Dependency and Self-Reliance in Indian Planning: The Formulation of the Fourth Five-Year Plan

Blake, Stephen J.

     The goal of this study is to "examine the impact of foreign aid on the formulation of the Fourth Five-Year Plan and assess the relevancy of dependency theory to Indian economic planning." "I . . . attempt to show the impact of American foreign aid on the Indian planning process, and try to determine whether foreign aid hindered or helped Indian economic planners in formulating their economic strategy. . . . I . . . show that India was a very heavy user of American aid for a long period of time. The question, then, is: "Did American aid determine Indian economic strategy and limit India's prospects for development, or, were other factors, such as India's internal political and economic situation, more important?' We . . . also answer the question: 'Who did Indian economic planning, India or the United States?'"
     The study concludes that "dependency theory does not explain the planning process in India during the Fourth Plan's formulation. There were simply too many factors that affected the final plan which were not related to foreign aid and aid policy. But dependency theory is useful in explaining some of the problems in the plan's formulation, particularly from 1965 to 1967. It makes us aware of the power which aid donors can use by cutting off aid. Aid can assist economic planning, but when it is not guaranteed, severe problems can result.