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CHAPTER

DEVELOPMENT PLANNING

Planning is the process of evolving a sequence


of actions, which are designed to solve problems
in future. The planning problems vary but tend
to be primarily economic and social; the
planning period also varies according to the type
and level of planning; but all planning involves
a sequential process, which can be
conceptualised into a number of stages.
In India, planning is still centralised.
National Development Council, consisting of
the central cabinet, members of the Planning
Commission and chief ministers of states and
union territories set the policy of the planning.
The Planning Commission is entrusted with
the formulation of the national plans.
Subjects of the national significance, such as
defence, communication, railway, etc. come
under the scope of Central Government, while
vital elements of rural development, such as
agriculture, power, education, health, social
services, small scale industries, and
development of roads and transport falls
under the scope of the state government. In
most cases, strategies, policies and
programmes are formulated by the Planning
Commission and states are asked simply to
implement them.
The planning process in the states is not
much different. While the national plan deals
with the conceptual and theoretical aspects,
streses upon aggregate needs and possibilities,
targets to be achieved and approaches to be
adopted, the states are responsible to carry out
the plan on the ground, and therefore, these
are supposed to be physical in nature. The
regional breakdown of sectoral plan is
attempted at state level. Through Constitutional
amendments, the planning has been made a
necessary component of local level development.
Now, there are agencies to prepare plans for
districts, blocks, cities and villages.

Planning in India
Planning in India derives its objective and
social promises from the Directive Principles
of the State Policy enshrined in the
Constitution. Public and Private Sectors are
viewed as complementary.

HISTORY

OF

PLANNING

Within few years of independence, India


appointed a National Planning Commission
and began the process of State-initiated
planned development. Even before that,
M. Visvesvarayya had published a ten-year
plan for India in 1936. The National Congress
in 1938 appointed an expert committee to
explore the possibility of an all India plan,
which was named as the National Planning
Committee. This committee without finalising
a plan formulated certain policies and
perspectives of development. In 1944, Tata
and Birla prepared the Bombay Plan. The
Gandhian plan prepared by S.N. Agrawal
followed it with the objectives of development
of agriculture and rural industries. After
independence, the Planning Commission
prepared a plan in 1952 as the First Five Year
Plan of 1951-56. The Planning Commission
has formulated and implemented nine Five
Year Plans since then. The Tenth Five Year
Plan has also been finalised and is being
implemented. Indian plans had multiple
objectives and emphasised growth as well as
social justice. On the basis of the experiences
of successive plans, several strategies and
approaches have been on test during the last
five decades. A succinct summary of the
objectives, strategies and approaches are
given below.

India People and Economy

First Five Year Plan (1951-56): With the view


to initiate the process of development, the
major emphasis in the First Plan was given
on an overall development, particularly of
rural communities. For this purpose, the
Community Development Programme (CDP)
was launched, and through the National
Extension Service, it was sought to extend
supplies of inputs, services, finance and
technical know-how to ruralites. This was
called as multipurpose approach based on the
principles of all-round development.
However, the First Plan accorded highest
priority to agriculture including irrigation and
power. Bhakra-Nangal Project for Punjab and
Rajasthan, Kosi Project for Bihar, Damodar
Valley Project for Jharkhand and West Bengal,
and Hirakud Project for Orissa were instituted
on the model of Tennessee Valley Authority
(USA) to control flood, irrigate land, generate
electricity, regulate soil erosion and fishing.
The first fertiliser factory was established at
Sindri (Jharkhand). In spite of this, the
multipurpose approach could not make much
headway and it gave way to the sectoral
approach in later plans.

(i) increase the national income rapidly,


(ii) achieve self-sufficiency in foodgrains and
increase agricultural production, (iii) expand
basic industries, (iv) expand employment
opportunities, and (v) reduce the regional and
personal disparity in income and wealth. The
achievements of the Third Plan were not
encouraging. The reasons of this shortfall
were untimely monsoon rains, severe drought
in 1965, war with China in 1962 and with
Pakistan in 1965, non-availability of foreign
credit and rigid administrative rules and
procedures. The record increase in foodgrain
production was achieved in 1964-65 as 88.95
million tonnes, which fell to 72.29 million
tonnes in the following year. The achievements
of the Third Plan were significant only in the
industrial sector. The overall performance was
poor in comparison to the Second Plan.
Annual Plans (1966-69): Instead of Fourth
Five-Year Plan, three annual plans were
formulated between 1966 and 1969. These
plans emphasised the adoption of package
programmes relating to high yielding varieties
of seeds, fertilisers, pesticides and credit
facilities in selected areas with assured rainfall
and irrigation. This is known as Intensive
Agricultural District Programme. This
package programme brought the so-called
Green Revolution. Consequently, agricultural
production registered rapid increase. The
industrial development registered imperceptible
changes. A recovery in industrial production
was recorded in 1968-69.

Second Five Year Plan (1956-61): This plan


sought to promote a pattern of development,
which would ultimately lead to the
establishment of a socialistic pattern of society
in India. Its main aims were: (i) an increase of
25% in the national income, (ii) rapid
industrialisation with particular emphasis on
development of basic and heavy industries, (iii)
expansion of employment opportunities, and
(iv) reduction in inequality. The special
emphasis was laid on the development of basic
and heavy industries in the second plan and
it defined the role of public sector in the
development of the country. New integrated
steel plants were commissioned in public
sector at Bhilai, Rourkela and Durgapur.
A heavy electrical plant (BHEL) was established
at Bhopal and apart from expansion of Sindri
fertiliser factory, Nangal and Rourkela fertiliser
units were opened. The agriculture sector was
not given due attention.

Fourth Five Year Plan (1969-74): Main


objectives of the Fourth Five Year Plan were:
(i) accelerating the tempo of development,
(ii) reducing fluctuations in agricultural
production, and (iii) safeguarding uncertainties
of foreign aids. Industries were dispersed to
stimulate the economy of weaker or less
developed areas. Programmes were designed
to promote growth with social justice. The
plan laid particular emphasis on improving
the condition of the less privileged and weaker
sections through education and employment.
Fifth Five Year Plan (1974-79): This plan
enlarged the measures introduced during the

Third Five Year Plan (1961-66): The main


objectives of the Third Five Year Plan were to:


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Development Planning

Fourth Plan with specific emphasis on


removal of poverty. An interregional allocation
policy in backward areas, an incentive policy
in industrially backward regions, a sub-plan
approach for some special problem areas, and
a social justice approach were principal
components of the policy/programme guiding
regional/area development planning in this plan
period.
The significant feature of the Fifth Five Year
Plan is the preparation of sub-plans for
selected tribal areas, hill areas and droughtprone areas in the country. The sub-plan
approach provided special central assistance
out of the state plan funds ensuring a certain
order of normal development. This plan
launched a national programme of minimum
needs, for providing a minimum level of social
consumption for different areas and sections
of the community based on the predetermined
criteria of uniformity and equality. It was
particularly a rural-oriented programme made
to improve the socio-economic conditions of
the weaker sections of the community.

Eighth Five Year Plan (1992-97): The New


economic policy, particularly the New
Industrial Policy, was announced in 1991 and
this plan was framed within the framework
of these policies. Among them structural
adjustment policies were important. Several
liberalisation measures were announced and
private sector was assigned important role in
the development, particularly in industrial
development. Growth of different sectors of
the economy was fast. Export and import also
increased substantially, recording reduction
in trade deficit.

Sixth Five Year Plan (1980-85): Removal of


poverty was the foremost objective of the Sixth
Plan. The strategy was to move
simultaneously towards strengthening
infrastructure for both agriculture and
industry. People were involved in formulating
specific schemes of development at the local
level. Various r-distribution measures were
advocated for raising the share of poorer
sections in the national income.

Tenth Five Year Plan (2002-07): This plan


envisages an average annual growth rate of 8
per cent. Besides economic growth, the tenth
plan has set some monitorable targets for key
indicators of human development, namely,
reduction of poverty ratio by 5 per cent points
by 2007, providing gainful employment to the
labour force, education for all children in
school by 2003, and increase in the literacy
rate to 75 per cent within the plan period.
The development strategy adopted for the
plan includes greater role of private sector in
the Indian economy, need for provision of
infrastructure, and need for greater flexibility
in fiscal and monetary policies. For a balanced
development of all states, the Tenth Plan
includes state-wise break-up of broad
development targets for growth rates and
social development consistent with national
targets. The plan also emphasises the need
to ensure equity and social justice, completion
of on-going projects, privatisation of public
enterprises particularly those which are
running below the capacity.

Ninth Five Year Plan (1997-2002): Objective


of this plan was the sustainable development
of the economy and society, ensuring food and
nutritional security and basic minimum
services to all, containing the growth rate of
population, empowerment of women and
socially disadvantaged groups and promoting
institutions like Panchayati Raj. Average
annual growth rate during the Ninth Plan was
lower than the plan target.

Seventh Five Year Plan (1985-90): The basic


tenets of this plan were growth,
modernisation, self-reliance and social justice.
Within this framework, policies and
programmes were framed for raising
foodgrains production, employment and
productivity. Generation of productive
employment was assessed as most critical.
Annual Plans (1990-92): The Seventh plan
was followed by two annual plans under the
constraints of prevailing political situation.
The basic thrust of these annual plans was
on maximisation of employment and social
transformation.


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Plan Implementation

India People and Economy

Sixth and Seventh Plans were also


remarkable, as the compound annual growth
rate of net domestic products was above 5.0
per cent. Growth was severely constrained
during the annual plans of 1990-92 due to
the political instability. The Eighth Plan
recorded all time highest annual growth rate
of 6.7 per cent. Again, the growth was slower
during the Ninth Plan period.

The real problems of planning in India are


related with plan implementation and not to
plan formulation. The formulation of plan is
concerned with the Planning Commission at
the central level while the implementation is
made by the several departments of the
central and state governments.
The states are not prepared to perform
the functions of planning. The complex
planning problems related to the development
of agriculture and allied activities, rural and
urban development, family planning, transport
planning and industrial development need the
concerned expertise. There is no expert of
planning at the state level to formulate and
implement plan in the state. Hence, the plan
at state level acts as distributing agency to
the sectoral needs of the concer ned
departments.

Growth in Different Sectors of the


Economy: The growth rate in net national
products and per capita income depended
largely on the performance of agriculture.
Production and productivity of agriculture
suffered setback from vagaries of monsoon
particularly in drought years. Contrary to it,
industrial growth rate has been consistently
higher than the agricultural. With the growing
economy, industrial structure of the country
diversified. Consequently, industrial
production grew by 5.5 per cent per annum
during this period as against 3.0 per cent of
agricultural production. This was higher than
the growth of population which was at 2.2
per cent. Output of quaternary sector grew
much faster. Contribution to gross domestic
product of trade and transport sector and
financing services increased by about 16
times each and of public administration and
services by more than 12 times during this
period. As a result of the planned efforts,
economy of the country diversified and
significance of non-primary sectors increased.
Primary sector accounted for 59.2 per cent of
the gross domestic product in 1950-51 but
only 26.6 per cent in 2000-01. The shares of
secondary sector on the other hand increased
from 13.3 to 25.0 per cent and that of tertiary
sector from 27.5 to 48.4 per cent within the
same period. Within the secondary sector,
manufacturing, electricity, gas and water
supply expanded rapidly. Similarly, in the
tertiary sector, trade, transport and public
administration together with defence recorded
very high growth. All these reflect a growing
maturity of the Indian economy.
Contrary to it, occupational structure of
workers did not change much. Primary sector
accounted for 72.0 per cent of the working

ACHIEVEMENTS
Growth in Net National Products: The
Indian economy made several strides during
the last fifty years (1950-51 to 2000-01) under
planned regime. As a result of this, the Net
National Product increased 7.6 times
registering a compound growth rate of 4.2 per
cent per annum. During the same period, per
capita income increased by 2.8 times,
registering a compound growth rate of 2.1 per
cent per annum. However, there has been
wide variation in annual growth rates during
different plans.
In terms of compound annual growth rate,
the First Plan was successful, especially in
respect of achieving self-sufficiency in food.
The Second Plan made further strides not only
in agriculture but also in industry. The Third
Plan and the subsequent three annual plans
were period of stagnation with lowest growth
in net domestic product. It was due to wars,
droughts and devaluation of Indian currency.
Situation did not improve much even during
the Fourth Plan. The Fifth Plan, however,
recorded substantial improvement in spite of
drought of 1979-80. Achievements during the


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Development Planning

Employment Situation: Employment


generation has also been one of the priorities of
the planning. Employment in absolute numbers
has risen from 303 million in 1983 to 397
million in 2000. Employment opportunities
have increased at a rate consistently lower than
the growth of population. Average annual
growth rate of overall employment was 2.73 per
cent during 1972-78 but declined to 1.54 per
cent during 1983-88 and to 1.03 per cent
during 1993-2000. Annual growth rate of
employment in organised sector declined
drastically and reached to -0.17 per cent in
2000. It was mainly due to slowdown in public
sector. As a result of this, the problem of
educated unemployed has assumed serious
proportion. Nearly 37 million persons were
registered with the employment exchanges for
seeking jobs in 1996-97.

population in 1951 and 67.5 per cent in 1991.


Leaving other primary activities aside,
agricultural activities alone account for 58.4
per cent of the total workers in 2001. When
seen against a sharp decline in the share of
primary sector in gross domestic product, a
relative fall in the per capita income in primary
sector vis-a-vis secondary and tertiary sectors
becomes obvious. This points out to an
accentuated disparity in income levels of
primary and non-primary sector workers, or
for that matter, of the rural and urban areas.
Nevertheless, plan performance fell short of
expectations and targets. It is ascribed to
unabated rapid growth of population and poor
per for mance of the public sector. New
economic policy initiated in 1991 shows
greater reliance on market forces and less role
of the public sector.
Improvement in Consumption Status:
Indicators of consumption show some
improvement. Per capita per day availability
of cereals and pulses together increased from
394 gm in 1951 to 417 gm in 2001; though
availability of pulses declined from 61 gm to
26 gm during this period. Per capita net
availability of edible oil per year went up by
3 times from 2.5 kg in 1955-56 to 8.0 kg in
2000-01, and that of sugar rose by more than
3 times from 5 to 15.8 kg. Growth in per capita
availability of electricity for domestic use, from
2.4 kWh in 1955-56 to 69.2 kWh in 19992000, is also impressive. These data, however,
do not show the distribution of benefits
spatially and socially.

REGIONAL DISPARITY
There is marked regional disparity in the level
of development within the country. For
instance, per capita income ranges from
Rs 6328 in Bihar to Rs 35,705 in Delhi in 19992000. Thus, the ratio between states with the
lowest and highest income is 1:5.6. Only in 14
out of 29 states and union territories per capita
income is above Rs. 15,000 per annum.
Similarly, proportion of population below
poverty line ranges from 3.48 per cent in
Jammu and Kashmir to 47.15 per cent in
Orissa in 1999-2000. Ratio between lowest and
highest values is thus 1: 13.5. Urbanisation is
another indicator of development. Proportion
of urban population among states varies from
5.50 per cent in Arunachal Pradesh to 49.77
per cent in Goa. Again the magnitude of
difference is 1:9. Still more than one-third of
the total population above 6 years of age is
illiterate. Situation is worse in female literacy.
Slightly more than half (54.2%) of them were
literate in 2001. This proportion ranges from
33.6 per cent in Bihar to 87.9 per cent in
Kerala. Human Development Index already
discussed earlier is as low as 0.367 for Bihar
and as high as 0.638 for Kerala among major
states of the country.

Success of Poverty Eradication


Programmes: The eradication of poverty has
been an integral component of the strategy
for economic development in the country.
The Planning Commission has been
estimating the incidence of poverty at the
national and state level. The incidence of
poverty expressed as a percentage of people
living below the poverty line has witnessed a
steady decline from 55 per cent in 1973-74
to 26 per cent in 1999-2000. Though the
poverty ratio declined, the number of poor
is still more than 260 million.


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India People and Economy

Regional disparity can be summarised as


follows:
1. Coastal areas are comparatively more
developed than the interior.
2. Diffusion of development in areas of
commercial agriculture, such as in Punjab
and Kerala is more whereas rural-urban
disparity is less.
3. T ribal areas are still relatively less
developed.
4. Areas suffering from physical constraints
like dry climate, difficult terrain and
frequent flood or those deprived of
advanced technology due to isolation have
remained backward.
The problems and issues of regional
development were not considered so markedly
in the early stages of planning as today.
Regional development policies during fifties
and sixties encouraged sectoral development
in an effort to gain maximum returns from
investment. The regional segregation of
national plans was not attempted except the
recognition of resource planning in some
problem regions like the Damodar valley.
Large industrial nodes which were developed
as the centripetal points during the Second
Five Year Plan increased interregional
differences in economic growth. Thus, the first
two plans created more regional imbalances
though there was an increase in the output
of goods and services. The government
however began some programmes for
development of backward regions during the
period. Efforts were made to narrow down
regional disparities in mid-sixties, which
showed some positive trend. The subsequent
years, however, recorded a trend in the
opposite direction. This resulted in decline in
industrial growth, that affected the backward
areas more, and the green revolution
remained confined only to the irrigated areas
of the country. A tendency of slight reduction
in regional disparity was observed during the
eighties when overall growth picked up. Green
revolution spread to other regions during
this period.
The new economic policy associated with
liberalisation, privatisation and globalisation

is attracting faster development in more


advantageous areas and thereby increasing
regional disparity. The foreign investment is
showing a locational bias in favour of coastal
states and the National Capital Region.
Emergence of the Panchayati Raj, however,
is expected to stimulate development on
micro-level, which is expected to reduce the
regional disparity.
Programmes
Disparities

to

Reduce

Regional

The programmes designed to reduce regional


disparities can be classed into two groups:
1. Integrated area approach and local
planning, and
2. Spatial integration in sectoral plans.
Integrated Area Approach and Local
Planning: One of the important measures for
reducing regional disparities in India relates
to the preparation of integrated plans for
selected areas and to the formulation of
district plans. Among them, integrated plans
for hill areas, drought-prone areas, tribal
areas, and areas with concentration of
marginal and small far mers are worth
mentioning.
Hill Area Development Programmes: The
special hill area development programmes
were started in hilly areas of Uttaranchal,
Assam Hill areas, Darjeeling district in West
Bengal and Nilgiri district in Tamil Nadu. The
programmes provided special emphasis on
exploiting local resources of the hill areas
through the development programmes of
horticulture, plantation agriculture, animal
husbandry, poultry, beekeeping, forestry, soil
conservation and suitable village industries.
Tribal Area Development Programmes: The
programme has been conceived for areas with
50 per cent or more tribal concentration. The
main long-term objectives of the sub-plan are
to narrow the gap between levels of
development of tribal and other people and
to improve the quality of life of the tribal
communities. The areas taken under this
programme lie in Madhya Pradesh,
Chhattisgarh, Orissa, Maharashtra, Gujarat,


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Development Planning

Andhra Pradesh, Jharkhand and Rajasthan.


Most of the grants to this programme are
provided from the state plan funds added
with a special allocation from the central
sector.
The programmes are framed to benefit the
common man, particularly the weakest group
and it should be quick yielding and easily
accessible to the average tribal. It deals with
the special problems of the area such as
shifting cultivation, bonded labour, land
alienation and programmes related with credit
and marketing, forestry and road.

Spatial Integration in Sectoral Plans:


Several programmes, specially designed to
promote balanced regional development, were
integrated within sectoral programmes during
different plans.
Community Development Programme: This
programme was launched in the first plan.
The country was divided into development
blocks. Through the National Extension
Service it was sought to extend supplies of
inputs, services, finance and technical knowhow to the ruralites. This has been called as
multipurpose approach based on the
principles of all-round development. But this
approach with its multisectoral components,
struggling with resource constraint could not
make much headway.

Drought Prone Area Programmes: The main


objectives of the programme were to provide
employment to the rural poor in drought
prone areas with inadequate natural
resources and creating productive assets to
mitigate the ef fects of droughts. The
programme was curative in terms of advance
planning to introduce work under scarcity
relief operations and preventive in the sense
that developmental works will increase the
productivity of land and labour. The emphasis
concentrated on integrated development of the
area related to irrigation projects, land
development programmes, afforestation,
grassland development, rural electrification
and programmes of infrastructural
development. Central assistance is conceived
as an additive to the normal state effort in
this programme.

Industrial Location and Regional Development:


These programmes aimed at decentralised
industrialisation. These programmes
encouraged industrial development in
backward regions by providing concessional
finance, creation of industrial estates,
establishment of public sector industrial
undertakings and preferential licensing.
Infrastructural facilities were provided to
locate industries in industrial estates. In the
first stage, the estates were located near
urban centres, but later on they were located
in rural areas also. These industrial estates
developed rapidly during the sixties but could
not fulfil the purpose of balanced
development.

Metropolitan Regional Planning: Large urban


centres were treated as industrial growth
poles. As a result large-scale movement of
labour from rural to urban areas
accompanied urban-based large-scale
industrialisation. Such influx of migrants
created several problems particularly in the
capital and port cities. Therefore, urban
master plans were prepared to reduce the
problems of rapid urbanisation. For Delhi,
Master Plan was prepared in 1955. It was
proposed to develop ring towns at Ghaziabad,
Faridabad, Ballabhgarh, Gurgaon and Loni
to deflect the growing population of Delhi.
Calcutta (Kolkata), Bombay (Mumbai),
Hyderabad and other metropolitan cities
followed Delhi.

Intensive
Agricultural
Development
Programme: This was adopted in the third
plan period. The essence of this policy was to
select a few districts where the prospects of
agricultural development were bright. The
districts selected had assured water supply
by irrigation. In these districts the farmers
were provided with full package services
improved seeds, fertilisers, plant protection
and short-term credit. Due to high cost of
inputs and high risk involved, this programme
was restricted within certain section of
farmers in limited areas.
The outcome of Indias planned
development is a mixed bag. On the success


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India People and Economy

sustainable development. The tenet of this


concept is the utilisation of the environmental
resources according to their capacity of
replenishing so that perpetual supply can be
ensured. Many forms of development erode
the environmental resources upon which they
are based; which in turn, undermine present
economic development and reduce future
possibilities. Therefore, sustainable development
should keep in view the stability of the
ecosystem.
Sustainability can also be understood in
social sense, meaning a thriving economy and
social order with productive structures and
relationships, which ensure a fair distribution
of income, power and opportunity, thus
providing the basis for social peace. In fact, it
is people oriented and nature oriented
development concept, in which social justice,
welfare, quality of life and environmental
protection are kept at par with the economic
growth. At the same time, local population,
resources, needs, aspirations and capabilities
are given due attention in the development
planning. It requires multilevel planning for
implementing equitable growth policies.

side, the country can take pride in achieving


self-sufficiency in food, the expanding,
diversifying and dispersing of its industrial
base, containing the inflation rate, a high rate
of capital formation internally, and reducing
poverty ratio as well as regional disparity. On
the reverse side, rate of increase of income
has been lower than the target, agricultural
per for mance has been weaker and its
industrial advancement lags far behind. The
country could not achieve the objective of
growth with equity. Sustained efforts are still
needed to reduce the visible disparities
amongst states, between rural and urban
areas and between males and females.
NEED

FOR

SUSTAINABLE DEVELOPMENT

The principal objective of the development


planning is the economic growth with
equitable distribution of benefits with least
deterioration of the ecosystem. To obtain this
objective sustainable development approach
would be appropriate. Several attempts have
been made to define sustainability and

EXERCISES
Review Questions
1. Answer the following briefly:
(a) What is planning?
(b) Why is planning required for the development of a country?
(c) What were the aims of the Second Five Year plan?
(d) What were the special features of the Annual Plans during 1966-69?
(e) What is the employment situation in India?
( f ) Mention the areas where Tribal Area Development Programmes were
implemented.
(g) Write salient features of the Drought Prone Area Programmes.
(h) When was the Intensive Agricultural Development Programme adopted?
2. Write short notes:
(a) Objective of the Tenth Five Year Plan
(b) Need for sustainable developmened.
3. Describe the main achievements of the Five Year Plans in India.
4. Describe the growth in the different sectors of Indian economy.


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Development Planning

5. Write salient features of regional disparities in the development of India.


Project Work
6. In an outline map of India show the following:
(a) Areas under Tribal Development Programmes,
(b) Areas under Drought Prone Area Programmes, and
(c) Area under Metropolitan Regional Planning.


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