Why India needs to focus on planning to address the structural deficiencies of Indian economy?
India’s commitment towards development through planning had begun to diminish much before the Planning Commission was formally dismantled in 2014. The diminishing intent towards planning was after the LPG reforms of 1991. As India embraced capitalism with both arms, the state-led planning was sidelined. Various international examples outline the significance of planning in the modern world.
- The successes achieved by East Asian countries like South Korea in manufacturing were to a great extent was the result of strategic planning over several decades by their governments.
- China which has now emerged as a global leader in several new technologies, including artificial intelligence and renewable energy owes much to the careful planning and investments made by its government, particularly in the area of science and technology.
Why planning is imperative for India?
- After the LPG reforms in 1991, public investment, especially on agriculture has been on a decline. This is led to the farm crisis and stagnating rural economy.
- Less attention towards the PSUs has undermined their significance in creating new technologies and knowledge, particularly in fields in which the private sector may have little interest or capabilities.
- Gaps in planning have led to rising unemployment. Even though India is one of the biggest markets for electronics and hardware’s, it is dependent on imports. There has been an increase in the imports of machinery, transport equipment, electronic goods, and all their components. Even the Make in India initiative is struggling to reverse this trend.
- In India close to 15 million are waiting to be absorbed in the industrial and services sectors every year. This cannot be achieved with the technologies that foreign companies bring into India. What India requires is a technological advance that creates new economic opportunities and absorbs, not displace labour.
To address these structural deficiencies India’s research institutions and PSUs must engage in the creation and dissemination of technologies which will provide jobs to our labor force. India’s industrial policies must enthuse young and educated entrepreneurs from rural areas to make use of these technologies to create new jobs. To achieve all these, planning should be brought back to the center of the Indian economy.