5 year Plans Of India . (Pan1- to Plan-9 ), a study materials for WBCS.pdf

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A Review of Five Year Plans The credit for concertizing ideas on national planning goes to Sri M.Visvesvaraya, the visionary engineer and statesman of Mysore who published his Planned Economy for India in 1934, which was a blue-print for a ten-year programme of planned economic development for India. Indian National Congress set up a National Planning Commission as far back as 1938 with Jawaharlal Nehru Chairman. Over the next decade, there were several initiatives. The most important were: • ‘A Plan for Economic Development in India (1944), popularly known as the Bombay

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Plan which gave priority to the development of basic industries, while at the same time

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seeking the doubling of agricultural production and of per capita income within a 15 years’ framework.

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• The People’s Plan drafted by Shri M N Roy which had a 10-year period and which Sought to give greatest priority to agriculture. It advocated the nationalization of all

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Agricultural production and distribution.

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• The Gandhian Plan drafted by Sriman Narayan emphasized economic decentralization with primacy to rural development through the development of cottage industries.

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Types of Planning

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Some of the important types of planning (not mutually exclusive) are described below:

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• Imperative planning involves centralized planning and implementation as opposed to

achieving the goals.

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Indicative planning which only lays down the broad goals, strategies and guidelines for

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• Fixed term plans are drawn up for a particular period (five years in India) whereas a rolling plan will be more flexible in its targets and allow extension of implementation

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period.

• Structural planning refers to a strategy, which involves the need to change existing

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institutions or creating new ones. On the other had, functional planning seeks to achieve

the objectives within the existing institutional framework (i.e., without changing existing laws, for instance). • Apex planning or centralized planning envisages only a central institution while multilevel planning allows for decentralized planning. The Panchayati Raj institutions seek to strengthen multi-level planning.

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Five-Year Plans (FYPs) FYPs are centralized and integrated national economic programs. Joseph Stalin implemented the first FYP in the Soviet Union in the late 1920s. Most communist states and several capitalist countries subsequently have adopted them. China and India both continue to use FYPs, although China renamed its

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Eleventh FYP, from 2006 to 2010, a guideline (guihua), rather than a plan (jihua), to signify the central

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government’s more hands-off approach to development. India launched its First FYP in 1951, immediately after

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independence under socialist influence of first Prime Minister Jawaharlal Nehru. The first Five-Year Plan was one of the most important because it has a great role in the launching of Indian

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development after the Independence. Thus, it strongly supported agriculture production and it also launched the industrialization of the country (but less than the Second Plan, which focused on heavy industries). It built

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a particular system of "Mixed economy", with a great role for the public sector (with an emerging Welfare State), as well as a growing private sector (represented by some personalities as those who published

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the Bombay Plan).

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First Plan (1951-56)

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K.N Raj a young economist involved in drafting the plan, argued that India Should "hasten slowly" for first

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two decades as a fast rate of development might endanger democracy  It was presented by the then Prime Minister Jawaharlal Nehru in the Indian parliament on 8th

 Energy and irrigation  Industry  Land rehabilitation  Target GDP growth of 2.1% per year.

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 Social services

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 Communications and transport

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 Community and agriculture development

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 Objectives

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December,1951

Allocation Of The Plan Budget: Total public sector outlay of Rs. 2069 crores (subsequently increased to Rs. 2378 crores)

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land rehabilitation 4% others 2% social services 17%

irrigation & energy 27%

industry 9% agriculture & community development 17%

 Achievements

GDP growth achieved @ 3.6% per year

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transport & communication 24%

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National income grew by 18% and per capita income by 11%

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Food production went up by 20%

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Evolution of good irrigation system

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There was an improvement in roads, civil aviation,railways,manufacture of fertilizers, elec electrical

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equipments.

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Bhakra Dam and Hirakud Dam.

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Five Indian Institutes of Technology (IITs) (IITs) were started as major technical institutions. University

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education in the country.

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Grant Commission was set up to take care of funding and take measures to strengthen the higher

The target set for the growth in the gross domestic product was 2.1 percent every year. In reality, the actual achieved with regard to gross domestic product was 3.6% per year. This is a clear indication of the success of

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the first Five-year Plan.

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Second Plan (1956-61) 

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Objectives 

Rapid Industrialisation

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25% increase in National Income

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Increase in employment opportunities

Plan Allocation: 

Total amount allocated was Rs 4600 Crores (Power and irrigation, Social service ,Communications & transportations etc)

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Achievements

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5 steel plants Large industries including steel plants (Durgapur, Bhilai and Rourkella) were set up. The

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locomotive factory at Chittaranjan and Coach Factory at Perambur were other major projects

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of this period.

Hydro-electric power project

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Production of coal increased

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The large enterprises in seventeen industries were nationalized

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Increase in the number of railway lines The Atomic Energy Commission was formed in 1957 with Homi J. Bhabha as the first chairman.

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The Tata Institute of Fundamental Research was established as a research institute. In 1957 a talent

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search and scholarship program was begun to find talented young students to train for work in nuclear

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power.

Rate of investment planned to be raised from 7% to 11% of national income.

Some Shortcomings

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 Mahalanobis Model

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The target growth rate was 4.5% and the actual growth rate was 4.27%

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National Income increased by almost 20% but per capita income rose only by 8%

 Unfavorable monsoon in 1957-58 and 1959-60 impacted agricultural production.  The Suez crisis blocked International Trading increasing commodity prices.  License were required for starting new companies

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 This is when India got its License Raj, the bureaucratic control over the economy

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 When a business was losing money the Government would prevent them from shutting down The second plan, particularly in the development of the public sector. The plan followed the Mahalanobis model, an economic development model developed by the Indian statistician Prasanta Chandra Mahalanobis in 1953. The plan attempted to determine the optimal allocation of investment between productive sectors in order to maximise long-run economic growth. It used the prevalent state of art techniques of operations research and optimization as well as the novel applications of statistical models developed at the Indian Statistical Institute. The plan assumed a closed economy in which the main trading activity would be centered on importing capital goods

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Third Plan (1961-66)  Objectives  Increased emphasis on agriculture  Power sector given importance  Increase in the National Income @ 5% per year.  Promotion of economic development in backward areas.  Prevent monopolies.

 Achievements The third Five-year Plan stressed agriculture and improvement in the production of wheat, but the

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brief China -Indian War of 1962 exposed weaknesses in the economy and shifted the focus towards

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the defense industry and the Indian Army. In 1965–1966, India fought a War with Pakistan. There was

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also a severe drought in 1965. The war led to inflation and the priority was shifted to price stabilization. The construction of dams continued. Many cement and fertilizer plants were also

Many primary schools were started in rural areas. In an effort to bring democracy to the grass-root

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built. Punjab began producing an abundance of wheat.

level, Panchayat elections were started and the states were given more development responsibilities.

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State electricity boards and state secondary education boards were formed. States were made responsible for secondary and higher education. State road transportation corporations were formed

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and local road building became a state responsibility. The target growth rate was 5.6%, but the actual growth rate was 2.4%. Inflation (36%) ate up much of

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the achievement; Rupee devaluation (1966).

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Due to miserable failure of third plan the government was forced to declare "plan holidays" (from

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1966–67,1968–69).

Annual Plans (1966-69)

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After the disastrous experience of the Third Plan, a plan holiday was declared for three years. All available experience of near-famine years (1965-66).

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resources were mobilized for building a buffer stock and for stepping up food production learning from the

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during the Annual Plans.

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 Three Annual Plans (1966-69) Plan holiday for 3years  The prevailing crisis in agriculture and serious food shortage necessitated the emphasis on agriculture  During these plans a whole new agricultural strategy involving wide-spread distribution of High-Yielding Varieties of seeds, the extensive use of fertilizers, exploitation of irrigation potential and soil conservation was put into action to tide-over the crisis in agricultural production.

 During the Annual Plans, the economy basically absorbed the shocks given during the Third Plan, making way for a planned growth.

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Fourth Plan (1969-74)  Situation : India had to reform and restructure its expenditure agenda, following the attack on India in the year

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1962 and for the second time in the year 1965 Due to recession, famine and drought, India did not pay much heed to long term goals. It started

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taking measures to overcome the crisis. The need for foreign reserves was felt

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Economic self-reliance

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 Objectives :

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 Reduction of foreign-aid plan).

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 Substantial increases in the outlay for family planning (Rs. 278 crores from Rs. 25 crores in third

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 Intensive irrigated agriculture  Promotion of industrial development

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 The target of overall growth rate was 5.7% per annum

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 Achievements:

The achievements of the fourth plan were below targets

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Poor achievement of targets – national income grew by 3.3% per annum; per capital income by 1.2% per annum

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Agriculture growth was just at 2.8%,

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Green revolution did not perform as expected

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Industry too grew at 3.9%

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The Indira Gandhi government nationalized 14 major Indian banks

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Actual growth rate achieved was 3.4%

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Fifth Plan (1974-79) The fifth plan was prepared and launched by D.D. Dhar.

• Situation :

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The world economy was in a troublesome state when the fifth five year plan was chalked out Prices in the energy and food sector skyrocketed and as a consequence inflation became inevitable

 Objectives :  The fifth plan proposed to achieve two main objectives viz, 'removal of poverty' ( ‘Garibi Hathao’ ) and 'attainment of self reliance', through promotion of high rate of growth, better distribution of income and a very significant growth in the domestic rate of savings

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 Target of growth rate in GDP was 5.5% per annum

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 to reduce social, regional, and economic disparities for developmental planning

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 to enhance agricultural productivity

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 to initiate land reforms  to check rural and urban unemployment

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 to emphasize on household industries  to encourage self-employment through a well integrated local planning

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 to encourage import substitution in areas like industrial machinery, chemicals, paper, iron and steel and

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non-ferrous metals

 to capture the markets with locational advantages  to initiate appropriate use of fiscal, credit and production support policies in the cottage industry

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sector

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Achievements

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 to develop labor intensive technological improvements

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 The greatest achievement was an unexpected rise of foreign exchange reserves. In 1974-75, Indian exports crossed 18%. For-ex reserves reached up to Rs. 4,000 crs by March 1978-79

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 Food-grain production was above 118 million tons due to the improvement of infrastructural facilities

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 Bombay High had shot up the commercial production of oil in India rate was 3.8% per annum

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 In the 4th year of this plan, the growth rate was as high as 8.6 %. The actual average annual growth  A National Programme for Minimum Needs including elementary education, safe drinking water

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health care, shelter for landless, and slum up graduation. A growth rate of 3.8 % (against a target of 4.4%) achieved.

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Agricultural production increased by 4.2% - the highest so far

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Moderate inflation of 2.1% per annum during he Emergency years (1975-1977)

 The Janata Government terminated the Plan in 1978.

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Rolling Plan (1978 - 80)  The plan was terminated in 1978 (instead of 1979) when Janta Govt. came to power  There were 2 Sixth Plans. One by Janta Govt. (for 1978-83) which was in operation for 2 years only and the other by the Congress Govt. when it returned to power in 1980.

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Sixth Plan (1980-85) • Janata Government had adopted a Sixth Plan (1978-83), which was conceived as rolling plan. Mrs. Gandhi’s Government in 1980 abandoned this and a new sixth plan was drafted.

• Poverty alleviation given the top priority. • Schemes for transferring skills (TRYSEM) and assets

(IRDP) and providing slack season employment (NREP).

 Situation:  At the onset of the Sixth Five Year Plan India, Rajiv Gandhi, the then prime minister prioritized speedy industrial development, with special emphasis on the information technology sector  From the Fifth Five Year Plan, the nation had been able to achieve self sufficiency in food.

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 Moreover, the industrial sector was also diversified and science and technology also made a significant

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advance

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 One of the major hindrances in the way of further development in this period was the boom in the

 Objectives :

Target growth of GDP was 5.3% per annum Increasing industrialization

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to increase the growth rate of the economy

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to concentrate on the promotion of efficient use of resources to control poverty and unemployment

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to initiate modernization for achieving economic and technological self-reliance

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Indian population

to introduce Minimum Needs Program for the poor and needy with an emphasis to reduce the to initiate Family Planning Programs in order to check the growing population trends

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to protect and improve ecological and environmental assets to promote the education at all levels

Achieved Average annual growth rate was 5.7% per annum

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 Achievements

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discrepancies in income and wealth accumulation

 The transport and communication system improved under this Plan

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 The Indian national highway system was introduced for the first time and many roads were widened to  Tourism also expanded

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accommodate the increasing traffic

 The sixth plan also marked the beginning of economic liberalization resulting in growth in standard of living of people  Family planning also was expanded in order to prevent overpopulation 

Poverty declined from 48.3% in 1977-78 to 37.4% in 1983-84

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Seventh Plan (1985-90) • Strong emphasis on creation of productive employment on farm as well as rural subsidiary occupations. • Stress on increasing the production of food grains, oilseeds, sugar, textiles, domestic fuel and housing • Outward-looking strategy with exports receiving high priority. • Tempo of domestic and external liberalization has tened • The plan also had a 15-year perspective (1985-2000) for removal of poverty, providing for basic needs, achieving universal elementary education and total access to health facilities.

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w Anti-poverty program

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 Objectives :

 Improved facilities for education to girls

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 The government undertook to increase productivity  Communications  Transport

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 Emergence of informatics, and hooking up of telecommunications with computers

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inland waterways, product pipelines, civil aviation, coastal shipping

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Social Justice

 Agricultural development

 Full supply of food, clothing, and shelter

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 Anti-poverty programs

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 Using modern technology

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 Increasing productivity of small and large scale farmers  Making India an Independent Economy GDP of 5.3%

A growth in labor force of 39 million people

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Employment was expected to grow at the rate of 4 percent per year

Projections for Balance of Payments: Export - Rs.60.7 thousand crore, Imports - (-) 95.4 thousand crore, Trade Balance- (-) Rs.34.7 thousand crore GDP OF 5.7%

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Average annual growth rate during the plan period was 5.7% (target fiver percent) Agriculture grew at 4.1% against a target of four percent.

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Achievements

Manufacturing industries achieved a growth rate of 8.8% (target 8%) There was a severe short fall in the mining sector (5.6% against a target of 13%) Social sector performance fell far short of targets especially in housing for the landless, Elementary education, and general poverty alleviation.

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Eighth Plan (1992-97) The plan was launched in 1992 after the Plan holiday during economically and politically difficult days of 1990-91 and 91-92. The acceptance of liberation and the need for market forces to play a greater role. • Employment generation to be speeded up to achieve full employment by 2000 • Total literacy to be achieved in the 15-35 age group by covering an additional 110 million people • Restructuring the systems of economic management through public sector reforms, including selective disinvestment.

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• The English Plan was to walk on ‘two legs’ – one leg of alleviating poverty and removing

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unemployment and the other ‘leg’ providing a ‘safety net’ for those who will be affected

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by the structural adjustment programme. The plan had thus built in ‘the human face’

 Objectives :

To prioritize the specific sectors which requires immediate investment To generate full scale employment

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To promote social welfare measures like improved healthcare, sanitation, communication and provision

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element of adjustment.

for extensive education facilities at all levels To check the increasing population growth by creating mass awareness programs

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To encourage growth and diversification of agriculture To achieve self-reliance in food and produce surpluses for increase in exports

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To strengthen the infrastructural facilities like energy, power, irrigation

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To increase the technical capacities for developed science and technology

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To modernize Indian economy and build up a competitive efficiency in order to participate in the global

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To place greater emphasis on role of private initiative in the development of the industrial sector To involve the public sector to focus on only strategic, high-tech and essential infrastructural developments

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To create opportunities for the general people to get involved in various developmental activities by Attain a GDP of 6.2%

 Achievements

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building and strengthening mass institutions

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developments

GDP growth of 6.7% was achieved Modernization of industries Liberalization , privatization & globalization Rise in Employment Level Poverty, which still afflicted 55% of the population in 1973-74, fell to 39% The literacy rate rose from 52% to 65%

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Ninth Plan (1997-2002) • The development strategy emphasized the role for markets and the need for government To intervene to promote a degree of competition through suitable legislation. Licence Raj was to be ended. The plan emphasized co-operative federalism. It also stressed the importance of infrastructural development. • The plan was indicative in nature, focusing on policies. It also provided a 15-year perspective. It aimed to achieve a growth rate of eight percent per annum in the medium term and a rate of 6.5percent during the plan period (’97-02’)

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 Objectives :

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 To prioritize agricultural sector and emphasize on the rural development  To generate adequate employment opportunities and promote poverty reduction

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 To stabilize the prices in order to accelerate the growth rate of the economy  To ensure food and nutritional security To provide for the basic infrastructural facilities like education for all, safe drinking water,

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primary health care, transport, energy

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 To check the growing population increase  To encourage social issues like women empowerment, conservation of certain benefits for the Special

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Groups of the society

 To create a liberal market for increase in private investments

 Achievements

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 GDP annual growth achieved 5.35 %

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 To attain GDP growth of 6.5%

 Real investment and the savings rates continued to rise modestly.

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Substantial liberalisation of central industrial licensing and controls.

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 Reduction in tax rates, the far-reaching liberalization in the trade sector.

 Reduction in tariff rates changed the business environment and scope for private investment.  Quantitative restrictions were removed at the end of the 9th Plan period.

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Prelims and as well as for Mains Exam also .

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********** For Plan –X to Plan – XII – Read it in Detail , it will be helpful for all of You specially for

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