India’s Success story of sustainable development through planned

8/13/2019 Indias Success story of sustainable development through planned

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INDIAS SUCCESS STORY OFSUSTAINABLE DEVELOPMENTTHROUGH PLANNED

ECONOMY: PLANNING-DFIS-PSUS


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DefinitionSD in IndiaFive year plans

Sustainable development


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1styear 1951-57

Jawaharlal Nehru presented the first five-yearplan

Based on Harrod-Domar model

agriculture sector, including investments indams and irrigation


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irrigation andenergy

27%

agriculture andcommunity

development17%

transport andcomm24%

industry8%

socialservices

17%

landrehabilitaion

4%

others3%

Division of budget

Budget 2069 crore


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achieved

targeted

0

1

2

3

4

GDP

GDPachieved 3.6

targeted 2.1

Result achieved

Per capita income increased by 8%


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econ ve- ear an

1961)

focused on industry, especially heavy industry an economic development model developed by

the Indian statistician Prasanta ChandraMahalanobis in 1953.

Budget Rs 4600 crore Power and irrigation

Social services

Communications and transport Miscellaneous

Target Growth:4.5% Growth achieved:4.0%


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0

1

2

3

4

5

6

7

8

9

manufacturing services mining

PSU created during 2ndplan

sector

Total 13


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Third Five-Year Plan (19611966)

Stressed on agriculture

Democracy at grass root level

Sino-Indian War (1962)

Target Growth: 5.6% Actual Growth: 2.4%


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Fourth Five-Year Plan (19691974)

Indira Gandhi

Green Revolution

Nationalization of 14 banks to supportindustries and agriculture

Indo-Pakistani War of 1971 and BangladeshLiberation War

PSU: cochin ship yard, SAIL,and CIL Target Growth: 5.7% Actual Growth: 3.3%


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Fifth Five-Year Plan (19741979)

Stress upon Employment, Poverty alleviation, and Justice focusingon self-reliance in agricultural production and defense.

Rejected by Morarji Desai

Central Government to enter into power generation and transmissionunder electricity supply act 1975. Also created Indian national highwaysystem

NHPC (power); BPCL (ministry of Petroleum and gas)

Bharat Refractory Ltd (ministry of steel); Bharat wagon & engg co ltd(ministry of railways); Central Coalfields Limited (ministry of coal)

Central Cottage Industries Corpn. Of India Ltd.(textile)

Dredging Corp. Of India Ltd. (shipping); Eastern Coalfields Ltd. (coal)

Hindustan Fertilizer Corpn. Ltd.(fertilizers and chemicals); HMT

India Trade Promotion Organisation (commerce)

National Film Development Corporation of India (information andbroadcasting)

Growth rated Target: 4.4%

Achieved: 5.0 %


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0

1

2

3

4

5

6

7

8

No. of PSU created

Total40


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Growth Rate

1951-56 1956-61 1961-66 1969-74 1974-79

2.1

4.5

5.6

5.7 4.43.6

4

2.4

7.4

5

Chart Title

Targeted Achieved


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CIL

Maharatna - Founded 1975, Headquartered in Kolkata,WB

world's largest coal miner with revenueexceeding 624.15 billion

Product: coal and Bituminous

the highest IPO subscription so far = ` 2.4 trillion

Employees 371,546 (2012)

subsidiaries:Bharat Coking Coal Limited (BCCL)(Dhanbad, Jharkhand)

Central Coalfields Limited (CCL)(Ranchi, Jharkhand)

Western Coalfields Limited (WCL)(Nagpur region)

Eastern Coalfields Limited (ECL) (Sanctoria, Asansol, West Bengal)


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STATE FARMS CORPORATIONOF INDIA LTD.

1969: under the dept of Agri. and Co-operation

Supply quality seeds

2005: asset ` (-) 45 crore and net loss was `105 crore 2008: revival package of ` 145 crore

2010: dividend paid ` 1.57 crore,

value of production increased ` 261 crorenet profit ` 21 crore


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SAIL

Founded 1954, based in New Delhi

Hindustan Steel Limited (HSL)

SAIL is the 14th largest steel producer in theworld

turnover of 48,681 crore

more than 1 lakh employees


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Sixth Five-Year Plan (19801985)

beginning of economic liberalization.

Price controls were eliminated.

ration shops were closed.

increase in food prices and the cost of living.

Family planning



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Seventh Five-Year Plan (19851990)

Social Justice

Using modern technology

Agricultural development

Anti-poverty programs

Full supply of food, clothing, and shelter

Increasing productivity of small- and large-

scale farmers

Making India an Independent Economy



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Eighth Five-Year Plan (19921997)

Modernization of industries

controlling population growth, povertyreduction, employment generation,

strengthening the infrastructure, Institutionalbuilding, tourism management, HumanResource development, Involvement ofPanchayat raj, Nagar Palikas, N.G.O'S andDecentralisation and peoplesparticipation.


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Ninth Five-Year Plan (19972002) to prioritize agricultural sector and emphasize on

the rural development

to generate adequate employment opportunitiesand promote poverty reduction

to ensure food and nutritional security.

to provide for the basic infrastructural facilities likeeducation for all, safe drinking water, primary

health care, transport, energy. to create a liberal market for increase in private

investments


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Tenth Five-Year Plan (20022007)

Attain 8% GDP growth per year.

Reduction of poverty ratio by 5 percentagepoints by 2007.

Reduction in gender gaps in literacy and wagerates by at least 50% by 2007.

20 point program was introduced.

Target growth:8.1% Growth achieved:7.7%


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Eleventh Five-Year Plan (20072012)

1. Income & Poverty

Accelerate GDP growth from 8% to 10% and thenmaintain at 10% in the 12th Plan in order to double

per capita income by 201617 Increase agricultural GDP growth rate to 4% per

year to ensure a broader spread of benefits

Create 70 million new work opportunities. Reduce educated unemployment to below 5%..

Reduce the headcount ratio of consumption

poverty by 10 percentage points.


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2. Education Reduce dropout rates of children from elementary

school from 52.2% in 200304 to 20% by 201112 Develop minimum standards of educational attainment

in elementary school, and by regular testing monitoreffectiveness of education to ensure quality

Increase literacy rate for persons of age 7 years orabove to 85%

3. Health Reduce infant mortality rate to 28 and maternal

mortality ratio to 1 per 1000. Reduce Total Fertility Rate to 2.1 Provide clean drinking water for all by 2009 and

ensure that there are no slip-backs


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4. Women and Children Raise the gender ratio for age group 06 to 935 by

201112 and to 950 by 201617 Ensure that at least 33 percent of the direct and

indirect beneficiaries of all government schemesare women and girl children.

5. Infrastructure Ensure electricity connection to all villages and

BPL households by 2009 and round-the-clockpower.

Ensure all-weather road connection to allhabitation by 2015. Connect every village by telephone by November

2007 and provide broadband connectivity to allvillages by 2012.


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6. Environment

Increase forest and tree cover by 5 percentagepoints.

Attain WHO standards of air quality in all majorcities by 201112.

Treat all urban waste water by 201112 toclean river waters.

Increase energy efficiency by 20%

Target growth:8.33% Growth achieved:7.9%


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GROWTH RATE

0

2

46

8

10

5.25 5.6 6.5

8.1

8.35.4

5.7 6.8

5.35

7.7 7.9

Targeted

Achieved


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NTPC Limited

founded on 7 November 1975.

Electricity generation and distribution.

natural gas exploration, production.

transportation and distribution

620.53 billion (US$11.73 billion)


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Other PSUs

Nepa Ltd.

ITI Ltd

National Research Development Corp.

Hindustan Antibiotics Ltd. Fertilizer Corpn. Of India Ltd.

Balmer Lawrie Investments Ltd.

Gail Gas Ltd.

Goa Shipyard Ltd.

GAIL (India) Ltd.


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DFI

Development Financial Institution

An institution promoted or assisted byGovernment mainly to provide development

finance to one or more sectors or sub-sectorsof the economy .

Can be broadly categorized as all-India or

state or regional level institutions.


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All-India institutions can be classified as

1. Term-lending institutions

Long term finance for industrial sectors.

IFCI,IDBI,IDFC,IIBI

2. Refinancing institutions

Refinancing agriculture, SSIs and housingsectors.

NABARD,SIDBI,NHB

3. Sector specific or specialized institutions

EXIM


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4. Investment Institutions

LIC,UTI,GIC,IFCI Venture Capital Funds,ICICIVenture Funds Management Co Ltd

State or Regional level institutions

SFCs,SIDCs,NEDFi Ltd

I d i l Fi C i


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Industrial Finance Corporationof India (IFCI)

First DFI in the country established on July1,1948.

Provide long term finance for the industrial

sector. Functions of IFCI:

1) For setting up a new industrial undertaking.

2) For expansion and diversification of existing

industrial undertaking. 3) For renovation and modernization of existing

concerns.

4) For meeting the working capital


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Some sectors that have directly benefited fromIFCI include:

Agro-based industry (textiles, paper, sugar)

Service industry (hotels, hospitals)

Basic industry (iron & steel, fertilizers,basic chemicals, cement)

Capital & intermediate goods industry

(electronics, synthetic fibres, syntheticplastics, miscellaneous chemicals) andInfrastructure (power generation, telecomservices)


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The direct employment generated as a result ofits financial assistance is estimated at almost 1million persons.

P Fi C ti


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Power Finance CorporationLimited

Incorporated in 1986 to finance Indias power

sector.

Issued IPO in January 2007.

Nodal agency for implementing Ultra MegaPower Plants and R-APDRPprogramme of GOI.

Provides technical, advisory and consultancy

services related activities through its subsidiarycompany namely PFC Consulting Limited.


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R-APDRP

Restructured- Accelerated PowerDevelopment And Reforms Programme.

Implemented in the 10thand 11thfive year

plans. Focus mainly on reduction of AT&C losses

upto 15% level during XI Plan.

Strengthening & up-gradation of SubTransmission and Distribution network.

I f t t D l t


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Infrastructure DevelopmentFinance Company

Incorporated on January 30, 1997.

Can lend upto 20% of infrastructure project cost.

Support private investment and public-private

partnerships in infrastructure development. Funded over one fifth of the national highways being

constructed with private participation.

Helped create more than half of the countrys telecom

towers and two-thirds of the wireless subscriber base. Financed more than half of the container cargo

capacity addition at Indian ports.

Created more than half of Indias private sector

thermal and large hydro-generation capacity .

N ti l B k F A i lt &


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National Bank For Agriculture &Rural Development (NABARD)

Apex development bank which focus to uplift ruralIndia.

Established on 12 July 1982. To uplift the agriculture and rural non-farm sector. Major Functions: 1. Providing refinance to lending institutions in

rural areas 2. Bringing about or promoting institutional

development and 3. Evaluating, monitoring and inspecting the client

banks.


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Export-Import Bank of India

An apex institution which promotes foreigntrade.

Creating export capability by arranging

competitive financing at various stages ofexport cycle.

Range of Financing Programmes

Export Credits

Finance for Export Oriented Companies

Bank provides export credit on deferredpayment terms on exports of Indian machinery,

manufactured goods and technology services.

S ll I d t i l D l t B k


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Small Industrial Development Bankof India

Principal Financial Institution for the Promotion,Financing and Development of the Micro, Smalland Medium Enterprise (MSME) sector.

Refinances loans given to small scale sector byprimary lending institutions.

Financial Products- Micro finance, venturecapital, project finance, assistance for technology

development, export finance etc. SIDBI introduced seed money scheme for the

benefit of entrepreneurs.


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SMALL makes BIG difference

Small industries contribute more than 45%share in industrial production.

Share in services is more than 65%.

80% share in employment generation.

More than 35% share in Indias export.


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National Housing Bank

Created on July 9, 1988 wholly owned by RBI.

Apex level institution for housing finance.

Regulating and refinancing social housing

programmes. Identified the non-availability of housing finance

during the seventh five year plan.

National Housing Policy was announced in 1988 toeradicate houslessness.

XI plan aimed at providing homestead sites to allby 2012 and step up the pace of house

construction for rural poor to cover all the poor by

Life Insurance Corporation of


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Life Insurance Corporation ofIndia

Founded in 1956 with the merger of more than200 insurance companies and provident societies.

Indias largest Financial Institutional Investor both

in equity market and term loans. Funds close to 24.6% of the Indian Government's

expenses

Contributed around 7% of Indias GDP in 2006. It has assets estimated of 13.25 trillion

(US$250.43 billion).

General Insurance Corporation of


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General Insurance Corporation ofIndia

Incorporated on 22 November 1972 .

GIC became the sole Re-Insurer in India, andis now called GIC Re.

Indian insurance companies are required bylaw to cede 10% of every policy value to GICRe.

GIC Re has diversified its operations and isnow emerging as an important Re-Insurer inSAARC countries.

Industrial Credit & Investment


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Industrial Credit & InvestmentCorporation of India Ltd.

Established in 1955 as a public limitedcompany in the private sector.Objectives: Main aim was to promote industrial

development in the private sector byproviding financial, technical, administrativeand other services

To assist in the promotion, expansion andmodernization of industrial enterprises in theprivate sector

To encourage and promote the participationof private capital, both Indian and foreign To stimulate the growth of private ownership

of industrial investments and expansion ofinvestment markets.


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Largest supplier of foreign currency toprivate sector industries.

Leading role in the areas of venture

capital.

Providing technical and managerial knowhow to industries.

Industrial Development Bank of


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Industrial Development Bank ofIndia

Started operations in 1964.

The main objective of the IDBI is to serve asthe apex institution for term finance for

industry in India. Co-ordination, regulation and supervision of

the working of other financial institutions

such as IFCI , ICICI, UTI, LIC, CommercialBanks and SFCs.

Purchase stock, shares, bonds anddebentures of other financial institutions.


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State Financial Corporations

Financial resources of the SFCs:

The SFCs mobilize their financial resourcesfrom the following sources

1. Their own Share capital2. Income from investment and repayment of

loans

3. Sale of bonds

4. Loans from the IDBI ( To some extent )

5. Borrowings from the Reserve Bank of India

6. Deposits from the Public

7. Loans from State Governments

Approach to Twelfth Five Year


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Approach to Twelfth Five YearPlan

The Planning Commission had estimated thatachieving a GDP growth of 9% during 2012-17will require:

(i) an overall investment rate, i.e. GrossCapital Formation, at 38.7% of GDP;

(ii) Gross Fixed Capital Formation (GFCF) at

33.5% of GDP and (iii) infrastructure investment rising from a

baseline of 8% of GDP in FY12 to 10% inFY17.

Difficulties in attaining the


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Difficulties in attaining thetarget

Due to the declining quality of economicgovernance, growth rate has reduced duringthe past few years.

Post the Lehman Brothers crisis, India haswitnessed nine successive quarters ofdeclining GDP growth.

From 9.4% in January-March 2010 to 5.3% inJanuary- March 2012

GDP growth has fallen 1.9% from 8.4% inFY11 to 6.5% in FY12.


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References

IDFC (2012), Growing Steadily: 15th AnnualReport 2011-2012.

India’s Success story of sustainable development through planned

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