESOU RC ES ASSESSIVENT 29and 41 .13 per cent in U.S.A. The investment of 36.8 per cent inindustry at 8 pr cent scenario for India. is well below thepercentages now being invested in industry in the developedcountnes.

Even taking into consideration, the prominence that agri-culture has to receive in the lndian situation, and the leaway tobe made in the infrastructure development, 36.8 per cent invest-ment in industry should not pose a great deal of a problem tothe lndian economy in the final years of the present Century.It is the immediate future that poses the problem. For 8 percent GDP growth rate. the industrial growth rate has to be 11.1per cent. The 1973-74 industry contribution was Rs. 69g3crores. The yearly incremental value that would have to beproduced at 11.1 per cent growth rate would be Rs. 775 crores.Rs.861 crores, Rs. 957 crores, Bs. 1062 crores and Rs. 1,181

crores between 1974 and 1979, that is Rs. 4,836 crores in all. (ltis assumed that once the investment is made, the industry wouldcontinue to yield the value added every year with proper upkeepand maintenance. though some allowance may have to be madefor the ultimate replacement of the equipment depreciation.) Theratio of investment to value added for the Census and Samplesector is now 3.7. An overall investment of Rs. 17,8g3 croreswould have to be made in industry to give a growth rate of11 .1 per cent for industry. These figures are again at 1g7g-74prices. lf we take the present index at 300 against 2EO for1973-74, the investment in industry at current prices wouldhave to be Rs.21 ,47O crores. The Fifth Five Year Plan (revised)estimates total resources available for investment at Rs. 63,751crores, out of which Rs. 58,320 crores are aggregate domesticsavings and the rest being inflow from the rest of theworld. In other words, we would have to spend 33.69 per centof the total resources available for investment in industry whichis rather difficult. In the earlier stages, therefore, we shouldconcentrate on fuller utilization of capacity, improved prociucti_vity, better management, greater use of waste and bye-products,economy in transport and packaging, less scrap and wastage,etc., so that with lesser investment, it would be possible for


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30 TOWARDS AN INDUSTRIAL POLICY-2OOO A.D.the industrial sector to contribute greater value added. Thisbrings home the point that we have to plan for a gradualincrease in the industrial growth, as also provide for someuntoward contingencies and lean years so that an overall contri-bution would be more in line with the planned scenario.


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Chapter Vlll

Consumption Pattern and Life Styleof Weaker Sections in 2OOO- 1 A.D.Dharia Committee Report on essential commodities andarticles of mass consumption (1973) considered the coarsecereals, pulses, sugar and gur, edible oils and vanaspati, milk,

eggs and fish, common clothing, standard footwear, Keroseneoil and domestic fuel, common drugs and medicines, bicycles,tyres and tubes, matches, dry cells. hurricane lanterns" soapsand detergents and text books and stationery as essentialcommodities and articles to the common man. Under long-rangeperspective, especially if the standard of living of the lowest 30per cent goes up substantially, we may have to consider afieshthe list drawn up by the Committee. lt is known, for instance,that the agricultural breakthrough has not yet affected thecoa rse grains.Moreover, with higher income, people would prefer riceand wheat to coarse grains. In fact, we may visualise a timewhen the coarse grains, because of their low and seasonalyield,may be costlier than the fine grains and may be eaten as esotericfood and on special occasions. Similarly, the spread of electricityand biogas plants to villages may do away with the need forhurricane lanterns. The domestic fuels will have to be consideredfrom the angle of saving of wood and cowdung and channelisingthe energy requirements to sources such as community gobargas plants which will give light. fuel and manure and improvethe health and hygiene of the villagers.ORG considered the objective of the Fourth plan that the


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32 IOWARDS AN INDUSTRIAL POLICY-2OOO A.O.average per capita monthly constlmption of the iowest 30 Befcent of the poptilation be raised to Rs. 20 at 1960-61 prices(Rs. 37 at 1970-71 prices or Rs, 50 at 1973-74 prices) andprojected the population below poverty line as follows ;

TABLE 8.4People below poverty line in 2000 A.D,M illion Sce na f io1. 307 * 10252.204- 9113. 191 - 10254. 141 - 10256. 103 - 9116. 87- 9111.49-10258, 23- 911

million poptilatiohmillion populationmillion populationmillion populationmillion populationmillion populationmillion populationmillion population

3.8o/o growth rate,3.8% growth rate,3.8% growth rate,5.29lo growth rate,3.8% growth rate,5.2% growlh rate,5.2% growth rate,5.2% growlh rate,

increasedincfeasedreducedincreasedredtlcedincreaeedredtlcedreduced

inequalitYinequalitYineqUalitYinequalitYinequalitYinequalityinequalityinequality

It will be seen that under f irst condition the absolute numberof people below poverty line will increase by 14 million ascompared to base year. For appreciable results we must hava high growth rate with reduced inequality. lf we can coupleit with low population growth, hardly 23 million people will bebelow poverty line in 2000 A.D.

ORG divides the costrmption basket in three categories:Categoly 1-Milk and milk products, fruits and nuts, be-verages and refreshments etc. and all itemsin non-food groups except {uel and light.Category 2*Vegetables, sugar, gur, edible oils, meat, fish'eggs,Category 3-Gerea!sThe Group estimates the changes in the percentage shareof the commodity categories as follows:

TABLE 8.5Commodity Base yearCategory

2000 A.D. (Percentage)Scenario

23

33,012.654/'

42 46.2 51,7 64.912.7 12.3 1 1,8 11.345.3 41.5 36,5 33.8


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CONSUMPIION PATTERN AND LIFE STYLE OF WEAKEF SECTIONS 33This reflects the inelasticity of demand for cereals (category3) after the minimum needs are met, suggesting that the expen-

diture on category 2 items will keep in line with the increaseddisposable income and that the expenditure on category 1commodities, which include durable and semi-durables likeappliances. kitchen-ware, fans. coolers. radio, television, audio.visuals and electronic gadgets, furniture, watches, cycles.scooters. mopeds etc. and seruices wrll increase more thanproport ionate Iy.We have to bear in mind the enormous potentialfor exportingdurable goods to oilrich ccuntries, and countries touching theindian ocean (East Africa, Australia, South East Asia etc.) as weare very advantageously situated in the centre of the lndianocean and can make our production available to these countriesmost economically and expeditiously. These goods are alsoknown to add substantial value in the process of manufacture.We can take advantage of the neighbouring market provided ourindustrial base is wide and sound and provided we can meerthe sophisticated demands of the classes demanding leisureservices, activities and products. lt would be difficutt to meetthe export demands if we have a very narrow production basefor such goods in the country. This fact has also been empha-sised by the Committee on institutional infrastructute for Exoortswhich identifies capital goods and durable consumer goods as

items for which we will have increased export demand.What will be the life style in 20OO A.D. ? We can be safein assuming that lndians will continue to be predominantlyvegetarian and will not emulate the Western world in gettingtheir proteins from meat but mostly from grams and pulses. Theintake of vegetables. sugar I gur, fruits and nuts, milk and milkproducts. vegetable oils, beverages and refreshments willincrease with increased disposable income.

As the urban rural ratio will be fast changing in favour ofurban population the foodgrains consumption for the populationas a whole will not rise steeply as lesser percentage will beinvolved in the arduous work on the fields. The farm |abour


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34 TOWARDS AN INDUSTRIAL POLICY'2OOO A.D.irself will be more intense but will demand more of brain thanbrawn as more implements, atlachments machinery and equip-ment willbecome the norm of agriculture for farm managementas per schedule, for multicropping, for timely watering' lertilizerCosages and Pest control.

The villager will be both a farmer and a marketeer and hisvisit to neighbouring setvlce centres and interaction with theurban people will be more frequent' He will be more informedar:d educated'

His clothing style is likely to change and be {unctionat likethat of a factory employee. He may not require the length ofdhotee and turban, but his demand for clothing will not comeCown as he will have more changes of clothes and use themfor other uses such as covers, curtains. furnishings' etc' Withincreasing pteference for synthetics, which are thrice as durableas cotton, it is doubtful if the overall per capita demand willmaterially increase, especially as the warm Indian cllmate doesnot necessitate too much clothing'

Though the dressing style of rural men willchange consider'ably it is doubtful if the rural women will change over tofunctional clothing to the same degree as the men' As thewomen will however have more frequent changes' there is likelyto be a good spurt in the cloth required by them'

The rural people will be more prone to go in for semi durableand durable consumer goods and appliances as they will r'othave the advantages of city services and, unlike city dwellers'they will not have the constraint of space for keeping theirappliances.

Though primary education and health services will have tobe provided for all lhe people, they will not pay anything forthese facilities, excepting if at all as a token' and so the costof oroviding these services will not come out of their income butwill have to be provided by the state'

The urban Cweller because cf the constraint of space andthe steep rise in prices of firewood, besides the disadvantage


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CONSUMPTION FATTERN AND LIFE STYLE OF WEAKER SECTIONS 35

of rransporting this bulky, ine{ficient and slow energy source'will change over to commercial fuels. In this proceSs' ho islikely to be attracted to oil for his requirements as coal has thesame disadvantages as firewood' Bio gas plants for cities willnot be possible excepting as municipal schemes to convert therefuge and waste material into manure and gas' The other methodwould be to convert coal into gas, excepting where gas is avai-lable from underground. To save on transport, to improve, localhygiene to improve manure availability for vegetable gardens inthe vicinity of cities and to supply cooking energy, it may be inthe overall national interest to convert refuge, garbage and wastematerial into gas and manure by every town and city andsupplement it with coal gas, where natural gas is not available'Otherwise the spurt in demand for oil to meet the energy needswill be disastrous for the country.

In rural areas, bio-gas plants will have to be supplementedby oil and gas cylinders, as it may not be possible to start smallcoal gas plants for the villages. The village demand for oiltherefore will go up phenomenally. This will have to be acceptedas a lesser of the evil as compared to forest denudation withthe consequent soil erosion, changes in rainJall and ecologicalimbalance.

TRANSPORT : The interaction between villages and urbanareas will increase considerably. The transport will be mostlypublic, either railways or buses. Individuals may go in more forscooters, motor cycles, mopeds etc. as the relative dlstance bet-ween villages and towns will be shorter (with the increase inthe number of urban towns) and the road network will haveirnproved.

tt is difficult to visualise a private automobile age in India{or even under most optimistic assumption of B per cent growtnand per capita income of Rs. 3598, automobile will cost 10years per capita income as compared to six months per capitaincome in USA and a year's per capita income in Japan. lf theper capita income, however" will be Rs' 1374 (at 4 per crnt


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36 TOWARDS AN INOUSTRIAL POLICY-2OOO A.D.growth rate) then an automobile would be equivalent to 26 yearsincome. We may not therefore have the possibility of theautomobile age coming to lndia. At the same time mass trans-port, public transport and group transport facilities will havc tobe enhanced for better human interaction.


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Chapter lX

Growth RateDraft Fifth Plan has given sorhe thought to the prevalence

of inequality, The Plan concludes that to improve the share of thebottom 30 per cent ol the population from the estimated Rs.25per capita consumption per month to Rs 40,6 per month (1972-73price) growth rate above 5.5 per cent and reduction in inequalityare both indispensable as even with the assumed growth rate of5.5, 6.0 and 6,2 per cent in successive plan periods, the percapita consumption would be only Rs' 38.00 at 1972-73 pricesin 1985-86.

TECS accepts Registrar General's Ms population {orecast asrcalistic and develops four scanarios of the Indian economy at3,5,7 and 9 per cent constant growth rate. Under these growthrates, the per capita GDP in the year 2000-1 is calculated at Rs.1087, Rs, 1793, Rs,2980 and Rs.4922orin US$at $ 134'$ 224, $ 373 and $ 615 respectively against the 1973/74 percapita GDP of Rs.78.3 ($ 98).

The Draft Fifth Plan whilst scrutinizing the impact of FourthPlan (estimating it at 3.7 per cent though, actually it is still lower)says that with the rate of growth experiences in the Fourth Plan-our basic problems would increase over the years rather thanmove towards a solution, A rate of growth of the order originallyenvisaged in the Fourth Plan (5,7 pr cent) is the minimtrm thatthe country must strive for if the planning process is to lead toprogressive improvement in the living conditions of the people(para 3,4) ,


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38 TOWANOS AN INDUSTRfAL POL{CY.2OOO A.D,

' The Pearson Commission and the United Nations Committeefor Development Flanning suggest growth target of at least 6 percent for the developing countries together with the concomitantchanges in the economic structure.

The lowest 30 per cent of the people have to be assuredtheir minimtrm needs in food, clothing and shelter. Besides, toimprove their lot, a massive programme of education, health,sanitation, drinking water and medical care has to be launched.Pheroze Medhora considers that a minimum growth rate of 7.50per cent is required to attain this. This is almost equaf to I percent suggested by Dudley Sears for the development of Columbiathough Sears stresses radical reforms as an essentiaI precondi-tion and a desirable mechanism of employment max;misation'

Taking all these estimates into consideration we willdevelopscenarios at 6 per cent growth rate with reduced inequality. Wewill also wolk out two alternatives @4-2 per cent of the above.rate to take note of adverse contingencies and of over fulfilmentof the targeted growth rate. The per capita GDP in 2000-1 A.D.will be Rs. 2298 at 6 per cent, Rs 'l 374 at4per cent and Rs 3598at 8 per cent at 1973-74 pr,ces assuming the population then tobe 945 million. We will test the feasibility of these scenariosagainst the objectives we have listed for the Industrial Policywlrich w l indlcate the choices that we may have to opt for if thepolicy objectlves have to be fulfllled.


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Chapter X

Structure : Economic and IndustrialChenerylT compared the data of about 100 countries over

the post-war period and came to the conclusion that "risingincome is associated with systematic variations in almost everyfeature of the economic structure", He stressed the need toshift the resources according to changing patterns of demandand opportunities for trade. He then developed a table tomeasure the ,:hanges at different stages of per capita income inaccumulation, output composition, urban/rural population,sectoral labour force and trade (Table 10.1.)

Though the data on which Chenery based his observationsmay not be fully valid, especially with new technological andenvironmental developments, they are pointers to the directionsin which the economy may move under present technology andenvironment. TECS have applied the relevant structure for $ 100GNP from Chenery's table to lndia and tind that it fits India'seconomy admirably (Table 10.2) (excepting for imports andexports percentage, because of the country's large size).Chenery's table shows remarkable validity for Japan in itsadvance from g 250 in 1955 to $ 2000 in 1972. excepting forthe saving rate (a high saving rate is the unique feature otJapanese economy).


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40 TOWARDS AN INDUSTRIAL POLICY-2COO A.D,

(v)e

\c!(') (f)a! (t)(o t.(pC;

q@.(Y) N

q{aci

l)oP(E .:: q! :J .=Jt E - 3t6.F5 P.6OrF=Fo.ld -=F

3 g*55bbH.e.EE ".'E: s E :

H; Ee sts? t;:E'aE;='izo


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STRUCTURE: ECONOMTC AND TNDUSTRTAL 4t'oco5.= o.-.9>;.iv\JO

crft ojoEi .YoO-c)ct:iXOF5J >:-6 9-..:;O -:;5 sFF d)Q.6 R;9J";f=gE;i o-Oo9E; d)m.,=>-;3eE" -F.g 6*arEEE6=


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STRUCTURE : ECONOMIC AND_tNoUSTRtAL 43We reproduce below the

strial labour as per cent oftable :industry share of GDP and indu-total labour force from Chenery,s

TABLE 10.3LEVEL OF GNP PER CAPITAIndia in1971-1s72 $100 $200 $300 $400 $600 $sooLevel of per cepitaGNP industry shareo{ cDPIndustriol labour as

% o{ totai labour forceUrban popu lation as% of total population 19.9 20.0 33.8 40.9 45.5 51.5 55.3In India the indtrstry share of GDp is slightly higher than theone indicated by Chenery's table @ g100. Thougn our marnemphasis in the coming quarter century should be on agriculture,it can be anticipated that industry share of GDp for respecttveincome levels will be almost jn line with Chenery,s eslmate as :1. India has developed industrial and technological skillsahead of the countries with g100 per capita GNp.2. lt has already learnt to utilise and process its resourcesin the initia I stage.3. lt has started exporting its manufactured products andwill continue to improve upon this in the fuiure.4. lt has trained manpower and skill much above theaverage,We may therefore not be wrong in asstrming Chenery.spercentage of industrial production in lndia with increasrng percapita income.We project the GDp growth rate @ A%+Z per cent witha population of 945 million in 2000-1 A.D, This means rnatour GDP in 2000-i A.D, will be as follows*

14,1 13.5 19.6 23.1 25,5 29.0 31.49.6 16.6 20.5 23.4 27.6 30.7


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44 1OWARDS AN INDUSf RIAL POLICY-2OOO A.D.GDP in Rs, crores at 1973-1974 prices

TABLE 10,42001 A,D,

69;%973YearGDPPopulat ion. (esti"mated) in millionPer capita GDP inRs"Per capita GDP ing @Rs,8 Per$

We may approximate the per capita GDP in lndia withChenerr,'s table as follov"'c :

TABLE 10,5Per capita GDP in tndia{97g 172$ 287$ 475

Chnery's tabl6

45,050581

97

r29,892 217,244 369,363045 945 945

1 ,37 4 2'298 3,59847541

$ 100$ 200$ 300$ 500 +xchen'Vdoesnoth6veaco|umnfot$S00,Wewillestirnatethe'igures

{or $ 500 as between $ 400 and $ 600'The output composition as per Chenery's table and for Indiaboth in percentages and in Rupees al 1973-74 prices are workedout in the following tables (Tables 10.6, 10 7 and 10.8)It will be observed that we have taken the primary sector'scontribution at a slightly higher percentage as compared to

Chenery's table because we are laying significant emphasison

the advisability of developing agriculture' We are slightly under'rating the eontribtrtion from indtrstry despite the cornparativelygoocl contribution from industry as $ 100' This is because wewould iike to give prominence to basic indtrstries end interrfiediategoods iis agaihst consumer goods, Which may lower th6 contri-btrtion from indus y inspite of equivalent investment' We afeglving almost egual credit to services because of the policy of


53/80


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46 TOWARDS AN INOUSTRIAL POLICY-2OOO A.O.Applying the estimated output composition of India to the

assumed growth rate of 6fi!2 per cent the estimated outputcomposition in 2000-1 A. D. brings home that :1) The ptimary Sector growth will not keep pace with theoverall growth rate. This is also borne out by our noting earlierthat the requirements for food are inelastic.2) The Services sector slightly outpaces the general growth

rate,3) lt is the utilities and lndustry sector that move ahead ofthe increasing growth rate. lt will be seen that for every 2 percent increase in GDP growth rate the industrial contributiondoubles itself and the utilities almost keep pace with industriesto keep them moving.Earlier we noted that Japan whilst increasing first industrial

production 5 times between 1954 and 1968, reduced the expen-diture on commodities for the final production by 52 per cent.We envisage industrial production in India to go up by 7 timesat 6 per cent growth rate (14 times at 8 per cent growth rate).We will therefore have to aim for at least 50 per cent reductionin expenditure on raw materials etc. for the final production in2000-1A.D. so that with raw materials consumption going upby 3.50 times, we may increase industrial production by 7 timesfor 6 per cent growth rate.

We have to decide on the structure of industry we aim toachieve. Our policy all throughout has been 1o go in heavily forcapital goods industry. The value added by different branchesof industry in the year 1973-74 is :

Branch of industryConsumer goodsIntermediate goodsBasic goods

Year 1973-7435.25 %1s.57 %45.18 %The Draft Fifth Plan visualises investment policy so as tochange this stfucture still more in favour of basic goods, basic


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STRUCTURE: ECONOMTC AN TNDUSTRTAL 47goods contributing 53.02 of the industrial output by the year1985-86 (Table 10.10)

rABLE 10.10TABLE 9 OF DRAFT FIFTH PLAN IN ABOVE FORMAT FOR INDIA

BRANCH OF INDUSTRYin o/o

1985/86 1973-74CONSUMER GOODS 25.60 35.25INTE RM EDIATE GOODS aa 2tl 19.57CAPITAL GOODS 53.02 45.18TOTAL 1 00.00 100.00

The TECS strrdy on the other hand advocates a reversal ofthis policy on the plea that the consumer goods industries are,less capital intensive and at the same time give more employment.They propose 65 per cent to come from consumer goods indus-tries, 20 per cent from intermediate goods and 15 per cent fromcapital goods by 2000-1 A.D.We have analysed the output of some of the advanced coun-tries for the year 1968 from U.N. publications (Table 10.11). Wesee from the table that Japan had the highest contribution frombasic goods amounting to 49.75 per cent. This sector of industrycontributed 46.2o per cent of industrial pfoduction in France and47.43 per cent in Sweden. The high rate in Japan may beexplained by the heavy export of capital goods from the country.Our planners visualise the basic goods to contribute 53.02 percent by 1985-86. We consider this percentage as too higheven for 2000-1 A. D. as, il we persist in it. we may have hugeinvestments locked up in basic goods plants which wouldrenrain idle for want of orders from the other sectors of industry,whilst shortages of intermediate and consumer goods willpersist. perpetuating an economy of shortages.


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48 TOWARDS AN INDUSTRIAL POLICY-2OOO A'D"TABLE 10.11

BRANCH OF INDUSTRY INDIA FRANCE JAPAN SWEDEN SINGAPORE1966 1968 1968 1968 1968coNsuMER GooDS 39.18 23 12 2644 26 51 385INTERMEDIATE GooDs 19.92 30 68 23 a?- 26 00 34'2CAPITAL GOODS 40.90 46.20 49.75 47.43TOTAL 10o.oo 100.00 1c0.01 100.00

We do not under-estimate the prospects of exports of capitaIand durable consumer goods from lndia especially to the Arabworld and South East Asia' Defence requires a strong supportfrom basic iniustries. We are in an advantageous position toexport plants and equipment especially where intermediatetechnologY is involved.

Even so we would suggest basic goods contribution to beof the crder of about 47 per cent by 2000-1 A D' considering itslow ernployment potential and high investment needs'Figures from other countries suggest that our weakest link

is intermediate group as the percentage contributed by thisgroup in France, Japan and Sweden is 30'68' 23'82 and 26iespectively compared to 19.57 for India in 1973-74' Even theDraft Fifth Plan visualises this group to contribute 21'38 percent bY 1985-86.We feel that we should aim at the following contribution

from diJferent branches of industry in the year 2000 A'D' :Consumer gooCs 28%I ntermed ialc goods 25%Basic goods 47%

100.00

This will mean that our major thrust wil[ have to be inintermediate goods whose percentage will have to be improvedfrom 19.57 to 25 per cent. The contribution frorn industries and


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' STRUCTURE : ECONOIItC AN-D tNDr.,STR|AL 49mining under different growth rates for the year 2000_1 will beas follows :

TABLE 10.12

1973-741. Food products I- Textiles 2292.3 (t)2. lntermed iates (Wood,leather, chemicals,coal and petroleum

2000- 1

6450 (3) 13060 (6) 253sO (12)6145 (5) 12500 (ro) 24250 (20'10455 (3.4) 21076 (7.2)4OS3O (14)

8%"/o

products)3. Basic goods 1271,62926.7 (1)(1)(Non-metallic mineralproducts, basic metals.metal products, non-electfical & electricalby-products, transpoftequ ipment instrumentsSmiscellaneous indus-tnesTotal 6490.64. ( M ining-excluded insectoraf categories) 442.423050 46636 905301630(3,8) 3330(7.5) 6500(14.7)

6933.00 24 680 (3.5) 49966(7.2) 97030( 14)(Figures in brackets indicate multiple ot 1973_74 figures or number of times)

We are reluctant to project the production of specific indus-tries because of the possible developments through research,technological advances, plocess clevelopments and shifts Inconsumer preferences. An overview of the quarter century whichis just ending would make cur point clear. The enormcus stridesmade in aviation (jet and superscnic planes), atomic energrj,communications. (integrated circu;try and satellite communica-tion) plastics, pha rmaceut ica ls, chemicals, computers, machinetools (numerical control) etc. would have been ditficult toforecast in 1950. And yet these are the growth industries oftoday, The pace of technological development has quickenedfurther and the industrial scene could change much more rapidly.Even the processes of powder metallurgy, cold extrusion,pressure die casting can drastjcaliy reduce the requirementsof basic metals fike steel and the machine tools required for


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60 TOWAROS AN INDUSTHIAL POLICY.2OOO A.O.removing the excess metals. The technological developlflentg inaluminium, plastics and ceramics may change the demand {otbasic metals, Enormous sums are already being invested indeveloping fusion reaction for energy generation as this processwill oonvert one cubic kilometer of sea water into energyequivalent of 300 billion tonnes o{ coal. We therefore pfoposeto limit our proiections to broad categories of basic, intermediateand consumer goods industries,


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Chapter Xl \

Employment and UrbanDevelopmentEarlier, we projected the total labour force in 2000-1 A. D.at 364 million, the rotal population being 94S million. We willproject the likely sectoral distribution of this labour forceapplying Chenery's table.

LIKELY SECTORAL DISTRIBUTTON OF INDIA'S LABOURFORCE BY 2OOO-1 A.D.

TABLE 11.1Sector Actual Based on Chenery.s pro.jection at perposition capita GDP ofin lndiain 1971 (App. $400 & 600). Corresponding to per capita GDp of

us $ 98 us $172 US $287 US $475PercentagePrimary 72.2 68.1 S8.7 49.9 40.1fndustry - 9.4 9.6 16.6 2o.s zi.iServicee 6 utilities 18.4 22.3 24J 29.9 SC.STotal 100.0 100.0 100.0 IOO.O 1OO.OIn Absolute Number-MillionPrimary 12Olndustry 17Services IUtiliries 33Total 17O

214 182 14660 75 9190 107 127364 364 364


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52 TOWARDS AN INDUSTRIAL POLICY.2OOO A.O.Considering the possibilities of intensive agricultural deve-

lopment, the increase in labour force in primary sector may notpose a problem. As per M S Swaminathan, Japan employs 21 9,Egypt 181 and India 93.2 persons per every 100 hectares ofbrable tand. Even with no increase in arable land, the 175million hectares of arable land will have to employ 122 personsper 100 hectares at $200.per capita GDP and 104 persons per100 hectares at $300 per capita GDP, which is much below eventhe Egyptian intensity at present. At $500 per capita GDP theper hectare labour force at present may have to be reduced byabout 1O\. Multiple cropping, increased irrigation, improvedcrop cycling and agro businesses will ensure occupation of thepeople depending on primary sector for employment. We arealso suggesting that agriculture development should have toppriority concurrent with family planning.

11 is the prospect of increasing employment from 17 millionin 1971 to 60 to 91 million by 2000 A.D. in industrial sectorthat is the challenge.When we compute the labour output (industrial labour forcein production in industry and mining) we get the followingfigures : industrial labour output in GDP.

TABLE 11.24o,/o growth rate6lo growth tate8% growth rate

197320oo-1 @

Rs.4078Rs.4113Rs. 6662Rs. 10662In Japan the labour productivity increased at 8.1 per centper year between 1955-66 due to technological progress,accumulation of capital, and shift of capital and labour from

stagnant industries to developing industries. We may have toprovide for a minimum 3 percent increase in productivity, whichTrade Unions in the Western World anticipate for wagesettlements. lf we are to achieve 3 per cent increase in producti-vity, and provide for-full employmnt, then our growth rate willhave to be atleast 8 per cent, as even at 6 per cent, the labouroutput is very much below what it would be at 3 per cent growth


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'.,.

EMPLOYMENTAND URBAN D EVELO PM ENT 53rate in productivity lat 3 per cent annual increase in productivitythe productivity in the year 2000-1 has to be Rs.9047). Inother words. a brake on productivity and large unemploymentwill be the norm of life at less than I per cent growth rate, At 4percent growth rate. unemployment will have assumed seriousproportions as increase in productivity is almost zero, whichmeans a stubborn insistence on low prcductivity and a hugeback- log of unemployment.

Japan's labour ptoductivity in 1965 was Yen 1,060,000. Atthe then prevailing exchange rates, this comes to US $3000 orequivalent to abour fis. 24,000. Since 1965 labour productivityin Japan has continued to soar whilst the exchange rates haveincreased the value of Yen by 30 per cent. The productivity inlndia @ 8 per cent growth rate in 2000-1 will at best be 40 percent of the 1965 productivity levels in Japan.

Even assuming the Planning Commssion Population projec-tion for 2001 , the labour force would be 323.5 million in 2001.With 4 per cent growth in GDP, the per capita GDP would be1545; at 6l Rs.2,585 and at 8% Rs. 4,276. At Rs.8 to a $, itwould be $ 193, $323 and $ 534.5 respectively.

Ouf output composition would remain more or less thesame, but the persons being employed in industry would comedown to 53.7 million at 4f growth, 66.3 million at 6% growthand 81 .2 million at 8% growth, with the productivity of theindustrial workerbeing Rs. 4,595, Rs. 7,536 and Rs, 11.948respectively. lt means that we have still to strive for 8 per centgrowth rate if we have to improve our yearly productivity byover 3 per cent.

We reproduce Chenery's table of urban pcpulation as itgives us sufficienl warning of the urban chaos if we do not taketimely action. TABLE 11.3Urban Popu lation PercentagePer capita GNPPercentage of urbanpopulation

$100 $200 $300 $50020.0 33.8 40.9 about 48.5


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54 TOWARDS AN INDUSTRTAT POLICY-2OOO A.D.Our urban population in 1971 was 19.9 per cent which isvery near Chenery's 20 per cent. The Registrar General projects

the urban population in 2000-1 A.D. at 29 '4. lt the past growthrate of Indian economy is projected to 2001 A.D. our per capitaGDP then would be somewhat less than $200 and so theRegistrar General's projection of 29.4 may hold good.

However if we want to improve the lot of the lowest 30 pelcent and if the people as a who le have to look forward to abetter future and get out of the poverty (according to the WorldBank, countries with per capita income below $300 at 1970prices are "poor"), we may have to force the pace of develop-ment. As a consequence the urban development may go beyond29.4 per cent. As it is, in 1971 for 17 million industrial labourforce the urban population was 108'9 million. To support anindustrial labour force of upto 91 million and services andutilities labour lorce of 127 million, we may have to go ina big way for a growth centre strategy.

This leads us to the conclusion that if full productiveemployment in indusrial sector for the envisaged labour force in2000-1 is to be assured, we wilJ have to strive for high growthrate. Similarly, our urban population estimate may go completelyhaywire at high growth rates as the projection of urban popula-tion is based on past trends when the growth rate was low'We will have to be prepared for higher urban population at highergrowth rates and take in hand dispersed industrial developmentwith growth centres approach lif we are to avoid the mad rushto metropolitan cong lo me rat io ns.


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Chapter Xll

Assessment of the Industrial PolicyObjectives

With the changing pattern of life style, it wotrld not beworthwhile to project the demand for individual items ofminimum need in the year2000. We have hower,er the recommen.dations of the Working Grotrp of 1962 and the PerspectivePlanning Division's paper on Planning for a minimum level ofincome which accepted the figure of Rs. 20 per capita permonth at 1961 prices for rural areas and Rs. 25 per capita permonth for urban areas to accommodate for higher prices.Education and health were excluded from this, whilst a subsidyon urban housing was implied,We will accept this quantified notion of minimum need asit lends itself to easy evaluation, and at the same time, givesdiscretion to the people to alter their concept of what constitutesthe minimtrm need,Whilst accepting this monetary unit to deline the minimumneeds of the weaker sections we will have also to decide on thelevel of inequality we are aiming at by 2000 A. D. The crossclasssification of countries by income leVel and equality hasbeen done in a joint study by the World Bank's Development

Research Centre and the Institttte of Development Sttrdies at theUniversity of Sussex from which We find as follows I

TABLE 12,1Countrylndia (1964)Korea (1970)u. K. fi968iezechbslovikia(1964)

Per Capita GNPu.s. $992352015,| 150

Lowest 40%16

',.. i8r.j'18.827.6

Middle 40olo Top.2O-2.t3742.241,4

52453931


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56 TOWARDS AN INDUSTRTAL POLICY-2OOO A'D'lncidentally,Czechoslovakiahastheleastinegualityinthetable. We may set our goals for 2000 A'D' {or lndia at thefollowing percentages which seem to be the best one can havewithin the presenl socro-political envitonment' 25 :40 : 35'This will mean that if the lowest 40 per cent have Rs 20

per capita per month, the middle 40 per cent will have Rs 32and the top 20 per cent will have Rs' 56 per month capita at1960-61 pric"r. We will further assume that this will be thenet consumption expenditure of the different strata'

We are now in a position to quantify money required at1973-7 prices (Rs. 20 at 1960-61 : Rs' 50 at 1973-74 prices)in the year 2001 to meet the minimum needs of the people'945 million x 0.4 x Rs. 600 Per Year945 million x 0.4 x Rs. 960 Per Peat945 mlliion x O'2 x Rs.1680 pel'yearloral

Rs. (Million)226,800362,800317 ,520907 ,120

The minimum needs programme further accepts thateducation and health will be provicled by the state We willattemDt to translate these needs into financial terms so thatwe have some idea of the costs involved in providing theseservices.J. P. Naik in his thought provoking book' "ElementaryEducation in India" refers to Education Commission's Reportwherein a teacher-pupil ralio of 40 at the lower primary and 35at the upper primrry level lias been suggested'

The Registrar General has projected the M2 population byage and sex for 2001 as 100,'l 81 ,000 in the age group of 5-9and 93,1 68.000 in the age group of 10-14' The number ofteachers required to train these pupils will be 2,500,000for lowetprimary at 40 pupils per teacher and 2,660,000 for upper primarylevel. (This number does not take into consideration leavevacancies, a resetve for absenteeism, or lower teacher-pupilratio in some places)' The main cost of education is teacher'ssalaries, whilst the non-teacher costs including contingent


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ASSESSMENT OF THE INDUSTRIAL POLICY OBJECTIVES 57expenditure, rent or maintenance of buildings, amortization costof new buildings constructed. equipment etc. are generallyassumed to be 20 per cent of the teacher costs.

We will adopt the formula developed by parulekar forascertaining the primary education cost which is as follows :T:H cr) + rWhere N : total number of children in the given age groupwho have to be educated.CT : teacher cost, on account of salary. allowances.old age provision, etc.R : average teacher pupil ratio.K : cost per pupil, other than teacher, cost, suchas rent of buildings or educational materialsand ancillary services such as free supply ofbooks, school meals, or health care.T : Total cost,

CT or teachers cost, however, varies with the national percapita income, it being 5 to I times the per capita income. Theper capila income in 2C00 A.D. at various growth rates, and theteacher's salary at 5 tin,es the per capita income is worked outbelow:TABLE 12.2

4Yo137 468706% BYoPer capita income atTeachers.annual salary 2294 359811490 17990K stands at about 10 per cent of the teachers cost at present.Says Naik, "The conditions in our primary schools are so patheticthat an increase in these costs is extremely urgent if studentshave to be improved. The Education Commission, therefore,placed the non-teacher cost at 20 per cent of the teacher costs,,.We will accept 20 per cent of the teachers cost as nonteacher,scost. Even then. these costs would not incfude. cost of freemeals, medical services. etc.

Our formula now would read as follows :T : (5,160,000 teachers x 6870/11,490/17,990) x 120/100or primary education yearly cost in ZOOO A.D. will be :


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58 TOWARDS AN INDUSTiIAL POLICY.2OOO A.D.Rs. 4,253 crores @ 4f growth rateRs. 7,115 crores @ 6f growth rateRs. 9,289 crores @ 8% growth rate

We will assume that an equal amount will be spent towardssecondary, university, social and technical education, thougheven in the Draft Fifth Plan, primary educaiion constitutes only43 per cent of the combined total educational budget of thecentre and the state.

Housing may be divided into two categories-rural housingand urban housing.Rural Housing :About 90 per cent of the houses are madeof mud-concrete or combination of wood, bamboo and thatchedroofs. The houses which are built of wood or bamboo andthatched roofs usually last three years, whereas the mud housesare easily eroded and are far' from water-proof. 41 per cent of

the rural population live in one-room houses;27 per cent in two-room houses;13 per.cent in three-room houses and the rest inbigger houses. 70 per cent of lhe households depend uponwells. tanks and Ponds for water. 94 per cent have no bath-rooms and 97 per cent have no built up toilets.

Urban Housing: As of 1971 , there were 18.5 milliondwelling units accommodating 19.92 million households. 12.7per cent of the houses were made of improvised matrials suchas mud walls, thatched roofs etc., about 63.8 per cent weremade of concrete and 23.5 per cent were semi-permanenthouses. In cities over 1 million population size 66.6 per centhouseholds occupy one-room houses. Besides, these major citieshave slumdwellers and squatters. Whereas in 1951 there wasone squatter household over 20 non-squatter households inDelhi, in 1973 there was one squatter for less than f ive non-squatter households. Squatter population has been growing atan annual rate of 12 per cent in.comparison to the growth ofthe cities at 4.5 percent. lt is estimated that 15 to 20 per centof the population live in squatter settlements in Calcutta andGreater Bombay. Slum dwellers are estimated at over 2 millioneach in Greater Bombay and Calcutta.


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ASSESSMENT OF THE INDUSTRIAL POLICY OBJECTIVES 59. By 2000 A.D., the number of households is estimated to be

201 million. Household size Is expecttd ro decrease from 5.7in 1971 to 4.7 in 2000 A.D. Surveys carried out place depletionand dilapidation of housing stock at 2 per cent in urban and 21per cent in rural areas. The Fifth Plan document indicated that15 per cent of the urban houses and 25 per cent of rural houseswere below the standard of habitation.The number oJ households in 2001 will be 59 million urban

and 142 rural. From this figure we may deduct the number ofhouses estimated to be currently existing, viz. 18.5 millionurban houses and 90 million rural houses. Besides the need forbuilding hotrses to meet the difference befween the alreadyexisting houses and those considered necessary for accommo-dating 2000 A.D. population, we have to allow for dilapidatedor improvised structures, and for deterioration in the existinghousing stock.

TABLE 12.3

Existing housing at the beginning of the Fifth PlanLess delapidaled or improvised structuresNet housing stockHouses required to accommodate the populationof 2000 A.D.Net number of houses to be builtRebuilding, based on 25 years life for rural housingand 50 years life for urban housingN6t number of houses to be built yearlyin 2000 A.D. (Total divided by 25 years)

(Figures in million)Rural Urban9018 1 8.5o.377')

14218.13

5YIU 40.87

20140 60.87s.6 2.4The figures for 2000 A. D. are in approximation on theassumption that in the initial years the backlog in housing

shortage will be tackled adequately.We have noted the lack of space in both the rural and urbanhouses. At the same time, because of the enormity of cost,we have brought down our concept of square feet per pgsonfrom 100 square feet to 60 square feet. As rural areas mayhave more open areas surrounding the house, we may consider


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60 TOWARDS AN INDUSTRIAL POLICY.2OOO A.D.250 sq. ft. per household as adeguate; for urban households, wemay provide for 300 sq. ft. per household. We will assume thehousing cost to be Rs. 30 per sq. ft. for urban houses andRs. 10 per sq. ft. for rural houses, though we realise that thehousing cost will have to provide for differences in per capitaincome at different growth rates to meet the labour cost, whilsteven the current costs are rnuch higher than the assumed costs.Our per annum housing cost, in 20OO A.D. therefore will be :(Rs. in crores)2250 Urban-2.4 million houses x Rs. 3000 sq. ft. per house- Rs. 30 per sq ft.1400 Bural-5.6 million hou3es x 250 sq. ft. per housex Rs. 10 per sq. ft.rora!39!q_

Infra structure for human settlements : Cost of urbaninfrastrtrcture for industry as related to city size in developingcountries, a study of U. P,, Punjab area undertaken in 1967,brought home the relative cost of facilities, such as sitedevelopment excluding roads, rail, power, water, sewerage,houses, schools, hospita ls, telephones, po lice, fire, refuge disposal(Table 99 of the study). The 1967 costs are now outdated. Butthe important fact brought out is the stable relationship betweenhousing cost as against the infrastructural facilities. The tableconsiders both the capital costs and the annual maintenancecost. The annual maintenance cost of houses was generally 15per cent of the capital cost, whilst both the caoital and mainte-nance cost of houses came to between 20 and 20.g per centof the overall facilities cost. In other words. the facilities costin urban areas is four times the housing cost. We have no dataregarding costs in rural areas. As it is, however, we areassuming the rural houses to cost one third of the urban houses.We may therefore maintain the relationship between facilitiescost and housing cost in the same ratio as for urban areas,which will actually mean that rhe rural facilities cost will be1/3rd ot those of the urban facilities.

Our annual urban and rural housing cost came to Rs. 3,650crores. The annual maintenance cost for all the hotrses wouldcome to 15 per cent of this figure viz. Rs. 550 crores. The total


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ASSESSMENT OF THE INDUSTRIAL POLICY OBJECTIVES 61annual cost on housing therefore would be Rs.4,200 crores. Thefacilities cost being four times the housing cost would come toRs. 16,800 crores. The total annual cost fof human set ementswould therefore come to Rs. 21,000 crores.

Health services are geriera!ly allocated about S0 per centof the Education Buclget. Here aEain the main costs are of thepersonnel such as doctors and nurses. The outlays for healthproposed in the Draft Fifth plan both for Centre and States isRs. 796 crores as against the outlays for education amountingto Rs. 1726 crores. Health services have received Cindrellatreatment all these years. For instance, for every 4,7g5 inhabi-tants Ind'a had one physician as compareel to less than g00inhabitants per physician for the developed world. We shouldtherefore provide for atleast S0 per certt of the educationalbudget for health services if we have to give prevenrrve,protective and.-urative health service to the people by 20004.D.The health services will therefore have to be provided Rs. 4253crores, Rs. 7,1 15 crores or Rs. 9,2g9 crores for 4,6 and g oer centgrowth rates respectively.

Exports: Exports are needed to meet the import obliga-tions as also to service external debts. For the year 1974_75our imports were Rs. 4,349 crores and total debt servicingcharges were Rs. 601 .8 crores consisting of Rs. 401 croresamortization and Rs. 200.8 crores interest payments. Ourexports for the period were, however, Rs. 3,330 crores, showinga trade deficit of 1,096 crores and another Rs.60i.g croresdeficit for debt servicing, The exports of this period constituted4.9 per cent of GNP. lf the exports were not only to balanceimports but to meet the debt servicing charges, rhey wotrld haveto be of the order of Rs. 4,950.8 crores or 7.45 per cent of GNp.Admittedly 1974-75 was an abnormal year fcr imports. Butthe abnormality seems io be perpetuating as oil prices, fertilizersand food are claiming priority on imports and the cost of oiland the imports thereof is not likely to diminish. A study of ourfcreign trade shows that except for the year 1972,73, we havehad an adverse balance continuously from 1951-52. At the


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ASSESSMENT OF THE INDUSTRIAL POLICY OBJECTIVES 63capabilities for emerging growth industries is stepping up theallocation for research" For instance" in 1gS9 it a ocated 1.11per cent of-its GNP to Research, This percentage was steppedup to 1,41 in 1967.

The growth industries like atomic energy, computer.s,electronics, airspace etc. clairn over S per cent of their sales toresearch and development. The more one has to develoD astrong national security base and a foundation for emergingglowth industries, the more therefore will a country have toallocate to reserch.As otlr country is large and has to guard its frontiers as alsoenstrre mutual peace,

towards an industrial policy 2000 a.d

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