Social Scientist. v 12, no. 139 (Dec 1984) p. 56.

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On the Approach to the Seventh Five Year Plan

THE Approach to the Seventh Five Year Plan starts with the by now familiar platitude, "the guiding principles of the Seventh Five Year Plan should contine to be growth, equity and social justice, self-reliance, improved efficiency and productivity". While there has been no lack of platitudes in the earlier plans, the difference is that, at least the Second and Third Plans had some kind of a theoretical framework to start with.

The absence of a cogent theoretical framework in the Approach paper is most clearly revealed in an aspect, which is very crucial to any planning exercise, namely, the question of resource mobilisation for investment.

According to the Approach paper, the mobilisation of resoures for investment, which is the crux of any planning exerise, is to depend "upon generating more internal resources through the public sector generating more resources35. The casualness with which a proposition, such as the above, is made on so crucial an aspect arises from the following two factors. Firstly, given the fact that the public sector is unable to generate adequate surpluses, in spite of administered price hikes as well as emphatic assertions about the need to improve efficiency, there is no reason why the wishful thinking of the framers of the Approach to the Seventh Five Year Plan, should all of a sudden consummate in ma-ssive public sector profits. Secondly, even if we do assume that public sector efficiency is going to improve dramatically in the future, this still will not make a significant impact on total resource mobilisation efforts, because the proportion of resources raised through public sector surpluses does not constitute a substantial part of the total resources mobilised. (In fact, non-tax revenue of recent years has just been about 20 per cent of total current revenue of the Central and State governments and public sector surpluses are just a constituent part of non-tax revenue).

The basic source of resource mobilisation for non-inflationary investment can only be through direct taxation of the private economic surplus, which is a major, and, of late, an increasing part of total economic surplus. On this basic question, the Approach paper reveals

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