Towards An Industrial Policy 2000 A.D

TOWARDS Atu
INDUSTRIAT POTICY 2000 A.D.
I0I|,ARDS Al{ [{Dt|$RrAt P0ilCI
2000 A.D.
P, D.
MALGAVKAR
V. A. PAI PANANDIKER
CENTRE FOR POLICY RESEARCH
NEW DELHI.11OO57
@ CENTRE FoR POLICY RESEARCH 1977
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Foreword
.development policies in most of ths less In the panorama of pride ol place has always been given developed countries, the to tho industrial policy. The rgtsons are simpla enough and are well known. But what should the key policy objectirts ot industlial developrnent be ? Are fhe existing frameworks adequate or shou ld the industril policy frameworks be reexamined and be ma& subservient to the basic socio-economic policies so that the directioffi of the national movement are clear as we move towards the 21st ceniuly. The present study place3 at the very core of industrial policy the four key socio-economic objectives of meeting (a) the minimum needs of the masses, (b) the strategic requirements of the nation, (c) the export objectives, and (d) the R I D goals to be abreast of the developed nations by the 21st centuly. Two factors which loom large and which, in one way. form the prerequisites of effective industrial policy are (1 ) population control. and (2) food production. The study estimates the policy implications of the four policy objectives and the feasibility of their achievement by the year
2000 A. D., and suggests several measures including those relating to the industrial structure. lt does not deliberately work out the micro implications for each of the industrial sectors for the 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 overall industIial policy to enaple us meet the needs of the Indian society by the year 2000 A.D.
Centre for Policy Rescarch
.V. A. Pai Panandiker
New Delhi
September, 1977
Director
Preface
The study is an outcome of intensive debate between several of our friends as regards the nature of lndia's Industrial Policy' In selecting fhe problem our objective was not so much to study as to who should produce what but rather what the country
should produce and the policy and objectives governing such production Programme.
Towards the preparation of this paper. we had intensive discussions amongst ourselves. "Ourselves" included more than the two of us. Dr. N.C, Mehta, the then Director of the National lnstitute of Bank Management, Bombay was an integral part of the debating group and played a most invaluable role in seeing this project to the Present stage.
Shri Pai, the then Minister for Industries B,Sivaraman, Member, Flanning Commission, Shri V. G' Raladhyaksha, then Chief Consultant and now a member of the Planning Commission, Shri M' Narasimham. former Secretary, Department of Banking and cutrently the Governor, Reserve Bank of lndia and a host of academic and policy personnel. We also had an opportunity to discuss the paper with a distjnguished group of scholars and administrators in September, 'l 976. We also had the benefit of close interaction
with
Shri T. A'
Civil Supplies,
We are grateful to all these persons for their indulgence. We are also grateful to the National lnstitute of Bank Management and to several members of its staff for help given in this project.
record our appreciation of the fine assistance rendered by Shri Y. L. Nangia, Shri Kamal Jit Kumar. Shri Trimbak Rao and Shri P. K. Yegneswaran in preparing the text for publication.
Finally
we
Needless to add the views expre ssed in this study are purely of the authors.
September 1977
P. D. Malgavkar V. A, Pai Panandiker
CO NTENTS
Foreward
Preface
V VI
Chapter I Chapter ll Chapter lll Chapter lV Chapter V Chapter Vl Chapter Vll Chapter Vlll Chapter Chapter Chapter Chapter lX X
lntroduction Population
Food
3 8
11
Labour Force
lndustry-A Review Energy, Water & Raw Material

lntensiveness Resources Assessment
14 18
24
31
Xl
Xll
Consumption Pattern and Life Style of Weaker Sections in 2000-1 A.D. Growth Rate Structure : Economic and Industrial Employment and Urban Development Assessment of the Industrial Policy
37
39
51
Objectives
Towards Industrial Policy 2000
Chapter Xlll
References
A.D.
55 66 69
Chapter
Introduction
the future development of the world are emerging simultaneously: the Enelgy crisis with the spectre of exhaustion of resources and the ecological imbalances which threaten the so_called free gifts of nature such as air, water, etc. are the latest entrants in this field. Both have shown the monster lurking behind them
Urgent issues likely
to
have
decisive influence on
threatening the human society.
. The problems of poprllation growth and food scarcity have been 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 for the Developed World. Brjt the rapid rise in population in the Developing worrd and the impact of the vagaries of the rains on food production have re-emphasised the need to assess their long range impact on the human society.
The problem of overcoming
ween nations and the more equitable distribution of National lncome-within the country have eluded satisfactory solution. In fact. the gap between the Developed and Developing World is increasing whilst within the country, the lot of the lowest 30 to 40 per cent has not improved though the highest 10 per cent
have become more affluent. A conscious programme of industrial development was under_ taken in India almost immediately after independence so that the country may utilise and process its resources,
the economic
imbalances bet_
nical and human skills. provide employment
improve
to
the
tech_
the growing
2 TOWARDS AN INDUSTRIAL
POLICY-2OOO A.D.
population and boost the economy cf the country' The unemployment in the country has, howeve r, steadily grown whilst the industry sector wh;ch had shown about 9 per cent growth between 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 activities that are necessary to meet these objectives may be stated as:
1.
ensuring the minimum needs of the people, specially of the lowest 30 per cent in cosumption, health, self development (education and training) and shelter;
2.
developing production facilities and capacity in areas essential for national security and defence, so that the nation is not unduly dependent on outside countries in national security matters; and services to meet our import requirements and debt servicing charges;
3. expoiting goods 4.
creating a Technological Research and Developnlent base to ensure --
a. that we are on par with b.

location
neigl'rbotlring countries in
defence technology and production,
of growth areas in whlch technology will
have a breakthrough in ihe first quarter of 21st cen' tury so that we may bridge the technoiogical gap between us and the developed world and be on par with them in growth industries and development,
c,
Resources optimization-.human,
agiicultural. mineral,
forests-so that the industry is geared to development of local resources for optimum value, both social and economic.
Chapter ll
Population
Recently a number of sti:dies on the emerging pattern in lndia have been undertaken. The Ford Foundaiion commissioned a series of studies on the "Second India", meaning si!..jdies of the Indian society when the Indian population will have doubled. Most of these studies concern with India in 2000 A.D. The Operations Research Group, Baroda, undeltook a study oll consumption pattern and life style of India in 2000 A.D. The Club of Rome's second study "Mankind at ihe TuIninE Point" goes upto the yeu 2025. lt divides the world in 10 regions, India being rncluded in Region I the Scuth Asia.
These studies develop alternative scenarios based upon past exoeriences and future trends. One of the critical item of these scenarios is the population in India and it is the one item wherein considerable work has been done and wherein the forecasts can be reasonablY certain. refer to the estimates by Ambannavar prepared for the Ford Foundation and of the Regisirar General. Ambannavar estimates the population in India in 2000 A.D. according to low, We
will
medium and high projections at 926 million,999 million and 1035 million on the assumption that NRR (Net Reptoduction Rate) of 1 would be reached in 2001, 2026 and 2Q51
respectivelY.
The Registrar General on the other hand estimates the 1971 population of 548 million to be between 830 million (Low1 estimate) and 1035 million (high'?estrmate) on the assumpiioit
4 TOWARDS AN INDUSTRIAL POLICY
2OOO
A,D.
that the present mortality rate of 15.2 per thousand would come down to between 9.4 and 9.8 per thousand by 2000 A.D (Table 2.1 ). The birth rate however is assumed to f luctuate between 30.4 and 20.9 against the present rate of 3b.4. For the meditrmz projection the Registrar General assumes a 10 per cent decli. ning general fertility rate till 1991 and thereafter at E per cent and estimates a population of 945 million in 2000 A.D. We feel the Registrar General's H2 estimate is too pessimistic as it expects the birth rate in 2000-1 to drop down only to 30.4. On the other hand, his Lr estimates are too optimistic as the birth rate is still hovering round 3S.4 and there are various lacunas in his assumptions that lead to a population estimate of g3O m illion.
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 will have to be protectod against the risks of pregnancy. By the end of the Fourth Plan, it is estimated that 1 6.3 million coupres constituting 15.6 per cent of the couples in reproductive age group were covered by one or the other method of contraceotion and it is most unlikely that this percentage would rise to 60 by the end of this century, considering the fact that the Family planning Programme has now to reach the poor and the less educated tural population. Ambannavar avers that only in the year 2021 the 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 be 744.8 million by 1991, or about 840.4 miilion by 2001.
The decline in mortality was largely achieved through lhe control of famines and epidemics through mass immunization programmes and public health medical services. But the spectre of ntrtritional deficiency with consequent vulnerability to diseases remains. Nearly one-third of the population suffers fram under-nutrition and another one third from malnutrition. The guantitative problem is one of achiev!ng a steady rise in the production of cereals and pulses and the qualitative problem is one of raising the production of nutritive foods such as milk, eggs, fish. meat, sugar, vegetables, fruit, etc. Sixty per cent of
lndia's population living mostly in rtjral areas does not even get safe 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 three years (by a team of scientists headed by G.p. Talwar at the All lndia Institute of Medical Sciences)
2.
tube \,/hich when implanted under the skin prevents pregrancy for a year or so (All lndia Institute of Medical Sciences)
a steroid
POPULATION 7
3.
a safe vasectomy device that can be switched on or off depending upon whether a child is desired or not (designed by two New York Pharmaco log ists).
It is not however the development of new birth control devices that will hold down the population but the motivation towards smaller family and translation thereof into a birth prevention programme supported by an infrastructure of family planning clinics and doctors.
There is all the more reason therefore to be concerned with are 830 million people in 2000 A.D. instead of 1035 million, the per capita income will go up by 25 per cent, thus increasing not only the disposable income of the individual, but also his savings rate and the taxable capacity.
the birth rate as, if there
It will have a strong cumulative effect spread over the 25 years period upto 2000 A. D. which may radically change the ultimate picture o{ India with the accumulated higher savings and investment, better nutritional standard, lower incidence of food scarcity etc.
allthe more urgent because of the vagaries of food production. To meet the requirement of 830 million population, India will have to produce 20 per cent less food than for a population of 1035 million.
The concern over birth rate is
Population control will mean giving Family Planning a leading role in aur development policies. Japan has shown that it could bring down its birth rate from 33.6 to 16.9 per thousand between 1947 and 1957; South Koi'ea has shown that it could bring down the birth rate from 42 to 29 per thousand in a
decade; and Taiwan has shown that it could bring the rate down to 19.4 per thousand by 1972. There is therefore no reason why lndia cannot achieve a major breakthrough provided there is a
nationai rruill to do so.
Chapter lll
Food
We tabutate below the low and high food requirements of lndia estimated by different scholars;
Group
V. M. Rao Tata Economic consultancy Services ITECSI Operaiions Research

IORGI
184 million to 261 million tonnes
274 million tonnes

189 to 198 million tonnes (revised)
to aggregate requirement of foodgrains in 2000-1 A. D. varying tram igq million ronnes to 261 milfion tonnes and other foods* tram 2.g4 times to b.4O times the base year.
The TECS assumes a population of 94b million (Mr) and suggests production of 274 milion tonnes of foodgrains @ 2g0 kg of foodgrains per capita against 196 kg for the y-ear 1gr3-74. The ORG takes NSS data for 1964_6b. estimates that NSS data is about 21 per cent higher than the off icia I estimates of
Rao includes in ,,ottur food & fish, fruits, vegetables, ed ible oils, beverages and refreshments.
of population in 2000-1 A.D. (the lower poor disappear in alt classlfications whilst the percentage of poor and rich alternate between 20 and 4O) and comes
Sample Survey f NSSI Reports rrpro 1966_67. lt stuclies the classw{se consumption of food, assumes three different classifications
Regis_ trar General's poprrlation estimates under Lr (g30 million), lllz (945 million) ar:d H2 (1032 milrion), and refers to National
Rao'5 s1g6y on Indian prospect for food assumes the
FOOD 9
the development of ground *ut", ,"aot ra"a, the hybrid seeds etc., we wiil have to put up with intrinsic difficurties in increasing the irrigated area as percentage of totar cultivated land, which means that sright variationr in ,uini.rr wiil have disastrous impact on our agricultural production. lt would there_ fore be in the interest of the cotrntry ,o uuoij significant dependence on outside supplies by limiting .tt,e numOer of new mouths. Says Rao, ,lf India fails to feed her popoularion by the end of the "a"qdatety century, it worifi Oe mainly a human failure'.
not an task due to research on dry farming techniques,impossible skills and practices,
varieties of cereals and to the revised requirements as between gg 1 to 19g million tonnes. The Group assumes a calorie intake of between 2400 and 310O per day under different alternatives. We further feel that the ORG's assumption of 26 per cent rrrOan popr,t"tion is cautious against Ambannavar,s estimate of 2g.g2 percent and .Registrar General,s estimate ot 2g.4 per cent, wtricti still further reduce the demand for cereals as the i" likely to urban popu,ation consumes less of cereals.as compared to rurat loputation. While the increase in food prodrrction is
comes
iOOO A.D. as varying between 196 and 237 million tonnes. tne OnC nas a second look at the estimate for urban shift and possible shift in preferences from inferior to superior
consumer expenoiture of Rs. 75l- and above) and the middle groups frorn rur"t ur"r. (cereals consumption ot Rs. 27.12 tor ttre rich'aglinst Rs. 16.93 for middle group) and estimates annual demandl"
per capita availability of food for rhe base year, finds in accepting the sudden jump in cereals consumftion difficulty O"t*"en rich (with per capita per month tota I
of Club of Rome "Mankind at Turning point" avers that the rooa Jri. in south Asia witt sieadiry worsen. Bv rhe year 2o2s il;ein deficit will have reached b0 million tonnes annually. This would mean an "import of b00 million tonnes of grain. These quantities wotild have to be delivered every year, in ever increasing amounts, without end,,. Even if these forebodings do nor come true, it would be in the interest of the country to have a specific
The prognostication of the Second Report
population and food policy progtamme so that we are not only in a position to give a lie to these gloomy forebodings but also be in a position to help the needy countries. Food production will have to be given priority if we are to come out of our continued dependence on outside world. We have to view our food requirements against the world food shortage in the coming decades. ensure adequate- buffer stock for seeds and lean years, and be able to meet the needs of hungry nations. We shall therefore have to plan for a minimum foodgrains production of 210 million tonnes by 2000 A.D. so that the per capita per day consumption of cereals will be 500 grams
and
pulses 75 grams. Studies indicate the availability of techniques, skills. fertilizers, water, land, seeds, etc. to achieve this target. The revised Fifth Five Year Plan expects the population to be 744.8 million by 1991, or about 840.4 million by 2001. This projection is midway between the lowl and lowz pupulation estimate of the Heg istrar- G eneral. On this basis, the food requirements would be 194 million tonnes in 2001 A. D. to ensure 500 grams of cereal and 75 grams of pulses plus '10 per cent reselve for sowing and emergency.
of
Chapter lV
Labour Force
Ambannavar noted that the average annuat death rate is Bteadily declining whilst the life expectancy at birth is going up,
which makes for a greater proportion

age group,
of people in the working
(Table from Ambannavar,s study supplemented General's figures)

at B irth
1881-1891 1891-1901 1901- 1g 11
1911 - 1921
TABLE 4.1 TRENDS IN LIFE EXPEETANCY AT BIRTH AND AVERAGE DEATH RATE i IND|A ; 1881 " 1971
by
Flegistrar
Life Expeclancy 25.0
Average ann ual death rate
4't.3
44,4 42.6 47.2 36.3 ?1 .' 29.2 24.1 18.6
lA t 16.9
z5.o
22.9
20.1
1921- 1931 1931- 194i
26.8 31.8
.tJ.5
1941-1951
1951- 1961 1961- 1971 1971
R
egistra r
Generd
figures
i's
1966-1970 1966-1970
Female
Mafe
39.0 45.5 48.75
,48.52
46.55
Ambannavar estimates that labour force wili go up from 1g0 million in 1961 to 420 million in 2O0O AD. We feel Anlbanna. var's estimates are very much on the high side. He estimated the laboUr foicd in 1971 at Z2j million, whilst as oer 1971 censrJs the labour force was 170 million (excluding workers below the agc
12 TOWARDS AN INDUSTRiAL POLICY.2OOO A.D.
of 14 years. With increasing spread of education. the ptactice of child labour may be expected to die out by 2OO0 A.D.). The Draft Fifth plan has projected the labour force upto 1986. As the entrants to labour force in the next twelve years are already born, we may accept this projection, though we feel that the Planning Commission is somewhat optimistic in projecting the size of the population (The Registrar General,s estimate of population in 1986 is 734 million under M2 estimate against the Planning Commission's estimate of 70b million). TECS have projected the labour force beyond 1986 upto 2001 A. D. The 1986 projection of TECS is 251 miilion labour force against the Planning Commission's estimate of 247.9 million, whilst the participation rate of lobour force to total poptrlation is 34.2 as per TECS and 3b.2 as per Planning Commission (This may be due to the fact that the planning Commission have under-estimated the size of the population whilst the labour force for 1 986 is already born). We are inclined to accept the labour force projection of TECS lor 2001 A.D. as agarnsr Ambannavar's first by because TECS projection is on Registrar General's M2 population projection, secondly because they follow the Planning Commission's definition oJ workers as excluding those in the age group 0-14. and thirdly because their assumption for projection of the labour force seems realistic. We give below the Planning Commission's and TECS projections of labour force.
TABLE 4.2 Labour force till 2001 A.D"
Year
Total
(million)
E/l Q
Population
Labour Force
Participation
(mittion)
nle3asyool2
31 (actual) ?5.2 ?4.2 35.8
37 .2
1971
1986 (Planning Commission)
170
247 .g
1986 TECS 1991 TECS

1996 TECS
705 734
801
251
ta1
200r TEcs
Total increase
over 1971
873
945
?o7
325 364
194
38.5
LABOUR FORCE 13
The labour force will .cjrow at a faster pace than the population due to changes in the age structure of populatron, increasing urbanization and decreasing proportion of youngsters in the labour force.
The growing population with a faster increase in the labour torce, added 'to the backlog of 9 million unemployed and another 9.7 million under-employed in 1971 (Bhagwati Committee
Report) necessitates a specific strategy for employment. as employment means dignity and self respecl to the people.
the revised Fifth Plan population estimates. the labour force in 2001 would be 323.5 million. The labour force till 1990, however, is already born and so the urgency of the unemployment problem will not be reduced. Nearly 150 million new jobs will have to be created between now and the turn df
Even for
the century-a task of gigantic propositions.
Chapter V
Industry-a review
. lndian economic development rill 1965 moved Very well, The industrial prodtrction wdnt Up by almost g per cent a year between 1 961 and 1965. The Fouith Plan projected rhe large sbale manufacture growth rate @ 9.3 per cent and of the 6ma|l scale manufactures at 5.2 per cent. But the countrv has not been able to achieve the 9 per cent growth rate since 1965. The sectbral contribUtion which showed dynamic changes from 1954-55 ts 1965"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 Percenlage
51,0 16.0 0.5
fndustrv 13.2 Electricitv 0.3 4. Construction 3,6 5. Transport 3.5 6. Other Services 23.6
2. 3.
Source
1.
Agriculture 55.8
4.6
4.3
24"6
42.6 18.2 0.9 4.7 F I 28.5
44,8 17.0 0.9 4.8

FA
27.5
43.9 6,9 1,1 5,5 |Ft 27.4

1
42.5
17 .1
1,1
45.74 15.39
1.13
5.6 E^
28.4
5.62 4.42 27.70
Dra{t Fifth Plan
Estimatee of National Product, C.S.O,
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 93 per cent of all the manufacturing establishments in lndia, whilst these constitute only 73.9 per cent in Japan, 54.3 per cent in U.S.A., 71.8 per cent in Great Btitain, 43.4 per cent in West Germany and 80.4 per cent in France. Masanori Koga11 therefore conclt-rdes that "one of the conspicuous features of the struclure of Indian industry lies in the fact that small scale industrial establishnrents are overwhelmingly dominant in lndian Industry",
INDUSTRY_A REVIEW 15
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Chapter Vl
EnergY, water and raw material intensiveness

for indus' Availability of power is one o{ the crucial factors
trial development.
transpolt The final uses of energy are indus y' agriculture' process heat' steam and and domestic. Industry uses energy as motive power.
like coal' and Besides, industry requires some of th6 fuels The production coke for riretallurgical purpose in steel industry'
process.
on electrolysis of fertitizer is based on coal, naptha' fuel oil or

RuraIeIectrificationforagricuIturaIsectorrequireslarge investments in distribution system'
wotrld redt'rce both regional development through growth centres
Life styles affect energy needs' Public transport
and
cost' As India the demand on energy and its distribution for heating residences g"n"rufft has warm climate, the demand standards' ina ro* places will be negligible' With improved for p"opt" tuy go in for {ans, room coolers and air-conditioners 17 '9 per cent of total coofer environmet in summer' ln USA' and another 24'9 energy consumption goes for space heating p", ."nt for transportation (year 1968)'
(Kirit S Patikh) considers The second tndia Studies Energy two scenarios as follows
:
ENERGY, WATER ANO"RAW MATERIAL INTENSIVENESS 19
Population 870 million with urban population ot 210 million. 7 per cent growth rate, per capita income Rs 1 310 at 1960-61 prices (equivalent to Rs. 2659 at 1972-73 prices), 'National lncome 1 14,000 crores.
l.
5.5 per cent growth rate, per capita income Rs. 655 at 1960-61 prices (equivalent to Rs. 1330 at 1972-73 prices), National Income 72,500 crores.
One of the unique features of consumption of energy in lndia is that almost 50 per cent of the energy requirements come from non-Gommercial energy sources such as firewood, dung, and vegetable waste (out of 376 million tonnes of coal replacement energy equivalent consumed in 1971, 179 million tonnes iwere accounted for by non-commelcial sources).
ll.
Population
11
10 million, urban population
310 miltion,
The actual energy consumption

table 6.1 TABLE 6.1
in
197A'71
is given in
Consumption of Energy in million tonnes of coal replacement (1970-71)
Vegetable
Coal oit Electricity Firewood Dung
51.35 97.19 48.65

116.62 26.91
(15.31 million tonnes ot oil) (48.65 billion KWH)
waste
35.88
376.60
' . The sectorwise consumption of commercial energy was as foflows (1970-71) in percentages :
TABLE 6,2
M
ining & manufacturing

60.50 11.22 70.61 38.87
Transport
31 .00
Agriculture
Domestic 7.92
Coal
oil
Electricity Total %
48.59 2.94
32.45
+o+
9.33
4.61
28.38
7.87 18.07
High Speed Diesel used for railways, trucks and buses eccounts for almost 40 per cent of the total oil use. Motor
gasoline (petrol) used for automobiles, scooters and threewheelers accounts for 7 per cent of the totat oil demano.
There is considerable uncertainty about the domestic energy requirements. The National Council of Applied Economic
Research survey (1962-63) estimated an urban limit of 0.44 tonne of coal replacement per person per annum. The Energy study states that lndia is well endowed with coal, and has sizeable hydel potential as well as large thorium deposits. . Recent off-shore discoveries lead one to expect selfsufficiency in oil in the coming years. especially as only about 4 per cent of the potential oil bearing sedimentary arda has been explored so far.
Uranium*nd thorium (assured resources of 22000 tonnes and estimated resources of 450.000 tonnes respectively) will
meet the potential need of fast breeder reactors.
The development in solar energy for a tropical country should be most promising. especially for water and space
heating, a ir-condition ing and refrigeration. The Energy study estimates that the 230 million cattle population (1966 cattle census) may not materially increase in number. (But their health, maintenance and milk yield may improve considerably.) Assuming each animal gives 10 kg of wet dung (2 kg dry) per day, the annual yield would be about 170 million tonnes oJ dry dung. During the nights the animals are in shade under shelter and therefore 50 per cent collection of dung could come from cattle sheds. With better animal hus_
bandry and dairying, one can expect 50 per cent of the balance cow dung to be collected. This would mean a total collection of 127.5 million tonnes of dry dung, which if it is processed through bio gas plants will give energy equivalent to 1OO miltion tonnes of coal replacement. Bio gas plants will also improve village sanitation and health not only by utilising cow dung but also night soil. (ln Surat district the latrines are joined to gas plants.) These plants further help eliminate flies and mosquitoes as
ENERGY, WATER
AND RAW MATERIAL INTENSIVENESS
21
the discharge from the plants is not attractive

to them.
and conducive
Assuming 2 per cent nitrogen content in the manure coming out of the plants one can expect 2.S million tonnes of nitrogen as fertilizer input to agriculture.
After considering the cost benefit of the bio gas plants (100 ft size for the family and 5000 cubic ft for community) the Energy study considers them well worth the investment, what with their output of energy and manure.
cubic
electricity thus bringing down the requirements of oil by 4g million tonnes) @ 650 million tonnes of coal. 97 million tonnes of oil and 700 billion KWH of electricity or 1O times, 6 times and 13 times as large as in 19j1 respecrively. (TECS on the other hand project coal production at 1O7O million tonnes and oil at 39 million tonnes.) The generation and transmission of electricity alone will demand an investment of about Rs. 25,000 crores. The dovelopment of coal mines including exploration costs, development of mines, and establishment of washeries would 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 current prices of Rs.600 per tonne would mean Rs. 37g0 crores in foreign exchange assuming domestic production to be 40 miflion tonnes and import of crude 63 million tonnes. (The M inister for Petroleum and Mines expects the country to be self_sufficient in oil needs by 1980.)
The Energy study estimates the energy requirements in 2000 A.D. (on the assumption that oil will be substituted by coal and
India's limited uranium reserves necessitate reliance on fast breeder reactors, which may demand transport of spent fuel to fuel reprocessing plants almost once a month from ptant. every
Energy may not be a constraint for development of India, what with better prospects of oil, large defosits ol coat and the
technological advances anticipated both in fusion power and

solar energy.
lf fusion reaction for energy production can be harnessed' the resources for energy generation (deuterium) would be availagive energy ble in plenty as one cubic kilometer of sea water can equivalent to 300 billion tonnes of coal'
Chaturvedi estimates the projected requirements
of
water
in 2000 A.D. as follows
TABLE 6.3 ( in billion Iitres/daY

Used in 1968-69 Industrial Steami Electric PoweI 7.3 19.05 2000151.00 237.80 388.80
1
) Consumption 11.58 148.00 159.58
withdrawal
The industrial and energy consumption of water will be per abotrt 7 per cent of the total water consumption, whilst 91 cent will be consumed by agriculture and another 2 per cent will be required for domestic constimption'
Though the volume of water for industrialconsumption may not be very high when compared to agriculture, the industrial demand may be contiguous to demands from the urban centres'
The return f ow
f
229.22 billion litres per day water from industry with its heat, wastes and pollution coupled with the low flow of water in summer and high temperatures prevalent in the country may pose serious pollution problems, which will be accentuated in premonsoon period between April, May' June' Moreover, the Western and Southern Regions which have high potential for industrial growth are water starved. lf water is not to act as a brake on the industrial development of these regions, corrective acion will have to be initiated at the earliest'
Raw materials intensiveness for development A study of the material intensiveness in industtial production in Japan gives us valuable clues ol the likely requirements
of
ENERGY, WATER
AND RAW MATERIAL INTENSIVENESS 23
of taw materials and services (such as fuel energy) that may be required to sustain the anticipated prodtrction in India, As per the study under reference, between 1954 and 1968 the industrial production in Japan went up five times. During the same period the expenditure on commodities per unit of produc'
production came down by 52 per cent. We may alternatively state that the raw material intensity in Japan came down by 52 per cent whilst production rose five times'
tion for the final
by
This savings in raw materials consumption has been achieved technical and technological advances, material saving, restructuring of economy, energy fuel-commcdity composition balances, organizational and management improvements, incentives, upgrading skills, zero deficit movement etc. Concretely, improvements in the initial raw material and processing, introduction of substitutes, reduction in non productive losses, use of secondary raw materials and scrap were systematically resorted to, For instance, in non-ferrous metallurgy, besides basic 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 the mines fot sulphur dioxide were closed in 1970,
Moreover, as most of the raw material has
to be
imported
into Japan, shipping costs constitute a sizeable proportion of the total cost, Changing geography of raw materials imports, siting users of imported raw materials on coast, going for
large cargo and specialised ships, modernising ports and warehouses, helped in reducing the overall raw material cost. Between 1960-66 use of large cargo ships alone brought down petroleum costs by 11.9 per ceht and sreel by 3.1 per cenl. Technological developments and optimum size plants reduced the coke consumption per tonne of pig iron from 901 kg in 1950 to 474 kg in 1970. In ship-building, improved hull design reduced steel requirements per tonne of ship by 5 to 6
Der cent,
A conscious policy support to reduce raw materials intensity may help lndia to reduce raw materials intensity on the same
scale as the one achieved in Japan,
Chapter Vll
Resources Assessment
for
We have dwelt at length with the major resoutces necessaty development viz, population, food, labour force, energy and
water. OtJr asGessment indicated adequate provision of these resources even for the most optimistic scenario in 2000 A,D,
We wilt now take
a look at
some
of the
non.renewable
oJ
tesources, The Fifth Five Year Plan has tabtrlated balance life known reserves at 1988-89 consumption leVels as follows :
Mineral
Balance lile at ,|968-89 Consumption levelg in YeaJs 44 168 159 165 62 84
1.
Coking coal
2.
Non-coking coal
(a)
(b).
indegenouS plu3 exports
lron ore- hematite (a) indegenoug (b) plirs exports

4.
lton ore- rriagnetits
(a) (b)
6.
Manganege ote
indegenous
10
12
plus exporlg
indegenooe plus exports
Chroftite
(8) (b)
1.
47
13
(a) (b)
Eauxite indegenous plg$ exporrt
oo
46
hESOURCES ASSESsMENT 25 Mineral Balance life at 1988-89 Consumption levels in years
L
9.
Zlnc
(a) (b) (a) (b)

10. Lead
indegenoUs
plus imporrs
indegenoUs
tt
!7
36
Copper
plus imports'
indegenous plus impons
indegenor.lg
(a).
(b)
11.
29
46
Rock phosphate
(a) (b)
ptus imports
12 475
Liilleston
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, besides ceramic and refractory materials, chemical and fertilizer minerals and other industril minerals like asbestos, bentonite, ftrller's earth, calcite, graphite, limestone, mica, ocres, talc, Vermiculite" preciotrs stones and mineral fuel are equally necessary for industrial development,
India has known reserves of over 21,000 million tonnes of lron ore, As per Zimmermann 2000 lbs. of ingot steel require:
We will confine ourselves to iron ore, copper and ahrminium s these are required in large quantities for industrial develop-
2,13A lbs. of iron ore 50O lbs. of lirnestone

1,.48O lbs.
1,150
30
oY coel lbs, of scraB" etc, tbs. of fero alloys etc,
It is not the strpply of iron ore but of scrap that mav be a critical factor in the production of steel for 2,O00 A.D. as besides
the known
reserves of iron ore, there is strong possibility of further 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 3.0 percent of cuprune converted into copper metal. India has proved feserves of about 3 million tonnes and further orobable reserves of another 2.7 million tonnes. Against this, copper production in the country was estimated at 12,700 tonnes in 1973-74 and the Fifth Plan envisages its being stepped up to 37,000 tonnes by 1979. The Planning Commission visualises thal the copper reserves at best can meet the country's requirements fol another 17 years.
Bauxite reserves are placed at 200 million tonnes of which 83 million tonnes are of high grade analysing 45 per aent or above AlzOs. The aluminium production in the country was estimated at 190,000 tonnes for 1973-74 which is to be stepped up to 370,000 tonnes by the end of the Fifth Plan' lndia can be
considered self-sufficient in respect of bauxite to come.
for many
Years
The ore reserves are likely to be considerably augmented by the explorations now going on under the seas.* Nations, therefore, are vying with one another to extend their claims on the seas. the claims increasing in a short span of time frorn 3 miles
to 12 miles, to 200 miles to mid-ocean. Besides under-water exoloration and fuller and deeper exploration on land and underground, benefication of low grade ores, improvements in exploration, mining and processing technology, advances in recycling' etc., would stretch our resources cosiderably.,As William Page puts it, the earth's resources are finite but not fixed and what is available in the earth's crust is infinitely greater than what is in fact assumed. i Savs William Page : Seawater has been estimaled to contain 1'000
years supply of sulphur, borax and potassium chloride; more than one million of molvbdenum, uranium, tin and cobalt; more than 1'000 of nickel and copper.-Thinking about future-A ctitique of Limits to Glowth' Edited by HSD Cole, Christopher Freeman, etc.-Sussex University Press-1973'
millionyearssupplyofsodiumchloride,magnesiumandbromine;100million
RESOURCES ASSESSMENT 27
We have to acknowledge that tfue conservation is not hoarding, but ,efficient and intelligent use of our resources.. The development of alloy steels enabling a five to ten times the performance of ordinary steels, the basic oxygen process (LinzDonawitz) reducing the steel conversion cycle from hours to minutes, continuous casting are all revolutionising the steel manufacturing process. powder metallurgyi ferrous pressure casting show fresh avenues of economising the use of steels as most of the steel ingots have to be scraped, cut, bored, ground, honed, etc., to make the Jinished components. These operations can 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 materials constraint.
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 Sector I Productive capital Invested Capital
*PRODUCTIVE INVESTED
Value added 3.96 Value added
Census and sample sector
Value
1
added
Value added 4.53 4.45 4.27
966
4.19
1969
4.025
J. OC
1970 1970-71
1971-72 1972-73 1973-74
3.749 3.687 3.318
4;161
4.143
3.706
productive capital
lixed capital
+ *orfing;upiil
unit value
utilization, better productivity, higher value of production, greater development of infrastructure, etc. With 'greater emphasis on productivity and raw materials intensity, we should look forward to the Census and Sample sector yielding a rario by 2,000 A.D. of invested capiral to value added of.3.1" thirs
Successively, the capital investment required to produce is coming down. The reasons may be fu ller capacity
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 of 3.5 from the present tatio ol 4.27. On the other hand. we expect the sample sector ratio to go up trom the present 2.c6 to 2.5, as it would be necessary to invest more in fixed assets in the sample sector. We expect the ratio between the census and the sample sector industry to be 80:20, thus giving a ratio of 3.1:1 between investments and value added. The Yearly incremental industriaI production in the last five years, viz. 1996-2001 will be Rs. 5,434 crores at 4% GDP growth rate, Rs. 16,194 crores at 6% growth and Rs. 39,708 at
8f
growth rate requiring 3.1 times investment in industry, i.e.
Rs. 16,845 crores. Rs. 50,200 crores and Rs. 123,095 crores for 4,6 ancl B per cent GDP growih rate at 1973-74 prices. These sums would constitute industrial investment of 2.81 ,5.175 and 7.93 per cent of ihe respective GDP in the last five years of the Century. As per Chenery's table, the gross domestic investment for 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 per
cent scenario. The investment in industry would thus constitute 15.4,26.26 and 36.8 per cent of the total investment at 4, 6 and 8 per cent growth scenario. The investment ratio to GDP countrles was as follows : Country
Japan
in some of the developed

Per cent ratio
West Germany
France
34.4 26.3 26.3

22.O
Sweden
U. K. u. s. A.
f
18.2
17.O
nvestment in plant and machinery constituted 44.75 per c nt of the total investment in Western Germany, 44.6 per cent in France. 37,84 per cent in Sweden, 51.43 per cent in U, K,
RESOU RC ES ASSESSIVENT
29
and 41 .13 per cent in U.S.A. The investment of 36.8 per cent in industry at 8 pr cent scenario for India. is well below the percentages now being invested in industry in the developed
countnes.
Even taking into consideration, the prominence that agriculture has to receive in the lndian situation, and the leaway to be made in the infrastructure development, 36.8 per cent investment in industry should not pose a great deal of a problem to the lndian economy in the final years of the present Century.
It is the immediate future that poses the problem. For 8 per cent GDP growth rate. the industrial growth rate has to be 11.1 per cent. The 1973-74 industry contribution was Rs. 69g3 crores. The yearly incremental value that would have to be produced 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. (lt
is assumed that once the investment is made, the industry would continue to yield the value added every year with proper upkeep and maintenance. though some allowance may have to be made for the ultimate replacement of the equipment depreciation.) The ratio of investment to value added for the Census and Sample sector is now 3.7. An overall investment of Rs. 17,8g3 crores would have to be made in industry to give a growth rate of 11 .1 per cent for industry. These figures are again at 1g7g-74
prices. lf we take the present index at 300 against 2EO for 1973-74, the investment in industry at current prices would have to be Rs.21 ,47O crores. The Fifth Five Year Plan (revised) estimates total resources available for investment at Rs. 63,751 crores, out of which Rs. 58,320 crores are aggregate domestic savings and the rest being inflow from the rest of the world. In other words, we would have to spend 33.69 per cent of the total resources available for investment in industry which is rather difficult. In the earlier stages, therefore, we should concentrate 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
the industrial sector to contribute greater value added. This brings home the point that we have to plan for a gradual increase in the industrial growth, as also provide for some
untoward contingencies and lean years so that an overall contribution would be more in line with the planned scenario.
Chapter Vlll
Consumption Pattern and Life Style of Weaker Sections in 2OOO- 1 A.D.

Dharia Committee Report on essential commodities and of mass consumption (1973) considered the coarse cereals, pulses, sugar and gur, edible oils and vanaspati, milk, eggs and fish, common clothing, standard footwear, Kerosene oil and domestic fuel, common drugs and medicines, bicycles, tyres and tubes, matches, dry cells. hurricane lanterns" soaps and detergents and text books and stationery as essential commodities and articles to the common man. Under long-range perspective, especially if the standard of living of the lowest 30 per cent goes up substantially, we may have to consider afiesh the list drawn up by the Committee. lt is known, for instance, that the agricultural breakthrough has not yet affected the
articles
coa rse grains.
Moreover,
coarse grains. In fact, we may visualise a time when the coarse grains, because of their low and seasonalyield, may be costlier than the fine grains and may be eaten as esoteric food and on special occasions. Similarly, the spread of electricity and biogas plants to villages may do away with the need for hurricane lanterns. The domestic fuels will have to be considered from the angle of saving of wood and cowdung and channelising the energy requirements to sources such as community gobar gas plants which will give light. fuel and manure and improve the health and hygiene of the villagers.
ORG considered the objective of the Fourth
and wheat
to
with higher income, people would prefer
rice
plan that the
32 IOWARDS AN INDUSTRIAL POLICY-2OOO A.O.
average per capita monthly constlmption of the iowest 30 Bef cent 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) and projected the population below poverty line as follows ; TABLE 8.4
People below poverty line in 2000 A.D,
M
illion
3.8o/o
Sce na f io
1. 307 * 1025 million poptilatioh 2.204- 911 million population 3. 191 - 1025 million population 4. 141 - 1025 million population 6. 103 - 911 million population 6. 87- 911 million population
growth rate, increased inequalitY 3.8% growth rate, incfeased inequalitY 3.8% growth rate, reduced ineqUalitY 5.29lo growth rate, increased inequalitY 3.8% growth rate, redtlced inequalitY
1.49-1025 8, 23- 911
5.2% growlh rate, increaeed inequality million population 5.2% growth rate, redtlced inequality million population 5.2% growlh rate, reduced inequality
It will be seen that under f irst condition the absolute number increase by 14 million as year. For appreciable results we must hav compared to base a high growth rate with reduced inequality. lf we can couple it with low population growth, hardly 23 million people will be below poverty line in 2000 A.D. ORG divides the costrmption basket in three categories: Categoly 1-Milk and milk products, fruits and nuts, beverages and refreshments etc. and all items in non-food groups except {uel and light. Category 2*Vegetables, sugar, gur, edible oils, meat, fish'
of people below poverty line will
eggs,
Category 3-Gerea!s
The Group estimates the changes in of the commodity categories as follows: TABLE 8.5
Commodity Base year
Category 33,0 12.6 2000 A.D. (Percentage) Scenario
the percentage share
2 3
54/'
42 46.2 51,7 12.7 12.3 1,8 45.3 41.5 36,5

1
64.9
11.3
33.8
CONSUMPIION PATTERN AND LIFE STYLE OF WEAKEF SECTIONS 33
This reflects the inelasticity of demand for cereals (category 3) after the minimum needs are met, suggesting that the expenditure on category 2 items will keep in line with the increased disposable income and that the expenditure on category 1 commodities, which include durable and semi-durables like appliances. kitchen-ware, fans. coolers. radio, television, audio. visuals and electronic gadgets, furniture, watches, cycles. scooters. mopeds etc. and seruices wrll increase more than
proport ionate Iy. We have to bear in mind the enormous potentialfor exporting durable goods to oilrich ccuntries, and countries touching the indian ocean (East Africa, Australia, South East Asia etc.) as we are very advantageously situated in the centre of the lndian ocean and can make our production available to these countries most economically and expeditiously. These goods are also known to add substantial value in the process of manufacture. We can take advantage of the neighbouring market provided our industrial base is wide and sound and provided we can meer the sophisticated demands of the classes demanding leisure services, activities and products. lt would be difficutt to meet the export demands if we have a very narrow production base for such goods in the country. This fact has also been emphasised by the Committee on institutional infrastructute for Exoorts which 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 safe assuming that lndians will continue to be predominantly vegetarian and will not emulate the Western world in getting their proteins from meat but mostly from grams and pulses. The intake of vegetables. sugar I gur, fruits and nuts, milk and milk
in
products. vegetable oils, beverages and refreshments will increase with increased disposable income.
As the urban rural ratio will be fast changing in favour of urban population the foodgrains consumption for the population as a whole will not rise steeply as lesser percentage will be involved in the arduous work on the fields. The farm |abour
34 TOWARDS AN INDUSTRIAL POLICY'2OOO A.D.
irself will be more intense but will demand more of brain than brawn as more implements, atlachments machinery and equipment willbecome the norm of agriculture for farm management as per schedule, for multicropping, for timely watering' lertilizer
Cosages and Pest control.
his visit to neighbouring setvlce centres and interaction with the informed urban people will be more frequent' He will be more The villager
will be both
a farmer and
a marketeer and
ar:d educated' His clothing style is likely to change and be {unctionat like that of a factory employee. He may not require the length of come dhotee and turban, but his demand for clothing will not of clothes and use them Cown as he will have more changes
for other uses such as covers, curtains. furnishings' etc' With as durable increasing pteference for synthetics, which are thrice overall per capita demand will as cotton, it is doubtful if the does materially increase, especially as the warm Indian cllmate not necessitate too much clothing'
Though the dressing style of rural men willchange consider' ably it is doubtful if the rural women will change over to men' As the functional clothing to the same degree as the women will however have more frequent changes' there is likely to be a good spurt in the cloth required by them' The rural people will be more prone to go in for semi durable and durable consumer goods and appliances as they will r'ot city dwellers' have the advantages of city services and, unlike they will not have the constraint of space for keeping their
appliances.
Though primary education and health services will have to be provided for all lhe people, they will not pay anything for so the cost these facilities, excepting if at all as a token' and income but of oroviding these services will not come out of their will have to be provided by the state'
the steep rise in
The urban Cweller because cf
the constraint of space
and
prices of firewood, besides the disadvantage
35 CONSUMPTION FATTERN AND LIFE STYLE OF WEAKER SECTIONS
of rransporting this bulky, ine{ficient and slow energy source' will change over to commercial fuels. In this proceSs' ho is likely to be attracted to oil for his requirements as coal has the cities will same disadvantages as firewood' Bio gas plants for to convert the not be possible excepting as municipal schemes method refuge and waste material into manure and gas' The other coal into gas, excepting where gas is avaiwould be to convert lable from underground. To save on transport, to improve, local hygiene to improve manure availability for vegetable gardens in the vicinity of cities and to supply cooking energy, it may be in the overall national interest to convert refuge, garbage and waste material into gas and manure by every town and city and supplement it with coal gas, where natural gas is not available' Otherwise the spurt in demand for oil to meet the energy needs will be disastrous for the country.
In rural areas, bio-gas plants will have to be supplemented by oil and gas cylinders, as it may not be possible to start small coal gas plants for the villages. The village demand for oil therefore will go up phenomenally. This will have to be accepted as a lesser of the evil as compared to forest denudation with the consequent soil erosion, changes in rainJall and ecological
imbalance.
TRANSPORT
areas will public, either railways or buses. Individuals may go in more for scooters, motor cycles, mopeds etc. as the relative dlstance between villages and towns will be shorter (with the increase in the number of urban towns) and the road network will have
irnproved.
: The interaction between villages and urban increase considerably. The transport will be mostly
is difficult to visualise a private automobile age in India {or even under most optimistic assumption of B per cent growtn and per capita income of Rs. 3598, automobile will cost 10 years per capita income as compared to six months per capita income in USA and a year's per capita income in Japan. lf the per capita income, however" will be Rs' 1374 (at 4 per crnt
tt
36 TOWARDS AN INOUSTRIAL POLICY-2OOO A.D.
growth rate) then an automobile would be equivalent to 26 years income. We may not therefore have the possibility of the automobile age coming to lndia. At the same time mass transport, public transport and group transport facilities will havc to be enhanced for better human interaction.
Chapter lX
Growth Rate
has given sorhe thought to the prevalence of inequality, The Plan concludes that to improve the share of the
Draft Fifth Plan
bottom 30 per cent ol the population from the estimated Rs.25 per capita consumption per month to Rs 40,6 per month (1972-73 price) growth rate above 5.5 per cent and reduction in inequality are both indispensable as even with the assumed growth rate of 5.5, 6.0 and 6,2 per cent in successive plan periods, the per capita consumption would be only Rs' 38.00 at 1972-73 prices in 1985-86.
TECS accepts Registrar General's Ms population {orecast as
rcalistic and develops four scanarios of the Indian economy at 3,5,7 and 9 per cent constant growth rate. Under these growth rates, 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 per capita GDP of Rs.78.3 ($ 98). The Draft Fifth Plan whilst scrutinizing the impact of Fourth Plan (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 than move towards a solution, A rate of growth of the order originally envisaged in the Fourth Plan (5,7 pr cent) is the minimtrm that the country must strive for if the planning process is to lead to progressive improvement in the living conditions of the people
(para 3,4)
,
38 TOWANOS AN INDUSTRfAL POL{CY.2OOO A.D,
' The Pearson Commission and the United Nations Committee for Development Flanning suggest growth target of at least 6 per cent for the developing countries together with the concomitant changes in the economic structure.
The lowest 30 per cent of
the people have to be
assured
in food, clothing and shelter. Besides, to their lot, a massive programme of education, health, improve sanitation, drinking water and medical care has to be launched. Pheroze Medhora considers that a minimum growth rate of 7.50 per cent is required to attain this. This is almost equaf to I per
their minimtrm needs
cent suggested by Dudley Sears for the development of Columbia though Sears stresses radical reforms as an essentiaI precondition and a desirable mechanism of employment max;misation' Taking all these estimates into consideration we willdevelop scenarios at 6 per cent growth rate with reduced inequality. We will also wolk out two alternatives @4-2 per cent of the above .rate to take note of adverse contingencies and of over fulfilment of 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 3598 at 8 per cent at 1973-74 pr,ces assuming the population then to be 945 million. We will test the feasibility of these scenarios against the objectives we have listed for the Industrial Policy wlrich w l indlcate the choices that we may have to opt for if the policy objectlves have to be fulfllled.
Chapter X
Structure : Economic and Industrial

ChenerylT compared the data of about 100 countries over the post-war period and came to the conclusion that "rising
income is associated with systematic variations in almost every
feature of the economic structure", He stressed the need to shift the resources according to changing patterns of demand and opportunities for trade. He then developed a table to measure the ,:hanges at different stages of per capita income in accumulation, output composition, urban/rural population,
sectoral labour force and trade (Table 10.1.) Though the data on which Chenery based his observations may not be fully valid, especially with new technological and environmental developments, they are pointers to the directions in which the economy may move under present technology and environment. TECS have applied the relevant structure for $ 100 GNP from Chenery's table to lndia and tind that it fits India's
economy admirably (Table 10.2) (excepting for imports and exports percentage, because of the country's large size). Chenery's table shows remarkable validity for Japan in its advance from g 250 in 1955 to $ 2000 in 1972. excepting for the saving rate (a high saving rate is the unique feature ot Japanese economy).
40 TOWARDS AN INDUSTRIAL POLICY-2COO A.D,
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STRUCTURE: ECONOMTC AND TNDUSTRTAL 4t
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42 TOWARDS AN INDUSTRIAL
POLICY.2OOO A'O.
STRUCTURE O.F THE INDIAN ECONOMY
IABLE 10.2
Years o{ reference {or India
ln
dia
Chenery's ratio at $ 100 Per capita
ACCUMULATION Gross National Savings ao% of GNP Gross Domestic Invettments as oo of GDP Tax Revenue as Y" of the
national income Sehool enrolmenl tatio
1974-75 1974-76 1971-72

1973-74 1971
13.1
lnn !E !
Adult literacy
.
rate
16.1 55.9 35.O

47.3 14.1 32.O
12.7 36.2 36.6 .,o.+
OUTPUT COMPOSITION Primary share af GD? T" Industries share of GDP o/e Services share of GDP o/"
1971-72 197'l-72
t3.s
Jtt,o
1971'72
Utility share of GDP %
6.6
F7
III.
POPULATION AND LABOUR FORCE Primary Laboul as % of total

labour
iorce
1971
72.8 9,4
17.4
8.1
[ndustrial labout as labour force
o/o
ol total
1971 1971 1971
9.6 22.3 20.0 41.4

lE t
Utilities 6 services labour ag 9i, of total labour force Urban population as % ot toial
population
t9.s
?o q
18.1
Birth rate per 1000 Population 19;1 Death rate per 1000 populalion 1971
IV. TRADE
Exports o{ goods & serviceg
as % of
as
GD?
1970-71
4.5 5.2
13.2
18,7
lmpcrts of goods & services % of GDP Primary expo*s as /o of total exports Primary imports as % of total imports
1970'71
197 2-7
45.7t.
78.0
1
1972-73
33,7..
8.0
tr
a) b) ci dt ej
Primary impons and exports comprise of : food and Iive snimals Beveteges and tobaccoCrude materials, inedible excopt {uels Mineral fuels, lubricants and related matellal6' ano Animal and vegetable oils and fats
STRUCTURE : ECONOMIC AND_tNoUSTRtAL 43
We reproduce below the industry share of GDP and industrial labour as per cent of total labour force from Chenery,s table : TABLE 10.3
LEVEL OF GNP PER CAPITA
India in
1971-1s72 $100 $200 $300 $400 $600 $soo

Level of per cepita GNP industry share o{ cDP
14,1
Industriol labour as
% o{ totai labour force Urban popu lation as % of total population
13.5 19.6 23.1 25,5 29.0
31.4 30.7 55.3
9.6 16.6 20.5 23.4 27.6

19.9 20.0 33.8 40.9 45.5 51.5
In India the indtrstry share of GDp is slightly higher than the one indicated by Chenery's table @ g100. Thougn our marn
emphasis in the coming quarter century should be on agriculture, it can be anticipated that industry share of GDp for respecttve income levels will be almost jn line with Chenery,s eslmate as :
1. 2. 3. 4.
India has developed industrial
and technological
skills
ahead of the countries with g100 per capita GNp. lt has already learnt to utilise and process its resources in the initia I stage.
lt has started exporting its manufactured products and will continue to improve upon this in the fuiure. lt has trained manpower and skill much above the
average,
percentage of industrial production in lndia capita income.
We may therefore not be wrong in asstrming Chenery.s with increasrng per
We project the GDp growth rate @ A%+Z per cent with population of 945 million in 2000-1 A.D, This means rnat our GDP in 2000-i A.D, will be as follows*
44 1OWARDS AN INDUSf RIAL POLICY-2OOO A.D.
GDP in Rs, crores at 1973-1974 prices
TABLE 10,4
2001 A,D,
Year GDP Populat ion. (esti" 1973
4%
69;
369,363 945 3,598 475
45,050
581
r29,892 217,244
mated) in million
Per
Rs"
045
1
945 2'298
)41
capita GDP in
,37
Per capita GDP in
g @Rs,8 Per$
97
We may approximate Chenerr,'s table as follov"'c
the per capita GDP in lndia with

:
TABLE 10,5
Per capita GDP
in tndia
Chnery's tabl6
{97 g 172 $ 287 $ 475

{or $ 500 as between $ 400 and $ 600'
$ 100 $ 200 $ 300 + $ 500
xchen'Vdoesnoth6veaco|umnfot$S00,Wewillestirnatethe'igures for India The output composition as per Chenery's table and 1973-74 prices are worked both in percentages and in Rupees al out in the following tables (Tables 10.6, 10 7 and 10.8)
It will be observed that we have taken the primary sector's to contribution at a slightly higher percentage as compared on Chenery's table because we are laying significant emphasis We are slightly under' the advisability of developing agriculture' rating the eontribtrtion from indtrstry despite the cornparatively goocl contribution from industry as $ 100' This is because we
would iike to give prominence to basic indtrstries end interrfiediate goods iis agaihst consumer goods, Which may lower th6 contribtrtion from indus y inspite of equivalent investment' We afe glving almost egual credit to services because of the policy of
STRUETURE : ECONOMIC AND INDUSTRIAL 45
giving high prioritY to the weaker sections of lhe

With a view to develop a the utilities to be in line With Chenerv"s table other sectors" TABLE 10,6
people and sound distributional set ilp. We expect
to support tfia
OUtput Composition
CHENERY TABLE
lnd ia 1913'74
46'74
'1
$1bo
46.4
1
$200
$300
3
$500*
23.5
.r1
R
Primarry Shate
ol
GDP
0,4
Industry (mining b mfg) 5.39

Services
Ut
3.5
'|
9'6
23.',\
33.32
5,
34.6
ilities
!C
37.9 7,0
7.1
40.2 e.6
Eslimated oulput coltrposition of lndia in 2000-i A D'
TABLE 10.7
Primaiy Ind ustrt'
ServiceS
39 1 9,0 7.0
2sro
23'0
37..3
it.o
3e.2 0.8
urilities
7.7
lrom Chenery's table! Thig Iigure ig estirflated at between $ 400 bnd $ 600
TABLE 10.8 Output eomposition l'rnder diflerent Scenarios

Growth rate \973174 Afftodnt in eroreg 8%
$5oo
46lo $200
69'; $3oo
PrimaiV Industry Service5 Utilities

Average annu al growth rate reqUI'
2b,6o1 6,933 15'009 2'501
50.658(2,50) 69,518(3'50) l]9,840(450) 24,680(3'8) 4e'966(7.i5) 97,030 ( 13'8e) 45,462(3) st,o33 (5.50) 140'870(9 33) s,092(3,60) 16,727(6'50) 31,623(12'50)
b.2%
11r1ya
!,*1f?lIxil5y 6.2b/o bracket ) ( Number of times in
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 output composition in 2000-1 A. D. brings home that :
1) The ptimary Sector growth will not keep pace with the
overall growth rate. This is also borne out by our noting earlier that the requirements for food are inelastic.
2)
rate,
The Services sector slightly outpaces the general growth
3) lt is the utilities and lndustry sector that move ahead of the increasing growth rate. lt will be seen that for every 2 per cent increase in GDP growth rate the industrial contribution doubles itself and the utilities almost keep pace with industries to keep them moving.
Earlier we noted that Japan whilst increasing first industrial production 5 times between 1954 and 1968, reduced the expenditure on commodities for the final production by 52 per cent. We envisage industrial production in India to go up by 7 times at 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 reduction in expenditure on raw materials etc. for the final production in 2000-1A.D. so that with raw materials consumption going up by 3.50 times, we may increase industrial production by 7 times for 6 per cent growth rate.
We have to decide on the structure of industry we aim to achieve. Our policy all throughout has been 1o go in heavily for capital goods industry. The value added by different branches of industry in the year 1973-74 is : Branch
of
industry
Year 1973-74
Consumer goods Intermediate goods Basic goods
35.25 % 1s.57 % 45.18 %
The Draft Fifth Plan visualises investment policy so as to change this stfucture still more in favour of basic goods, basic
STRUCTURE: ECONOMTC AN TNDUSTRTAL 47
goods contributing 53.02 1985-86 (Table 10.10)
of the industrial output by the
year
rABLE 10.10
TABLE 9 OF DRAFT FIFTH PLAN IN ABOVE FORMAT FOR INDIA
in
BRANCH OF INDUSTRY
o/o
1985/86 25.60
aa 2tl
1973-74
35.25 19.57
CONSUMER GOODS
INTE RM EDIATE GOODS
CAPITAL GOODS
TOTAL
53.02
1
45.18
100.00
00.00
The TECS strrdy on the other hand advocates a reversal of this 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 industries, 20 per cent from intermediate goods and 15 per cent from capital goods by 2000-1 A.D.
We have analysed the output of some of the advanced countries for the year 1968 from U.N. publications (Table 10.11). We see from the table that Japan had the highest contribution from basic goods amounting to 49.75 per cent. This sector of industry contributed 46.2o per cent of industrial pfoduction in France and
47.43 per cent in Sweden.
The high rate in Japan may be
explained by the heavy export of capital goods from the country. Our planners visualise the basic goods to contribute 53.02 per
cent by 1985-86. We consider this percentage as too high even for 2000-1 A. D. as, il we persist in it. we may have huge investments locked up in basic goods plants which would renrain idle for want of orders from the other sectors of industry, whilst shortages of intermediate and consumer goods will persist. perpetuating an economy of shortages.
48 TOWARDS AN INDUSTRIAL POLICY-2OOO A'D"
TABLE 10.11
BRANCH OF INDUSTRY
INDIA FRANCE JAPAN SWEDEN
SINGAPORE
1968
1966 1968 1968 1968

23
30
coNsuMER
GooDS 39.18
GooDs
12 2644 68
23
26 26
51 00
385
34'2
INTERMEDIATE
19.92
a?-
CAPITAL GOODS TOTAL
40.90
46.20
49.75
47.43 100.00
10o.oo 100.00 1c0.01
100.00
a strong support world and South East Asia' Defence requires We are in an advantageous position to from basic iniustries. intermediate export plants and equipment especially where technologY is involved.
of capitaI We do not under-estimate the prospects of exports especially to the Arab and durable consumer goods from lndia
to be Even so we would suggest basic goods contribution its of the crder of about 47 per cent by 2000-1 A D' considering
low ernployment potential and high investment needs' Figures from other countries suggest that our weakest link is intermediate group as the percentage contributed by this group in France, Japan and Sweden is 30'68' 23'82 and 26 Even the iespectively compared to 19.57 for India in 1973-74' group to contribute 21'38 per Fifth Plan visualises this
Draft
cent bY 1985-86. We feel that we should aim at the following contribution A'D' : from diJferent branches of industry in the year 2000
Consumer gooCs
I
ntermed
ialc
goods
Basic goods
28% 25% 47%
This will mean that our major thrust wil[ have to be in be improved intermediate goods whose percentage will have to per cent. The contribution frorn industries and from 19.57 to 25
'
as follows
:
STRUCTURE
ECONOIItC AN-D tNDr.,STR|AL 49
mining under different growth rates for the year 2000_1
will
be
TABLE 10.12
20001
1973-74
4"/o
8%
13060
1.
2.
3.
Textiles 2292.3 (t) lntermed iates (Wood, leather, chemicals,

coal and
petroleum products) 1271,6 (1) Basic goods 2926.7 (1) (Non-metallic mineral products, basic metals.
Food products
6450
(3) (5)
(3.4)
(6)
(ro)
253sO (12)
6145
10455
12500
24250
(20'
21076 (7.2)4OS3O (14)
electfical & electrical

equ
metal products, non-
by-products, transpoft ipment instruments

Smiscellaneous indus6490.6
tnes
Total
(
4.
sectoraf
ining-excluded in
23050
24 680
46636
90530
categories)
442.4 6933.00
1630(3,8) 3330(7.5) 6500(14.7)

(3.5)
49966(7.2) 97030( 14)
(Figures in brackets indicate multiple ot 1973_74 figures or number of times)
made in aviation (jet and superscnic planes), atomic energrj, communications. (integrated circu;try and satellite communication) plastics, pha rmaceut ica ls, chemicals, computers, machine
consumer preferences. An overview of the quarter century which is just ending would make cur point clear. The enormcus strides
We are reluctant to project the production of specific industries because of the possible developments through research, technological advances, plocess clevelopments and shifts In
tools (numerical control) etc. would have been ditficult to forecast in 1950. And yet these are the growth industries of today, The pace of technological development has quickened
further and the industrial scene could change much more rapidly. Even the processes of powder metallurgy, cold extrusion, pressure die casting can drastjcaliy reduce the requirements of basic metals fike steel and the machine tools required for
60 TOWAROS AN INDUSTHIAL POLICY.2OOO A.O.
removing the excess metals. The technological developlflentg in aluminium, plastics and ceramics may change the demand {ot basic metals, Enormous sums are already being invested in developing fusion reaction for energy generation as this process
oonvert one cubic kilometer of sea water into energy equivalent of 300 billion tonnes o{ coal. We therefore pfopose to limit our proiections to broad categories of basic, intermediate
will
and consumer goods industries,
Chapter
Xl \
Employment and Urban Development

Earlier, we projected the total labour force
at 364 million, the rotal population being 94S million. We will project the likely sectoral distribution of this labour force
applying Chenery's table.
LIKELY SECTORAL DISTRIBUTTON OF INDIA'S LABOUR
FORCE BY 2OOO-1 A.D.
in
2000-1 A. D.
TABLE 11.1
Sector
Actual
position
Based on Chenery.s pro.jection at per
capita GDP of (App. $400 & 600)

Corresponding to per capita GDp of
in
lndia
in 1971
us $ 98 us
$172
US
$287
US $475
Percentage
Primary 72.2 68.1 S8.7 49.9 40.1 fndustry 9.6 16.6 2o.s zi.i 9.4 - utilities 18.4 22.3 24J Servicee 6 29.9 SC.S Total 100.0 100.0 100.0 IOO.O 1OO.O
In Absolute Number-Million
Primary lndustry Services I Utiliries Total
12O
17
33
17O
214 60 90 364
182 75 107 364
146
91
127
364
52 TOWARDS AN INDUSTRIAL POLICY.2OOO A.O.
Considering the possibilities of intensive agricultural development, the increase in labour force in primary sector may not pose a problem. As per M S Swaminathan, Japan employs 21 9, Egypt 181 and India 93.2 persons per every 100 hectares of brable tand. Even with no increase in arable land, the 175 million hectares of arable land will have to employ 122 persons per 100 hectares at $200.per capita GDP and 104 persons per 100 hectares at $300 per capita GDP, which is much below even the Egyptian intensity at present. At $500 per capita GDP the per hectare labour force at present may have to be reduced by about 1O\. Multiple cropping, increased irrigation, improved crop cycling and agro businesses will ensure occupation of the people depending on primary sector for employment. We are also suggesting that agriculture development should have top priority concurrent with family planning.
in
is the prospect of increasing employment from 17 million 1971 to 60 to 91 million by 2000 A.D. in industrial sector
11
that is the challenge.

When we compute the labour output (industrial labour force
in production in industry and mining) we get the following

figures : industrial labour output in GDP. TABLE 11.2
1973
4o,/o
20oo-1 @
6lo growth
growth
rate
8% growth rate
tate
Rs.4078 Rs.4113 Rs. 6662

Rs. 10662
In Japan the labour productivity increased at 8.1 per cent per 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 to provide for a minimum 3 percent increase in productivity, which Trade Unions in the Western World anticipate for wage settlements. lf we are to achieve 3 per cent increase in productivity, and provide for-full employmnt, then our growth rate will have to be atleast 8 per cent, as even at 6 per cent, the labour output is very much below what it would be at 3 per cent growth
'.,.
EMPLOYMENTAND URBAN
D EVELO PM
ENT 53
rate in productivity lat 3 per cent annual increase in productivity the productivity in the year 2000-1 has to be Rs.9047). In other words. a brake on productivity and large unemployment will be the norm of life at less than I per cent growth rate, At 4 percent growth rate. unemployment will have assumed serious proportions as increase in productivity is almost zero, which means a stubborn insistence on low prcductivity and a huge backlog of unemployment. Japan's labour ptoductivity in 1965 was Yen 1,060,000. At the then prevailing exchange rates, this comes to US $3000 or equivalent to abour fis. 24,000. Since 1965 labour productivity in Japan has continued to soar whilst the exchange rates have increased the value of Yen by 30 per cent. The productivity in lndia @ 8 per cent growth rate in 2000-1 will at best be 40 per cent of the 1965 productivity levels in Japan.
Even assuming the Planning Commssion Population projection for 2001 , the labour force would be 323.5 million in 2001. With per cent growth in GDP, the per capita GDP would be
1545; at 6l Rs.2,585 and at 8% Rs. 4,276. At Rs.8 to a $, it would be $ 193, $323 and $ 534.5 respectively. Ouf output composition would remain more or less the same, but the persons being employed in industry would come down to 53.7 million at 4f growth, 66.3 million at 6% growth and 81 .2 million at 8% growth, with the productivity of the industrial workerbeing Rs. 4,595, Rs. 7,536 and Rs, 11.948 respectively. lt means that we have still to strive for 8 per cent growth rate if we have to improve our yearly productivity by over 3 per cent. We reproduce Chenery's table of urban pcpulation as it gives us sufficienl warning of the urban chaos if we do not take timely action.
TABLE 11.3
Urban Popu lation Percentage

Per capita GNP
Percentage of urban
$100 $200
$300
$500
population
20.0 33.8 40.9
about 48.5
54 TOWARDS AN INDUSTRTAT POLICY-2OOO A.D.
Our urban population in 1971 was 19.9 per cent which is very near Chenery's 20 per cent. The Registrar General projects the urban population in 2000-1 A.D. at 29 '4. lt the past growth rate of Indian economy is projected to 2001 A.D. our per capita GDP then would be somewhat less than $200 and so the Registrar General's projection of 29.4 may hold good. However if we want to improve the lot of the lowest 30 pel cent and if the people as a who le have to look forward to a better future and get out of the poverty (according to the World Bank, countries with per capita income below $300 at 1970 prices are "poor"), we may have to force the pace of development. As a consequence the urban development may go beyond 29.4 per cent. As it is, in 1971 for 17 million industrial labour force the urban population was 108'9 million. To support an
industrial labour force of upto 91 million and services and utilities labour lorce of 127 million, we may have to go in a big way for a growth centre strategy.
us to the conclusion that if full productive employment in indusrial sector for the envisaged labour force in 2000-1 is to be assured, we wilJ have to strive for high growth
This leads
rate. Similarly, our urban population estimate may go completely haywire at high growth rates as the projection of urban population is based on past trends when the growth rate was low' We will have to be prepared for higher urban population at higher growth rates and take in hand dispersed industrial development with growth centres approach lif we are to avoid the mad rush to metropolitan cong lo me rat io ns.
Chapter Xll
Assessment of the Industrial Policy Objectives

With the changing pattern of life style, it wotrld not be to project the demand for individual items of minimum need in the year2000. We have hower,er the recommen. dations of the Working Grotrp of 1962 and the Perspective Planning Division's paper on Planning for a minimum level of income which accepted the figure of Rs. 20 per capita per month at 1961 prices for rural areas and Rs. 25 per capita per month for urban areas to accommodate for higher prices. Education and health were excluded from this, whilst a subsidy on urban housing was implied, We will accept this quantified notion of minimum need as it lends itself to easy evaluation, and at the same time, gives discretion to the people to alter their concept of what constitutes the minimtrm need,
worthwhile
Whilst accepting this monetary unit to deline the minimum will have also to decide on the level of inequality we are aiming at by 2000 A. D. The cross classsification of countries by income leVel and equality has been done in a joint study by the World Bank's Development Research Centre and the Institttte of Development Sttrdies at the University of Sussex from which We find as follows I
needs of the weaker sections we
TABLE 12,1
Country
Per Capita GNP
lndia (1964) Korea (1970)
u.s.
Lowest 40%
Middle
-2.t
40olo
Top.2O
99
u.
K.
ezechbslovikia
(1964)
fi968i
235
2015 ,|
150
i8 r.j'18.8 ',..
27.6
16
37
52
45 39
31
42.2
41,4
A'D' 56 TOWARDS AN INDUSTRTAL POLICY-2OOO
lncidentally,Czechoslovakiahastheleastinegualityinthe lndia at the table. We may set our goals for 2000 A'D' {or best one can have following percentages which seem to be the 25 :40 : 35' within the presenl socro-political envitonment' per cent have Rs 20 This will mean that if the lowest 40 per cent will have Rs 32 per capita per month, the middle 40 capita at and the top 20 per cent will have Rs' 56 per month that this will be the 1960-61 pric"r. We will further assume net consumption expenditure of the different strata'
required We are now in a position to quantify money : Rs' 50 at 1973-74 prices) 1973-7 prices (Rs. 20 at 1960-61 of the people' in the year 2001 to meet the minimum needs
945 million 945 million 945 mlliion
at
x 0.4 x x 0.4 x x O'2 x
Rs. 600 Per Year Rs. 960 Per Peat Rs.1680 pel'year
Rs. (Million) 226,800

362,800
317 907
,520
,120
loral
The minimum needs programme further accepts that We will education and health will be provicled by the state terms so that attemDt to translate these needs into financial we have some idea of the costs involved in providing these
services.
wherein a teacher-pupil ralio of 40 at the lower primary at the upper primrry level lias been suggested'
J. P. Naik in his thought provoking book' "Elementary Report Education in India" refers to Education Commission's
and
35
The Registrar General has projected the M2 population by age and sex for 2001 as 100,'l 81 ,000 in the age group of 5-9 and 93,1 68.000 in the age group of 10-14' The number of teachers required to train these pupils will be 2,500,000for lowet primary at 40 pupils per teacher and 2,660,000 for upper primary
level. (This number does not take into consideration leave vacancies, a resetve for absenteeism, or lower teacher-pupil
ratio in some places)' The main cost of education is teacher's salaries, whilst the non-teacher costs including contingent
ASSESSMENT OF THE INDUSTRIAL POLICY OBJECTIVES 57
expenditure, rent or maintenance of buildings, amortization cost
of new buildings
We
constructed. equipment
etc. are generally
assumed to be 20 per cent of the teacher costs.
adopt the formula developed by parulekar for ascertaining the primary education cost which is as follows :
will
Where N : total
CT
R K
T:H cr) + r
: : :
number of children in the given age group who have to be educated. teacher cost, on account of salary. allowances. old age provision, etc. average teacher pupil ratio. cost per pupil, other than teacher, cost, such as rent of buildings or educational materials and ancillary services such as free supply of books, school meals, or health care. Total cost,
CT or teachers cost, however, varies with the national per capita income, it being 5 to I times the per capita income. The per capila income in 2C00 A.D. at various growth rates, and the teacher's salary at 5 tin,es the per capita income is worked out below:
TABLE 12.2
Per capita income at Teachers.annual salary
4Yo 137 4
6870
2294 11490
6%
BYo
3598
17990
K stands at about 10 per cent
of the teachers cost at present.
that an increase in these costs is extremely urgent if students have 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,s
Says Naik, "The conditions in our primary schools are so pathetic
cost. Even then. these costs would meals, medical services. etc.
not incfude. cost of

:
free
Our formula now would read as follows
(5,160,000 teachers x 6870/11,490/17,990) x 120/100 or primary education yearly cost in ZOOO A.D. will be :
58 TOWARDS AN INDUSTiIAL POLICY.2OOO A.D.
Rs. 4,253 crores @ 4f growth rate Rs. 7,115 crores @ 6f growth rate Rs. 9,289 crores @ 8% growth rate We will assume that an equal amount will be spent towards secondary, university, social and technical education, though even in the Draft Fifth Plan, primary educaiion constitutes only 43 per cent of the combined total educational budget of the centre and the state.
Housing may be divided into two categories-rural housing

and urban housing.
Rural Housing :About 90 per cent of the houses are made of mud-concrete or combination of wood, bamboo and thatched roofs. The houses which are built of wood or bamboo and thatched roofs usually last three years, whereas the mud houses are easily eroded and are far' from water-proof. 41 per cent of the rural population live in one-room houses;27 per cent in tworoom houses;13 per.cent in three-room houses and the rest in bigger houses. 70 per cent of lhe households depend upon wells. tanks and Ponds for water. 94 per cent have no bathrooms and 97 per cent have no built up toilets. Urban Housing: As of 1971 , there were 18.5 million dwelling units accommodating 19.92 million households. 12.7 per cent of the houses were made of improvised matrials such as mud walls, thatched roofs etc., about 63.8 per cent were made of concrete and 23.5 per cent were semi-permanent houses. In cities over 1 million population size 66.6 per cent
households occupy one-room houses. Besides, these major cities have slumdwellers and squatters. Whereas in 1951 there was one squatter household over 20 non-squatter households in Delhi, in 1973 there was one squatter for less than f ive nonsquatter households. Squatter population has been growing at an annual rate of 12 per cent in.comparison to the growth of the cities at 4.5 percent. lt is estimated that 15 to 20 per cent
of the
population live
in squatter
settlements in Calcutta and
Greater Bombay. Slum dwellers are estimated at over 2 million each in Greater Bombay and Calcutta.
By 2000 A.D., the number of households is estimated to be 201 million. Household size Is expecttd ro decrease from 5.7 in 1971 to 4.7 in 2000 A.D. Surveys carried out place depletion and dilapidation of housing stock at 2 per cent in urban and 21 per cent in rural areas. The Fifth Plan document indicated that 15 per cent of the urban houses and 25 per cent of rural houses were 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 of houses estimated to be currently existing, viz. 18.5 million urban houses and 90 million rural houses. Besides the need for building hotrses to meet the difference befween the already existing houses and those considered necessary for accommodating 2000 A.D. population, we have to allow for dilapidated or improvised structures, and for deterioration in the existing
housing stock.
TABLE 12.3
(Figures in million)
Rural
Existing housing at the beginning of the Fifth Plan Less delapidaled or improvised structures Net housing stock of 2000 A.D.
Houses required to accommodate the population
Urban
1
90
18
8.5 o.37
7')
18.13 5Y 40.87
142
IU
Net number of houses to be built Rebuilding, based on 25 years life for rural housing and 50 years life for urban housing N6t number of houses to be built yearly in 2000 A.D. (Total divided by 25 years)
20
140 s.6
60.87
2.4
The figures for 2000 A. D. are in approximation on the assumption 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 urban houses. At the same time, because of the enormity of cost, we have brought down our concept of square feet per pgson from 100 square feet to 60 square feet. As rural areas may have more open areas surrounding the house, we may consider
250 sq. ft. per household as adeguate; for urban households, we may provide for 300 sq. ft. per household. We will assume the housing cost to be Rs. 30 per sq. ft. for urban houses and Rs. 10 per sq. ft. for rural houses, though we realise that the housing cost will have to provide for differences in per capita income at different growth rates to meet the labour cost, whilst even 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
1400
x Rs. 3000 sq. ft. per house - Rs. 30 per sq ft. Bural-5.6 million hou3es x 250 sq. ft. per house x Rs. 10 per sq. ft.
Urban-2.4 million houses
rora!39!q_
Infra structure for human settlements : Cost of urban infrastrtrcture for industry as related to city size in developing countries, a study of U. P,, Punjab area undertaken in 1967, brought home the relative cost of facilities, such as site development 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. But the important fact brought out is the stable relationship between housing cost as against the infrastructural facilities. The table considers both the capital costs and the annual maintenance cost. The annual maintenance cost of houses was generally 15 per cent of the capital cost, whilst both the caoital and maintenance cost of houses came to between 20 and 20.g per cent of the overall facilities cost. In other words. the facilities cost in urban areas is four times the housing cost. We have no data regarding costs in rural areas. As it is, however, we are assuming the rural houses to cost one third of the urban houses. We may therefore maintain the relationship between facilities cost and housing cost in the same ratio as for urban areas, which will actually mean that rhe rural facilities cost will be 1/3rd ot those of the urban facilities. Our annual urban and rural housing cost came to Rs. 3,650 crores. The annual maintenance cost for all the hotrses would come to 15 per cent of this figure viz. Rs. 550 crores. The total
facilities cost being four times the housing cost would come to Rs. 16,800 crores. The total annual cost fof human set ements would therefore come to Rs. 21,000 crores.
annual cost on housing therefore would be Rs.4,200 crores. The
Health services are geriera!ly allocated about S0 per cent Education Buclget. Here aEain the main costs are of the personnel such as doctors and nurses. The outlays for health proposed in the Draft Fifth plan both for Centre and States is Rs. 796 crores as against the outlays for education amounting
of the
to Rs. 1726 crores. Health services
budget
treatment all these years. For instance, for every 4,7g5 inhabitants Ind'a had one physician as compareel to less than g00 inhabitants per physician for the developed world. We should therefore provide for atleast S0 per certt of the educational
have received Cindrella
for health
services
protective and.-urative health service to the people by 20004.D. The health services will therefore have to be provided Rs. 4253 crores, Rs. 7,1 15 crores or Rs. 9,2g9 crores for 4,6 and g oer cent
if we have to give prevenrrve,
growth rates respectively.
Exports: Exports are needed to meet the import obligations as also to service external debts. For the year 1974_75 our imports were Rs. 4,349 crores and total debt servicing charges were Rs. 601 .8 crores consisting of Rs. 401 crores amortization and Rs. 200.8 crores interest payments. Our
a trade deficit of 1,096 crores and another Rs.60i.g
exports for the period were, however, Rs. 3,330 crores, showing
crores
deficit for debt servicing, The exports of this period constituted 4.9 per cent of GNP. lf the exports were not only to balance imports but to meet the debt servicing charges, rhey wotrld have to 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. But the abnormality seems io be perpetuating as oil prices, fertilizers and food are claiming priority on imports and the cost of oil and the imports thereof is not likely to diminish. A study of our fcreign trade shows that except for the year 1972,73, we have had an adverse balance continuously from 1951-52. At the
same time, our exports as percentage of GNP ranged from 6.8 per cent of GNP in 1960-61 to a low of 3.7 per cent in 1971-72 again to rise to 4.9 per cent in 1974-75.
lf we are to increase industrial production, we will have to resort to export in a bigger way to meet the increasing import Bill for raw materials and energy fuels. If we compare our performance with world exports, we find our exports sliding down from 1.97 per cent of world exporls in 1951 to 0.46 per
cent in 1 974.
The projection of the world export Trade to 2000 A.D. gives us a figure of g 10,625 billon. As per past trends, however, our exports in 2000 A.D. will be $ 13.84 billon or 0.1 3 per cent of world exports. Even if we were to keep up to the level of 0.46 per cent of world exports, we will have to export goods worth $ 48.9 biltions by 2000 A.D.
. These trend figures have not been adjusted for inflation. As per the past trends, the 2000 year figures are inflated three times. Allowing for this adjustment, we will have to export $ 16.3 billion at 1974 prices in 2000 A.D. to keep our share to 0.46 per cent of world share. As the. national price of Rs. B per $ 1 this comes to Rs. 13,046 crores of exportat 1974 prices (the
actual g: Rs. rate is now above Rs.9). This figure of export comes to 10 per cent of our 2000 A.D. GDP. at 4 per cent growth rate.
lf our import needs and debt servicing charges can be balanced with export of 10 per cent of GDP at 4 per cent growth rate, with higher growth rates, it should be easier to spare 10 per cent of GDP for exports and for servicing our foreign exchange needs. We will therefore assume that 10 per cent of GDP will have to be exported to give us financial stability in
the lnternational Moneta[y Market. Research and Development r lt is very difficult to indicate monies to be alloted for this important and vital function .if the we are to ensure our national security and at the same time develop knowhow for the grow:h industries of the next century" Japan which has succeeded in developing knowhow and
is stepping up the allocation for research" For instance" in 1gS9 it a ocated 1.11 per cent of-its GNP to Research, This percentage was stepped up to 1,41 in 1967.
The growth industries like atomic energy, computer.s, electronics, airspace etc. clairn over S per cent of their sales to research and development. The more one has to develoD a strong national security base and a foundation for emerging glowth industries, the more therefore will a country have to allocate to reserch.
As otlr country is large and has to guard its frontiers as also enstrre mutual peace, the allocation for research has to be considerable, This has to be supported by a GDp which is not very large. we therefore believe that atleast 2 per cent of out GDP wilt have to be allocated to Research and Development if we are to adequately provide for national security and emerging growth industries. Research and Development have to be translated into prcduction, weapons, manufacturing and information systems etc. which again require financial backing. We may have to allocate atleast five times the amount spent on Research for converting research findings into viable products, strategic and protective weapons, industrial product, information and servicing systems etc. In other words, we will have to allocate atleast 1O per cent of our GDp against this head. The new developments in strategic arms are far ahead of ballistic missiles; they are multiple independently targetable re-entry vehicles (MIRVS), backfire bombers, and rong-range cruise missiles which are still in the deve l:pment stage.
The broad rilsearch fields can be vaguely discerned. Energy. both fusion and solar, besides wind, tide. coal, agriculture crop research. especially for arid zones; ground water location and utilization. pollution, prevention and control through m,crobiology; conversion of wastes; cheaper housing; information collection, storage and retrieval; miniaturization and computer technology,
capabilities for emerging growth industries
64 TOWARDS AN INDUSTRIAL POLICY.zOOO A.D'
techniques of mass education and trainings; synthetics to substitute; metals; ferrous pressure die casting and extrusion; medicines effective {or a longer duration. etc.
Besides these allocations, it is necessary to allocate funds for development o{ agriculture, irrigation. power, transport and communication. which together constituted 58.5 and 55.6 per cent of total outlays as against the outlays for minimum need programmes which constitured 14 and 14.4 per cent in the Fourth and Fifth Plan respectively. Money will also have to be provided for other mining and manufacturing activities, trade and storage, public administration and defence which has to come out of G D P.
We are now in a position to tabulate the outlays necessary for meeting our objectives as follows :
TABLE 12.4 YEAR 2OOO A,D.

(All figures in Crores) Growth rate
4% Minimum consumption of the population
Education- Primarv
9A,712
other
Housing Infrastructure facilities Health services @ 50 per cent of educational expenses Export @ 10% of GDP Research 8 Developmenl @ 2o/" GDP Allocgtion for strategic arms production & growth industries 10% GDP
GDP Resources available for agriculture, irrigation, power. transport and communication, other Industries trade and siorage, public administration and delence etc.
+,zcJ 4,253 4,200

16,800 13,000 2,600
6% 90,7't2 7,115 ,115 4,200

7
8% 90,712 9,289 9,289

4.2QO
16,800
111R
16,800
O
4,253
22,00a 4,400
teq
36.000
7.200
22,OOO 36,000 153,071 181,457 218,779 129,892 217,444 359,363 -?-3179 +35987 +145584
13,000
We note from this exercise that with 4 per cent growth rate, we cannot meet even the minimum needs of the people by 2000 A.D. At 6 per cent growth rate, we can meet the minimum needs
as we understand them today and have a small surplus for
meeting other developmental needs such as agriculture and irrigation, power, transport and communication, public administration and defence etc. The residue. however, is too small to adequately service the various needs. Nor does it take into account the growing expectations of the people with increase in education, which wilt be accentuated by increasing contact with the World what with the development in communications, information and transports. Only at 8 per cent growth rate thete will be adequate resources to service the developmental expenses after meeting the minimum needs.
Chapter Xlll
Towards Industrial Policy-2000 A.D.

The objectives of the industrial policy as we have are essentially four :
spelt out
1. Ensuring the minimum needs to the masses. 2. Meeting the strategic requirements of the nation. 3. Exporting goods and services to meet domestic needs. 4. Development of Research and Development base to
enter the nalions.
21
st century on terms of equality with advanced
The critical prerequisites for successful industrial and economic development of the country are : (1) Population
Control and (2) Food Production. The population estimates by the year 2O0O A.D. range from minima of 830 million to a maxima of 1035 million. lf by domestic policy measures population can be contained within the above minima, the per capita income would automatically go up by 25 per cent since labour force would not be a constraint. In addition, it would have profound cumulative effects over the next quarter century radically changing the ultimate picture in favour of the country.
The food requirements too would depend considerably upon
the population levels. At 830 million population, the food requirements would be 20 per cent less than at the population
ol 1035 million.
lndustrial policy must therefore be oriented to subserve these twin prerequisites. This has many implications to the
TOWARDS INDUSTRIAL POLICY-2OOO A.D. 67
structure of the industrial orgnisatiorr and they need to be carefully worked out in further detail. The broad parameters have been indicated in this study.
(b) the strategic requirements, (c) export objectives and (d) the R & D goals, the study reveals that at the present rate of less than 4 per cent growth, the GDP of the country will be inadequate to meet even these objectives by the end of the century (see Table 12.1,).The miirimun-r needs visualised at the rate of Rs-20 consumption per month per capita of rural population and Rs. 25 per capita of urban population at 1960-61 prices. if provided. wilI alone consume nearly 69 per cent of the GDP in the year 2000 A.D. Rates of growth will therefore have to be consistently between 6-8 per cent ever the next twenty five years to give the country a reasonable chance to meet the various demands on the economy and the polity.
There are many implications of these assessments. One is to grow at much faster rate and in the right direction. The other is to adopt methods, processes, institutions organisatlonal structure, skill deployment etc. which will enable the country to meet the variotrs needs at lesser cost than envisaged at present. This itself is no mean a task, because it implies concentration of our research and development efforts to have a breakthrough in meeting the minimum needs in fcod. nutrition, clothing, shelter, education, health infrastructure facilities etc. so that we have techniques and technologies to met the minimum needs at much lower costs. Alternatively, we will have to seek changes in the values and attitudes of the people to lower their expectations, a none
On the central obiectives of meeting (a) the minimum needs
too pleasant a task.

We will also have to take up measures as in Japan to reduce the raw materials intensity in the final product, A target of 50 per cent reduction of this type by the year 2000 A.D. seems to be feasible. Towards this purpose utilization of wastes, scrap,
and byproducts for greater effectrveness of raw materials has to
be encouraged.
One crucial conclusion of the study is that nearly 150 million
new jobs will have to be created during the next twenty five years. This means that on an average 6 million new Jobs will have to be created every year, until the end of the century.
Even if we assume a low investment level of Rs. 15,000 per capita for this purpose, it means that nearly Rs. 9,O0O crore investment per annum will be needed over the next twentv five years-a task of some gigantic proportions.
The industrial policy will also have to ensure production of the various goods and services to keep in step with anticipated and programmed demands failing which stresses and strains like shortages or surpluses of goods leading to hoarding and other malpractices or distress sales and tay offs will be inevitable.
We have suggested the industrial structure consisting of consumer goods at 28 per cent, intermediate goods at 2b per cent and basic goods at 47 per cent. This implies a major thrust in the intermediate goods industry which will have to improve from 19.57 per cent at present to 25 per cent. We have been reluctant to specify the production levels in specific industries, partly because it needs further work and partly because technological developments make long term projections hazardous and unrealistic.
The present study is an initial effort to clarify policy objectives and to define the broad parametric implications of the
policy objectives. The task is huge and unprecedented. The earlier therefore the po[icy objectives and the long-term perspectives are settled, the easier it will be to work out the details, implications and specific policy measures of these objectives. This study is a step in that direction.
References
1.
Ambannavar, Jaipal
2. 3,
4. 5.
p., Second tndia'studies : population, Delhi, Macmillan, 1 97F. Bose, Ashish. et. al., population in lndia,s Development 1947-2000, Dethi. Vikas, 1974. Rao, V.M., Second tndia Studies : Food, Delhi, Macmillan, 1975.
Tata Economic Consultancy Services, Bombay, lndian Eco_ nomy in 2000 A.D., Bombay, TECS, 1974.
Operations Research Group, Baroda, A Long_Range perq_ pective for lndia-Consumption pattem and Life Style: 2000 A.D., Baroda, ORG, 197S. 6. Mesarovic, Mihajlo and pestel, Eduard, Mankind at the Turning Point-second Report to the Club of Rome, New york, Dutton, 1974.
7.
millan, 1976. 9. Bhagavati Committee on Unemployment, Feport, New Delhi, Department of Labour and Employment, 1g73. 10. India. Planning Commission, Draft Fifth Five year plan_ 1974-79, New Delhi, The Commissio n; 1973-74. 11. .Koga, Masanori, Traditional and Modern Industries, Develop_ ing Economies, 6(3), Sept. 1969. 12. Chaturvedi, M.C., Second India Studies : Waten Delhi. Macmillan, 1976.
B. Parikh, Kirit S., Second tndia Studies : Energy, Delhi,
Oak Ridge National Laboratory, U.S.A., Sfudy, 196g
Mac_
13, Dobrovinshil, 8., Material

Winter, 1973-74.
Intensiveness and its lnfluence on the Effectiveness of productio n, Japanese Economic Studies,
14. United Nations., Statistical Yearbook for Asia and Far East' 15. lndia. Committee on Essential Commodities and Articles of Mass Consumption, Report, New Delhi, Planning Commission, 1 973. New York, U.N., 1968.
'
16.
Sociat Equity in Developing Countries, Stanford' Stanford U niversitY Press, 1973.
Adef man, f rma and Morris, Cynthia
Talt, Economic Growth
and
17. Chenery, Hollis B.' Growth and StructuraI Change, Finance and develc7menf, 8(3) SePt. 1971' 18. United Nations, The Growth of world Industry : General
lndustrial Statistics, 1960-69, New York, U N', 1970' 19. Myrdal, Gunnar, Asian Drama, Vol. ll, pp' 91 9-921, New York. Pantheon' 1 968' 20. Hermanson, Tormod, lntemational Allocation of lnvestments for Social and Economic Development-An ElementatY Modet Approach to Analysis, Geneva, United Nations Research lnstitute for Social Development, 1969. (Published under lnstitute's Programme lV-Regional Development).
21
Basu, K.5., Human Factors in lndustry, 1969' P.
22. Malgavkar,
(Mimeo).
D., "Sub Contracting Cleaning
House"
23. Malgavkar, 24. Malgavkar,

(Mimeo).
P.D., Zessozs
from the lnternational Experience
in Ancillary Development, 1974 (Mimeo). P.
D., Small and Medium Business in Japan
25, Town and Country Planning Organization. Delhi, Towards Human Settlement Policy in India-2001 , Delhi' The Organization, 1975.
26. World Bank Development Research Centre and lnstitute of
of Sussex, RedisttiJoint Study, Oxford, Oxford bution with Growth-A

Development Studies at the University University Press, 1 974. 975.
27. Naik, J.P., Elementary Education in lndia-A Promise to

Keep, Bombay, Allied,
1
28. Stanford
Research lnstitute, Cost of lhrban lnfrastructure for lndustry as related to City Size in Developing Countries, Stanford, The Institute, 1967. (A Joint StuJy made in association with SIET Institute'and Institute of Town and Country Planning.)
29. India. Ministry of tJealth and Family planning. Group of
Medlcal Education and Support Manpower, Health Services and Medical Education : A programme for lmmediate Action-Report, New Delhi. The Ministry, 1975,
l1
ii il
t-*=

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TOWARDS Atu

INDUSTRIAT POTICY 2000 A.D.

I0I|,ARDS Al{ [{Dt|$RrAt P0ilCI

CENTRE FOR POLICY RESEARCH

@ CENTRE FoR POLICY RESEARCH 1977

All rights reserved. No part of this publication may be reproduced

Price : Rs. 251Foreign $ 5

Printed at PRINTOX, A-10, Jangpura Extension New Delhi-14 (lndia)

P. D. Malgavkar V. A, Pai Panandiker

lndustry-A Review Energy, Water & Raw Material

Urgent issues likely

threatening the human society.

nical and human skills. provide employment

tail into the

creating a Technological Research and Developnlent base to ensure --

a. that we are on par with b.

defence technology and production,

of growth areas in whlch technology will

4 TOWARDS AN INDUSTRIAL POLICY

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6 TOWARDS AN INDUSTRIAL POLICY.2OOO A.D.

ceptive technology such as:

the birth rate as, if there

nationai rruill to do so.

V. M. Rao Tata Economic consultancy Services ITECSI Operaiions Research

184 million to 261 million tonnes

274 million tonnes

Rao'5 s1g6y on Indian prospect for food assumes the

The prognostication of the Second Report

10 TOWARDS AN INDUSTRIAL POLICY.2OOO A.D.

which makes for a greater proportion

of people in the working

(Table from Ambannavar,s study supplemented General's figures)

Life Expeclancy 25.0

Average ann ual death rate

1921- 1931 1931- 194i

39.0 45.5 48.75

12 TOWARDS AN INDUSTRiAL POLICY.2OOO A.D.

1986 (Planning Commission)

1986 TECS 1991 TECS

the century-a task of gigantic propositions.

42.6 18.2 0.9 4.7 F I 28.5

44,8 17.0 0.9 4.8

43.9 6,9 1,1 5,5 |Ft 27.4

5.62 4.42 27.70

Dra{t Fifth Plan

Estimatee of National Product, C.S.O,

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