Introduction:

This study analyzes the pattern and trend of central government

expenditure in India 1970-80, seeking in particular to explore the factors
underlying the process of government growth. The present analysis
addresses various dimensions of government expenditure in the Indian
economy, focusing on expenditure at the Central Government level over the
period 1970-71 to 2007-08.
The decade of the 1970s first marked a gradual drawing away from the
Principle of Good Budgeting, as it were, that had been informing Indian
budgetary policy upto then, viz. maintaining a revenue account surplus with
which to finance capital expenditure (Chelliah 1973, Suraj B. Gupta 1981).
This gradual departure was being unmistakably reflected in the continually
dwindling balance in the revenue account of the Central Government, until in
1979- 80, the Centres revenue budget finally turned into an irreversible
deficit that was henceforth to persist and continue to widen dramatically.
Hence, 1970-71 was deemed as a suitable starting point to capture this
gradually evolving Budget philosophy.
Indias expenditure norms remained conservative till the 1980s. From
1973-74 to 1978- 79 the central government continuously ran revenue
surpluses. Its gross fiscal deficit also showed a slow growth with certain
episodes of downward movements Therefore, besides the burden of servicing
the public debt; the subsidy burden was also quite great.

1971-74:
The Fourth Five Year Plan (1969-74) aimed at increasing national
income by 5.5 per cent, creating economic stability, reducing inequalities in
income distribution, and achieving social justice with equality. Simultaneous
growth of both agricultural and industrial sectors was fully recognized under
the Fourth Plan. Though the total amount spent during this plan was Rs.
22,862 crore, this plan could not ensure economic growth.
Neither could it achieve self-sufficiency in food grains, nor could the
generation of employment opportunities make any significant dent in the
widespread unemployment problem. The inflationary situation was also
aggravated. With 1960-61 as the base, the wholesale price index jumped
from 165.4 in 1968-69 to 281.7 by the end of 1973-74, an increase of 70 per
cent in a five year period.
The Fourth Plan (1969-74) aimed at 5 per cent annual growth in food
grains. High Yielding Variety (HYV) of seeds, fertilizer use, new agriculture
techniques and irrigation facilities provided to expand area of Green
Revolution. The pro-duction of wheat increased sharply but growth in rice,
oilseeds and coarse grains were nominal resulting in only 3 per cent annual
growth against the target of 5 per cent.

1.
Special
Category
states
like Assam, Jammu
and
Kashmir and Nagaland were given preference. Their needs should first be
met out of the total pool of Central assistance.
2. The remaining balance of the Central assistance should be distributed
among the remaining states on the basis of the following criteria:

60 per cent on the basis of population;

10 per cent on the basis of tax effort, determined on the basis of

individual State's per capita tax receipts as percentage of the State's
per capita income;

10 per cent on the basis of per capita state income, assistance going
only to States whose per capita incomes are below the national
average;

10 per cent on the basis of spill-over into the fourth plan of major
continuing irrigation and power projects;

10 per cent for special problems of individual states.

1974-78

The breakdown of the outlay (in Rs. Crs) under major heads of development
is as follows :
1
.
2
.
3
.
4
.
5
.
6
.
7
.
8
.
9
.
1
0

agriculture and allied programmes

4935.0
0
irrigation and flood control
2681.0
0
power
6190.0
0
industry and mining
9029.0
0
transport and communications
7115.0
0
education
1726.0
0
social and community services (including 5074.0
economic and general services but excluding 0
education)
hill and tribal areas and NEC schemes
500.00
sectoral distribution not yet reported.
Total

37250.
00

Expenditures were allocated to the individual sectors as under:

Agriculture : Performance of the important programmes, like DPAP, minor
irrigation, production and distribution of high-yielding varieties of seed and
distribution of fertilisers have been specifically examined and necessary
provision has been made.
Power: Particular consideration has also been given to infra and inter-State
transmission lines, setting up and strengthening of regional load despatch
centres, and investments on distribution.
Industry and mining: Significant increase in production have been
achieved in some of the basic industries like steel, coal, cement, non-ferrous
metals and power generation.

Transport & Communications: Main emphasis has been on completion of

spill over works of the Fourth Plan, which included a number of missing
bridges and road links.
Social & Community Services:. Care has been taken to ensure that
important programmes like Intergrated Child Care Services, Working Girls
Hostels, Scholarships for Handicapped Persons in the Central Sector and
women and child welfare Programmes and Programmes of Social Defence in
the State sector are provided adequate funds.

1978-80
The Janta Government terminated the fifth five year plan in 1977-78 and
launched its own sixth five year plan for period 1978-83 and called it a
Rolling

Plan.

The meaning of the Rolling Plan was that now, every year the
performance of the plan will be assessed and a new plan will be made next
year based upon this assessment. In the rolling plans there are three kinds of
plans.

First is the plan for the current year which comprises the annual
budget.

Second is a plan for a fixed number of years, which may be 3, 4 or 5

years. This second plan is kept changing as per the requirements of the
economy (and politics).

Third is a perspective plan which is for 10, 15 or 20 years. Thus, there

is no fixation of dates in respect of commencement and end of the plan
in the rolling plans.

The main advantage of the rolling plans is that they are flexible. They are
able to overcome the rigidity of fixed five year plans by revising targets,
projections and allocations as per the changing conditions in the countrys
economy. Thus, the rolling plans allow for revisions and adjustments. In
rolling plans the review of a plan becomes a continuous exercise. The effect

of changed circumstances and the changed demand and supply conditions

can be incorporated in the plan. No doubt in fixed plans, the annual reviews
are made, but they are getting information regarding the progress of the
economy. While in case of rolling plans, the yearly reviews are such a nature
that they serve the basis for the revised new five year plan every year. Such
yearly review is the essence of rolling plans. However if targets are revised
each year, it becomes very difficult to achieve the targets which are laid
down in the five year period. Frequent revisions make it difficult to maintain
right balances in the economy which are essential for its balanced
development. So far, rolling plans have been unsuccessful in underdeveloped
economies like Mexico and Myanmar and were later discarded, however in
developed nations like Japan & Poland they have been successfully used.
Due to political problems, Morar Ji Desai was forced to resign and his
successor Chaudhary Charan Singh (was in office for 170 days) failed to
sustain a parliamentary majority as alliance partners withdrew support. The
new elections were held and now Indira Gandhi came back to power with
thumping success in January 1980. She resumed her own strategy and new
6th plan was started on April 1, 1980 which continued till March 31, 1985.
The main disadvantage of this plan is that if the targets are revised each
year, it becomes very difficult to achieve them which are laid down in the
five-year period and it turned out to be a complex plan. Frequent revisions
make them resulted in instability of the economy which are essential for its
balanced development and progress.