(a) Discuss the role of D. R. Gadgil in economic planning and development in India. (20 marks) (b) Explain the role of public…

(a) Role of D. R. Gadgil in economic planning and development

Dhananjay Ratnakar Gadgil (1901-71) was both a scholar and a planner.

(i) Research base. As Director of the Gokhale Institute of Politics and Economics, Pune (1930-66), he built empirical work on industrial, agricultural and cooperative questions, including his early study of Indian industrial evolution, and trained a generation of economists.

(ii) Planning thought. He argued in Planning and Economic Policy in India (1962) for planning tied to regional and rural development, decentralised decisions and cooperative institutions, and for a stronger farm base.

(iii) Planning Commission. As Deputy Chairman (1967-71) he led the Fourth Plan approach, which stressed agriculture, stability and self-reliance after the drought years and the devaluation of 1966.

(iv) Gadgil formula (1969). It allocated central plan assistance among states by objective criteria, giving the largest weight to population, alongside relative poverty and tax effort and special problems, replacing scheme-based discretion. A revised version, the Gadgil-Mukherjee formula, was adopted in 1990.

Gadgil's contribution thus lay in grounding planning in evidence and in federal fairness, though later critics noted that the formula still left regional disparities.

(b) Role of the public sector, and its problems between 1970 and 1980

The public sector was to hold the "commanding heights" under the 1956 Industrial Policy Resolution: it built heavy industry (steel, power equipment, coal, oil), infrastructure and banking, created employment, helped backward regions and gave the state a tool for planned investment.

During 1970-80 the sector expanded by nationalisation (banks 1969, coal, insurance, and takeovers of sick units) but faced problems:

(i) Low returns on large capital, with price controls on outputs such as steel, coal and fertiliser.

(ii) Cost and time overruns and low capacity utilisation, partly from power and coal shortages and labour trouble.

(iii) Overstaffing and managerial interference with limited autonomy and accountability.

(iv) Rising capital-output ratios and dependence on budget support, which strained the public finances after the oil shocks.

(v) Sick unit takeovers added losses.

The result was a sector that expanded in size but not in efficiency, which led to later reforms.

(c) Ceiling on agricultural landholding and its rationality

A ceiling is a legal limit on the area a person or family may own, with the surplus taken over (with compensation) and distributed to landless and small cultivators. States legislated in the 1960s, and national guidelines of 1972 fixed the family as the unit with ceilings of about 10 to 18 acres for the best irrigated land and higher for poorer land.

Equity. It reduces concentration of land, gives land to the poor and dilutes rural power. But evasion through benami transfers, family splits, exemptions and litigation meant that only a small fraction of operated area was declared surplus.

Efficiency. Evidence of an inverse relation between farm size and yield per hectare (A. K. Sen, 1960s) supports small farms under labour-intensive methods. But small holdings find it harder to use machinery, irrigation and credit, so a rigid ceiling can limit scale gains, and tenancy and fragmentation remain problems.

Thus the ceiling is sound on equity and partly on efficiency, but its weak enforcement and later emphasis on tenancy reform and productivity support have reduced its force.