ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846
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Obstacles to Autonomy

Instead of coming to grips with the basic cause of the high cost-structure of industry, the occasional ideas that have emanated from the Government and the Planning Commission have generally tended to make a had situation worse. There was once a notion that competition could be stimulated and costs and prices reduced by splitting up capacity among a number of units. More recently there has been talk of deliberately creating capacity in excess of demand. Such 'policy innovations' can only lead to more waste of capital and further built-in high cost. On the whole, the cost-benefit evaluation of investment projects is yet another area where the Government, itself only too willing to plump for wrong decisions, has received scant expert guidance from the Planning Commission. The entire chapter on Industry in the Fourth Plan document shows no awareness of the problem. It applauds the building up of a "diversified industrial structure" and the creation of "substantial capacity" in "many new lines", but does not raise, let alone answer, the question whether all this diversification was in fact justified on cost-benefit const- derations and how many of the new lines of activity came into being as a result of unthinking application of the import substitution criterion. The thought does not appear to cross the Planning Commission's mind that perhaps the import substitution priniciple is due for a careful second look; nor does the need for selecting investment projects on rational cost-benefit calcu- lation at all figure among the "considerations to be taken into account in determining the approach to industrial development" in the Fourth Plan period. All this cannot be covered up by a casual swipe at an inconsequential scapegoat like the Tariff Commission.

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