INDIAN ECONOMY-III

BY:
DR J R KALYANKAR
BSc, LLM, DLL, DTL, DBM, DCA, DBF, CAIIB, MMS, PhD.
 Syllabus

• Unit-4:
• Objectives and Strategy of Planning
• Five Year Plans
• Target, Achievement & Failure of Plans in Mixed Economy like
India
• Models of Economic Development
• Nehru V/s Gandhi
• Lliberalisation, Privatisation & Globalisation Strategy
• PURA-Neo Gandhian Approach to Development and Modi’s
Strategy
 Objectives and Strategy of Planning

• 1. Economic Development:
• The main objective of Indian planning is to achieve the goal of economic
development economic development is necessary for under developed
countries because they can solve the problems of general poverty,
unemployment and backwardness through it.
• Economic development is concerned with the increase in per capita
income and causes behind this increase.
• In order to calculate the economic development of a country, we should
take into consideration not only increase in its total production capacity
and consumption but also increase in its population.
• Economic development refers to the raising of the people from inhuman
elements like poverty unemployment and ill heath etc.
 Objectives and Strategy of Planning
• 2. Increase Employment:
• Another objective of the plans is better utilization of man power resource
and increasing employment opportunities.
• Measures have been taken to provide employment to millions of people
during plans. It is estimated that by the end of Tenth Plan (2007) 39
crore people will be employed.
• 3. Self-Sufficient:
• It has been the objective of the plans that the country becomes self-
sufficient regarding food grains and industrial raw material like iron and
steel etc.
• Also, growth is to be self sustained for which rates of saving and
investment are to be raised. With the completion of Third Plan, Indian
economy has reached the take off stage of development.
• The main objective of the Tenth Plan is to get free from dependence on
foreign aid by increasing export trade and developing internal resources.
 Objectives and Strategy of Planning

• 4. Economic Stability:
• Stability is as important as growth. It implies absence of frequent end
excessive occurrence of inflation and deflation. If the price level rises very
high or falls very low, many types of structural imbalances are created in
the economy.
• Economic stability has been one of the objectives of every Five year plan
in India. Some rise in prices is inevitable as a result of economic
development, but it should not be out of proportions. However, since the
beginning of second plan, the prices have been rising rather considerably.
• 5. Social Welfare and Services:
• The objective of the five year plans has been to promote labour welfare,
economic development of backward classes and social welfare of the
poor people. Development of social services like education, health,
technical education, scientific advancement etc. has also been the
objective of the Plans.
 Objectives and Strategy of Planning
• 6. Regional Development:
• Different regions of India are not economically equally developed.
Punjab, Haryana, Gujarat, Maharashtra, Tamil Nadu, Andhra Pradesh
etc. are relatively more developed.
• But U.P., Bihar, Orissa, Nagaland, Meghalaya and H.P. are economically
backward. Rapid economic development of backward regions is one of
the priorities of five year plans to achieve regional equality.
• 7. Comprehensive Development:
• All round development of the economy is another objective of the five
year plans. Development of all economic activities viz. agriculture,
industry, transport, power etc. is sought to be simultaneously achieved.
• First Plan laid emphasis on the development of agriculture.
• Second plan gave priority to the development of heavy industries.
• In the Eighth Plan maximum stress was on the development of human
resources.
 Objectives and Strategy of Planning
• 8. To Reduce Economic Inequalities:
• Every Plan has aimed at reducing economic inequalities. Economic
inequalities are indicative of exploitation and injustice in the country. It
results in making the rich richer and the poor poorer.
• Several measures have been taken in the plans to achieve the objectives of
economic equality specially by way of progressive taxation and reservation
of jobs for the economically backward classes. The goal of socialistic pattern
of society was set in the second plan mainly to achieve this objective.
• 9. Social Justice:
• Another objective of every plan has been to promote social justice. It is
possible in two ways, one is to reduce the poverty of the poorest section of
the society and the other is to reduce the inequalities of wealth and income.
• According to Eighth Plan, a person is poor if the spends on consumption
less than Rs. 328 per month in rural area and Rs. 454 per month in urban
area at 1999-2000 prices. About 26 percent of Indian population lives below
poverty line. The tenth plan aims to reduce this to 21%.
 Objectives and Strategy of Planning

• 10. Increase in Standard of Living:

• The other objective of the plan is to increase the standard of living
of the people.
• Standard of living depends on many factors such as per capita
increase in income, price stability, equal distribution of income etc.
• During the period of Plans, the per capita income at current prices
has reached only up to Rs. 20988.
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 Five Year Plans
• History of Economic Planning In India
• Economic planning in India dates back to pre-Independence period when leaders of
the freedom movement and prominent industrialists and academics got together to
discuss the future of India after Independence which was soon to come.
• Noted civil engineer and administrator M. Visvesvaraya is regarded as a pioneer of
economic planning in India. His book “Planned Economy for India” published in
1934 suggested a ten year plan, with an outlay of Rs. 1000 crore and a planned
increase of 600% in industrial output per annum based on economic conditions of
the time.
• The Industrial Policy Statement published just after independence in 1948
recommended setting up of a Planning Commission and following a mixed
economic model. Here are the major milestones related to economic planning in
India:
• Setting up of the Planning Commission: 15 March 1950
• First Five Year Plan: 9 July 1951
• Dissolution of the Planning Commission: 17 August 2014
• Setting up of NITI (National Institution for Transforming India) Aayog: 1 January
2015
 Five Year Plans
Plan Year Objectives Achievement

1 1951-56 Rehabilitation of refugees, rapid Targets and objectives more or

agricultural development to achieve less achieved. With an active
food self-sufficiency in the shortest role of the state in all economic
possible time and control of sectors. Five Indian Institutes of
inflation. Technology (IITs) were started
as major technical institutions.

2 1956-61 The Nehru-Mahalanobis model was It could not be implemented fully

adopted. ‘Rapid industrialisation due to the shortage of foreign
with particular emphasis on the exchange. Targets had to be
development of basic and heavy pruned. Yet, Hydroelectric
industries Industrial Policy of 1956 power projects and five steel
accepted the establishment of a mills at Bhilai, Durgapur, and
socialistic pattern of society as the Rourkela were established.
goal of economic policy.
 Five Year Plans
Plan Year Objectives Achievement

3 1961-66 ‘Establishment of a self-reliant Failure. Wars and droughts. Yet,

and self-generating economy’ Panchayat elections were
started.• State electricity boards
and state secondary education
boards were formed

4 1966-69 Crisis in agriculture and serious A new agricultural strategy was

food shortage required attention implemented. It involved the
distribution of high-yielding
varieties of seeds, extensive use
of fertilizers, exploitation of
irrigation potential and soil
conservation measures.
 Five Year Plans
Plan Year Objectives Achievement

5 1969-74 ‘Growth with stability’ and Was ambitious. Failure. Achieved

progressive achievement growth of 3.5 percent but was spoiled
of self-reliance Garibi by Inflation. The Indira Gandhi
HataoTarget: 5.5 % government nationalized 14 major
Indian banks and the Green
Revolution in India advanced
agriculture.

6 1974-79 ‘Removal of poverty and High inflation. Was terminated by the

attainment of self-reliance’ Janta govt. Yet, the Indian national
highway system was introduced for the
first time
 Five Year Plans
Plan Year Objectives Achievement

7 1980-85 ‘Direct attack on the problem of Most targets achieved. Growth:

poverty by creating conditions 5.5 %. Family planning was also
of an expanding economy’ expanded in order to prevent
overpopulation.

8 1985-90 Emphasis on policies and With a growth rate of 6 %, this

programs that would accelerate plan was proved successful in
the growth in foodgrains spite of severe drought
production, increase conditions for the first three
employment opportunities and years consecutively. This plan
raise productivity introduced programs like
Jawahar Rozgar Yojana.
 Five Year Plans
Plan Year Objectives Achievement

9 1989-91 No plan due to political It was the beginning of

uncertainties privatization and liberalization in
India.

10 1992-97 Rapid economic growth, high Partly success. An average

growth of agriculture and allied annual growth rate of 6.78%
sector, and the manufacturing against the target 5.6% was
sector, growth in exports and achieved.
imports, improvement in trade
and current account deficit. to
undertake an annual average
growth of 5.6%
 Five Year Plans
Plan Year Objectives Achievement

11 1997-02 Quality of life, generation of It achieved a GDP growth rate

productive employment, of 5.4%, lower than the target.
regional balance and self- Yet, industrial growth was 4.5%
reliance. Growth with social which was higher than targeted
justice and equality. growth 3%. The service industry had a
target 6.5% growth rate of 7.8%. An
average annual growth rate of
6.7% was reached.

12 2002-07 To achieve 8% GDP growth It was successful in reducing

rate, Reduce poverty by 5 the poverty ratio by 5%,
points and increase the literacy increasing forest cover to 25%,
rate in the country. increasing literacy rates to 75 %
and the economic growth of the
country over 8%.
 Five Year Plans
Plan Year Objectives Achievement

13 2007-12 Rapid and inclusive growth. India has recorded an average

Empowerment through education and annual economic growth rate
skill development. Reduction of gender of 8%, farm sector grew at an
inequality. Environmental sustainability. average rate of 3.7% as
To increase the growth rate in against 4% targeted. The
agriculture, industry, and services to industry grew with an annual
4%,10% and 9% resp. Provide clean average growth of 7.2%
drinking water for all by 2009. against 10% targeted

14 2012-17 “Faster, sustainable and more inclusive Its growth rate target was 8%.
growth”. Raising agriculture output to 4
percent. Manufacturing sector growth to
10 %
The target of adding over 88,000 MW of
power generation capacity.
 Economic Development Models
• Introduction
• Economic development means overall increase the wellbeing of
human capital over a period of time as compared to increase in
national income. The only increase in the national income doesn't
mean economic development. For that, economic development models
used to observe the real effect.
• Types of Models
• Harrod-Domar growth model
• Lewis Structural Change Model
• Rostow's Model – the 5 Stages of Economic Development
• Chenery's patterns of development
• Neoclassical dependence model
• The International Dependence Revolution (IDR)
• Traditional Neoclassical Growth Theory
 Economic Development Models
• 1) Harrod-Domar growth model
• This model mainly depends on two factors:
Savings
Investment
In this model, the main strategy is a mobilisation of saving and to generate
investment to increase economic growth.
• It means investment leads to growth and it comes from saving.
• Higher income means higher savings.
• Economic growth measured by saving ratio and capital input-output ratio.
• 2) Lewis Structural Change Model
• It is also called as DUEL-SECTOR model.
This model has two sectors:
Tradition sector
It has surplus of labour for i.e. Agriculture sector
• Modern sector
Modern sector focuses on the transfer of surplus labour to the modern sector
for i.e. Industrial sector
 Economic Development Models
• 3) Rostow's Model – the 5 Stages of Economic Development
• The American Economist, W.W.Rostow developed this theory by saying that
nation passed through five stages of economic growth development.
• The traditional society
• The pre-conditions for off-take
• The takeoff
• The drive to maturity
• The age of high mass consumption
• 4) Chenery's pattern of development
• Chenery along with his colleagues examined patterns of development for
countries at different per capita income levels.
• Shift from agriculture to industrial production.
• A steady accumulation of physical and human capital.
• Change in consumer demands.
• Increased urbanisation.
• A decline in family size.
• Demographic transition.
 Economic Development Models
• 5) Neoclassical Dependence Model
• This model is based on the condition, dependence is a condition by which
one country's economic development depends on others.
• 6) The International Dependence Revolution (IDR)
• This model opposes the tradition's emphasis on the GNP growth for the
development.
• It mainly emphasis on the international relations and policy reforms.
• IDR model stated that developing countries as intercept by institutional,
political, and economic rigidities in both domestic and international setup.
• 7) Traditional Neoclassical Growth Theory
• This theory mainly depend on these three Output growth results
• Increase in labour
• Increase in capital
• Changes in technology
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 Gandhi Versus Nehru
• Who was Gandhi?
• The full name of Gandhi is Mohandas Karamchand Gandhi. He is also known
as Mahatma Gandhi. Mahatma is a sanskrit word, which means venerable or
high-souled. So, you understand that the term Mahatma was used as an
honorary term for Gandhi.
• Mahatma Gandhi was born on October 2, 1869 in the district of Porbandar in the
state of Gujarat, in India. The birthday of Mahatma Gandhi is celebrated in India
as Gandhi Jayanthi. Also, Gandhi’s birthday is celebrated worldwide as the
International Day of Non-Violence.
• Gandhi was 20 years older than Nehru. Gandhi is often described as the ‘Father
of the Nation.’ Mahatma Gandhi took part in the independence struggle of India.
He was the architect of several movements in India that led to the independence
of the country. Some of the movements started by Mahatma Gandhi include Quit
India Movement, Civil Disobedience Movement, Dandi March, and the like.
People followed him wherever he went. Gandhi advocated the principle of non-
violence.
• He put forward the principle of Satyagraha. Jawaharlal Nehru participated in
these movements. Mahatma Gandhi was assassinated on 30th January 1948.
 Gandhi Versus Nehru
• Who was Nehru?

• Nehru is the short form of his full name Jawaharlal Nehru.

• Jawaharlal Nehru was affectionately called ‘chacha,’ which means ‘an uncle.’
Jawaharlal Nehru was born on November 14, 1889 in the district of Allahabad, in
the state of Uttarpradesh.
• Nehru was very fond (loving) of children. This is the reason his birthday is
celebrated in India as Children’s Day. Nehru participated in the struggle for
independence of his country, India.
• Nehru became the first Prime Minister of Independent India. Nehru is often
described as the architect of modern India for he laid the foundation for the
industrial and the agricultural development in the country.
• Daughter of Jawaharlal Nehru, Indira Gandhi, is also well-known as she was the
third Prime Minister of India. Jawaharlal Nehru passed away on 27th May 1964.
 Gandhi Versus Nehru
• What is the difference between Gandhi and Nehru?
• When we consider the outlook of the two, we can see that Gandhi’s outlook
was oriental. He was inspired by the cultural heritage of India.
• Nehru, on the other hand, was westernized in his outlook. The western
education has a huge impact on the way Nehru looked at things. His ideas
were pragmatic (practical).
• Gandhi’s idea of a democracy was spiritualized. He envisaged a society
without hypocrisy (falseness) and corruption. In order to attain that, a society
where property and position had no importance had to be created. Gandhi
believed manual work to be the basis of such a society.
• Nehru believed in a parliamentary democracy. He had faith in the institutions.
For him, the basis of such a democracy was universal adult suffrage.
• For a self-sufficient economy, cottage industry (hand spinning, hand
weaving, Khadi) was an idea of Gandhi.
• Nehru as his ideologies followed democratic socialism. He believed in
massive industrialization, scientific and technological advancement, etc. for a
strong economy for India.
 Gandhi Versus Nehru
• While Gandhi believed India should not interfere in the affairs of other
countries
• Nehru believed in having good relationships with other countries and helping
the world as much as one could. He believed this was essential to uplift India
in the world.
• Gandhi’s ideas, as we discussed earlier, was more spiritual. He never
compromised with his principle of truth, non-violence and purity. On the other
hand,
• Nehru was not so much spiritual as Gandhi. He was always the pragmatic one.
If the situation demanded, he was ready to compromise. That was how he
became a good leader to the newly independent India.
• Gandhi always chose traditional methods to win his goals while Nehru was
open to the new ways.
• Gandhi was named the Father of the Nation because he was a hard working,
compassionate man and also someone who agreed with what traditional India
brought forth.
• Nehru was known as the architect of modern India because he was a man of
pragmatic thought and a dream to modernize India.
 Liberalisation, Privatisation, Globalisation
• Introduction to LPG
• LPG stands for Liberalization, Privatization, and Globalization. India under its
New Economic Policy approached International Banks for development of the
country. These agencies asked Indian Government to open its restrictions on
trade done by the private sector and between India and other countries.
• Indian Government agreed to the conditions of lending agencies and
announced New Economic Policy (NEP) which consisted wide range of
reforms. Broadly we can classify the measures in two groups:
• 1. Structural Reforms
• With long-term perspective and eyeing for improvement of the economy and
enhancing the international competitiveness, reforms were made to remove
rigidity in various segments of Indian economy.
• 2. Stabilization Measures (LPG)
• These measures were undertaken to correct the inherent weakness that has
developed in Balance of Payments and control the inflation. These measures
were short-term in nature.
 Liberalisation, Privatisation, Globalisation
• Various Long-Term Structural Reforms were categorized as:
• Liberalization
• Privatization and
• Globalization
• Collectively they are known by their acronym LPG. The balance of
Payment is the system of recording the economic transactions of a country
with the rest of the world over a period of one year. When the general
prices of goods and services are increasing in an economy over a period
of time, the same situation is called Inflation. Let’s understand each
terminology in detail
• Liberalization
• The basic aim of liberalization was to put an end to those restrictions
which became hindrances in the development and growth of the nation.
The loosening of government control in a country and when
private sector companies’ start working without or with fewer restrictions
and government allow private players to expand for the growth of the
country depicts liberalization in a country.
 Liberalisation, Privatisation, Globalisation

• Objectives of Liberalization Policy

• To increase competition amongst domestic industries.
• To encourage foreign trade with other countries with regulated
imports and exports.
• Enhancement of foreign capital and technology.
• To expand global market frontiers of the country.
• To diminish the debt burden of the country.
• Economic Reforms during Liberalization
• Many sectors were impacted during the course of Liberalization. They
were:
• Industrial Sector Reforms
• Financial Sector Reforms
• Tax Reforms / Fiscal Reforms
• Foreign Exchange Reforms / External Sector Reforms
 Liberalisation, Privatisation, Globalisation
• 1. Industrial Sector Reforms
• I. Abolition of Industrial Licensing
• The government abolished the licensing requirements of all industries, except for
five industries, which are:
• Liquor
• Cigarettes
• Defense equipment
• Industrial Explosives
• Dangerous Chemicals, drugs, and pharmaceuticals
• II. Contraction of Public Sector
• A number of public sector industries which were earlier reserved under
governmental control reduced from 17 to 8 in the count. Presently these
companies are only 3 in number. Public sector undertaking controls in the sectors
mentioned below –
• Railways
• Atomic Energy
• Defense
 Liberalisation, Privatisation, Globalisation
• III. De-reservation of Production Areas
• The productions areas which were earlier reserved for
Small Scale Industries were de-reserved to all. This improved the land
efficiency and developed more cultivation area across the country.
Farmers were earlier restricted to use area owned by them. Later during
privatization, many private sector organizations entered into the sector of
farming. Liberalization technically increased the production per hectare
and supported the growth of the nation.
• IV. Expansion of Production Capacity
• The producers were voluntarily allowed to expand their production
capacity according to the nature of the market. They were allowed to
choose their own crop or product. On the study of the market conditions
related to demand and supply the producers were allowed to choose the
size of land under cultivation for each crop and had a liberty to plan their
production either for the domestic market or international markets.
 Liberalisation, Privatisation, Globalisation
• V. Freedom to Import Capital Goods
• To upgrade and adopt technology which is more advanced as compared
to existing technology, the business houses, and production units were
allowed to import capital goods from advanced countries. This helped in
increasing the per-acreage cultivation across the country. Farmers and
producers of other products were allowed to exchange the technological
up gradation.
• 2. Financial Sector Reforms
• Financial Sector includes various financial institutes like Commercial
Banks, investment banks, stock exchange operators and foreign
exchange dealers.
• Following reforms were enforced and initiated in above mentioned
financial institutes:
• I. Reducing various ratios
• Statutory Liquidity Ratio (SLR) was lowered from 38.5% to 18%.
• Cash Reserve Ratio (CRR) was lowered from 15% to 4%.
 Liberalisation, Privatisation, Globalisation
• II. Competition from new private banks
• The banking sector emerged in the private sector and many players
grabbed the opportunity to compete with public sector banks.
• This lead to the creation of positive competition and expansion of the
service sector for the consumers.
• III. Change in the role of RBI
• The central bank of the country i.e. The Reserve Bank of India became a
“facilitator”. Earlier RBI was the “regulator” of the financial activities in the
country.
• IV. De-regulation on interest rates
• Banks were allowed to set their own interest rates on all business and
commercial borrowings. But for saving bank deposits, the control was with
the central government.
 Liberalisation, Privatisation, Globalisation
• 3. Tax Reforms / Fiscal Reforms
• Fiscal Reforms are the policies set for the government’s taxation and
public expenditure policies. All macroeconomic related issues are part of
fiscal policies designed by the central government. Prior policy simplified
the tax structure and taxation rates were dropped and reduced for
convenience of the taxpayers.
• This increased the tax revenue for the government and reduced all tax
evasion strategies which taxpayers used to follow to skip tax liability. As
the tax revenue and other revenues increased for the government,
correspondingly government started developing all the areas which were
either underdeveloped or undeveloped.
• 4. Foreign Exchange Reforms / External Sector Reforms
• All foreign exchange policies and foreign trade policies were covered in
external sector reforms. These were developed to increase international
trade between countries. Various reforms were initiated in this sector to
develop the foreign exchange reserves. Some of the reforms were:
 Liberalisation, Privatisation, Globalisation
• I. Devaluation of Rupee
• The value of the rupee was deliberately devalued to encourage exports and
discourage imports. In 1991, to increase foreign exchange reserves, exports
were promoted and all relevant benefits were provided to exporters.
• II. Other Measures-
• The quota system was abolished. Especially on imports
• All import related policies were trashed
• Duties on various imported goods were reduced
• All export duties were withdrawn
• Privatization
• This is the second of the three policies of LPG. It is the increment of the
dominating role of private sector companies and the reduced role of public
sector companies. In other words, it is the reduction of ownership of the
management of a government-owned enterprise. Government companies
can be converted into private companies in two ways:
 Liberalisation, Privatisation, Globalisation
• By disinvestment
• By withdrawal of governmental ownership and management of public
sector companies.
• Forms of Privatization
• Denationalization or Strategic Sale:
• When 100% government ownership of productive assets is transferred to
the private sector players, the act is called denationalization.
• Partial Privatization or Partial Sale:
• When private sector owns more than 50% but less than 100% ownership
in a previously construed public sector company by transfer of shares, it is
called partial privatization. Here the private sector owns the majority of
shares. Consequently, the private sector possesses substantial control in
the functioning and autonomy of the company.
 Liberalisation, Privatisation, Globalisation
• Objectives of Privatization
• Improve the financial situation of the government.
• Reduce the workload of public sector companies.
• Raise funds from disinvestment.
• Increase the efficiency of government organizations.
• Provide better and improved goods and services to the consumer.
• Create healthy competition in the society.
• Encouraging foreign direct investments (FDI) in India.
• Globalization
• It means to integrate (mix) the economy of one country with the global
economy. During Globalization the main focus is on foreign trade &
private and institutional foreign investment. It is the last policy of LPG to
be implemented.
 Liberalization, Privatization, Globalization
• Outsourcing as an Outcome of Globalization
• The most important outcome of the globalization process is Outsourcing.
During the outsourcing model, a company of a country hires a
professional from some other country to get their work done, which was
earlier conducted by their internal resource of their own country.
• The best part of outsourcing is that the work can be done at a lower rate
and from the superior source available anywhere in the world. Services
like legal advice, marketing, technical support, etc. As
Information Technology has grown in the past few years, the outsourcing
of contractual work from one country to another has grown tremendously.
As a mode of communication has widened their reach, all economic
activities have expanded globally.
• Various Business Process Outsourcing (BPO) companies or Call Centres,
which have their model of a voice-based business process have
developed in India. Activities like accounting and book-keeping services,
clinical advice, banking services or even education are been outsourced
from developed countries to India.
 Liberalization, Privatization, Globalization
Benefits of Globalization Impacting India
Rise in Employment: With the opening of SEZs or Special Economic Zones, the
availability of new jobs has been quite effective. Furthermore, Export Processing
Zones or EPZs are also established employing thousands of people. Another factor
is cheap labour in India. This has motivated big firms in the west to outsource work
to companies present in this region. All these factors are causing more employment.
Surge (flow) in Compensation: After the outburst of globalization, the
compensation levels have stayed higher. These figures are impressive as compared
to what domestic companies might have presented. Why? The level of knowledge
and skill brought by foreign companies is obviously advanced. This has ultimately
resulted in modification of the management structure.
Improved Standard of Living and Better Purchasing Power: Wealth generation
across Indian cities has enhanced since globalization has fully hit the nation. You can
notice an improvement in the purchasing power for individuals, especially those
working under foreign organizations. Further, domestic organizations are motivated
to present higher rewards to their employees. Therefore, a number of cities are
experiencing better standards of living together with business development.
----
 Providing Urban Amenities to Rural Areas-
PURA
After India gained its independence, despite a full of welfare schemes and
activities aimed at rural areas in successive five-year plans, a skewed
development model increasing the disparities between the rural and the urban
areas.
Lack of livelihood opportunities, modern amenities and services for decent living
in rural areas lead to migration of people to urban areas. There are wide gaps in
the availability of physical and social infrastructure between rural and urban
areas.
To address these issues, the President of India A.P.J. Abdul Kalam highlighted a
vision of transformation of rural India by launching a large-scale mission for
Provision of Urban Amenities in Rural Areas (PURA).
On the eve of India's 54th Republic Day, in 2003, Dr. Kalam addressed the
nation explaining them his vision for a new India. He visualised providing four
elements of connectivity: physical connectivity, electronic connectivity,
knowledge connectivity leading to economic connectivity of rural areas and
where there would be a lesser urban-rural divide.
 Providing Urban Amenities to Rural Areas
Provision of Urban Amenities to Rural Areas (PURA) is a strategy for rural
development in India. This concept was given by former president
Dr. A.P.J. Abdul Kalam and discussed in his book Target 3 Billion.
The genesis of PURA can be traced to the work done by Nimbkar
Agricultural Research Institute in the early 1990s on Taluka energy self-
sufficiency. It was shown in the study that energy self-sufficient talukas can be a
new development model for rural India in terms of creation of jobs and better
amenities to its population.
PURA proposes that urban infrastructure and services be provided in rural hubs
to create economic opportunities outside of cities. Physical connectivity by
providing roads, electronic connectivity by providing communication networks,
and knowledge connectivity by establishing professional and
technical institutions will have to be done in an integrated way so that economic
connectivity will originate..
The Indian central government has been running pilot PURA programs in
several states since 2004. The Shyama Prasad Mukherjee Rurban Mission is a
successor to this mission.
 Providing Urban Amenities to Rural Areas
To make basic amenities like good roads and drinking water accessible to people
even in remote villages, The Ministry of Rural Development (MORD),
Government of India has re-launched the scheme Provision of Urban Amenities in
Rural Areas (PURA) as a Central Government scheme during the remaining period
of the eleventh five-year plan.
MoRD, with support from Department of Economic Affairs and the
Asian Development Bank (which provided the technical assistance), intends to
implement the PURA scheme under a Public Private Partnership (PPP) between
Local executive bodies like the Gram Panchayat and private sector partners.
The vision of the scheme in particular is providing dual benefits like
rural infrastructure development coupled with economic re-generation activities; it is
the first attempt of the government in this direction of delivering basic amenities and
infrastructure through this model to people in remote rural areas.
All the efforts are directed to obtain dual benefits, provide a different framework for
the efficient implementation of rural infrastructure development schemes and benefit
from the private sector efficiencies in the management of assets and delivery of
services.
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 Gandhian Approach to Rural Development

In the Indian context rural development may be defined as maximising

production in agriculture and allied activities in the rural areas including
development of rural industries with emphasis on village and cottage industries.
Provision of certain basic amenities like drinking water, electricity, especially for
the productive purpose, link roads connecting villages to market centres and
facilities for health and education etc. figure prominently in the scheme of rural
development.
Theoretically, Gandhian approach to rural development may be labelled as
‘idealist’. It attaches supreme importance to moral values and gives primacy to
moral values over material conditions. The Gandhians believe that the source of
moral values in general lies in religion and Hindu scriptures like the Upanishads
and the Gita, in particular.
 Gandhian Approach to Rural Development
Ideal Village:
The village is the basic unit of the Gandhian ideal social order. Gandhi succinctly
(neatly) pointed out, “If the village perishes India will perish too…. We have to
make a choice between India of the villages that is as ancient as herself and
India of the cities which are a creation of foreign domination”.
Gandhi’s ideal village belongs to the Pre-British period, when Indian villages
were supposed to constitute the federation of self-governing autonomous
republics.
Decentralisation:
Gandhi firmly believes that village republics can be built only through
decentralisation of social and political power.
In such a system decision-making power will be vested in the Village Panchayat
rather than in the State and the national capital.
The representatives would be elected by all adults for a fixed period of five
years. The elected representatives would constitute a council, called the
Panchayat.
 Gandhian Approach to Rural Development
Self-sufficiency:
Such a decentralised polity implies a decentralised economy. It can be attained only
through self-sufficiency at the village level. The village should be self-sufficient as far
as its basic needs – food, clothing, and other necessities – are concerned. The
village has to import certain things which it cannot produce in the village. “We shall
have to produce more of what we can, in order thereby to obtain in exchange, what
we are unable to produce”.
Industrialization:
Gandhiji maintained that industrialization would help only a few and will lead to
concentration of economic power. Industrialization leads to passive or active
exploitation of the villages. It encourages competition. Large scale production
requires marketing. Marketing means profit-seeking through an exploitative
mechanism.
Moreover, industrialization replaces manpower and hence it adds to unemployment.
In a country like India, where millions of labourers in the villages do not get work for
even six months in a year, industrialization will not only increase unemployment but
force labourers to migrate to urban areas. This will ruin villages.
 Gandhian Approach to Rural Development
Trusteeship:
Gandhiji was not against the institution of private property. But he wanted to restrict
the right of private property to what was necessary to yield an honourable livelihood.
For the excess he prescribed the principle of trusteeship.
Gandhiji emphasized the principle of trusteeship in social and economic affairs. He
firmly believed that all social property should be held in trust. The capitalists would
take care not only of themselves but also of others. Some of their surplus wealth
would be used for the rest of the society.
The poor workers, under trusteeship, would consider the capitalists as their
benefactors; and would repose faith in their noble intentions. Gandhiji felt that if such
a trusteeship were established, the welfare of the workers would increase and the
clash between the workers and employers would be avoided. Trusteeship would help
considerably “in realising a state of equality on earth.
In fine, Gandhian approach to rural development strives to reconstruct village
republics which would be non-violent, self- governed and self-sufficient so far as the
basic necessities of ruralites are concerned. Apart from creating a new socio-
economic order, it Endeavour’s to transform man; otherwise the changes in the
socio-economic order will be short-lived. ---
 Modi’s Strategy to Develop Economy

Clean India Mission (Swaach Bharat Abhiyaan)

In his 2014 speech, the Prime Minister flagged increasing access to clean toilets
for women and girls as an urgent policy objective.
In his announcement, the Clean India mission began in 2015, with the vision of
achieving universal sanitation coverage that would include universal access to
toilets across urban and rural areas in India before October 2019.
Even though the target was quite ambitious for a country with a mere
38.7 % in 2014, the Government of India managed to achieve its goal by
declaring India Open Defecation Free in 2019.
Government data reveals that the government constructed over 100 million
toilets in 5 years, covering close to 0.6 million villages.
 Modi’s Strategy to Develop Economy
Make in India and Skill India (Pradhan Mantri Kaushal Vikas Yojana)
Another flagship scheme that Modi announced in 2014 was the Make in India
program, which sought to boost the manufacturing sector in India by
transforming India into an attractive investment destination.
India has made significant steps with its World Bank’s
Ease of Doing Business Index rank, moving from 142 in 2014 to 63 in 2019.
Six new industrial corridors (passage ways) were developed and India also
received some large foreign investments in manufacturing. Prime Minister Modi
engaged in extensive economic diplomacy, signaling Make in India around the
world in front of major companies to attract foreign direct investment (FDI). And
yet, the scheme failed to match its ambitious goals of making India a global
manufacturing hub, increasing the contribution of the manufacturing sector in
India to 25% of the GDP by 2025, and creating 100 million jobs.
Data shows that there was little difference between the FDI inflows from 2009 to
2014 and from 2014 to 2019. Further, with the unemployment rate at a
45-year high of 6.1%, the investments India did get do not seem to be
converting into job creation quickly enough.
 Modi’s Strategy to Develop Economy
Financial Inclusion Scheme (Pradhan Mantri Jan-Dhan Yojana)
Modi also announced one of the world’s biggest financial inclusion programs in
his 2014 speech. Since its inception, the initiative has been successful in
opening around 380 million bank accounts.
Today, 80 percent of adults in India have access to a bank account, which has
significantly reduced the inefficiencies in cash transfers to beneficiaries.
However, the objective of financial inclusion goes beyond merely providing
access to bank accounts. Concerns such as limited usage of the bank accounts,
and other issues such as availability of credit, insurance and payments to the
beneficiaries, and the vast differences in the benefits across states and within
communities, continue to persist.
Eliminating Single-use Plastics
Another commitment made by Modi in his speech, which he reiterated at the
United Nations General Assembly in September, is making India free of single-
use plastic. Though this would be a significant step toward environment
conservation, the government is already facing implementation roadblocks..
 Modi’s Strategy to Develop Economy
Water Conservation
Modi used his Independence Day address to pledging an investment of $52
billion toward water conservation and access. The government established a
new Ministry of Jal Shakti (Water) at the start of the new term, bringing together
the existing Ministry of Water Resources, Ministry of River Development and
Ganga Rejuvenation, and Ministry of Water and Sanitation to develop a more
integrated approach to water concerns in India. Two flagship initiatives – Jan
Shakti Abhiyaan (JSA), a mission to leverage citizen participation for water
conservation, and the Jal Jeevan Mission (JJM), which seeks to provide water
connection to all households by 2024 – have been fast-tracked to boost access
and conservation of water. Providing households with water connections will be
crucial to the success of the government’s Clean India Mission as well.
The Big Dream: A $5 Trillion Economy
The overarching vision of Modi’s 2019 address was the dream of making India a
USD $5 trillion economy by 2024. Currently, India is a USD $2.7 trillion
economy. To almost double the size of the current economy in five years will be
difficult given the current slowdown in the Indian economy.
 Modi’s Strategy to Develop Economy
Housing for All (Pradhan Mantri Awas Yojana)
India will be in the 75th year of its independence in 2022, and Modi reiterated his
government’s 2016 commitment to provide housing to twenty million
economically vulnerable families in rural India by 2022.
The Ministry of Housing and Urban Affairs, which handles the urban component
of the scheme, notes the need of 11.2 million houses, of which the Ministry has
already approved 75% (houses), with a quarter of the approved houses already
completed. The numbers are reassuring even for the rural component, with
approximately 50% of the 20 million houses being approved and over 80% of
those already completed.
At this pace, the Modi government appears to be on track with their commitment
toward Housing for All, a great accomplishment. It will be interesting to see if
these houses come with supportive infrastructure such as piped water
connectivity and electricity, in line with the government’s other initiatives.
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