THE ECONOMIC WEEKLY
SPECIAL NUMBER JUNE
1960
Premises for Planning
Bhabatosh Datta
The
middle-fifties was an important stage
in
the
development
of
economic thinking
in
India.
It would not be far from the truth to say that, all things token together, considerably more important
and worth-while work on our economic problems was done during the fifties than was done in the whole sixdecade period from the eighteen-nineties to the mid-point of the present century.
The greatest stimulating factor in this was the experiment in planned economic growth, an experiment
which presented problems in the raw and thus offered a challenge to the intelligence of the new generation of
economists,
The major factor causing a stalemate in the discussions is that the growth models, as hitherto developed, do not answer—nor seek to answer—the basic questions and issues of planning economy.
It is not
suggested that these questions can at all be fully answered by economists.
The emphasis is rather on the point
that planning has no meaning, unless there is a major premise or an adopted policy postulated.
I
THERE
has been a general comp l a i n t a l l a r o u n d f o r some t i m e
that the discussions on the T h i r d
P l a n have not p r o d u c e d any new
line of thinking anywhere—neither
a m o n g the Government economists,
n o r a m o n g those w h o should be able
to take up independent lines of
t h i n k i n g . T h i s stands i n s h a r p contrast against the a n i m a t e d debate
that m a r k e d the m i d d l e fifties when
the F i r s t P l a n was n e a r i n g its comp l e t i o n a n d the Second P l a n was
being drafted.
To a large extent,
the discussions at the t i m e of the i n c e p t i o n of the Second P l a n arose
f r o m the p r o v o c a t i o n given to economists a n d p o l i c y m a k e r s by the att e m p t made by Professor M a h a l a nobis to b u i l d up a theoretical model
specially a p p l i c a b l e t o the I n d i a n
economy and t o d e r i v e the m a i n
p l a n n i n g premises as w e l l as conclusions f r o m this m o d e l . T o some
extent also, the debate of 1955-56
was s t i m u l a t e d by the l a r g e size of
the c a p i t a l e x p e n d i t u r e
projected
a n d by the p r o p o s a l f o r financing
a q u a r t e r of the total p u b l i c investment b y i n f l a t i o n a r y b o r r o w i n g f r o m
the Reserve B a n k .
It was noticeable that w h i l e the
debate on deficit f i n a n c i n g and i n flationary pressures soon became a
continuous
r e p e t i t i o n of the same
arguments
and
thus
became
a
f a v o u r i t e subject
for
paper-setters
in examinations,
the
Mahalanobis
model provided a starting point for
a n u m b e r of able a n d i n t e l l i g e n t studies
of
the
basic
problems
of
growth.
T h e r e was the fact that
the M a h a l a n o b i s m o d e l was set f o r t h
at a t i m e w h e n the y o u n g e r generat i o n o f economists i n I n d i a was j u s t
ready for something
o f this t y p e .
The
H a r r o d and Domar growth
models, effectively p u b l i c i s e d only
after the p u b l i c a t i o n o f H a r r o d ' s
Towards
a
Dynamic
Economics
in
1948, were at that t i m e b e i n g thoroughly discussed f r o m m a n y d i f f e r ent a n g l e s , — w i t h v a r i a t i o n s i n t r o duced by c h a n g i n g the time-lags or
by o p e n i n g up the models to intern a t i o n a l transactions i n c l u d i n g f o r e ign
borrowing.
Dynamic
growth
models were
not
only becoming
fashionable as w e l l as r e s p e c t a b l e ;
there was, besides, a c e r t a i n a m o u n t
of
aesthetic satisfaction
in representing the economy in the f o r m of
elegant difference equations ( w h i c h
m a n y discovered to be sometimes
easier t h a n d i f f e r e n t i a l e q u a t i o n s ) .
T h e discovery of the pedagogic v a l u e
of the schematic d i a g r a m s of closedloop systems led m a n y teachers to
further explorations
and many of
the y o u n g e r economists to attempts
at positive c o n t r i b u t i o n s .
It was a g a i n near about this t i m e
that attention came to be r e - d r a w n
to the classical p r o b l e m s of c a p i t a l
accumulation
and
technological
choice.
L e w i s in his f a m o u s Manchester
School
article
and
Joan
Robinson
in her
Accumulation
of
Capital established a clear l i n k between the f u n d a m e n t a l p r o b l e m s of
a
developing
economy—whether
Great B r i t a i n i n the early nineteenth
c e n t u r y o r I n d i a i n the m i d - t w e n t i e t h — a n d the types of p r o b l e m s
w h i c h the now economics of g r o w t h
was seeking to analyse t h r o u g h the
v a r i o u s types of d y n a m i c models.
It is also possible that the presence
o f M r s R o b i n s o n i n I n d i a a t the
t i m e the discussions were g o i n g on
was itself a f a c t o r i n v i t i n g attention
to the classical n a t u r e of the p r o b lems of economic d y n a m i c s .
A n o t h e r i m p o r t a n t f a c t o r was the
increasing awareness a m o n g economists of the l i m i t a t i o n s of static wel879
f a r e analysis. T h i s led, on the one
h a n d , to a search f o r a basis f o r
establishing a m i n i m u m set of welf a r e p r o p o s i t i o n s f o r an economy
w h i c h has to take g r o w t h into cons i d e r a t i o n , a n d , on the other, to the
opposite d i r e c t i o n of concentrating
attention on the p u r e l y technical aspects of the p r o b l e m of investment
criteria.
I t was somewhat u n f o r t u nate that the ' c r i t e r i o n analysis' was
often made i n d e p e n d e n t l y of any
w e l f a r e analysis, r e s u l t i n g in the discovery s i m p l y of the necessary results of g i v e n or assumed capitall a b o u r and l a b o u r - o u t p u t co-efficients.
To some extent a l l this was due to
the increasing f a m i l i a r i t y w i t h the
Soviet theoretical discussions on the
c r i t e r i o n p r o b l e m , in w h i c h g i v e n or'
assumed technical ratios were the
o n l y i m p o r t a n t things and i n w h i c h
there was p r a c t i c a l l y no discussion
on the p r i n c i p l e s b e h i n d the choice
of targets or of the time-horizon and
a l l o c a t i o n over t i m e of the g r o w t h paths of different outputs.
T h e r e was in a d d i t i o n the fact
that statisticians and econometricians
i n I n d i a were becoming f a m i l i a r
w i t h the techniques of i n p u t - o u t p u t
analysis and linear p r o g r a m m i n g .
T h e intellectual exercise p r o v i d e d by
these, techniques o f t e n led to an u n conscious b r u s h i n g aside
of
the
l i m i t a t i o n s of w o r k i n g w i t h fixed coefficients and linear equations in a
rapidly
growing
economy.
And
there were cases in w h i c h the exercise was not even i n t e l l e c t u a l ; the
computing machine contributed immense powers to the q u a n t i t a t i v e
analyst a n d it was not s u r p r i s i n g
that a l a r g e p a r t of the analysis
emanated not so much f r o m the consideration of the real and h u m a n
aspects of the problems as f r o m the
consideration of what the c o m p u t i n g
m a c h i n e c o u l d be fed u p o n .
THE
SPECIAL NUMBER JUNE 1960
T h e i m p o r t a n t fact, however, was
that the middle-fifties was art i m p o r t a n t stage in the development of
economic t h i n k i n g i n I n d i a . One
has o n l y to compare the types of
discussions that were common in the
field of I n d i a n economic problems
before the Second W o r l d W a r , or
even d u r i n g it and the m u c h more
nature type that came to appear in
the fifties. It would not be far f r o m
the t r u t h to say that, a l l things taken
together, considerably more i m p o r t ant and worth-while w o r k on o u r
economic problems was done d u r i n g
the fifties than was done in the whole
six-decade p e r i o d f r o m the eighteennineties to the m i d p o i n t of the present century. It is necessary to remember that the greatest s t i m u l a t i n g
factor in this was the experiment in
planned economic g r o w t h , an experiment w h i c h presented problems i n
the raw and thus offered a challenge
to the intelligence of the new gener a t i o n of economists.
II
T h e m o m e n t u m gathered in the
fifties is still w o r k i n g in a number
of fields, but it is clearly noticeable
that there has not been in the recent
months a n y t h i n g l i k e the breakt h r o u g h one saw at the t i m e the
Second P l a n was being prepared.
One easy explanation w o u l d be that
the field has been more or less f u l l y
worked out and that we k n o w broadly where we are. T h e o n l y remaini n g gaps, according to this explanation, are quantitative data —
p r o d u c t i o n data, i n p u t - o u t p u t data,
data about the rates of change a n d
so on and so f o r t h ; if these are. available in increasing variety and
quantity, we can b u i l d up the framework of any p l a n .
A second explanation would be
that excursions into the g r o w t h
models have indicated their p u r e l y
mechanical nature and consequently
their l i m i t a t i o n s as w o r k i n g tools.
The mathematics —- relatively easy,
but l o o k i n g f o r m i d a b l e to those to
w h o m a single rotational or operator
symbol, or even an italicised letter,
is a t e r r o r — c a n be put only in a
very general f o r m , the p a r t i c u l a r types
of functional relations being either
unknown or based on given co-efficients. A l l that can sometimes be
forced is that there are consistent
and meaningful solutions. The stage
is thus left open to the econometricians, who can give a body to the
equations. It is however realised
that the forms given to the equations
on the basis of observed or assumed
data do not really represent w h a t is
wanted i n a p l a n n i n g economy w i t h
a long-term perspective. T h e r e is
the difficulty that the independently
derived co-efficients m a y not all be
realistic together in the same system,
when some of the i m p o r t a n t values
are changing. A n d , there is also the
difficulty a r i s i n g f r o m the fact that
it w o u l d be the deliberate purpose
of p l a n n i n g to change some of the
coefficients.
The major factor causing a stalemate in the discussions is that the
g r o w t h models, as h i t h e r t o developed,
do not answer—nor seek to answer
—the basic questions a n d issues of
a p l a n n i n g economy. It is not suggested that these questions can at a l l
be f u l l y answered by economists.
The emphasis is rather on the p o i n t
that p l a n n i n g has no meaning, u n less there is a m a j o r premise or an
adopted
p o l i c y postulated. T h i s
postulate carries w i t h i n i t a l l the
value-judgements of the c o m m u n i t y
and thus gives the necessary shape
to the forms of equations a n d defines the set of targets. It is easy
to speak about a ' m a x i m a n d ' , b u t it
is also easy to forget the elementa r y index number p r o b l e m i n v o l v e d
i n the d e f i n i t i o n o f the m a x i m a n d f o r
the economy as a whole. There is
a stage at w h i c h g r o w t h economics
shades into welfare economics a n d
one has to leave the mechanical w o r l d
of technical inter-relations a n d move
into the h u m a n w o r l d of what is
most desirable among the feasible
alternatives, or what is most feasible
among the desirable alternatives.
It is easy these days to r e m i n d
ourselves that the establishment of a
m a j o r premise or a set of premises
is not a p u r e l y economic p r o b l e m ,
and. in any case, not an easy problem. It is not, however, always realised that non-technical issues a n d
questions are often i n e x t r i c a b l y m i x ed up w i t h the supposedly technical
ones at almost every step. A good
example is discussions based u p o n
'surpluses' in the a g r i c u l t u r a l sector
p r o v i d i n g resources f o r developing
the non-agricultural sector. If a
surplus is defined as the difference
between the o u t p u t in a p a r t i c u l a r
line o f a g r i c u l t u r a l p r o d u c t i o n a n d
given wages or given consumption
levels i n that line, and i f given
capital-labour-output ratios are taken
f o r a l i n e of non-agricultural product i o n , the results can be easily calculated. T h e n , by v a r y i n g the different
values, w i t h i n the range of freedom
permitted by the system, one can find
880
ECONOMIC
WEEKLY
o u t various combinations o f the
t w o outputs possible in the system,
subject perhaps to certain m i n i m u m
a n d m a x i m u m constraints.
From
this it is possible to find out how the
n o n - a g r i c u l t u r a l o u t p u t can be m a x i mised or at what outputs the two
sectors w i l l be at e q u i l i b r i u m . T h e
question that remains unanswered is
whether it is at a l l desirable to extract the so-called surplus f r o m the
a g r i c u l t u r a l sector.
T h e s u r p l u s o f the a g r i c u l t u r a l
sector can be conceived either on the
basis of g i v e n levels of consumption
in that sector or on the basis of some
idea about the desirable levels of
consumption. E i t h e r of these i n volves a m a j o r decision about the
d i s t r i b u t i o n of incomes and benefits
a r i s i n g f r o m planned g r o w t h . I t i s
interesting to note that both in the
'capitalistic' development of Great
B r i t a i n in the early nineteenth cent u r y and in the socialistic development of Soviet Russia in the recent
decades, the m a i n emphasis was on
the desirability of developing the
n o n - a g r i c u l t u r a l sector.
In Great
B r i t a i n , it was the food problem of
the new i n d u s t r i a l areas that was
the uppermost, and, in Soviet Russia, it was the deliberate p o l i c y of
the government to extract as m u c h
as possible f r o m the a g r i c u l t u r a l
sector.
In the b o t h of these, the
adopted p o l i c y postulate was weighte d heavily i n f a v o u r o f the indust r i a l classes and against the agricult u r a l classes.
A surplus can be generated in
agriculture by keeping consumption
levels steady w i t h an increase in
output, or at least by
preventing
consumption in the a g r i c u l t u r a l sector f r o m r i s i n g at a rate equal to
the rate at w h i c h a g r i c u l t u r a l prod u c t i o n is g r o w i n g . In both of these,
there is an i m p l i c i t d i s t r i b u t i o n hypothesis. It is, of course, possible
to generate a surplus in agriculture
by reducing the numbers dependent
on it accompanied by a steady or
increasing a g r i c u l t u r a l output. As
long as the diverted a g r i c u l t u r a l
p o p u l a t i o n produces some net output
elsewhere, a p o l i c y of this nature
w o u l d be less open to objections t h a n
those mentioned above, but the probl e m of a distribution-postulate is not
entirely eliminated. A n d , even i f the
policymakers proceed in a p r a g m a t i c
manner f r o m one practicable step to
another, it is the d u t y of the economist to b r i n g i n t o the open the t y p e
of social welfare m a j o r premise that
the adopted p l a n involves.
THE
ECONOMIC
SPECIAL NUMBER JUNE 1960
WEEKLY
A closely-allied case in p o i n t is
the proposal f o r t a x i n g a g r i c u l t u r e
w i t h a view to p r o v i d i n g resources
for the T h i r d P l a n . A decision to
tax a g r i c u l t u r e is a decision to reduce the current share of the present generation of agriculturists in
the national income, w i t h a view to1
increasing the current share of other
groups, a n d / o r w i t h a view to i n creasing the future incomes of all or
some groups.
There is no a priori
reason w h y such a decision should
not be taken, but it is often forgotten
that there is no a priori reason w h y
such a derision should be taken. It
is possible that there
w o u l d be
general agreement in regard to the
desirability of increasing the taxburdens on the a g r i c u l t u r a l sector but
it should be clearly recognised that
there is a m a j o r income-distribution
hypothesis i m p l i c i t i n w h a t appears
on the surface s i m p l y as a policy for
raising resources for the p u b l i c sector, or for securing a balance between aggregate demand and s u p p l y .
The neglect of the d i s t r i b u t i o n
p r o b l e m is patent in such arguments
as that the sector p r o d u c i n g nearly
50 per cent of the national income is
not c o n t r i b u t i n g its share to the
national exchequer. It is also surp r i s i n g that in m a n y cases the argument for t a x i n g agriculture has
been based on the presumption that
there has been a large increase in i n comes of the agriculturists. Even if
the presumption is correct, there is
s t i l l no knowledge about how the
income increase has been distributed within the agricultural sector.
W h a t is more i m p o r t a n t is that there
is no necessary welfare basis f o r the
contention that the g r o u p that has
received the largest absolute or relative increment in income is the
group w h i c h should bear an increased share of the total costs of devel o p m e n t It is easy to see that planned development w i l l often mean a
large increase in the incomes of the
poorest groups, that many w o u l d consider this to be a desirable result of
p l a n n i n g , that even after the increase
in incomes, the poorest g r o u p m a y
still remain in the lowost position
in the distribution-scale, a n d that the
increase May be very unevenly dist r i b u t e d w i t h i n the g r o u p . I f the
a g r i c u l t u r a l sector has to be taxed,
the arguments have to be that i n dustrialisation is considered desirable and that is the society's judgement, that development should be
financed by preventing a large rise
i n the incomes i n the a g r i c u l t u r a l
sector. The society can adopt the
postulate that the
groups that are
relatively r i c h should bear a larger
share of the tax-burden, It can also
adopt the postulate that the groups
that have become richer than they
were should bear an increased share
of the development costs. It is often
forgotten that either of these is a
value-judgement and that these two
postulates are not identical.
III
We have now reached a stage at
which the fundamentals should be
clearly stated and f u l l y considered.
The First Plan was one of u t i l i s i n g
excess capacities
and of
making
good large and g l a r i n g deficiencies.
It is almost certain that a referend u m in 1951 w o u l d have almost
unanimously supported the major
aims of the First Plan and that we
would have been able to get a democratically derived social welfare maj o r premise. The problem of choice
originates in the existence of, or
potentiality for, variety, and at a
stage where the elemental needs have
been satisfied. The Second Plan d i d
b r i n g in the choice problem, but for
a t i m e the technological problem held
the field and the more fundamental
problems were kept in the backg r o u n d . It is time now that the economists went b o l d l y into the problems of inter-personal d i s t r i b u t i o n .
time-horizons
and
inter-temporal
distribution.
It should not be possible for the
economists to escape f r o m their resp o n s i b i l i t y by h o l d i n g that a decision
about inter-personal and inter-temporal d i s t r i b u t i o n is not a purely
economic decision. A r g u i n g on that,
line, the political scientists, the p o l i ticians, or the technicians could a l l
escape the responsibility f o r decision-making. The facts are that decisions have to be made and that it
w o u l d be better to make the decisions
consistent a m o n g one another and
w i t h some major premise than to
proceed g r o p i n g l y f r o m one step to
another. T h e economists w i t h their
t r a i n i n g should be able to contribute
somewhat more than those without
the t r a i n i n g . I f non-economic variables are i m p o r t a n t , there is the economic p r o b l e m of choosing among
these non-economic variables, i.e.,
of deciding w h i c h of the non-econom i c variables should be given p r i ority.
Even i f
the economist
cannot do a n y t h i n g else, he can
serve by constantly emphasizing
881
the need f o r h a v i n g a major premise — i n c o r p o r a t i n g inter-personal
and inter-temporal income distribut i o n targets—right in the forefront
when policy decisions are adopted.
There is a vaguely effective distribution, hypothesis in our plans,
originating f r o m the r u l i n g political
party's resolution on the establish'
ment of a socialistic pattern of society. It has not, however, been
clearly recognised that there is an
infinite number of ways in w h i c h
income-inequalities can be reduced,
and again an infinite number of
alternative time-rales at w h i c h i n come-equalisation
can be brought
about. A n d , in actual policy f o r m u lations, it is the question of raising
resources that has often been given
p r i o r i t y . Commodity targets have
been l a i d d o w n on the basis of some
sort of an 'essentiality c r i t e r i o n ' , but
it has not been realised that the definition of essentiality begs the whole
question of the social welfare funct i o n . The inter-temporal analysis
undertaken so far has been little
more than a statistical projection of
certain broad categories over a
period of the next 10 or 15 years.
It is, of course, possible to go too
far in the opposite d i r e c t i o n . There
is no reason w h y a major premise,
once adopted, should be r i g i d l y
adhered to at all costs. There should
always be scope for recognising
changes in the structural and institutional s e t u p and in attitudes and
preference-patterns, and there should
further be scope for recognising the
errors of judgement previously comm i t t e d . But there must be at any
point or period of time a welfare
premise in terms of which the details are to be worked out and the
progress evaluated and the f a i l u r e to
w o r k out its inter-personal and intertemporal d i s t r i b u t i o n implications,
may lead to many difficulties, includi n g the setting up of m u t u a l l y inconsistent targets.
T h i s danger is real in I n d i a ,
where it is generally held that agricultural outputs should be increased,
that the price of food to the nona g r i c u l t u r a l p o p u l a t i o n should be
low, that the agriculturist should get
an incentive f o r his w o r k , that he
should bear a large share of burdens of development, that his income should be increased, and so on
and so f o r t h . The problems arising
f r o m these inconsistent targets can be
easily solved in a totalitarian economy. But in a country in w h i c h
SPECIAL NUMBER JUNE 1960
the weapons
of a t o t a l i t a r i a n econ o m y are n o t available, one has to
decide o n m a n y questions, a l l i n v o l v i n g decisions on the desired changes a n d rates of changes in incomedistribution.
T h e answers
to these
questions
i n v o l v e difficulties.
A p a r t f r o m the
Index n u m b e r p r o b l e m in the defin i t i o n o f the desirable
output-mix,
there is the fact that the f u t u r e is
not j u s t a block a l t e r n a t i v e to the
present.
There i s a n i n f i n i t e v a r i e t y
of futures—alternative
bundles
of
a l t e r n a t i v e time-paths
of different
outputs o f d i f f e r e n t lines o f p r o d u c t i o n , w i t h the associated a l t e r n a t i v e
time-pattern, of changes in the i n come
distribution.
And,
besides,
the time-paths all spread
i n t o the
infinity.
T h e f i r s t essential
for
bringing
everything into
manageable p r o p o r t i o n s is to
consider the
p r o b l e m i n terms o f specified timehorizons.
It is possible to take a
v e r y long v i e w — t h e h i s t o r i a n ' s v i e w
i n the
reverse g e a r — r e m e m b e r i n g
that fifty years or a c e n t u r y is not h i n g i n the h i s t o r y o f a n a t i o n .
It
is alternatively possible
to proceed
on the basis that the results of p l a n n i n g — i n terms o f consumer g o o d s s h o u l d b e e n j o y e d b y the m a j o r i t y
o f the present w o r k i n g f o r c e i n their
own lifetime.
I n that case, the app r o p r i a t e t i m e - h o r i z o n s h o u l d be 15
years or thereabouts.
It is of course
possible' to take—as is o f t e n d o n e —
an
election-to-election v i e w ,
which
w i l l put a p r e m i u m on short-gestation
projects.
Generally, of course, it is
a m i x t u r e that w o u l d be f o u n d to be
o p e r a t i v e , but here a g a i n one comes
face to face w i t h the desirable timem i x of the projects i n c l u d e d in the
plan.
IV
T h e economist can be of real help
i n p r o v i d i n g the
analytical
framew o r k f o r b r i n g i n g together the alternative feasible social w e l f a r e postulates and the technical requirements
o f the different types o f plans. I n
f a c t , he is q u a l i f i e d only
f o r this,
and it is not s u r p r i s i n g that he can
be no belter t h a n pedestrian
when
o f f e r i n g advice on specific problems
of t a x a t i o n or r a i s i n g resources or
selecting
projects.
T h e fact
that
the economist cannot offer a u n i q u e
or satisfactory answer to the p r o b lems raised by h i m is not the i m portant point.
What really is important is that the complex of issues
should be sorted out. a n d one should
be able to
specify exactly
where
THE ECONOMIC WEEKLY
non-economic
elements enter
into
the economic p r o b l e m s ,
w h a t these
non-economic elements a r e a n d w h a t
are the i m p l i c a t i o n s o f the different
degrees of i m p o r t a n c e
attached to
p a r t i c u l a r non-economic v a r i a b l e s .
W e l f a r e economics hag f o r a l o n g
t i m e engaged
itself in the
rather
sterile field of the static
allocation
problem.
It is now r e l a t i v e l y easy
to state the
c o n d i t i o n s of
optimisation a n d one k n o w s where the econ o m i s t qua economist has to stop.
T h e r e is, however, the immense field
o f economic g r o w t h whose w e l f a r e
e c o n o m i c s — i n the f o r m of a theory
o f economic p o l i c y — c a n make valuable
contributions,
even if
these
sometimes consist in i n d i c a t i n g certain limits and limitations.
There
are fields in w h i c h the first essential
is to pose the questions l o g i c a l l y and
accurately.
O n e notes that m a n y of
these questions have not
yet been
asked in I n d i a and that a considerable a m o u n t o f h y p o t h e t i c a l m a t t e r
has o f t e n been t a k e n f o r g r a n t e d .
T h e basic p r o b l e m of i n c o m e dist r i b u t i o n has not yet been
studied
i n I n d i a either b y statisticians o r b y
economists,
despite the
fact
that
there has been a f a i r l y l a r g e v o l u m e
o f theoretical w o r k o n the p r o b l e m
of the i n t e r r e l a t i o n between incomeg r o w t h a n d macro-economic
income
distribution.
L i t t l e is known, here
about i n c o m e - d i s t r i b u t i o n by sectors
a n d there is p r a c t i c a l l y no i n f o r m a t i o n about intra-sector d i s t r i b u t i o n .
T h e discussions in terms of
broad
sectors n a t u r a l l y raise the question
o f inter-sector i n c o m e
distribution,
and policy
conclusions
regarding
the d i s t r i b u t i o n
of p l a n n i n g
costs
r e q u i r e i n f o r m a t i o n about the i n t r a sector position as w e l l .
Now
that
m a n y of the regional and c i t y surveys have been
completed,
there
should be an encouragement of statistical
and economic investigation
o f the p r o b l e m o f
income-distribution.
T h e w o r k i s one l a r g e l y f o r
the statisticians, but economists can
also help considerably in
interpreti n g the data a n d in
a n a l y s i n g the
probable
economic effects
of the
changes
in
distribution
brought
about by planned
development, by
t a x a t i o n , o r b y the deliberate adopt i o n of p a r t i c u l a r types of d i s t r i b u t i o n policies.
T h e r e are other problems also,
some of them of w i d e r i m p o r t a n c e .
T a k e , f o r e x a m p l e , the question o f
the welfare-significance of a w i d e n 882
i n g o f the f i e l d o f choice available
to the
consumers. T h e
question
was not o f m u c h i m p o r t a n c e under
the F i r s t P l a n , b u t i t i s obvious that
w i t h the increase in the v a r i e t y of
consumer goods p r o d u c e d i n I n d i a ,
the question is b e c o m i n g i m p o r t a n t ,
T h e r e is, s i m i l a r l y , the question of
the w e l f a r e significance of
expandi n g e m p l o y m e n t per se.
T h e r e have
been proposals f o r the a d o p t i o n of
unorthodox
methods f o r
creating
e m p l o y m e n t — i f necessary, at wages
below the m a r k e t rates.
If
other
choices are a v a i l a b l e , there is some
c o n t r i b u t i o n that the economists can
make i n
b r i n g i n g the
issues i n t o
clearer l i g h t . T h e r e are, besides, a l l
the p r o b l e m s r e l a t i n g to the generation of sectoral surpluses a n d those
regarding
the d i s t r i b u t i o n
of the
costs of development a m o n g d i f f e r e n t
groups of persons and over d i f f e r e n t
periods of time.
T h e economists
w h o have
been
a n a l y s i n g v a r i o u s types o f
growth
models can easily go one step f u r ther and i n t r o d u c e
income-distribut i o n e x p l i c i t l y i n t h e i r models. One
can e n q u i r e ,
f o r example,
what
happens to a p a r t i c u l a r multi-sector
g r o w t h m o d e l , w h e r e We
have not
only certain technical and
behavioural
relations,
b u t also
certain
d i s t r i b u t i o n goals to achieve,
and
when
we k n o w that
distributional
changes m a y be causes, effects, targets and also instruments of p o l i c y .
One easy w a y o u t w o u l d be to suggest that the p r o b l e m of d i s t r i b u t i o n
is one that the state can lake up i n dependently of any other considera t i o n . But as l o n g as a d i s t r i b u t i o n
p a t t e r n a n d the process of c h a n g i n g
it have effects on p r o d u c t i v i t y , such
a clear-cut separation is i n a d m i s s i b l e
in an analysis of the theory of economic policy.
T h e T h i r d Plan w i l l i n m a n y ways
be a technical f o l l o w - u p of the sec o n d , and one m i g h t say that w i t h
the tracks already l a i d d o w n , there
is not m u c h that the economist can
say on the technical side.
But this
need not i n h i b i t in any w a y the analysis of m a n y of the basic problems
of economic g r o w t h that have not
yet been studied in the I n d i a n context. T h e r e is. therefore, a p r o v o k i n g
challenge b e f o r e the
economist in
I n d i a a n d it should be
possible to
hope the discussions on the p r o b l e m
o f economic development
will run
a l o n g m a n y new lines in the c o m i n g
years.
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ECONOMIC
SPECIAL NUMBER JUNE 1960
WEEKLY
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THE ECONOMIC WEEKLY
SPECIAL NUMBER JUNE 1960
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