Are the objectives of five year plan mutually consistent? What are the major areas of conflict?
Possible areas of conflict between different objectives in
the short run can be noted as follows:
1. Rapid Economic Growth and Employment: The
process of economic growth can be accelerated by the use of capital-intensive
high technology of production. But this type of technology is generally
labour-displacing. Thus a choice made in favour of this type of technology
could only be at the cost of employment generation in the economy. Likewise,
labour intensive tech niques of production, generally create large employment
opportunities. But such techniques are relatively less efficient; more
employment may be created only at the cost of possible higher rate of growth.
2. Economic Growth and Equality : If the objective
of equity is pursued seriously even by attempting redistribution of wealth and
income, it may have diverse effects on the rate of economic growth. The
propensity to save of the richer sections of the society is generally higher
than the propensity to consume. A redistribution of income and wealth in favour
of poor would only mean that the available resources are being diverted from
saving to current consumption. Howsoever desirable this diversion may be from
the social point of view, it cannot be practiced for long as it would adversely
affect the rate of economic growth and this would end up in equal distribution
of poverty rather than equal distribution of wealth.
3. Economic growth and balanced regional development:
Balanced regional development would require diversion of resources from
relatively less developed regions to backward regions. In the former regions,
generally, the developed infrastructure is available which adds to the
efficiency of the resources. On the other hand, the same amount of investment
in backward regions with hardly any infrastructural facilities would result in
relatively lower growth; thus, the balanced regional growth can be had only at
the cost of efficient utilization of resources.
4. Economic growth and price stability: A
gradually rising price level generally results in rising profits, that
stimulate private investment. On the other hand, stationary price level will
have adverse effect on the rate of profit investment and growth in the economy.
Thus, there appears to be a conflict among the different
objectives at least in the short-run; though in the long run, various
objectives may supplement and reinforce
each other. In the short run therefore it may be necessary to spell out the
“trade offs” among different objectives in various plans.
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