The main features of India's development policies are matters of common knowledge. The First Five Year Plan placed the emphasis on agriculture. The Second Plan, which came into effect in April 1956, seeks to promote an expansion of small-scale village industries for the production of consumer goods. At the same time it calls for a big increase in steel production and engineering capacity. Before considering these specific programs it is necessary to deal with a subject that dominates the background of economic policy in India.

The Problem op Unemployment

Concern with the problem of unemployment is paramount in current Indian thinking. Professor P. C. Mahalanobis, one of the chief planners, regards this as “the most pressing problem.” A panel of Indian economists speaks of it as “a problem of enormous dimensions.” The urgent need to create more employment opportunities is stressed in nearly all documents relating to the current Plan.

This emphasis may seem surprising, perhaps even incomprehensible, to some economists outside India. What are the facts? There is first a certain amount of open unemployment, mostly in urban centers, which is said to have increased in the years 1952–1955 and is estimated at somewhere between five and ten million persons. India has rightly been proud of her success in expanding production since 1951 without any price inflation, at any rate up to the end of 1955.