Economic Planning & Policies in India

Planning is programming for action for a particular period for achieving certain
specific progressive developmental goals. In other words, it is a method of
achieving economic prosperity by the optimum utilization of the resources of an
organization. It is a tool to bridge the gap between reality and objectives of an
organization. Also, it is an effort towards attaining self-sufficiency and
narrowing the intra and inter-regional disparities and preparing ideal
conditions for the development.

The first almost rudimentary idea of economic planning as part of republican

justice in India started in 1938 when he was Congress President, Netaji
Subhas Bose, with the collaboration of the physicist and mathematician,
Meghnad Saha, gave us a glimpse of all that planning for the long term, by an
independent and transparent apex, could do for an India of the future. In his
presidential address at the Haripura session of the Congress in February 1938,
Netaji envisaged “the first task of the Government of Free India” as being the
setting up of a “National Planning Commission” in order to address the task of
fighting poverty. He created what was, in effect, the nucleus for the future
Union Planning Commission in the National Planning Committee under the
aegis of the Indian National Congress, with Jawaharlal Nehru as the first
Chairman of the Committee.

Objective of Economic Planning of India

1. Economic Development:

The main objective of Indian planning is to achieve the goal of economic

development economic development is necessary for under developed countries
because they can solve the problems of general poverty, unemployment and
backwardness through it.
2. Increase Employment:

Another objective of the plans is better utilization of man power resource and
increasing employment opportunities. Measures have been taken to provide
employment to millions of people during plans. It is estimated that by the end
of Tenth Plan (2007) 39 crore people will be employed.

3. Self-Sufficient:

It has been the objective of the plans that the country becomes self-sufficient
regarding food grains and industrial raw material like iron and steel etc. Also,
growth is to be self sustained for which rates of saving and investment are to
be raised. With the completion of Third Plan, Indian economy has reached the
take off stage of development. The main objective of the Tenth Plan is to get rid
of dependence on foreign aid by increasing export trade and developing internal
resources.

4. Economic Stability:

Stability is as important as growth. It implies absence of frequent end excessive

occurrence of inflation and deflation. If the price level rises very high or falls
very low, many types of structural imbalances are created in the economy.

Economic stability has been one of the objectives of every Five year plan in
India. Some rise in prices is inevitable as a result of economic development, but
it should not be out of proportions. However, since the beginning of second
plan, the prices have been rising rather considerably.

5. Social Welfare and Services:

The objective of the five year plans has been to promote labour welfare,
economic development of backward classes and social welfare of the poor
people. Development of social services like education, health, technical
education, scientific advancement etc. has also been the objective of the Plans.

6. Regional Development:

Different regions of India are not economically equally developed. Punjab,

Haryana, Gujarat, Maharashtra, Tamil Nadu, Andhra Pradesh etc. are
relatively more developed. But U.P., Bihar, Orissa, Nagaland, Meghalaya and
H.P. are economically backward. Rapid economic development of backward
regions is one of the priorities of five year plans to achieve regional equality.

7. Comprehensive Development:

All round development of the economy is another objective of the five year
plans. Development of all economic activities viz. agriculture, industry,
transport, power etc. is sought to be simultaneously achieved. First Plan laid
emphasis on the development of agriculture. Second plan gave priority to the
development of heavy industries. In the Eighth Plan maximum stress was on
the development of human resources.

8. To Reduce Economic Inequalities:

Every Plan has aimed at reducing economic inequalities. Economic inequalities

are indicative of exploitation and injustice in the country. It results in making
the rich richer and the poor poorer. Several measures have been taken in the
plans to achieve the objectives of economic equality specially by way of
progressive taxation and reservation of jobs for the economically backward
classes

9. Social Justice:

Another objective of every plan has been to promote social justice. It is possible
in two ways, one is to reduce the poverty of the poorest section of the society
and the other is to reduce the inequalities of wealth and income. According to
Eighth Plan, a person is poor if the spends on consumption less than Rs. 328
per month in rural area and Rs. 454 per month in urban area at 1999-2000
prices. About 26 percent of Indian population lives below poverty line. The
tenth plan aims to reduce this to 21%.

10. Increase in Standard of Living:

The other objective of the plan is to increase the standard of living of the
people. Standard of living depends on many factors such as per capita increase
in income, price stability, equal distribution of income etc. During the period of
Plans, the per capita income at current prices has reached only up to Rs.
20988.

Role of Planning In India:

Accelerating Economic Growth:

There were two main features of India’s economic policy that emphasized the
role of planning and intervention by the State in the development process of
the Indian economy in the first three decades of planning. First, to accelerate
economic growth economists and planners recognized that raising the rate of
saving and investment was essential to accelerate the rate of economic growth.

It was thought that the private sector on its own would not be able to achieve a
higher rate of saving and investment required to break the vicious circle of
poverty. Therefore, the state had to intervene to raise resources and increase
the rate of saving and investment. This made the planning and the expansion
of the public sector essential to accelerate economic growth.

To Compensate for Market Failures:

Market failure is the economic situation defined by an inefficient distribution of
goods and services in the free market. It was therefore asserted that the State
and planning could play an important role in allocating resources for
investment to bring about rapid economic growth.

Besides, failures of market mechanism and free working of private sector to

allocate adequate amount of resources for investment in infrastructure such as
power, transport, communication created substantial external economies and
also where significant economies of scale existed. Therefore, in the development
of infrastructure, the State and planning had an important role to play.

Regulatory Role of the State:

There is another important aspect of the role of State and planning in the
development of the Indian economy which dominated economic thinking in the
pre-reform period. Though the private sector was given an important role to
play in the framework of mixed economy, to achieve optimal allocation of
resources among different industries according to plan priorities, economic
activities in the private sector were required to be regulated by the State.
Further, to achieve other objectives of planning such as restraining the
concentration of economic power in a few big business houses, the private
sector was subjected to industrial licensing controls.

Tackling the Problems of Poverty and Unemployment:

The other problem which makes role of planning and state intervention
important is the need to tackle the problems of poverty and unemployment.
Since the beginning of the seventies the Indian planners realised, especially in
the Fifth, Sixth and Seventh Five Year Plans, that even if growth rate of GDP
was raised to 5 to 6 per cent per annum, it was not possible to make a
significant dent on the problems of mass poverty and unemployment prevailing
in the Indian economy.
Some argued that benefits of economic growth did not trickle down to the poor.
Others were of the view that even if the poor get benefits from growth by way of
more employment opportunities generated by it, mere economic growth was not
enough to eradicate poverty and unemployment. Therefore, role of planning
and State was necessary to start and implement special poverty and
unemployment schemes such as Food for Work Programme and Employment
Guarantee Schemes to help the poor and weaker sections of the society.

Salient Features of India’s Five Year Plan

Here we detail about the twelve salient features of India’s Five Year Plan.

1. Democratic:

The first important feature of Indian planning is that it is totally democratic.

India being the largest democratic country in the world has been maintaining
such a planning set up where every basic issue related to its Five Year Plan is
determined by a democratically elected Government. Moreover, while
formulating a Five Year Plan, opinions of various tiers of Government, various
organisations, institutions, experts etc. are being given due considerations.

2. Decentralised Planning:

Although since the inception of First Plan, the importance of decentralised

planning was emphasized so as to achieve active people’s participation in the
planning process, but the real introduction of decentralised planning was made
in India for the first time during the Seventh Plan.

Thus decentralised planning is a kind of planning at the grass root level or

planning from below. Under decentralised planning in India, emphasis has
been given on the introduction of district planning, sub-divisional planning and
block-level planning so as to reach finally the village level planning
successfully.

3. Regulatory Mechanism:

Another important feature of Indian planning is that it is being directed by a

central planning authority, i.e., the Planning Commission of India which plays
the role of regulatory mechanism, so as to provide necessary direction and
regulation over the planning system.

4. Existence of Central Plan and State Plan:

Another important feature of Indian planning is that there is the co-existence of

both the Central Plan and State Plans. In every Five Year Plan of the country,
separate outlay is earmarked both for the Central Plan and also for the State
Plans. Central Plan is under the exclusive control of the Planning Commission
and the Central Government, whereas the State Plan is under the exclusive
control of State Planning Board and State Government which also requires
usual approval from the Planning Commission.

5. Public Sector and Private Sector Plan:

Another notable feature of India’s Five Year Plan is that in each plan, a
separate outlay is earmarked both for public sector and the private sector. In
each five year plan of the country, public sector investment and private sector
investment amount is separately fixed, which comprises the total investment in
each plan. India, being a mixed economy, it is quite natural that a separate
investment outlay for public as well as the private sector is being maintained in
each plan.

6. Periodic Plan:
One of the important features of Indian planning is that it has adopted a
periodic plan of 5-year period having five depurate Annual Plan components.
This type of periodic plan approach is quite suitable for realizing its definite
targets.

7. Basic Objectives:

One of salient features of Indian Five Year Plan is that each and every plan is
guided by certain basic or fundamental objectives which are almost common in
most of our plans.

The major objectives of economic planning in India mostly consist:

(a) Attainment of higher rate of economic growth

(b) Reduction of economic inequalities

(c) Achieving full employment

(d) Attaining economic self-reliance

(e) Modernisation of various sectors

(f) Redressing the imbalances in the economy.

In general, Growth with social justice is the main objective of economic

planning in India.

8. Unchanging Priorities:

Five year plans in India are determining its priorities considering the needs of
the country. It is being observed that Indian Five Year Plans have been giving
too many priorities on the development of industry, power and agriculture with
minor modifications. Thus there is no remarkable changes in the priority
pattern of Indian planning, although in recent years increasing priorities are
also being laid on poverty eradication programmes and on employment
generating schemes.

9. Balanced Regional Development:

Another salient feature of India’s Five Year Plan is that it constantly attaches
much importance on balanced regional development. Development of backward
regions is one of the important objectives of Indian planning. India’s planning
system has even isolated some states under “special category states” so as to
channelize additional resources to these backward states for their rapid
development. Special budgetary relief in the form of tax holiday or tax relief for
establishing industries into back-ward regions of the country.

10. Perspective Planning on Basic Issues or Problems:

Another important feature of Indian planning is that it has adopted the system
of perspective planning on some basic issues or problems of the country, for a
period of 15 to 20 years on the basis of necessary projections.

11. Programme Implementation and Evaluation:

used to play a very important role. Programme implementation machinery

includes various Government departments which are usually involved for the
implementation of the plan. More there is an evaluation machinery which
usually conducts pre-project evaluation and post-project evaluation of every
planning project of the country.

12. Shortfalls in Target Realization:

Another notable feature of India’s Five Year Plan is its shortfalls in target
realization. Although targets are fixed for every plans in respect of rate of
growth of national income, employment, population, production of some
important items etc. But in most of the cases these targets are not fulfilled to
the fullest extent, excluding certain specific cases.

Such shortfalls in target realization lead to the problems of spill over of projects
into next five year plans and cost over-runs. Thus we have seen that salient
features of India’s Five Year Plans, although numerous but some of these are
quite common to that of other countries while some are very much uncommon
even.

THE STRATEGY OF PLANNING-IN INDIA

In order to achieve the long-term and short-term objectives set in the each five
year, specific strategies are required. It involves allocation resources across
different sectors of the economy in tandem with the specified objectives. It
involves selection choices like development of agricultural sector or industrial
sector, public sector or private sector involvement, closed economy or open
economy model. Indian planning strategies can be split into two phases: pre-
1991 phase and post – 1991 phase.

Pre 1991 Phase or Pre-reform Phase

During pre – 1991 phase (1951 to 1990), India followed the strategy of planning
with greater reliance on the public sector along with a regulated private sector.
Following strategies are followed during 1951-91 phase:

Heavy Reliance on Public Sector

Greater reliance was placed on public sector compared to private sector.

As private sector was not able to invest in large amount for development
of heavy industries, government turned towards public sector for
provision of essential and basic needs for the people. At the same time
private sector was not willing to provide the services in backward regions
of the country.
Regulated Expansion of Private Sector

Private sector was restricted to few areas of activities. New legislations

were created for the restriction for the restriction of private sector.

Development of Heavy Industries

Government invested heavily in development of Heavy industry like iron

industry.

Protection of Small Scale Industry

Small scale industry was protected by means of establishment of boards

for different small scale industries and reserving few areas of production
exclusively for the small scale industry.

Inward Looking Trade Strategy

Domestic industry was protected from competition in the international

market. Heavy import duty was imposed to curb competitive imports,
while domestic industries were encouraged to produce domestic
substitutes of essential imports.

Thrust on Savings and Investment

Promotion of savings and investment was the undisputed objective of

monetary and fiscal policies of the government. Savings are induced
through high rate of interest. Tax concessions were to mobilise savings.

Restriction on Foreign Capital

Several types of restrictions were imposed on foreign direct investment.

To control and regulate it, Foreign Exchange Regulation Act (FERA) was
enforced.
Adherence to Centralised Planning

State level plans were aligned in sync with the over all objectives and
strategy of growth as specified in Five Year Plans.

• Pre 1991 Phase or Pre-reform Phase

Strategy of planning in India witnessed a marked shift in the year 1991.

Following are main changes observed under NEP (new economic policy):

 Fiscal policy and monetary policy have been reoriented to facilitate the
free play of market forces.
 Foreign capital in the form of FDI (Foreign direct investment) and FII
(Foreign Institutional Investment) are encouraged.
 Import restrictions are restricted to the minimum, while export
promotion has been accorded a high priority.
 Competition rather than controls have become the fulcrum of growth
process.
 Direct participation of the government is significantly tempered and
confined only to strategic industries such as atomic energy, minerals and
railways.
 Partial convertibility of Indian Rupee.

Recently, the concept of Sustainable development is included as main feature

of the strategy of planning in India. Sustainable development refers to the
development of present generation by taking into consideration of the future
generations.

Following are some notable reasons for change in economic policy:

1. Mounting Fiscal Deficit and revenue deficit: Fiscal deficit and revenue
deficit of the country are increased due to the policies followed before the
1990’s governments.
 2. Balance of Payments (BoP) Crisis: Heavy dependence on imports resulted
in  a BoP crisis.
3. Gulf Crisis: On account of Iraq war in 1990-91, prices of petrol started
increasing. Remittances from gulf countries are also stopped.
4. Fall in Foreign Exchange Reserves: In 1990-91, India’s foreign exchange
reserves lowered to such a level that these were not enough even to pay
for an import bill of 10 days.
5. Rise in Prices: In India prices happened to rise rapidly. Expansion in
money supply was the principal cause of inflationary pressures. In turn,
this was related to deficit financing. Country has experienced the
situation of stagflation.
6. Dismal Performance of Public Sector Undertakings (PSUs):Public sector
undertakings were showed dismal performance.

On account of all these factors, the government shifted to New Economic

Policy.

Three Principal Components of New Economic Policy

Liberalisation, Privatisation and Globalisation are the three principal

components of New Economic Policy. Liberalisation of the economy means
freedom of the economy from restrictions of the Government. Liberalisation was
expected to break the deadlock of low investment by exposing the economy to
the forces of supply and demand.  Privatisation refers to allowing private sector
to enter in those areas of production which were previously reserved for the
public sector. Also, existing public enterprises are either wholly or partially
sold to private sector. It was considered to be the fittest option to stave off
problems of public sector enterprises. Globalisation means integrating
domestic economy with rest of the world under conditions of free flow of trade
and factors of production across borders. Globalisation results in flow of
capital and technology from developed countries into the Indian economy.
MAHALANOBIS STRATEGY

At the time of the formulation of the Second Five Year Plan, Prof.P.C.
Mahalanobis who was friend and adviser to Late Prime Minister Jawaharlal
Nehru and who was one time member of Planning Commission,  prepared a
growth model with which he showed that to achieve a rapid long- term rate of
growth it would be essential to devote a major part of the investment outlay to
building of basic heavy industries.

Mahalanobis strategy of development emphasising basic heavy industries

which was adopted first of all in the Second Plan also continued to hold the
stage in Indian planning right up to the Fifth Plan which was terminated by the
Janata Government in March 1978, a year before its full term of five years.

The main elements of Mahalanobis strategy of development are as follows:

1. Role of Heavy Industry: At the time of independence, Indian economy was

dependent excessively on agriculture. The industrial sector was
heavily/dominated by traditional industries such as textiles and sugar.
Therefore, diversification of industries into newer areas was a natural desire.
However, the Indian development strategy went further than that. The Second
Plan Mahalanobis model maintained that if industrialization has to be rapid
enough, the country must aim at developing basic and heavy or capital goods
industries. In his two sector model, he divided the entire economy into
investment goods industries (R) and consumer goods industries (c) We can
consider machines to be of two types those that produce directly consumer
goods and those which make only more machines. Mahalanobis model
considered development of basic industries which make “machines to make
more machines”. Heavy industry was expected to increase the country’s
capacity for capital formation and the general rate of industrialization so that
India could ultimately become independent of the import of foreign producer
goods. Basic and heavy industries were defined to include industries such as
iron and steel, non ferrous metals machines building, coal and heavy
chemicals.

2. Role of Foreign capital & aid recognized:

The strategy considered the role of foreign capital and aid in the development
of the country. The burden of foreign grant would be borne by domestic
savings . The need to increase of exports was emphasized.

3. Role of Agriculture: The Committee admitted agriculture to be the main

stay of economy. The self- sufficiency was must to reduce dependence on
Import of food grains. It was reasoned that industrial growth cannot be
achieved without advancements in agriculture.

4. Role of Small industries recognized: In the early years of planning the

policies for the development of small scale sector were promotional through the
use of various concessions and licensing framework. They emphasized the need
for promoting greater integration between large scale and small scale
industries. The fourth five year plan stressed for the first time, the competitive
rather than the complementary aspect of the development of small scale and
large scale sectors. Hence there was a shift to protectionist policies toward the
small scale sector, in the form of reservation. The number of items reserved for
production in the small sector stood at around 800 in 1989.

5. Role of Public Sector and Private Sector:

A second major feature of the Indian industrial strategy was to carve out a
prominent role for the public sector in the planning for industrialization. The
strategy of development did not lay emphasis only on industrialization, but it
was also an import-substitution oriented strategy. Such a strategy entails on
attempt to replace commodities that are being imported with domestic sources
of production and supply. It is a policy of reduced dependence on imports and
self-reliant growth. Thus there was a strong accent on the creation of domestic
capacity in the direction of producing capital goods to produce more capital
goods. Thus Central importance was assigned to the Public sector and was first
articulated in the Industrial Policy Resolution of 1956 and subsequently
incorporated in the Second Five Year Plan.

Within the guidelines of state intervention and under the leadership of the
Public Sector, the Private sector was expected to make its contribution in a
mixed economy framework as envisaged by the planners. In areas which were
left for the private sector, a clear role was feel for the state intervention as
articulated in the Second Five Year Plan, i.e. The government policy can
influence regulate and control) the private decisions through fiscal measure,
licensing and to the extent necessary, through direct physical allocations, so as
to promote and facilitate the realization of the targets proposed. The Public
Sector was thus expected to shape the entire pattern of investments in the
economy.

Achievements of Mahalanobis strategy:

1. The strategy helped in developing of heavy industry and expansion of capital

goods sector.

2. Economic infrastructure (in the form of communication, transportation,

energy, power, irrigation etc) has been expanded considerably.

3. Significance expansion of social infrastructure( education, medial and

health care facilities) has been seen over the years.

4. increase in savings and investment rates.

Short comings of Mahalanobis strategy:

1. Agriculture development required considerable investment in new
technologies like better varieties of seeds, irrigation facilities, power supply
fertilizers, tools and machinery, pesticides ect which has been inadequate.

2. Heavy industries highly dependent on import of capital goods. Besides

this increased imports widened the trade deficit an BOP imbalance.

3. Small scale industries were ignored, leading to employment problems.

4. The expansion of public sector led to emergence of high cost economy,

characterized by large capital investments, operational inefficiencies and low
return on investment.

Achievements of Five Year Plans

Increase in National Income

 Five year plans are able to increase the nation income level form a
stagnant position at the time of independence.

Increase in Per Capita Income

 Increase in national income resulted in increase of per capita income.

Increase in Rate of Capital Formation

 Capital formation is a key factor of economic growth. It depends on

saving and investment. During Five Year Plans, there has been a
considerable increase in the rate of saving and investment. It was around
35% by 2010-11.

Growth of Agricultural Sector

 Both crop productivity and crop production have shown a substantial

rise in India. From the net importer of foodgrains, India became net
exporter.
Development of Industries

 There has been a substantial improvement of the capital goods industry

including iron and steel, machinery, chemical fertilisers, etc.

Development of Economic Infrastructure

 Five-year plans laid the foundation for development of economic

infrastructure which include transportation, power generation,
communication etc.

Development of Social Infrastructure

 Social infrastructure includes such services as education, health

facilities, etc. In this area also, five year plans able to achieve desired
success.

Other areas of achievements are in increased employment, modernisation of

the society and achieving self-sufficiency.

Failures of Economic Planning

Following observations highlight failures of planning in India:

 No Substantial Increase in the Standard of Living

 Rise in Prices
 Increase in Unemployment
 Inadequate Increase in Production
 Inadequate Development of Infrastructure
 Inefficient Administration
 High Capital Output Ratio

Major Accomplishments of Planning:

(a) Higher Rate of Growth:

Economic planning in India aims at bringing about rapid economic

development in all sectors. In other words, it aims at a higher growth rate.

India’s macroeconomic performance has been only moderately good in terms of

GDP growth rates. The compound annual rate of growth stands at 4.4% at
1993-94 prices for the whole planning period (1950-51 to 1999-00). Compared
to the pre-plan period when she was caught in a low level equilibrium trap,
growth acceleration during the last 50 years has been impressive indeed. How-
ever that it is not yet clear as to how much of this acceleration has been due to
the change in the world economic boom since World War II and how much due
to India’s own planning efforts.

(b) Growth of Economic Infrastructure:

India’s performance in building up the necessary economic infrastructure is

really praiseworthy. It is to be noted that the process of industrialisation of any
country largely depends on the development of economic infrastructure in the
form of transport and communications, energy, irrigation facilities, and so on.

At the inception of economic planning road length was 4 lakh kms, but by
1996- 97 it rose to approximately 24.66 lakh kms, railway route length
increased from 53,596 kms in 1951 to about 62,800 kms in 1999-00. Today,
the Indian railway system is the largest in Asia and the fourth largest in the
world. Similarly, other modes of transport (such as shipping and civil aviation)
have also expanded phenomenally.

The electric power generated jumped from a meager 61.26 million kw in 1970-
71 to 526.7 billion kw in 1999- 00. However, as per the needs of the economy,
it is still inadequate. The gross irrigated area as a percentage of gross cropped
area increased from 17.4% in 1950-51 to 38.7% in 1996-97.

(c) Development of Basic and Capital Goods Industries:

Another major area of success of Indian planning is the growth of basic and
capital goods industries. With the adoption of the Mahalanobis strategy of
development during the Second Plan period, some basic and capital goods
industries like iron and steel witnessed spectacular growth.

It is said that the present level of development in infrastructure as well as basic

and capital goods industries is considered enough to put the Indian economy
on the path of self-sustaining growth. Yet more is to be done for achieving
rapid industrialisation. But whatever growth has been achieved in
infrastructure and basic industrialise been due to planning.

(d) Faster Growth of Agriculture:

The most significant aspect of India’s five year plans is that the overall rate of
growth of food production has now exceeded the rate of growth of population.
No doubt, in the early years of planning, agricultural performance was
miserable. As a result there had emerged food crisis. But due to the impact of
biochemical revolution from the late 1960s, food crisis has become almost a
thing of the past. She has attained self-sufficiency in food-grains.

That is why the Indian economy is now stronger and better equipped to tackle
any eventuality (mainly food crisis) than ever before. Despite the worst- ever
droughts of 1986 and- 1987, India was required to import a very small quantity
of food. This is, no doubt, a notable achievement.

(e) Savings and Investment:

The rise in the domestic savings rate from 8.9% of GDP in 1950- 51 to 22.3%
in 1999-00 is definitely impressive. Similarly, India’s gross domestic capital
formation increased from 8.7% in 1950-51 to 23.3% of GDP in 1999-00.
However, this higher growth rate of capital formation failed to accelerate the
rate of economic growth. Hence, a paradox has been encountered high saving
rate and slow growth of per capita income.

(f) Economic Self-Reliance:

Self-reliance refers to the lack of dependence on external assistance. In other

words, it means zero foreign aid. India all along used to importing huge food-
grains, fertilisers, raw materials and industrial machinery and equipment. This
resulted in draining of India’s precious .foreign exchange reserves. Hence, the
need for achieving economic self-reliance.

No doubt India has achieved quite some progress in certain important

directions. Firstly, because of the increase in output of food-grains, India has
achieved near self-sufficiency in food. India is now capable of handling food
crises in spite of failures due to the building up of buffer stock of food-grains.
Secondly, with the establishment of basic industries as well as imports substi-
tute industries, India’s dependence on imports for heavy chemicals, transport
and communications machinery, plant and other capital equipment has
diminished a great deal.

Major Failures of Planning:

(a) Inadequate Growth Rate:

In quantitative terms, the growth rate of the Indian economy may be good but
not satisfactory by any standards. Since the actual growth rate was less than
the planned or targeted rate of growth it was not possible to meet other goals of
planning such as poverty alleviation and improvement of living standards.

Except in the First and the Sixth Five Year Plans, the actual growth rate
remained below the targeted growth rates of GNP and per capita income. India
remains one of the poorest nations of the world even after 50 years of economic
planning. It has been estimated that at least 7 to 7 ½ years are required to
attain the five-yearly targeted growth rates of various plans.

Let us now turn to the desired rate of growth which involves several non-
economic (mainly socio-psychological) variables such as people’s hopes and
aspirations, desires and rising expectations. An ordinary man evaluates
planning in terms of availability of essential goods and services at affordable
prices.

The per capita availability of cotton cloth has, in fact, increased marginally
from 12.9 metres per annum in 1980-81 to 14.2 metres p.a. in 1999-00. Per
capita availability of food-grains has increased from 394.9 grams per day in
1950-51 to 470.4 grams per day in 1999-00. The falling or slow growth of per
capita supplies of necessary wage goods (such as food-grains, textiles, tea, etc.)
is a matter of grave concern and is an indication of tragic failure-of planning.

(b) Move Toward Socialistic Pattern of Society:

Indian planning aims at building up a ‘socialistic pattern of society’, in a mixed

economy, through various egalitarian measures. These are (i) land reform
measures with the purpose of redistribution of land among poorer peasants, (ii)
reduction of concentration of economic power in the hands of a few big
bourgeoisie and (iii) expansion of the public sector and nationalisation of
certain important industries.

Most land reform measures have failed a achieved partial success. Security of
tenure, conferment of ownership rights on actual tillers, ceiling on
landholdings, etc. are all on paper.

The concentration of economic power in a few hands has to be reduced. But

mainly due to India’s tax system and industrial licensing policy the big firm
have become bigger over the plan period. In recent years, the Government has
encouraged privatisation in a large measure by de-licensing industries. This
has led to further inequality.

The development of public sectors has been viewed by the Government as a

“countervailing power” to private monopoly. But the contribution of the public
sector and nationalised institutions towards the national exchequer is highly
insignificant. Barring a few public sector industries, all Central and State
Government public sector units are running at a loss.

(c) Economic Inequality and Social Injustice:

Two aspects of social justice involves, on one hand, the reduction of poverty
and on the other, the reduction of inequality. Indian plans aim at reducing
such inequalities, so that the benefits of economic development can be enjoyed
by poor people and the weaker sections of the society.

It was estimated that more than 50% of the total population was below the
poverty line in 1950-51. The poverty ratio come down to 37% in 2000-01. In
spite of some success achieved in alleviating poverty, the incidence of poverty is
still high in India. And the incidence of poverty is higher in rural areas than in
cities and towns.

(d) Unemployment:

The removal of unemployment is considered to be another important objective

of India’s five-year plans. But the employment generation programmes did not
achieve much success and the problem of unemployment has become more
and more serious plan after plan. The number of applicants on the live register
of employment exchanges increased from 17.83 lakhs in 1981 to 40.37 lakhs
in 1999.

(e) Regional Imbalance:

The entire planning exercise has created a vast regional imbalance. Over the
years, inequalities among the States have widened. This is mainly because the
backward areas did not receive fair treatment, so far as resource transfer is
concerned.

(f) Inflation:

Finally, the benefits of economic planning have largely offset by price inflation.
The prices of essential goods have been increasing much faster than other
prices. This has resulted in great hardships to the vast majority of the people
mainly the poor and the weak. Growth without stability has become an
essential characteristic of Indian planning.

On the social side, poverty remains pervasive, the infant mortality rate has
stagnated at 72 per 1000 for a number of years, the literacy rate is still low
(65.38% in 2001) though improving, and 60% of rural and 20% of urban
households have no power connections. So the quality of life of Indian people
remains very low even after 50 years of planning.

In view of these failures, Prof. Sukhamoy Chakraborty remarked that “Indian

plans may be good on paper but are rarely good in implementation”. So
the need of the hour is to formulate a correct economic policy and implement it
properly.
Assessment of Indian planning

First Plan (1951–1956)

India was facing three major problems i.e., influx of refugees, severe food crisis
and mounting inflation. India had also to correct the disequilibrium in the
economy caused by the Second World War and partition of the country.
Therefore, the First Plan emphasized, as its immediate objectives and
rehabilitation of refugees, rapid agricultural development so as to achieve food
self-sufficiency in the shortest possible time and inflation control.

The first Indian Prime Minister, Jawaharlal Nehru presented the First Five-Year
Plan to the Parliament of India and needed urgent attention. The First Five-
year Plan was launched in 1951 which mainly focused in development of the
primary sector. The First Five-Year Plan was based on the Harrod–Domar
model with few modifications.

The total planned budget of Rs.2069 crore (2378 crore later) was allocated to
seven broad areas: irrigation and energy (27.2%), agriculture and community
development (17.4%), transport and communications (24%), industry (8.4%),
social services (16.6%), rehabilitation of landless farmers (4.1%), and for other
sectors and services (2.5%). The most important feature of this phase was
active role of state in all economic sectors. Such a role was justified at that
time because immediately after independence, India was facing basic problems
—deficiency of capital and low capacity to save.

The target growth rate was 2.1% annual gross domestic product (GDP) growth;
the achieved growth rate was 3.6% the net domestic product went up by 15%.
The monsoon was good and there were relatively high crop yields, boosting
exchange reserves and the per capita income, which increased by 8%. National
income increased more than the per capita income due to rapid population
growth. Many irrigation projects were initiated during this period, including the
Bhakra, Hirakud, Mettur Dam and Damodar Valley dams. The World Health
Organization (WHO), with the Indian government, addressed children's health
and reduced infant mortality, indirectly contributing to population growth.

At the end of the plan period in 1956, five Indian Institutes of Technology (IITs)
were started as major technical institutions. The University Grants
Commission (UGC) was set up to take care of funding and take measures to
strengthen the higher education in the country. Contracts were signed

to start five steel plants, which came into existence in the middle of the Second
Five-Year Plan. The plan was quasi successful for the government.

Second Plan (1956–1961)

Agricultural targets fixed in First Plan had been achieved. Poverty level had
registered a fail, and consequently, it was felt that the Indian economy had
reached a stage where agriculture could be assigned a lower priority and a
forward thrust made in the development of heavy and basic industries of the
economy for more rapid advance in future.

The Second Plan was particularly in the development of the public sector and
"rapid Industrialisation". 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 centred
on importing capital goods

Hydroelectric power projects and five steel plants at Bhilai, Durgapur, and
Rourkela were established with the help of Russia, Britain (the U.K) and West
Germany respectively. Coal production was increased. More railway lines were
added in the north east.

The Tata Institute of Fundamental Research and Atomic Energy Commission of

India was established as research institutes. In 1957 a talent search and
scholarship program was begun to find talented young students to train for
work in nuclear power.

The total amount allocated under the Second Five-Year Plan in India was
Rs.48 billion. This amount was allocated among various sectors: power and
irrigation, social services, communications and transport, and miscellaneous.

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

Third Plan (1961–1966)

The Third Five-year Plan, stressed agriculture and improvement in the

production of wheat, but the brief Sino-Indian War of 1962 exposed
weaknesses in the economy and shifted the focus towards the defence industry
and the Indian Army. In 1965–1966, India fought a War with Pakistan. There
was also a severe drought in 1965. The war led to inflation and the priority was
shifted to price stabilisation. The construction of dams continued. Many
cement and fertilizer plants were also built. Punjab began producing an
abundance of wheat.

Many primary schools were started in rural areas. In an effort to bring

democracy to the grass-root level, Panchayat elections were started and the
states were given more development responsibilities.

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 and local road building became a
state responsibility.

The target growth rate was 5.6%, but the actual growth rate was 2.4%.

Due to miserable failure of the Third Plan the government was forced to declare
"plan holidays" (from 1966–67, 1967–68, and 1968–69). Three annual plans
were drawn during this intervening period. During 1966–67 there was again
the problem of drought. Equal priority was given to agriculture, its allied
activities, and industrial sector. The government of India declared "Devaluation
of Rupee" to increase the exports of the country. The main reasons for plan
holidays were the war, lack of resources, and increase in inflation.

Fourth Plan (1969–1974)

At this time Indira Gandhi was the Prime Minister. The Indira Gandhi
government nationalised 14 major Indian banks and the Green Revolution in
India advanced agriculture. In addition, the situation in East Pakistan (now
Bangladesh) was becoming dire as the Indo-Pakistan War of 1971 and
Bangladesh Liberation War took funds earmarked for industrial development.
India also performed the Smiling Buddha underground nuclear test (Pokhran-
1) in Rajasthan on May 18, 1974, partially in response to the United States
deployment of the Seventh Fleet in the Bay of Bengal. The fleet had been
deployed to warn India against attacking West Pakistan and extending the war.
The target growth rate was 5.6%, but the actual growth rate was 3.3%. [6]

Fifth Plan (1974–1978)

The Fifth Five-Year Plan laid stress on employment, poverty alleviation (Garibi
Hatao), and justice. The plan also focused on self-reliance in agricultural
production and defence. In 1978 the newly elected Morarji Desai government
rejected the plan. The Electricity Supply Act was amended in 1975, which
enabled the central government to enter into power generation and
transmission.

The Indian national highway system was introduced and many roads were
widened to accommodate the increasing traffic. Tourism also expanded. The
twenty-point programme was launched in 1975. It was followed from 1974 to
1979.

The Minimum Needs Programme (MNP) was introduced in the first year of the
Fifth Five Year Plan (1974–78). The objective of the programme is to provide
certain basic minimum needs and thereby improve the living standards of the
people.

The target growth rate was 4.4% and the actual growth rate was 4.8%.

Rolling Plan (1978–1980)

The Janata Party government rejected the Fifth Five-Year Plan and introduced
a new Sixth Five-Year Plan (1978–1980). This plan was again rejected by the
Indian National Congress government in 1980 and a new Sixth Plan was
made.The Rolling Plan consists of three kind of plans that were proposed. The
First Plan is for the present year which comprises the annual budget and
Second is a plan for a fixed number of years, which may be 3, 4 or 5 years.
Plan number two is kept changing as per the requirements of the Indian
economy. The Third Plan is a perspective plan which is for long terms i.e. for
10, 15 or 20 years. Hence there is no fixation of dates in for the
commencement and termination of the plan in the rolling plans. The main
advantage of the rolling plans is that they are flexible and are able to overcome
the rigidity of fixed five year plans by mending targets, the object of the
exercise, projections and allocations as per the changing conditions in the
country’s economy. The main disadvantage of this plan is that if the targets are
revised each year, it becomes very difficult to achieve them which are laid down
in the five-year period and it turned out to be a complex plan. Frequent
revisions resulted in lack of stability in the economy which is essential for its
balanced development and progress.

Sixth Plan (1980–1985)

The Sixth Five-Year Plan marked the beginning of economic liberalisation. Price
controls were eliminated and ration shops were closed. This led to an increase
in food prices and an increase in the cost of living. This was the end of
Nehruvian socialism. The National Bank for Agriculture and Rural
Development was established for development of rural areas on 12 July 1982
by recommendation of the Shivaraman Committee. Family planning was also
expanded in order to prevent overpopulation. In contrast to China's strict and
binding one-child policy, Indian policy did not rely on the threat of force [citation
needed]
. More prosperous areas of India adopted family planning more rapidly
than less prosperous areas, which continued to have a high birth rate.

The Sixth Five-Year Plan was a great success to the Indian economy. The target
growth rate was 5.2% and the actual growth rate was 5.4%. The only Five-Year
Plan which was done twice.

Seventh Plan (1985–1990)

The Seventh Five-Year Plan was led by the Congress Party with Rajiv Gandhi as
the prime minister. The plan laid stress on improving the productivity level of
industries by upgrading of technology.

The main objectives of the Seventh Five-Year Plan were to establish growth in
areas of increasing economic productivity, production of food grains, and
generating employment through "Social Justice".

As an outcome of the Sixth Five-Year Plan, there had been steady growth in
agriculture, controls on the rate of inflation, and favourable balance of
payments which had provided a strong base for the Seventh Five-Year Plan to
build on the need for further economic growth. The Seventh Plan had strived
towards socialism and energy production at large. The thrust areas of the
Seventh Five-Year Plan were: social justice, removal of oppression of the weak,
using modern technology, agricultural development, anti-poverty programmes,
full supply of food, clothing, and shelter, increasing productivity of small- and
large-scale farmers, and making India an independent economy.

Based on a 15-year period of striving towards steady growth, the Seventh Plan
was focused on achieving the prerequisites of self-sustaining growth by the
year 2000. The plan expected the labour force to grow by 39 million people and
employment was expected to grow at the rate of 4% per year.

Some of the expected outcomes of the Seventh Five-Year Plan India are given
below:

 Balance of payments (estimates): Export – ₹330 billion (US$4.8 billion),

Imports – (-)₹540 billion (US$7.9 billion), Trade Balance – (-)₹210 billion
(US$3.1 billion)
 Merchandise exports (estimates): ₹606.53 billion (US$8.8 billion)
 Merchandise imports (estimates): ₹954.37 billion (US$13.9 billion)
  Projections for balance of payments: Export – ₹607 billion
(US$8.8 billion), Imports – (-) ₹954 billion (US$13.9 billion), Trade
Balance- (-) ₹347 billion (US$5.0 billion)

Under the Seventh Five-Year Plan, India strove to bring about a self-sustained
economy in the country with valuable contributions from voluntary agencies
and the general populace.

The target growth rate was 5.0% and the actual growth rate was 6.01% and the
growth rate of per capita income was 3.7%.

Annual Plans (1990–1992)

The Eighth Plan could not take off in 1990 due to the fast changing political
situation at the centre and the years 1990–91 and 1991–92 were treated as
Annual Plans. The Eighth Plan was finally formulated for the period 1992–
1997.

Eighth Plan (1992–1997)

1989–91 was a period of economic instability in India and hence no five-year

plan was implemented. Between 1990 and 1992, there were only Annual Plans.
In 1991, India faced a crisis in foreign exchange (forex) reserves, left with
reserves of only about US$1 billion. Thus, under pressure, the country took the
risk of reforming the socialist economy. P.V. Narasimha Rao was the tenth
Prime Minister of the Republic of India and head of Congress Party, and led one
of the most important administrations in India's modern history, overseeing a
major economic transformation and several incidents affecting national
security. At that time Dr. Manmohan Singh (later Prime Minister of India)
launched India's free market reforms that brought the nearly bankrupt nation
back from the edge. It was the beginning of liberalization, privatisation and
globalization (LPG) in India.
Modernization of industries was a major highlight of the Eighth Plan. Under
this plan, the gradual opening of the Indian economy was undertaken to
correct the burgeoning deficit and foreign debt. Meanwhile, India became a
member of the World Trade Organization on 1 January 1995. The major
objectives included, controlling population growth, poverty reduction,
employment generation, strengthening the infrastructure, institutional
building, tourism management, human resource development, involvement of
Panchayati rajs, Nagar Palikas, NGOs, decentralisation and people's
participation.

Energy was given priority with 26.6% of the outlay.

The target growth rate was 5.6% and the actual growth rate was 6.8%.

To achieve the target of an average of 5.6% per annum, investment of 23.2% of

the gross domestic product was required. The incremental capital ratio is 4.1.
The saving for investment was to come from domestic sources and foreign
sources, with the rate of domestic saving at 21.6% of gross domestic
production and of foreign saving at 1.6% of gross domestic production.

Ninth Plan (1997–2002)

The Ninth Five-Year Plan came after 50 years of Indian Independence. Atal
Bihari Vajpayee was the Prime Minister of India during the Ninth Five-Year
Plan. The Ninth Five-Year Plan tried primarily to use the latent and unexplored
economic potential of the country to promote economic and social growth. It
offered strong support to the social spheres of the country in an effort to
achieve the complete elimination of poverty. The satisfactory implementation of
the Eighth Five-Year Plan also ensured the states' ability to proceed on the
path of faster development. The Ninth Five-Year Plan also saw joint efforts from
the public and the private sectors in ensuring economic development of the
country. In addition, the Ninth Five-Year Plan saw contributions towards
development from the general public as well as governmental agencies in both
the rural and urban areas of the country. New implementation measures in the
form of Special Action Plans (SAPs) were evolved during the Ninth Five-Year
Plan to fulfill targets within the stipulated time with adequate resources. The
SAPs covered the areas of social infrastructure, agriculture, information
technology and Water policy.

Budget

The Ninth Five-Year Plan had a total public sector plan outlay of ₹859,200
crore (US$130 billion). The Ninth Five-Year Plan also saw a hike of 48% in
terms of plan expenditure and 33% in terms of the plan outlay in comparison
to that of the Eighth Five-Year Plan. In the total outlay, the share of the center
was approximately 57% while it was 43% for the states and the union
territories.

The Ninth Five-Year Plan focused on the relationship between the rapid
economic growth and the quality of life for the people of the country. The prime
focus of this plan was to increase growth in the country with an emphasis on
social justice and equity. The Ninth Five-Year Plan placed considerable
importance on combining growth oriented policies with the mission of
achieving the desired objective of improving policies which would work towards
the improvement of the poor in the country. The Ninth Five-Year Plan also
aimed at correcting the historical inequalities which were still prevalent in the
society.

Objectives

The main objective of the Ninth Five-Year Plan was to correct historical
inequalities and increase the economic growth in the country. Other aspects
which constituted the Ninth Five-Year Plan were:
  Population control.
 Generating employment by giving priority to agriculture and rural
development.
 Reduction of poverty.
 Ensuring proper availability of food and water for the poor.
 Availability of primary health care facilities and other basic necessities.
 Primary education to all children in the country.
 Empowering the socially disadvantaged classes like Scheduled castes,
Scheduled tribes and other backward classes.
 Developing self-reliance in terms of agriculture.
 Acceleration in the growth rate of the economy with the help of stable
prices.

Strategies

 Structural transformations and developments in the Indian economy.

 New initiatives and initiation of corrective steps to meet the challenges in
the economy of the country.
 Efficient use of scarce resources to ensure rapid growth.
 Combination of public and private support to increase employment.
 Enhancing high rates of export to achieve self-reliance.
 Providing services like electricity, telecommunication, railways etc.
 Special plans to empower the socially disadvantaged classes of the
country.
 Involvement and participation of Panchayati Raj institutions/bodies and
Nagar Palikas in the development process.

Performance

 The Ninth Five-Year Plan achieved a GDP growth rate of 5.4% against a
target of 6.5%
  The agriculture industry grew at a rate of 2.1% against the target of 4.2%
 The industrial growth in the country was 4.5% which was higher than
that of the target of 3%
 The service industry had a growth rate of 7.8%.
 An average annual growth rate of 6.7% was reached.

The Ninth Five-Year Plan looks through the past weaknesses in order to frame
the new measures for the overall socio-economic development of the country.
However, for a well-planned economy of any country, there should be a
combined participation of the governmental agencies along with the general
population of that nation. A combined effort of public, private, and all levels of
government is essential for ensuring the growth of India's economy.

The target growth was 7.1% and the actual growth was 6.8%.

Tenth Plan (2002–2007)

The main objectives of the Tenth Five-Year Plan:

 Attain 8% GDP growth per year.

 Reduction of poverty rate by 5% by 2007.
 Providing gainful and high-quality employment at least to the addition to
the labour force.
 Reduction in gender gaps in literacy and wage rates by at least 50% by
2007.
 20-point program was introduced.
 Target growth: 8.1% – growth achieved: 7.7%.
 The Tenth Plan was expected to follow a regional approach rather than
sectoral approach to bring down regional inequalities.
 Expenditure of ₹43,825 crore (US$6.4 billion) for tenth five years.
Out of total plan outlay, ₹921,291 crore (US$130 billion) (57.9%) was for
central government and ₹691,009 crore (US$100 billion) (42.1%) was for states
and union territories.

Eleventh Plan (2007–2012)

 it was in the period of Manmohan Singh as a prime minister.

 It aimed to increase the enrolment in higher education of 18-23 years of
age group by 2011-12.
 It focused on distant education, convergence of formal, non-formal,
distant and IT education institutions.
 Rapid and inclusive growth (poverty reduction).
 Emphasis on social sector and delivery of service therein.
 Empowerment through education and skill development.
 Reduction of gender inequality.
 Environmental sustainability.
 To increase the growth rate in agriculture, industry and services to 4%,
10% and 9% respectively.
 Reduce total fertility rate to 2.1.
 Provide clean drinking water for all by 2009.
 Increase agriculture growth to 4%.

Twelfth Plan (2012–2017)

The Twelfth Five-Year Plan of the Government of India has been decided to
achieve a growth rate of 8.2% but the National Development Council (NDC) on
27 December 2012 approved a growth rate of 8% for the Twelfth Five-Year
Plan.[10]

With the deteriorating global situation, the Deputy Chairman of the Planning
Commission Montek Singh Ahluwalia has said that achieving an average
growth rate of 9 percent in the next five years is not possible. The Final growth
target has been set at 8% by the endorsement of the plan at the National
Development Council meeting held in New Delhi.

"It is not possible to think of an average of 9% [in the 12th plan]. I think
somewhere between 8 and 8.5 percent is feasible,” Ahluwalia said on the
sidelines of a conference of State Planning Boards and departments. The
approached paper for the 12th Plan, approved last year, talked about an
annual average growth rate of 9%.

“When I say feasible... that will require major effort. If you don’t do that, there
is no God given right to grow at 8 percent. I think given that the world economy
deteriorated very sharply over the last year...the growth rate in the first year of
the 12th Plan (2012–13) is 6.5 to 7 percent.”

He also indicated that soon he should share his views with other members of
the Commission to choose a final number (economic growth target) to put
before the country’s NDC for its approval.

The government intends to reduce poverty by 10% during the 12th Five-Year
Plan. Ahluwalia said, “We aim to reduce poverty estimates by 9% annually on a
sustainable basis during the Plan period". Earlier, addressing a conference of
State Planning Boards and Planning departments, he said the rate of decline in
poverty doubled during the 11th Plan. The commission had said, while using
the Tendulkar poverty line, the rate of reduction in the five years between
2004–05 and 2009–10, was about 1.5%points each year, which was twice that
when compared to the period between 1993–95 to 2004–05. The plan aims
towards the betterment of the infrastructural projects of the nation avoiding all
types of bottlenecks. The document presented by the planning commission is
aimed to attract private investments of up to US$1 trillion in the
infrastructural growth in the 12th five-year plan, which will also ensure a
reduction in the subsidy burden of the government to 1.5 percent from 2
percent of the GDP (gross domestic product). The UID (Unique Identification
Number) will act as a platform for cash transfer of the subsidies in the plan.

The objectives of the Twelfth Five-Year Plan were:

 To create 50 million new work opportunities in the non-farm sector.

 To remove gender and social gap in school enrolment.
 To enhance access to higher education.
 To reduce malnutrition among children aged 0-3 years.
 To provide electricity to all villages.
 To ensure that 50% of the rural population have accesses to proper
drinking water.
 To increase green cover by 1 million hectare every year.
 To provide access to banking services to 90% of households.
Strategy of Indian planning

First Plan (1951–1956)

India was facing three major problems i.e., influx of refugees, severe food crisis
and mounting inflation. India had also to correct the disequilibrium in the
economy caused by the Second World War and partition of the country.
Therefore, the First Plan emphasized, as its immediate objectives and
rehabilitation of refugees, rapid agricultural development so as to achieve food
self-sufficiency in the shortest possible time and inflation control.

The first Indian Prime Minister, Jawaharlal Nehru presented the First Five-Year
Plan to the Parliament of India and needed urgent attention. The First Five-
year Plan was launched in 1951 which mainly focused in development of the
primary sector. The First Five-Year Plan was based on the Harrod–Domar
model with few modifications.

The total planned budget of Rs.2069 crore (2378 crore later) was allocated to
seven broad areas: irrigation and energy (27.2%), agriculture and community
development (17.4%), transport and communications (24%), industry (8.4%),
social services (16.6%), rehabilitation of landless farmers (4.1%), and for other
sectors and services (2.5%). The most important feature of this phase was
active role of state in all economic sectors. Such a role was justified at that
time because immediately after independence, India was facing basic problems
—deficiency of capital and low capacity to save.
The target growth rate was 2.1% annual gross domestic product (GDP) growth;
the achieved growth rate was 3.6% the net domestic product went up by 15%.
The monsoon was good and there were relatively high crop yields, boosting
exchange reserves and the per capita income, which increased by 8%. National
income increased more than the per capita income due to rapid population
growth. Many irrigation projects were initiated during this period, including the
Bhakra, Hirakud, Mettur Dam and Damodar Valley dams. The World Health
Organization (WHO), with the Indian government, addressed children's health
and reduced infant mortality, indirectly contributing to population growth.

At the end of the plan period in 1956, five Indian Institutes of Technology (IITs)
were started as major technical institutions. The University Grants
Commission (UGC) was set up to take care of funding and take measures to
strengthen the higher education in the country. Contracts were signed

to start five steel plants, which came into existence in the middle of the Second
Five-Year Plan. The plan was quasi successful for the government.

Second Plan (1956–1961)

Agricultural targets fixed in First Plan had been achieved. Poverty level had
registered a fail, and consequently, it was felt that the Indian economy had
reached a stage where agriculture could be assigned a lower priority and a
forward thrust made in the development of heavy and basic industries of the
economy for more rapid advance in future.

The Second Plan was particularly in the development of the public sector and
"rapid Industrialisation". 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 centred on importing capital goods

Hydroelectric power projects and five steel plants at Bhilai, Durgapur, and
Rourkela were established with the help of Russia, Britain (the U.K) and West
Germany respectively. Coal production was increased. More railway lines were
added in the north east.

The Tata Institute of Fundamental Research and Atomic Energy Commission of

India was established as research institutes. In 1957 a talent search and
scholarship program was begun to find talented young students to train for
work in nuclear power.

The total amount allocated under the Second Five-Year Plan in India was
Rs.48 billion. This amount was allocated among various sectors: power and
irrigation, social services, communications and transport, and miscellaneous.

"The target growth rate was 4.5% and the actual growth rate was 4.27%."
Third Plan (1961–1966)

The Third Five-year Plan, stressed agriculture and improvement in the

production of wheat, but

the brief Sino-Indian War of 1962 exposed weaknesses in the economy and
shifted the focus towards the defence industry and the Indian Army. In 1965–
1966, India fought a War with Pakistan. There was also a severe drought in
1965. The war led to inflation and the priority was shifted to price stabilisation.
The construction of dams continued. Many cement and fertilizer plants were
also built. Punjab began producing an abundance of wheat.

Many primary schools were started in rural areas. In an effort to bring

democracy to the grass-root level, Panchayat elections were started and the
states were given more development responsibilities.

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 and local road building became a
state responsibility.

The target growth rate was 5.6%, but the actual growth rate was 2.4%.

Due to miserable failure of the Third Plan the government was forced to declare
"plan holidays" (from 1966–67, 1967–68, and 1968–69). Three annual plans
were drawn during this intervening period. During 1966–67 there was again
the problem of drought. Equal priority was given to agriculture, its allied
activities, and industrial sector. The government of India declared "Devaluation
of Rupee" to increase the exports of the country. The main reasons for plan
holidays were the war, lack of resources, and increase in inflation.

Fourth Plan (1969–1974)

At this time Indira Gandhi was the Prime Minister. The Indira Gandhi
government nationalised 14 major Indian banks and the Green Revolution in
India advanced agriculture. In addition, the situation in East Pakistan (now
Bangladesh) was becoming dire as the Indo-Pakistan War of 1971 and
Bangladesh Liberation War took funds earmarked for industrial development.
India also performed the Smiling Buddha underground nuclear test (Pokhran-
1) in Rajasthan on May 18, 1974, partially in response to the United States
deployment of the Seventh Fleet in the Bay of Bengal. The fleet had been
deployed to warn India against attacking West Pakistan and extending the war.

The target growth rate was 5.6%, but the actual growth rate was 3.3%. [6]

Fifth Plan (1974–1978)

The Fifth Five-Year Plan laid stress on employment, poverty alleviation (Garibi
Hatao), and justice. The plan also focused on self-reliance in agricultural
production and defence. In 1978 the newly elected Morarji Desai government
rejected the plan. The Electricity Supply Act was amended in 1975, which
enabled the central government to enter into power generation and
transmission.

The Indian national highway system was introduced and many roads were
widened to accommodate the increasing traffic. Tourism also expanded. The
twenty-point programme was launched in 1975. It was followed from 1974 to
1979.

The Minimum Needs Programme (MNP) was introduced in the first year of the
Fifth Five Year Plan (1974–78). The objective of the programme is to provide
certain basic minimum needs and thereby improve the living standards of the
people.

The target growth rate was 4.4% and the actual growth rate was 4.8%.

Rolling Plan (1978–1980)

The Janata Party government rejected the Fifth Five-Year Plan and introduced
a new Sixth Five-Year Plan (1978–1980). This plan was again rejected by the
Indian National Congress government in 1980 and a new Sixth Plan was made.
The Rolling Plan consists of three kind of plans that were proposed. The First
Plan is for the present year which comprises the annual budget and Second is
a plan for a fixed number of years, which may be 3, 4 or 5 years. Plan number
two is kept changing as per the requirements of the Indian economy. The Third
Plan is a perspective plan which is for long terms i.e. for 10, 15 or 20 years.
Hence there is no fixation of dates in for the commencement and termination of
the plan in the rolling plans. The main advantage of the rolling plans is that
they are flexible and are able to overcome the rigidity of fixed five year plans by
mending targets, the object of the exercise, projections and allocations as per
the changing conditions in the country’s economy. The main disadvantage of
this plan is that if the targets are revised each year, it becomes very difficult to
achieve them which are laid down in the five-year period and it turned out to
be a complex plan. Frequent revisions resulted in lack of stability in the
economy which is essential for its balanced development and progress.

Sixth Plan (1980–1985)

The Sixth Five-Year Plan marked the beginning of economic liberalisation. Price
controls were eliminated and ration shops were closed. This led to an increase
in food prices and an increase in the cost of living. This was the end of
Nehruvian socialism. The National Bank for Agriculture and Rural
Development was established for development of rural areas on 12 July 1982
by recommendation of the Shivaraman Committee. Family planning was also
expanded in order to prevent overpopulation. In contrast to China's strict and
binding one-child policy, Indian policy did not rely on the threat of force [citation
needed]
. More prosperous areas of India adopted family planning more rapidly
than less prosperous areas, which continued to have a high birth rate.

The Sixth Five-Year Plan was a great success to the Indian economy. The target
growth rate was 5.2% and the actual growth rate was 5.4%. The only Five-Year
Plan which was done twice.

Seventh Plan (1985–1990)

The Seventh Five-Year Plan was led by the Congress Party with Rajiv Gandhi as
the prime minister. The plan laid stress on improving the productivity level of
industries by upgrading of technology.

The main objectives of the Seventh Five-Year Plan were to establish growth in
areas of increasing economic productivity, production of food grains, and
generating employment through "Social Justice".

As an outcome of the Sixth Five-Year Plan, there had been steady growth in
agriculture, controls on the rate of inflation, and favourable balance of
payments which had provided a strong base for the Seventh Five-Year Plan to
build on the need for further economic growth. The Seventh Plan had strived
towards socialism and energy production at large. The thrust areas of the
Seventh Five-Year Plan were: social justice, removal of oppression of the weak,
using modern technology, agricultural development, anti-poverty programmes,
full supply of food, clothing, and shelter, increasing productivity of small- and
large-scale farmers, and making India an independent economy.

Based on a 15-year period of striving towards steady growth, the Seventh Plan
was focused on achieving the prerequisites of self-sustaining growth by the
year 2000. The plan expected the labour force to grow by 39 million people and
employment was expected to grow at the rate of 4% per year.

Some of the expected outcomes of the Seventh Five-Year Plan India are given
below:

 Balance of payments (estimates): Export – ₹330 billion (US$4.8 billion),

Imports – (-)₹540 billion (US$7.9 billion), Trade Balance – (-)₹210 billion
(US$3.1 billion)
 Merchandise exports (estimates): ₹606.53 billion (US$8.8 billion)
 Merchandise imports (estimates): ₹954.37 billion (US$13.9 billion)
 Projections for balance of payments: Export – ₹607 billion
(US$8.8 billion), Imports – (-) ₹954 billion (US$13.9 billion), Trade
Balance- (-) ₹347 billion (US$5.0 billion)

Under the Seventh Five-Year Plan, India strove to bring about a self-sustained
economy in the country with valuable contributions from voluntary agencies
and the general populace.

The target growth rate was 5.0% and the actual growth rate was 6.01% and the
growth rate of per capita income was 3.7%.

Annual Plans (1990–1992)

The Eighth Plan could not take off in 1990 due to the fast changing political
situation at the centre and the years 1990–91 and 1991–92 were treated as
Annual Plans. The Eighth Plan was finally formulated for the period 1992–
1997.

Eighth Plan (1992–1997)

1989–91 was a period of economic instability in India and hence no five-year

plan was implemented. Between 1990 and 1992, there were only Annual Plans.
In 1991, India faced a crisis in foreign exchange (forex) reserves, left with
reserves of only about US$1 billion. Thus, under pressure, the country took the
risk of reforming the socialist economy. P.V. Narasimha Rao was the tenth
Prime Minister of the Republic of India and head of Congress Party, and led one
of the most important administrations in India's modern history, overseeing a
major economic transformation and several incidents affecting national
security. At that time Dr. Manmohan Singh (later Prime Minister of India)
launched India's free market reforms that brought the nearly bankrupt nation
back from the edge. It was the beginning of liberalization, privatisation and
globalization (LPG) in India.

Modernization of industries was a major highlight of the Eighth Plan. Under

this plan, the gradual opening of the Indian economy was undertaken to
correct the burgeoning deficit and foreign debt. Meanwhile, India became a
member of the World Trade Organization on 1 January 1995. The major
objectives included, controlling population growth, poverty reduction,
employment generation, strengthening the infrastructure, institutional
building, tourism management, human resource development, involvement of
Panchayati rajs, Nagar Palikas, NGOs, decentralisation and people's
participation.

Energy was given priority with 26.6% of the outlay.

The target growth rate was 5.6% and the actual growth rate was 6.8%.

To achieve the target of an average of 5.6% per annum, investment of 23.2% of

the gross domestic product was required. The incremental capital ratio is 4.1.
The saving for investment was to come from domestic sources and foreign
sources, with the rate of domestic saving at 21.6% of gross domestic
production and of foreign saving at 1.6% of gross domestic production.

Ninth Plan (1997–2002)

The Ninth Five-Year Plan came after 50 years of Indian Independence. Atal
Bihari Vajpayee was the Prime Minister of India during the Ninth Five-Year
Plan. The Ninth Five-Year Plan tried primarily to use the latent and unexplored
economic potential of the country to promote economic and social growth. It
offered strong support to the social spheres of the country in an effort to
achieve the complete elimination of poverty. The satisfactory implementation of
the Eighth Five-Year Plan also ensured the states' ability to proceed on the
path of faster development. The Ninth Five-Year Plan also saw joint efforts from
the public and the private sectors in ensuring economic development of the
country. In addition, the Ninth Five-Year Plan saw contributions towards
development from the general public as well as governmental agencies in both
the rural and urban areas of the country. New implementation measures in the
form of Special Action Plans (SAPs) were evolved during the Ninth Five-Year
Plan to fulfill targets within the stipulated time with adequate resources. The
SAPs covered the areas of social infrastructure, agriculture, information
technology and Water policy.

Budget

The Ninth Five-Year Plan had a total public sector plan outlay of ₹859,200
crore (US$130 billion). The Ninth Five-Year Plan also saw a hike of 48% in
terms of plan expenditure and 33% in terms of the plan outlay in comparison
to that of the Eighth Five-Year Plan. In the total outlay, the share of the center
was approximately 57% while it was 43% for the states and the union
territories.

The Ninth Five-Year Plan focused on the relationship between the rapid
economic growth and the quality of life for the people of the country. The prime
focus of this plan was to increase growth in the country with an emphasis on
social justice and equity. The Ninth Five-Year Plan placed considerable
importance on combining growth oriented policies with the mission of
achieving the desired objective of improving policies which would work towards
the improvement of the poor in the country. The Ninth Five-Year Plan also
aimed at correcting the historical inequalities which were still prevalent in the
society.

Objectives

The main objective of the Ninth Five-Year Plan was to correct historical
inequalities and increase the economic growth in the country. Other aspects
which constituted the Ninth Five-Year Plan were:

 Population control.
 Generating employment by giving priority to agriculture and rural
development.
 Reduction of poverty.
 Ensuring proper availability of food and water for the poor.
 Availability of primary health care facilities and other basic necessities.
 Primary education to all children in the country.
 Empowering the socially disadvantaged classes like Scheduled castes,
Scheduled tribes and other backward classes.
 Developing self-reliance in terms of agriculture.
 Acceleration in the growth rate of the economy with the help of stable
prices.

Strategies

 Structural transformations and developments in the Indian economy.

 New initiatives and initiation of corrective steps to meet the challenges in
the economy of the country.
 Efficient use of scarce resources to ensure rapid growth.
 Combination of public and private support to increase employment.
 Enhancing high rates of export to achieve self-reliance.
  Providing services like electricity, telecommunication, railways etc.
 Special plans to empower the socially disadvantaged classes of the
country.
 Involvement and participation of Panchayati Raj institutions/bodies and
Nagar Palikas in the development process.

Performance

 The Ninth Five-Year Plan achieved a GDP growth rate of 5.4% against a
target of 6.5%
 The agriculture industry grew at a rate of 2.1% against the target of 4.2%
 The industrial growth in the country was 4.5% which was higher than
that of the target of 3%
 The service industry had a growth rate of 7.8%.
 An average annual growth rate of 6.7% was reached.

The Ninth Five-Year Plan looks through the past weaknesses in order to frame
the new measures for the overall socio-economic development of the country.
However, for a well-planned economy of any country, there should be a
combined participation of the governmental agencies along with the general
population of that nation. A combined effort of public, private, and all levels of
government is essential for ensuring the growth of India's economy.

The target growth was 7.1% and the actual growth was 6.8%.

Tenth Plan (2002–2007)

The main objectives of the Tenth Five-Year Plan:

 Attain 8% GDP growth per year.

 Reduction of poverty rate by 5% by 2007.
  Providing gainful and high-quality employment at least to the addition to
the labour force.
 Reduction in gender gaps in literacy and wage rates by at least 50% by
2007.
 20-point program was introduced.
 Target growth: 8.1% – growth achieved: 7.7%.
 The Tenth Plan was expected to follow a regional approach rather than
sectoral approach to bring down regional inequalities.
 Expenditure of ₹43,825 crore (US$6.4 billion) for tenth five years.

Out of total plan outlay, ₹921,291 crore (US$130 billion) (57.9%) was for
central government and ₹691,009 crore (US$100 billion) (42.1%) was for states
and union territories.

Eleventh Plan (2007–2012)

 it was in the period of Manmohan Singh as a prime minister.

 It aimed to increase the enrolment in higher education of 18-23 years of
age group by 2011-12.
 It focused on distant education, convergence of formal, non-formal,
distant and IT education institutions.
 Rapid and inclusive growth (poverty reduction).
 Emphasis on social sector and delivery of service therein.
 Empowerment through education and skill development.
 Reduction of gender inequality.
 Environmental sustainability.
 To increase the growth rate in agriculture, industry and services to 4%,
10% and 9% respectively.
 Reduce total fertility rate to 2.1.
 Provide clean drinking water for all by 2009.
 Increase agriculture growth to 4%.
Twelfth Plan (2012–2017)

The Twelfth Five-Year Plan of the Government of India has been decided to
achieve a growth rate of 8.2% but the National Development Council (NDC) on
27 December 2012 approved a growth rate of 8% for the Twelfth Five-Year
Plan.[10]

With the deteriorating global situation, the Deputy Chairman of the Planning
Commission Montek Singh Ahluwalia has said that achieving an average
growth rate of 9 percent in the next five years is not possible. The Final growth
target has been set at 8% by the endorsement of the plan at the National
Development Council meeting held in New Delhi.

"It is not possible to think of an average of 9% [in the 12th plan]. I think
somewhere between 8 and 8.5 percent is feasible,” Ahluwalia said on the
sidelines of a conference of State Planning Boards and departments. The
approached paper for the 12th Plan, approved last year, talked about an
annual average growth rate of 9%.

“When I say feasible... that will require major effort. If you don’t do that, there
is no God given right to grow at 8 percent. I think given that the world economy
deteriorated very sharply over the last year...the growth rate in the first year of
the 12th Plan (2012–13) is 6.5 to 7 percent.”

He also indicated that soon he should share his views with other members of
the Commission to choose a final number (economic growth target) to put
before the country’s NDC for its approval.

The government intends to reduce poverty by 10% during the 12th Five-Year
Plan. Ahluwalia said, “We aim to reduce poverty estimates by 9% annually on a
sustainable basis during the Plan period". Earlier, addressing a conference of
State Planning Boards and Planning departments, he said the rate of decline in
poverty doubled during the 11th Plan. The commission had said, while using
the Tendulkar poverty line, the rate of reduction in the five years between
2004–05 and 2009–10, was about 1.5%points each year, which was twice that
when compared to the period between 1993–95 to 2004–05. The plan aims
towards the betterment of the infrastructural projects of the nation avoiding all
types of bottlenecks. The document presented by the planning commission is
aimed to attract private investments of up to US$1 trillion in the
infrastructural growth in the 12th five-year plan, which will also ensure a
reduction in the subsidy burden of the government to 1.5 percent from 2
percent of the GDP (gross domestic product). The UID (Unique Identification
Number) will act as a platform for cash transfer of the subsidies in the plan.

The objectives of the Twelfth Five-Year Plan were:

 To create 50 million new work opportunities in the non-farm sector.

 To remove gender and social gap in school enrolment.
 To enhance access to higher education.
 To reduce malnutrition among children aged 0-3 years.
 To provide electricity to all villages.
 To ensure that 50% of the rural population have accesses to proper
drinking water.
 To increase green cover by 1 million hectare every year.
 To provide access to banking services to 90% of households.

13th five-year defence plan (2017-22)

The 13th five-year defence plan (2017-22) envisages an allocation of Rs

26,83,924 crore for the armed forces.1 This includes Rs 13,95,271 crore under
the revenue segment and the remainder for defraying the capital expenditure.
Given the secrecy surrounding the plans, it is unlikely that much will be
known about the outcomes intended to be achieved.
Although other stakeholders were apparently consulted while preparing the
plan, in all probability this projection does not include the requirements of the
Defence Research & Development Organisation, Ordnance Factories, Coast
Guard, Border Roads Organisation, and many other organisations as well as
activities carried out under the administrative control of the Ministry of
Defence (MoD). It certainly does not include the money required for defence
pensions.

The total allocation for these aforesaid organisations, activities and defence
pensions adds up to Rs 1,36,746.10 crore for the year 2017-18, with defence
pensions alone accounting for Rs 85,737.31 crore. Without factoring in any
increase in the coming years, the requirement on this count for the plan period
will work out to Rs 6,83,730.50 crore.

Assuming that the requirement has been worked out based on immaculate
costing and there will be no cost overruns or additional requirements, the total
requirement of the armed forces, other organisations and defence pensions
would thus add up to Rs 33,67,654.50 crore.

Since the current financial year happens to be the first year of the 13th five-
year plan and a total sum of Rs 3,59,851.43 crore already stands allocated for
the current year, a sum of Rs 29,07,803.07 crore will be required for the
remaining four years at an annual average of Rs 7,26,950.76 crore. This figure
may undergo some minor change if additional sums are allocated, or the
allocation reduced, at the Revised Estimate (RE) stage.

Achieving the intended outcomes of the plan, therefore, is critically dependent

on the ability of the Ministry of Finance (MoF) to increase the budget by at least
100 per cent from next year onward, pushing it to around three per cent of the
Gross Domestic Product (GDP). This is considered by many to be an ideal level
of funding. It is, therefore, possible that the plan is actually based on the
assumption that allocations totalling three per cent of the GDP will be made
available for defence during the 13th defence plan period.

It is not known whether the MoF was asked about the possible level of funding
before commencing the planning process. In any case, meeting the projected
requirement will require the MoF to revisit its Midterm Fiscal Policy of 2016-17,
which estimated the defence expenditure, including its capital component, to
be about 1.6 per cent of GDP in both 2017-18 and 2018-19.2 It will also have
to make serious efforts to raise more revenue in the coming years to be able to
meet the requirement.

From now on, the discourse on the 13th defence plan will follow a familiar
course. To begin with, there is bound to be clamour for an early ‘approval’ of
the plan. Though there is no procedural or statutory requirement of seeking
the approval of any authority outside the MoD, the expectation will be that the
plan will be brought before the Cabinet Committee on Security (CCS) for
immediate approval.

For the record, only three of the 12 five-year plans so far have been approved
by a cabinet committee. The sixth and seventh plans for the periods 1980-85
and 1985-90 were approved by the Cabinet Committee on Political Affairs
(CCPA), and the ninth plan for the period 1997-2002 was approved by the
Cabinet Committee on Security (CCS).

Stung by protracted deliberations with the MoF on the size of the 11th defence
plan which led nowhere and forced it to abandon the idea of seeking CCS
approval, the MoD decided to let matters rest after the 12th five year plan was
approved by the Defence Acquisition Council (DAC) within the ministry on April
2, 2012.

But the view that defence plans must be approved by the CCS continues to find
strong support in the public discourse, although hardly any information is
available on the impact of such approvals on the achievement of the intended
outcomes of the plans in the past or, conversely, the impact of non-approval on
defence preparedness. The general view is that CCS approval would make it
binding on the government to make the projected funds available for spending
during the plan period.

The clamour for seeking CCS approval, with strong prodding from Parliament’s
Standing Committee on Defence (SCoD), may force the MoD to abandon the
precedent set in 2012 and actually seek CCS approval. This will lead to the re-
emergence of the problem which had led the MoD in the first place to abandon
the idea of seeking CCS approval for the 11th plan and instead deciding to
approve it within the ministry.

According to the laid down procedure, MoD will need to first consult the MoF
on putting up the 13th defence plan for CCS approval. The expectation implicit
in this process is that the government will ‘commit’ itself to the projected level
of funding, irrespective of any other developments which may have a bearing
on its ability to generate additional revenues to meet the commitment. While
nothing is impossible, this seems improbable and, consequently, so does the
possibility of obtaining CCS approval any time soon, causing disappointment
all around.

This might also lead to some feeble questioning of the utility of basing five year
or other plans on unrealistic assumptions about how much money is likely to
be available for achieving the desired objectives. It does not help either that the
plans are not overarching in so far as they do not encompass other
organisations which must necessarily play a complementary or supplementary
role in achieving the overall objectives.

Defence planning was synchronised with national plans only in 1980 when the
sixth defence plan for the period 1980-85 was made coterminous with the sixth
national plan covering the same period. It is not clear what purpose was served
by this, as there has never been any direct linkage between the two.

While there is no question that planning is an important facet of defence

management, the question whether objectives can be achieved only be
persisting with the concept of five-year defence plans as a part of the three-
tiered structure of defence planning is moot. The entire gamut of defence
planning needs to be revisited against the backdrop of the dismantling of the
national five-year centralised planning regime and the Niti Aayog – successor of
the Planning Commission – vowing to venture into defence. There is no
indication that the proposed 13th defence plan takes into account the Niti
Aayog’s vision for defence.

A financially pragmatic and outcome oriented plan covering a compressed time

span has a better chance of showing results in the short run and setting the
stage for a long haul towards achieving the highest level of defence
preparedness. It is time that financial viability, including the ways and means
of augmenting financial resources, is recognised as an inalienable factor in
planning, however abhorrent that idea may be.

Achievements & Failures of Indian Plans

The main achievements of Indian Plans are as under:

1. Increase in National Income:

During planning period national income has increased manifold. The average
annual increase in national income was registered to be 1.2 percent from 1901
to 1947.
This increase was recorded to be 3 percent in two decades i.e. 1950-70.
Moreover, average annual growth rate of national income was 4 per cent in
1970-80 which, further, increased to 5 percent in 1980-90. From 1980-81 to
2000-01, it increased to 5.8 per cent. Thus, a rise in national income has been
key indicator for economic development of India.

2. Increase in Per Capita Income:

Before independence, increase in per capita income was almost zero. But after
the adoption of economic planning in free India, per capita income has
continuously been increased. In the first plan, it raised .by 1.8 per cent and in
Second Plan, it was 2.0 per cent.

During Third Plan, it declined to (-) 6.8 per cent. In Three annual plans, growth
of per capita income was registered at 1.5 per cent.

In Fourth Plan, it came down to 1.0 per cent. In Fifth Plan, it was 2.7 per cent.
During Sixth and Seventh Plan, it was 3.2 per cent and 3.6 per cent
respectively. In Eighth Plan, it rose to 4.6 per cent. In 2000-01, its rise was
registered at 4.9 at 1993-94 prices.

3. Development in Agriculture:

Agricultural productivity has also marked an upward trend during the plan
period. The production of food grains which has 510 lakh tonnes in 1950-51
increased to 1804 lakh tonnes in 1990-91 and further to 212.0 million tonnes
in 2000-01.

Similarly, the production of cotton which was 21 lakh bales in 1950-51 was
expected to be 10.1 million bales in 2000-01. In the same period, the
production of sugarcane was expected to be 300.1 lakh tonnes in 2000-01
against the 69 lakh in 1950-51.
Thus, agriculture production during planning period has increased. During the
entire planning period, growth rate of agricultural production remained 2.8 per
cent per annum.

However, use of chemical fertilizer, better seeds, irrigation and improved

methods of cultivation has increased productivity per hectare and per worker
many times. This development has laid the foundation of green revolution and
other institutional changes in agriculture sector.

4. Development of Industry:

In the first five year plan much of the capital was invested to develop the
industry and defense. About fifty percent of the total outlay of the plan was
invested for their development.

As a result, industrial production increased to a great extent. For instance, the

production of cotton cloth which was 4210 million sq. meters in 1950-51
increased to 18989 million sq. metres in 1999-2000.

The production of finished steel increased to 31.1 million tones in 2001-02

from 10 lakh tonnes in 1950-51. In the same fashion, the production of coal
was recorded to be 3226 million tonnes in 2001-02 against the 323 million
tonnes in 1950-51.

5. Development of Transport and Communication:

During the planning period, much attention has been paid towards the
development of transport and communication. In the first two plans, more than
one-fourth of the total outlay was invested on the development of transport and
communication.
In 1990-91, the total length of roads increased to 1024.4 thousand kms from
157.0 thousand km. However, further it increased to 1448.6 thousand km in
1998-99. In order to encourage trade goods rail was developed.

6. Self Reliance:

During the last four decades, considerable progress seems to have been made
towards the achievement of self reliance. We are no longer dependent on other
countries for the supply of food grains and a number of agricultural crops.

In the same fashion, we have made substantial investment in basic and heavy
industries. We are in a position to produce all varieties of basic consumer
goods.

7. Employment:

During the planning period, many steps have been taken to increase the
employment opportunities in the country. In the first five year plan
employment opportunities to 70 lakh people were provided.

In the fourth and fifth plans about 370 lakh persons got employment. In the
seventh five year plan, provisions have been made to provide employment to
340 lakh people.

8. Development of Science and Technology:

In the era of planning, India has made much progress in the field of science
and technology. In reality, the development is so fast that India stands third in
the world in the sphere of science and technology. Indian engineers and
scientists are in a position that they can independently establish any industrial
venture.

9. Capital Formation:
In India due to the development of agriculture, industry and defense, the rate
of capital formation has also increased. In 1950-51, the rate of capital
formation was 11.5 percent.

The rate of capital formation during Second, Third and Fourth plan was 12.7
per cent, 13.5 per cent and 14.5 per cent respectively. It was 24.1 per cent in
seventh plan and 26 per cent in Eighth plan and 24 percent in Ninth Flan, 35%
by 2010-11.

10. Social Services:

Social services, like, education, health and medical facilities, I family planning
and the like have also expanded considerably.

As a result of these services: (i) Death rate reduced from 27 per thousand in
1951 to 8 per thousand in 2000-01. (ii) Average life-expectancy increased from
32 years in 1951 to 638 in 2000-01. (iii) Several deadly diseases like malaria
etc. have been eradicated, (iv) The number of school going students has
increased three-fold and that of collegiate five-fold since 1951. The number of
annual admissions to degree courses in Engineering Colleges increased from
7100 in 1950 to 1, 33,000 and the number of universities increased from 27 to
254 by now. (v) A chain of National Laboratories and Research Centers has
been set up across the country. (vi) Number of hospital-beds, doctors, nurses,
medicines and family planning clinics and medical facilities has greatly
increased. Number of hospitals and dispensaries has increased to 68396. Now
there is one doctor per 5.2 per ten thousand.
Five-Year Plans: With Objectives and Achievements

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The following points highlight the top five year plans.

I. First Five Year Plan:

Prior to first five year plan, Indian economy was backward. Population was
increasing more as compared to economic growth.

The situation of trade and industries was far from satisfaction. The rate of
capital formation was at low level. The per capita income in the country was
also very low.

Objectives:

The main objectives of the First Five Year Plan are explained as under:

1. To reform the country’s economy.

2. To solve the food problem.

3. To raise the standard of living.

4. To provide social and economic justice.

Achievements:

Increase in National Income:

The First Five Year sustained the hope of the planners by making headway in
achieving its targets and ambitious objectives to a larger extent. The national
income rose from Rs. 9110 crores to Rs. 10800 crores from 1950- 51 to 1956-
57 at the price level of 1953-54.

The per capita income increased by 11 per cent and per capita consumption by
8 per cent over the same period. The net domestic saving was Rs. 756 crore in
1955-56 against Rs. 455 crore in 1950-51.
Agricultural Development:

In the field of agriculture, total food-grains was 69.3 million tones against the
target of 62.6 million tones. The index number of agricultural production for all
crops increased from 26 to 117 during the period of 1950-51 to 1955-56 (1949-
50 = 100). During this period, the import of foodstuffs led to a drastic
reduction.

In 1954, only 0.8 million tones of food-grains valued at Rs. 47.02 crore was
imported as compared to 4.7 million tones at a total value of Rs. 216 crore in
1951. The production of some major crops like rice, wheat and cotton was
recorded to be 28.7 million tones, 8.9 million tones and 4.2 million bales
against its targets of 27.7 million tones, 3.4 million tones and 4.8 million bales
respectively.

Industrial Production:

Industrial production has recorded the increase to the extent of 38 per cent.
Total gross investment in fixed capital in the private sector was about Rs. 340
crore.

The progress of production and expansion of capacity was satisfactory in the

case of Sindri Fertilizer Factory, Chittaranjan Locomotive Factory, Indian
Telephone Industries, Integral Coach Factory, Cable Factory and Pencillin
Factory. A new plant of iron and steel was set with a capacity of 35000 tones of
pig iron.

Irrigation and Railway Development:

Irrigation facilities were extended to 16 million acres of land. Out of it, 10

million acres through small works and 6 million through major works. The
work on a number of multipurpose river projects like Bhakra Nangal, Damodar
Valley and Hirakund was accelerated and many more new projects were started
on Kosi Koyna, Rihand and Chambal.

In rail transport, the traffic carried between 1951-52 to 1955-56 in terms of

tones originating increased by about 8 per cent. All the commencement of the
plan, Indian Railways has 8209 locomotives, 19225 coaches and 222441
wagons on the line which increased to 9262 locomotives 23779 coaches and
266049 wagons by ending 1955-56.

Miscellaneous Achievements:

A significant achievement during the plan period was of launching Community

Development and National Extension Services programme on 2nd October,
1952. This programme covered 78 million persons in 143000 villages situated
in 1075 development blocks ending 1955- 56.

The number of co-operative societies rose from 180000 to 240000 and the
number of members from 13.72 to 17.62 millions, 53000 new agricultural
credit societies were registered with total number of members 1.60 lakhs, 44
extension training centres were established.

Education:

The percentage of facilities of schooling for children in the age group of 6-11
was 42.0 per cent which rose to 51.0 per cent from 1950-51 to 1955-56. There
were 209671 primary and 7288 high/higher secondary schools in 1950-51
which increased to 274038 and 106000 in 1955-56 respectively.

The number of training institutions for basic education was recorded 449 in
1955-56 against its number 114 in 1950-51. There were 8600 medical
institutions with 113000 beds in 1950-51. There were 8600 medical
institutions with 113000 beds in 1950-51 which increased to 10000 with
125000 beds during 1955-56.
Balance of Payment:

The balance of payment position was quite satisfactory. In the original plan
estimates, an average annual deficit of Rs. 180 to 220 crore was visualised but
the actual expenditure was of amounting Rs. 96 crore. So far as sterling
balance was concerned the withdrawal was of only Rs. 138 crore against Rs.
290 crore.

II. Second Five Year Plan:

The second period of second five year plan was April 1, 1956 to May 31, 1961.
The main purpose of the plan was to establish ‘socialistic pattern of society.

Objectives:

The main objectives of the Second Five Year Plan are as under:

(i) Sizeable increase in the national income to raise the level of living.

(ii) Rapid industrialisation with special emphasis on the development of basic

and heavy industries;

(iii) Large expansion of employment opportunities;

(iv) Reduction of inequalities in income and wealth and a more even

distribution of economic power.

Achievements:

Foreign Exchange:

The plan witnessed a severe drain on the foreign exchange resources of the
country. The reserves were drawn by about Rs. 540 crore during the period of
1955-56 to 1959-60 which was due to the large trade deficits. In 1959-60,
India’s external payment position continued to reflect this very trend with the
foreign exchange reserves declining by Rs. 16 crore.

Agricultural Development:

In the case of agriculture, the index number rose to 135 in 1960-61 from 116.8
in 195-56. The production was recorded 76 million tones in 1960-61 against
658 million tones in 1955-56. The overall increase was 16 per cent. The
production of cotton, sugarcane and oilseeds was 5.1 million bales, 8 million
tones and 7.1 million tonnes ending 1960-61 while it was registered 4.0 million
bales, 5.1 million tones and 5.6 million tones respectively in 1955-56.

The total area under food grain crops was 113.4 million acres in 1960- 61
while it was 105.3 million acres during 1955-56. The rate of growth in
agriculture sector was 44.6 per cent in 1956-57 and 6.5 per cent in 1960-61.

Power Programmes:

The power programmes suffered a setback because of foreign exchange

hardships. Even then, total number of villages/towns electrified in the country
was 21396 ending March 1960. About 16000 kilometres of transmission lines
with operating voltage about 33 KV were erected during the plan period.

Industrial Development:

The tempo of industrial advancement gathered momentum during the second

plan period. The country for the first item started producing large quantities of
machinery, machine tools, heavy electrical equipment’s and scientific
instruments. Furthermore, opening was made in the field of tractors,
newsprint, motor-cycles, scooters, sulpha, DDT, Dyestuffs.

Similarly, rapid progress was acknowledged in the case of durable consumer

goods such as sewing machines, bicycles, fans, radios and other electric goods.
The discovery of petroleum reserves in the Sibsagar area of Assam and in the
Bombay. Ankleshwar area of Gujarat was another vent in this plan. The index
of industrial production (1950-51 =100) rose by forty per cent. The production
of steel ingots was 3.5 million tones and of finished steel 2.2 million tones. In
coal, the production was registered to be 54.6 million tones.

General Development:

The programmes for railway and ports were carried out substantially. In 1960-
61, the railway carried a freight of 154 million tones. There were 1813
locomotives. 6091 coaching vehicles and 85526 wagons during 1959-60.
During 1959-60, 105 miles of missing links and bypasses and 10 major bridges
were constructed. Number of passenger vehicles increased from 44744 to about
46000 ending 1959-60.

In the field of education, additional schooling facilities at elementary stage were

provided to about 2 lakh children ending March, 1961. The centrally sponsored
scheme for the expansion of girl education and training of women teachers was
implemented by almost all states.

The total numbers of primary health units were recorded 2500 ending March,
1960. The strength of doctors increased from 7000 to 68,000 during the same
period.

III. Third Five Year Plan:

The Third Five Year Plan was a continuation of the previous plan designed to
provide India a self generating and self-reliance economy by 1975-76.

However, it aimed at:

(a) To secure an increase in national income of over 5 per cent per annum, the
pattern of investment being designed so as to sustain this rate of growth during
the subsequent plans;

(b) To achieve self sufficiency in food-grains and increase agricultural

production to meet the requirement of industry and exports;

(c) To expand the basic industries such as steel, chemical industries, power
and also establish machine building capacity so that the requirements of
further industrialisation can be met within a period of ten years or so mainly
from the country’s own resources;

(d) To utilise to the fullest possible extent the manpower resources of the
country and to ensure a substantial expansion in employment opportunities;

(e) To establish progressively greater equality of opportunity and to bring about

reduction in disparities in income and wealth and a more even distribution of
economic power.

Achievements:

National Income:

The rate of growth of national income was less than half of the rate 5 per cent
per annum. In 1964-65, it was registered to the tune of 2.5, 1.7 and 4.9 per
cent respectively. In 1965-66, it declined to 4.2 per cent.

Agricultural and Power Development:

In agriculture sector, there was stagnation during the first three years while in
1964- 65, there was bumper record and again in the year of 1965-66 its
production declined to unprecedented floods and droughts. As a whole,
agricultural production went down by 7.4 per cent.
The output of food-grains was about 76 million tones against its target of 100
million tones. The aggregate index of production was 159.4 in 1964-65
considering 1949-50 = 100.

The average growth rate of generating capacity was 12.5 per cent during 1965-
66 while installed generating capacity was 10.17 million KW in the same year
against installed generating capacity of 5.65 million KW at the beginning of
1960-61.

Industrial Development:

The increase in industrial output considering 1960 as base year stood at 8.2
per cent in 1961-62, 9.6 per cent in 1962-63, 9.2 per cent in 1963-64 and 8.3
per cent in 1964.65. Thereafter, there was sharp deterioration in the rate of
growth of output. It fell to 4.3 per cent in 1965-66.

The production in the case of iron ore, diesel engines, cloth textile, machinery
and soda ash was registered to the extent of 24.46 million tones, 93.1
thousands, 200 million rupees and 33.1 tones, respectively ending 1965-66.
While it was 11 million tones, 44.7 thousands, 104 million rupees and 152
tones at the start of the plan period.

Village and Small Scale Industries:

The progress of village and small scale industries was also encouraging during
the first two years and later on showed downward trend due to shortage of raw
materials followed by hostilities of 1962 and 1965. The production of handloom
and power-loom increased from 2013 million metres in 1960 to 3056 million in
1965-66.

The total share in production of cloth was 30.4 per cent in 1960 while it rose to
40.0 per cent in 1965-66. The production of all varieties of Khadi including
woolen and silk increased from 53.76 million sq. metres in 1960-61 to 84.85
million sq. metres in 1965-66. The industry provided employment to nearly 2
million persons.

Railway Development:

The total length of railway route rose from 56247 kms. to 59399 kms,
passengers originating from 1594 million to 2082 million over the plan period.
Commercial vehicles increased from 225 thousand to 333 thousand over the
same period.

In coastal and overseas shipping, in 1965-66, its number was recorded 1540
and 323 thousand GRT while it was 857 and 313 thousand GRT respectively in
1960-61. On the other hand, the capacity of Indian Airlines was 155 million
tones kms, in 1965-66 against its number of 113 million tones kms in 1961-
62.

Education:

In the sphere of elementary education age group of 6-14, there was 48.7 per
cent in 1961-62 which increased to 59.6 per cent in 1965-66. The total
enrolment of 0.03 million in secondary education rose to 5.19 million over the
same period. This was 16.7 per cent in 1965-66 against 11.1 per cent in 1960-
61. The enrolment in science courses percentage of total enrolment increased
from 25.7 million to 41.5 million during the period from 1961-62 to 1965-66.

IV. Fourth Five Year Plan:

The Fourth Five Year Plan should ordinarily have commenced in 1966 on the
expiry of the Third Five Year Plan. The necessary preparatory work had already
been undertaken but its finalisation was delayed due to severe threats like
hostilities of 1962 and 1965 and the steep fall in agricultural production over
two successive years 1965-66 and 1966-67, and devaluation of Indian Rupee
in June 1966.
The Planning Commission which was reconstituted in September 1967, felt
that the five year period of the Fourth Plan should commence from 1969 and
the year of 1968-69 should have an annual plan as of 1966-67 and 1967- 68.
Therefore, the document of the Fourth Plan for 1969-74, reaffirmed the
objective enunciated in the previous plans and included the policies and
programmes which would promote the attainment of self reliance with
adequate growth rate and accelerate the progress towards a socialist society.

Objectives:

Fourth Five Year Plan have following objectives:

(a) Feasible rates of growth as indicated in the direction of becoming free from
dependence on foreign aid by providing priority to increase agricultural and
industrial sector;

(b) Measures to maintain stability in the prices and to set up consistent

economic policies which would lead towards the goal of mixed economy;

(c) Priority would be given to enlarge the income of the rural population and
augment the supply of food. Efforts would be made to maximise the
production.

(d) For ensuring continued growth in various industries like machinery,

chemicals, mines, power and transport which are useful for self-reliance,
connected schemes would be expedited for keeping up the momentum already
built and making the basic needs of the country in the next five year plan
period;

(e) For the development of human resources, additional facilities would be

provided particularly in rural areas.

Achievements:
National Income and Balance of Payment:

The plan envisaged an average annual compound growth rate of 5.7 per cent.
Against this projected growth, the economy experienced a rate of growth of 5.2
per cent in 1969-70, 4.2 per cent in 1970-71, 1.7 per cent in 1971-72, and 0.6
per cent in 1972-73. The rate of domestic saving rose from 8.4 per cent to 13.6
per cent during the plan period and the rate of investment from 9.5 per cent to
14.4 per cent over the same period.

During the first three years of the Fourth Plan, the balance of payment was
fairly stable but in the later period, all was not well in the economy. The
drought of 1972-73 compelled the country to go in for large imports of food-
grains when the world prices of food-grains had gone up to unprecedented
levels.

The import prices of other major requirements such as petroleum, petroleum

products, fertiliser, iron, steel, non-ferrous metals and newsprint also
increased manifold.

Agriculture Production:

The production of food-grains was estimated to rise from 98 million tones to

129 million tones but it was registered only 104.7 million tones in 1973-74 ;
thereby the increase was of 7.2 per cent against its targeted increase of 31.6
per cent. The highest level of production was 108 million tones in 1970-71. The
output of pulses had deteriorated in spite of favourable price trend.

As against the target of 15.0 million tones, the production was hardly 10.0
million tones in 1973-74. The total area of food crops under irrigation was 35.2
million hectares whereas non-food crops under irrigation was recorded 4.8
million hectares in 1973- 74.
The chemical fertilizers in terms of nitrogenous and phosphatic was recorded
10.58 lakh and 4.1 lakh tones respectively ending 1973-74. The ultimate
irrigation potential of 107 million hectares, a potential of 44.9 million hectares
was recorded in 1973-74.

Industrial Development:

The rate of growth in the industrial sector was only 3.9 per cent annual. The
industrial production growth rate declined from 6.8 per cent in 1969-70 to 3.7
per cent in 1970-71 but it increased to 4.5 per cent in 1971-72 and at around
5 per cent during 1972-73-74. The production of steel ingot was 7.4 million
tones against 10.8 million tones ; finished steel was of 5.4 million tones against
8.1 million tones ; cotton textile machinery of Rs. 300 million against Rs. 450
million ; petroleum of 7.7 million tones against 8.5 million tones.

General Development:

In social welfare activities, substantial progress was achieved. The number of

primary health centres and sub-centres rose to 5250 and 33000 by the end of
1973-74 against its number of 4919 and 22826 respectively in 1968- 69.
Similarly, the number of doctors and nurses also increased from 102520 and
61000 to 138000 and 88000 in the same period.

V. Fifth Five Year Plan:

During the course of presentation of the draft the Fifth Five Year Plan,
unfortunately coincided with a major upheaval on the international economic
scene which largely affected the developed and developing countries. Political
leaders and economists all over the world were aware of this collapse.

The sharp increase in the prices of food, fertilizers and oil seriously upset the
assumption on which draft had been framed. Mrs. Indira Gandhi, while
addressing the news conference warned against the economic challenges and
hoped that “the people will face these problems with unity and in a spirit
of co-operation.”

Defending the Government’s attitude towards these hardships, she said,

“Many things are not foreseen. It is always possible to have hindsight. The
poor people have faced the challenges with a stout heart. But for the
public distribution system these people would not have got even their
rations.”

In the meanwhile on the implementation of the Plan, Dr. Minhas resigned.

Thus, putting aside his argument, Mrs. Gandhi and Planning Minister Mr.
Dhar called for small plan and sacrificing the industrial core, jeopardies self-
reliance and unrealistic projections.

Objectives:

1. 5.5 per cent overall rate of growth of ‘gross domestic product;

2. Expansion of productive employment;

3. A national programme for minimum needs;

4. Extended programme of social welfare;

5. Stress on agriculture, key and basic industries producing goods for mass
consumption.

Achievements:

National Income:

Though the Fifth Five Year Plan was suspended one year earlier than its
tenure, even then, its progress could be considered fairly satisfactory and be
compared with the complete period of five years. The growth rate of national
income ending fifth plan period was 5.4 per cent at the price index of 1970-71.
The average growth rate of per capita income was 2.92 per cent due to high
growth of population.

Agricultural and Social Sector:

The agricultural production showed tremendous favorable trends. The annual

rate of growth of agricultural production grew at the rate of 4.58 per cent
against its target rate of 3.3 per cent. The total food-grains production was of
the order of 125.6 million tonnes in 1978-79 while oilseed was registered of 8.9
million tones. The gross irrigated area was recorded 48.41 million hectares
during the same period.

The total coverage under soil and water conservation was 21.7 million hectare
in 1977-78 About 78000 Gobar Gas Plants were installed by the end of plan
period. Agricultural Co-operative Credit Societies advanced Rs. 1626 crore
which contained Rs. 1340 crore for short term, Rs. 95 crore for medium and
long term and Rs. 291 crore for land development respectively. The storage
capacity available for food-grains was about 14 million tones ending 1977.78.

Industrial Development:

During the plan period of 1974-79, village and small industries registered a
growth rate of 6.8 per cent per annum. The gross value added at factor cost
rose from Rs. 2800 crore in 1973-74 to Rs. 4100 crore in 1979-80 (at price of
1970-71) registering a growth rate of 6.6 per cent per annum. The employment
has increased in Village and Khadi industries from 8.84 lakh and 9.27 lakh in
1973.74 to 11.24 lakh in 1979-80.

The growth rate of industrial production was around 6.2 per cent. The
production of coal, crude oil and iron ore was recorded to the tune of 104
million tones, 11.77 million tones and 39 million tones respectively in 1978-79.
General Development:

The traffic by railway in terms of tone kilometres gone up from about 122.4
billion net tone kilometres in 1973-74 to 162.7 billion net tones kilometers in
1977- 78. 5549 kms. of new national highways were added during the plan
period and total surfaced road length was 623402 kms ending March 1979.

During the period of 1974-80, 20259 post offices were opened, raising its
number to 1.3 lakh. Besides, 11970 telegraphic offices and 8825 long distance
public call offices were opened. The total enrolment in elementary education
has been recorded 905 lakh during the plan period. About 1.84 lakh villages
had been benefited from water supply schemes.

VI. Sixth Five Year Plan:

In the Sixth Five Year Plan (1978-83) (envisaged during the Janta Government
at Centre); the National Development council discussed the document Draft
Plan 1978-83 under the chairmanship of the Prime Minister of March 18/19,
1978 and approved the programme such as removal of unemployment,
reduction in poverty and inequalities and the continues progress towards self-
reliance.

This clearly showed a clear cut shift in the strategy of planning. For the first
time, Planning Commission acknowledged the denial of Social justice to the
poorest sections of population. Draft Five Year Plan 1978-83 stated, ‘what
matters is not the precise rate of increase in the national product that is
achieved in five or ten years but whether we can ensure within specified time
frame a measurable increase in the welfare of the million of the poor.’

Therefore, Mahalanobis strategy of heavy industry development was

condemned. With its revised priorities, the Janta Government Strategy
favoured Gandhian solution which stressed for the development of cottage and
small industries based on labour-intensive techniques. Another significant
change was noticed in the field of industrial development i.e. liberalising the
economy by making extension in the area of private sector and liberal imports.

Objectives:

The objectives of Sixth Five Year plan are as under:

(а) Promotion of efficiency in the use of resources and improved productively;

(b) Strengthening the impulses of modernisation for the achievement of

economic and technological self-reliance;

(c) A progressive reduction in the incidence of poverty and unemployment;

(d) A speedy development of indigenous sources of energies;

(e) Improving the quality of life of the people in general with special reference to
the economically and socially handicapped population;

(f) Strengthening the distribution bias of public policies and services in favour
of weaker sections of society;

(g) A progressive reduction in regional inequalities;

(h) Promoting policies for controlling the growth of population through

voluntary acceptance of the small family norm;

Achievements:

Balance of Payment:

The export and import ending 1984-85 was recorded to the order of Rs. 9962
crore and Rs. 15600 crore respectively. The trade balance was (—) 21.0 against
its projection of (—) 17.8. The disappointing performance of export was related
to an unusual combinations of adverse internal and external developments.
Horticultural and Plantation Crops:

The production of vegetables and potatoes was recorded during 1984-85 as

40.00 million tones and 16.00 million tones respectively. The production of
coconut was also satisfactory. Fruits also showed the production of 23.50
million tones in 1984-85 against its target of 24.40 million tones.

In the same manner, the production of tea was of little less than the target. It
was 645 million kgs in 1984-85 against target of 705 million kgs but coffee’s
production was more than target 20000 thousand tonnes of production was
estimated in 1984-85 when it was only 118.6 thousand tones in 1980-81.

Crop Production and Selected Inputs:

In the sixth plan, it was proposed to have replacement rate of 10 per cent for
the pollinated crops like wheat and paddy, 100 per cent for hybrids and 5 per
cent for pulses and oil seeds. In states like Madhya Pradesh, they are very
much low, which it attributed to countless reasons, as high sale prices of the
seeds and lack of popularising certified seeds.

On the other hand, higher replacement rate in some of the states like Assam,
Manipur and Tripura (vary from 30 to 60 per cent) are due to the fact that it is
not possible for the cultivators of these states to have their own seeds because
of the agro-climatic conditions.

Agricultural Credit and Storage Capacity:

The co-operative with their country wide network of 94089 primary agricultural
credit societies constitute the most significant agency in terms of volume of
loan advanced and territorial coverage. Commercial banks have over 36000
semi urban and rural branches and regional rural banks number 182 with
8727 branches as on March 31, 1985.
Through these agencies, disbursement of credit has risen from Rs. 2550 crore
in 1979-80 to Rs. 5810 crore in 1984-85.

Another important development in the field of agricultural credit was the

establishment of the National Bank for Agriculture and Rural Development
(NABARD) in July, 1982. Its business has gone up from the level of Rs. 703
crore in 1982-83 to Rs. 1056 crore in 1984-85.

Animal Husbandry and Dairying:

The number of veterinary hospitals and dispensaries rose from 12017 in 1979-
80 to 14849 in 1984-85. Besides 19286 Veterinary First Aid Centres were
established against the plan target of 18483 to provide animal health facilities
near the doorsteps of farmers.

Similarly, the number of liquid milk plants were recorded 166 in 1984-85
against its number of only 142 in 1979-80. For marketing of eggs, 111 egg and
poultry production cum marketing centres were established during the plan
period. Three sponsored Dairy development Projects in the districts of Dorrang,
Dibrugarh, Sibsagar.

VII. Seventh Five Year Plan (1985-90):

The draft of Seventh Five Year Plan approved by National Development Council
on Nov. 9, 1985. It was noted that since independence the inception of
planning, Indian economy has made steady progress towards the basic
objectives of building an independent, self-reliance economy. The plan sough to
emphasize polices, which would accelerate the growth in food-grain production,
increase in employment and raise productivity.

Achievements:

Agriculture:
The first three years were of the poor monsoon years. 150.4 million tones of
food-grains was recorded in 1985- 86 which was lower than the previous peak
production of 152.4 million tones in 1983-84. The second year 1986-87
recorded decline to 143.4 million tones and followed decline to 138.4 million
tones in 1987-88.

This set back to agricultural production in these years to be seen against the
background of the long-term growth rate of agricultural output around 2.6 per
cent for the period from 1949-50 to 1984-85; the growth rate between 1978-79
and 1984-85 rose to 3.5 per cent.

Among non-foodgrain crops, the production of oil seeds remained below the
target in the first three years of Seventh Plan. In the case of cotton, the output
exceeded the target during the first three years. During the current year (1988-
89) production is likely to touch a record level of 90.95 lakh bales.

The production of jute and mesta in the first two years exceeded the target
while the third year registered a fall. The production of sugarcane reached a
record to 196.72 million in 1987-88.

So far as, food crops are concerned, the production of rice was lowered from
59.39 million tones in 1985-86 to 53.66 million tones in 1986-87 and further
to 48.76 million tones in 1987-88. In 1988-89, production has been estimated
to 67.95 million tones.

Agricultural Inputs:

During 1985-86 and 1986-87, total potential irrigation was achieved of 4.41
million hectare against its target of 4.65 million hectares. However, investment
on minor irrigation development was made of the order of Rs. 647 crore in
1985-86 and Rs. 730 crore in 1986-87.
At the terminal year of the plan, 70 million hectares of land was to be covered
under HYV but achievement fell short of the target by 5.7 per cent in 1985-86.
7.4 per cent in 1986-87 and about 17.9 per cent in 1987-88.

The consumption of fertilizer is expected to touch a level of 12.3 million tones

by the end of 1989-90. However, in 1988-89, the figure of consumption is
around 11.3 million tones.

Industrial Performance:

The Seventh Plan has laid down considerable emphasis on accelerating the
pace of growth by liberalization of industrial licensing policy and other
regulations, provision of incentives for certain key areas like electronics etc.
The pace of growth is almost maintained in 1987-88 despite the drought
conditions, resilience to supply shocks from agriculture and thinning
interdependence between agriculture and industry.

In 1987-88 industrial production had grown at 7.5 per cent while the
manufacturing sector recorded a growth of 8.2 per cent. However, the sectoral
break up of index of industrial production indicated growth rate of 3.6 per cent,
8.2 per cent and 7.7 per cent respectively for mining, manufacturing and
electricity in 1987-88. During April to December 1988, manufacturing sector
as a whole grew at 9.9 per cent.

Balance of Payment:

The trade deficit, which averaged 3.4 per cent of GDP during sixth plan period,
increased to 3.7 per cent of GDP in 1985-86 but declined in 1986-87 to 3.2 per
cent due to both better export performance and acceleration in growth rates of
imports.

Net earnings on invisible account fell down from an average of 2.1 per cent of
GDP during sixth plan to 1.4 per cent of GDP in 1985-86 and further to 1.2 per
cent of GDP in 1986- 87. As a result, current account deficit is estimated to
have averaged over two per cent of GDP, as against the targeted average of 1.6
per cent for the plan period.

In 1987-88, export of Rs. 15741 crore showed a substantial increase of 26.4

per cent as against a small increase of 14.3 per cent recorded in 1986- 87.
Similarly, imports too rose at a higher rate of 10.9 per cent in 1987- 88
compared to an increase of only 2.8 per cent in 1986-87.

In the first three years of seventh plan, imports increased by an annual

compound growth rate of 9.3 per cent as compared to an annual compound
increase of 16.1 per cent in the corresponding period of sixth plan. The trade
deficit declined from Rs. 7748 crore in 1986-87 to Rs. 6658 crore in 1987-88.

However, in SDR terms, total foreign exchange reserves stood at SDR 4486
million ending March 1988, showing a fall of SDR 627 million during 1987-88
as compared to a decline of SDR 615 million in 1986-87.

Price Trend:

Monsoon failures generate strong inflationary pressures because of the

consequent supply squeeze in agriculture and its effect on the rest of the
economy. The annual inflation rate in terms of the wholesale price index (WPI)
had gone up to 10.6 per cent during 1987-88. Upto January 1989, wholesale
price index had come down to 5.4 per cent.

The consumer price index has also registered a lower increase of 8.6 per cent
during April-December, 1988 as against 9.6 per cent in 1986-87. The
behaviour of prices during October-November 1988 was erratic.

Employment and Poverty Alleviation Programme:

At the beginning of the Seventh Plan, it was estimated that 222 million persons
in rural and 50.5 million in urban areas lay below the poverty line. In terms of
percentage, the poverty ratio was 39.9 per cent in rural areas and 27.7 per cent
in urban areas in 1984- 85. This plan aimed at bringing .down the poverty rate
from an average of 36.9 per cent to 25.8 per cent.

VIII. Eighth Five Year Plan (1992-97):

The eighth five year plan was for the period of April 1992 to March 1997.

Objectives:

Based on the approach, the following objectives were accorded priority in

Eighth Plan period:

(i) Generating adequate employment to achieve near full employment level by

the turn of the century.

(ii) Containing population growth through active people’s cooperation and an

effective scheme of incentives and disincentives.

(iii) Universalization of elementary education and complete eradication of

illiteracy among the people in the age group of 15 to 35 years.

(iv) Provision of sale drinking water and primary health facilities including
immunisation for all villages and entire population and complete elimination of
scavenging.

(v) Growth and diversification of agriculture to achieve self- sufficient in food

and generate surpluses for exports.

(vi) Strengthening the infrastructure (energy, transport, and communication,

irrigation) in order to support the growth processes on a sustainable basis.
(vii) The withdrawal of the state from these industrial activities where its
presence is not essential and encouraging private sector initiative to fill the
vacuum.

(viii) Encouraging all-round productivity and efficiency in the public sector

enterprises compelling them to rely on internally generated resources rather
than on budgetary support.

Achievements of the Plan:

The achievements of eighth five Year plan can be discussed as below:

Growth Rate:

The Eighth Plan had set a target of 5.6 per cent but it revealed from Economic
Survey of 1998-99 that the growth rate, which was only 0.5 per cent in 1991-
92 gradually increased to 5.2 per cent in 1992-93 and then increased to 6.2
per cent provisional in 1993-94. In 1994-95, the CSO estimates show that the
growth rate of GDP would be around 6.8 per cent.

Again, in 1995-96, the CSO estimate shows that the growth rate of GDP would
be around 6.8 per cent. Again, in 1995-96, the CSO estimate shows that the
growth rate of GDP at factor cost would be around 7.3 per cent. Moreover, in
1996-97, the same growth rate of GDP was around 7.8 per cent. Thus the
Eighth Plan is likely to end with an average growth rate of 6.8 per cent per
annum.

Gross Domestic Savings and Investment:

Gross domestic savings as per cent of GDP at current prices, during the first
four years of the Eighth Plan has increased from 22.1 per cent in 1992-93, to
24.9 per cent in 1994-95 and then to new peak of 26.1 per cent in 1996-97.
The average gross domestic savings (GDS) as per cent of GDP during the
Eighth Plan is estimated at 24.3 per cent and these surpassed the target of
21.6 per cent. The rise in domestic savings in 1996-97 to a peak level of 26.1
per cent of GDP was primarily due to rise in private savings to 24.2 per cent of
GDP.

The gross domestic investment as per cent of GDP at current prices has also
increased from 23.9 per cent in 1992-93 to 25.7 per cent in 1996-97. The
average gross domestic investment as per cent of GDP during the Eighth Plan
reached the level of 25.7 per cent. The average of saving-investment gap during
the first four years of the Eighth Plan (1992-96) stood at (—) 1.4 per cent.

The gross domestic capital formation which was 24.0 per cent of GDP in 1992-
93 gradually rose to 25.2 per cent in 1996-97. The average gross domestic
capital formation as per cent of GDP during the Eighth Plan (1992-97) stood at
24.5 per cent of GDP.

Sectoral Growth:

Agriculture:

In the agricultural sector, has achieved 6.1 per cent growth rate in 1992-93
and 94 per cent growth rate in 1996- 97. Total production of food-grains has
increased to 179.5 million tones in 1992-93 showing a growth rate of 6.6 per
cent and then it increased to 199.4 million tones in 1996-97 showing a growth
rate of 10.5 per cent.

Thus the agricultural sector performed better with an estimated growth rate of
10.5 per cent in 1996-97 as against a negative growth rate of 2.7 per cent in
1995-96. During the Eighth Plan (1992-97), the average growth rate attained
by the agricultural sector is estimated at.3.9 per cent.

Mining:
In respect of Mining and Quarrying sector of the country, the Eighth Plan set
the target of attaining annual average growth rate of 8 per cent but this sector
could attain the growth rate of 1.1 per cent and 1.7 per cent only in 1992-93
and 1993-94 respectively. Again in 1994- 95, 1995-96 and 1996- 97, this has
attained the growth rate of 9.2 per cent, 7.4 per cent and 1.2 per cent
respectively.

During the Eighth Plan (1992-97), the average growth rate attained by the
mining and quarrying sector was estimated at 3.4 per cent.

Industry:

As against the targeted growth rate of 7.3 per cent in the manufacturing sector
during the Eighth Plan, this sector could attain only 4.2 per cent and 8.4 per
cent growth rate in the 1992-93 and 1993-94 respectively.

Again the growth rate of manufacturing sector gradually increased to 10.6 per
cent in 1994-95, 15.0 per cent in 1995-96 and then declined to 7.7 per cent (P)
in 1996-97. The average growth rate attained by the manufacturing sector
during the Eighth Plan (1992-97) is estimated at 9.2 per cent.

During the Eighth Plan, the industrial sector of the country has responded well
to the economic reforms process. Accordingly, the growth rates of industrial
sector which was only 4.2 per cent in 1992-93 gradually rose to 6.6 per cent in
1993-94, 9.3 per cent in 1994-95, 12.2 per cent in 1995- 96 and 6.0 per cent
in 1996-97.

The average growth rate attained by the industrial sector during the Eighth
Plan (1992-97) was estimated at 8.0 per cent.

Electricity, Gas and Water Supply:

In respect of electricity, gas and water supply sector, the average performance
of the sector during the Eighth Plan (1992-97) was 7.3 per cent as against
targeted rate of 7.8 per cent. But taking the energy sector alone, the growth
rate of generations of electricity was only 5 per cent in 1992-93 and then rose
to 7.4 per cent in 1994- 95 and 8.2 per cent in 1995-96 as against the targeted
growth rate of 9 per cent during the Eighth Plan period. This shortfall in
respect of generation of electricity has been acting as a hurdle in the path of
growth of industrial sector.

Transport and Communication:

The growth of the Transport sector during the first two years of the Eighth Plan
was 5.4 per cent in 1992-93 and then declined to 4.4 per cent in 1993-94 as
against the targeted annual average growth rate of 6.1 per cent.

The thrust areas identified for the Eighth Plan period include replacement and
renewal of over aged assets, augmentation of terminal and rolling stock
capacities, gauge conversion and electrification. Indian Railways completed
gauge conversion of 1.351 kms. in 1992-93, 1,619 kms. in 1993-94, 1000 kms.
in 1995- 96 and 1300 kms. in 1996-97.

Again the communication sector has achieved a satisfactory progress, i.e. 10.3
per cent growth rate during 1992-93 and only 4.4 per cent growth rate in
1993-94 as against the targeted annual growth rate of 6.1 per cent during the
Eighth Plans.

In 1995-96, new telephone connections grew by 29.3 per cent. The department
of Telecommunication has released more than 7 million connections during the
first four years of the Eighth Plan since 1991-92. Thus the Eighth Plan target
of providing 7.5 million new telephone connections was exceeded by 2.5 million
connections.

Services Sector:
In respect of services sector, the rate of growth attained which was 5.4 per cent
in 1992-93, gradually increased to 7.7 per cent in 1994-95 and then to 8.0 per
cent in 1996-97 (P). During the Eighth Plan (1992-97), the average growth rate
attained by the services sector is estimated at 7.9 per cent as compared to that
of 7.4 per cent during the Seventh Plan.

Sectoral Share in GDP:

During the Eighth Plan the sectoral share in GDP between agriculture,
industry and services sector has undergone of considerable change from 30.19
per cent in agriculture, 29.08 per cent in industry and 40.73 per cent in
services in 1992-93 to 26.10 per cent in agriculture, 31.0 per cent in industry
and 42.70 per cent in services sector in 1996- 97. The Eighth Plan’s projection
of sectoral share for 1996-97 was 24.60 per cent in agriculture, 33.20 per cent
in industry and 42.20 per cent in services.

Employment Generations:

The Eighth Plan set ambitious targets of attaining growth rate of 2.6 per cent in
employment generation along with the annual average growth rate of 5.6 per
cent in GDP. Accordingly, it was estimated that on an average about 8 to 9
million additional employment opportunities would be generated every year
during the Eighth Plan.

As per one estimate of the Planning Commission, it is found that about 6.4
million additional employment opportunities would have been created in 1992-
93 and 5.6 million during 1993-94 where the rate of growth of employment
generation was 2.6 per cent in 1992-93 and 1.8 per cent in 1993-94.

Again the total annual employment growth in the economy is estimated to have
increased to about 7.2 million in 1994-95. Thus although the Eighth Plan
envisaged 8 to 9 million new jobs per year but during the first three years of
the plan 19.6 million new jobs were created.
Rural Development:

During the Eighth Plan the achievements of the rural development programmes
were not so impressive. About the achievement of IRDP during the Eighth Plan
period, total amount f fund utilised was to the extent of Rs. 4,866.7 crore and
the total amount of investment made (both subsidy and interest) was to the
tune of Rs. 11,523 crore.

Total number of families benefitted during the Plan was 108.08 lakh. Daring
the Eighth Plan, in case of DWCRA another sub-scheme of IRDP, a total of 1,
41,397 groups were formed with a membership of 22,66,817. Again in respect
of JRY, total number of man-days of employment generated during the Eighth
Plan was 4,037.4 million as against the target of 4,040.8 million.

Price Behaviours:

During the Eighth Plan the behaviour of prices was not satisfactory. In 1992-
93, the wholesale price index of the country rose by 7 per cent. In 1993-94,
although the Government wanted to control the growth of price level by 5 per
cent but ultimately wholesale price index in this year finally rose by 11 per cent
and thus crossed the double digit level.

In 1994-95, the inflation rate moved to double digit figure of 11.52 per cent
during the week ended February 11 although it reached the level of 10.04 per
cent during the week ending March 1995.

Thereafter, the country experienced a continuous, though gradual, decline in

inflation rate based on the movement of wholesale price from 10.4 per cent
from the first week end of April 1995 to 8.11 per cent by the end of July 1995,
and then to 4.40 per cent during the week ending February 1996 and then
slightly rose to 4.63 per cent for the week ending March 2, 1996.
Then after reversing the trend, the annual rate of inflation continued its
downward climb setting at 4.20 per cent during the week ending April 6, 1996.

IX. Ninth Five Year Plan (1997-2002):

The Ninth Plan has been launched in the 50th year of the independence of our
country. This is an opportune moment to take stock of the success of’ our
planning process. According to the Approach Paper, Ninth Plan will cover the
period from 1st April 1997 to 31st March 2002.

The principle task of the Ninth Plan will be to usher in a new era of people-
oriented planning, in which not only the Governments at the Centre and the
States, but the people at large, particularly the poor, can fully participate.

A participatory planning process is an essential pre-condition for ensuring

equity as well as accelerating the rate of growth of the economy. Total
investment is proposed to be Rs. 21,90,000 crore of it, public sector investment
will be Rs. 8,75,000 crore and private sector investment will be Rs. 13,15,000
crore. The objective of the plan is to achieve a growth rate of 7 percent per
annum.

Objectives of Ninth Five Years Plan:

The major objectives of Ninth Five Years Plan stated are as under:

(i) Priority to agriculture and rural development with a view to generating

adequate productivity employment and eradication of poverty;

(ii) Accelerating the growth rate of the economy with stable prices;

(iii) Ensuring food and nutritional security for all, particularly the vulnerable
sections of society;
(iv) Providing the basic minimum services of safe drinking water, primary
health care facilities, universal primary education, shelter, and connectivity to
all in a time bound manner;

(v) Containing the growth rate of population;

(vi) Ensuring environmental sustainability of the development process through

social mobilisation and participation of people at all levels;

(vii) Empowerment of women and socially disadvantaged groups such as

Scheduled Castes, Scheduled Tribes and other Backward Classes and
Minorities as agents of socio-economic change and development ;

(viii) Promoting and developing people’s participatory institutions like

Panchayati Raj Institutions, co-operatives and self-help groups.

(ix) Strengthening efforts to build self-reliance.

Achievements of the Ninth Plan:

The Ninth Plan has already completed its four year duration, thus it is quite
necessary to review the achievements of the plan. Let us now examine the
achievements of the Ninth Plan.

(i) Growth Rate:

Regarding annual growth rate of GDP, although the approach paper of the
Ninth Plan initially set the target of attaining 7.0 per cent annual growth rate of
GDP but considering the slowdown of the economy, the draft Ninth Plan has
reduced the overall growth targets in GDP from 7.0 per cent to 6.5 per cent.

But according to the Economic Survey 2001-2002, the growth rate of GDP
which has only 4.8 per cent in 1997-98 gradually increased to 6.5 per cent in
1998-99 and then decelerated marginally to 6.2 per cent in 1999-2000 and
then to 4.0 per cent in 2000-01 and then to 5.4 per cent in 2001-02.

Therefore, the annual average growth rate during the Ninth Five Year Plan
(1997-2002) is now estimated at 5.4 per cent which is lower than the plan
target of 6.5 per cent.

(ii) Gross Domestic savings and Investment:

The Ninth Plan draft had set the target of gross domestic savings rate at 26.1
per cent of GDP but the same rate at current prices, during the first three
years of the Plan has reached the level of 23.1 per cent in 1997-98, 21.7 per
cent in 1998-99 and 23.2 per cent in 1999-2000 and 23.4 per cent in 2000-01.

The gross domestic investment as per cent of GDP at current prices has
reached the level of 25.0 per cent in 1997-98, 22.7 per cent in 1998- 99 and
24.3 per cent in 1999-2000 and 24.0 per cent in 2000-01 as against the
annual average target of 28.2 per cent.

(iii) Sectoral Growth:

Although the draft Ninth Plan had set a target to attain annual average growth
rate of 3.9 per cent in Agriculture and allied sector but during the first three
years of the Ninth Plan it has attained 2.7 per cent growth rate. The same
sector attained the growth rate of (—) 2.7 per cent in 1997-98, 7.6 per cent in
1998-99, (—) 0.9 per cent in 1999-2000, (—) 6.6 per cent in 2000-01 and
finally 6.8 per cent in 2001-02.

The index of agricultural production (1981- 82 = 100) increased from 165.3 in

1997-98 to 177.9 in 1998-99, 176.2 in 1999- 2000, 164.6 in 2000-01 and
finally to 175.9 in 2001-02.
Total production of food-grains has also increased substantially from 192.3
million tones in 1997-98, 203.6 million tones in 1998-99, 209.8 million tones
in 1999-2000 and then declined to 195.9 million tones in 2000-01 and then
again increased to 209.2 million tones in 2001-02. Thus the agriculture and
allied sector has shown a mixed performance during the period of the Ninth
Plan.

Mining:

In respect of mining and quarrying the Ninth Plan has set a target of attaining
growth rate of 7.2 per cent but during the first three years of the plan, this
sector could attain an average growth rate of 2.9 per cent. The yearly growth
rate of this sector was 6.9 per cent in 1997-98 and then the same growth rate
declined to 0.9 per cent in 1998-99, 1.0 per cent in 1999- 2000 and 3.7 per
cent in 2000-2001 and 1.1 per cent in 2001-02.

Industry:

The growth rate of 8.2 per cent was fixed in the manufacturing sector during
the Ninth Plan. This sector could attain on an average 4.9 per cent growth rate
during the first three years of the plan. Again, in respect of Electricity, Gas and
water supply, as against the targeted growth rate of 9.3 per cent, this sector
could attain the growth rate of 7.7 per cent during the first three years of the
plan.

But taking the industry sector as a whole, this growth rate attained in this
sector was 6.7 per cent in 1997-98 and 4.1 per cent in 1998-99 but then the
same growth rate increased to 6.7 per cent in 1999- 2000 and 5.0 per cent in
2000-2001 and 2.3 per cent in 2001-02.

Transport and Communication:

The Ninth Plan has fixed the target of 3.9 per cent for rail transport, 4.4 per
cent in other transport and 9.5 per cent in communication sector, but during
the first three years of the plan these sectors could attain an average growth
rate of 3.1 per cent, 5.6 per cent and 14.1 per cent respectively.

Trade:

As against the targeted growth rate of 6.7 per cent in the trade sector during
the Ninth Plan this sector could attain on an average 6.7 per cent growth rate
of during the first three years of the plan.

Service Sector:

The growth rate of 9.9 per cent in the financial services sector was targeted in
the Ninth Plan. The sector could attain on an average 11.4 per cent growth rate
during the first three years of the plan. Again, in respect of other services, as
against the targeted growth rate of 6.6 per cent, the actual realisation of the
target during the first three years of the plan was 8.8 per cent.

But taking the services sector as a whole, the growth rate attained in this
sector was 9.8 per cent in 1997-98, 8.2 per cent in 1998-99, 9.6 per cent in
1999-2000 and 6.5 per cent in 2000-2001.

Price behaviours:

During the first four years of the Ninth Plan, the price behaviour of the country
reflects a moderate behaviour in its price level. Accordingly, the average rate of
inflation (WPI) which was 4.4 per cent in 1997-98, gradually rose to 5.9 per
cent in 1998-99 and then declined to 3.3 per cent in 1999-2000 and again rose
to 7.1 per cent in 2000-2001 and finally to 4.4 per cent in 2001-02.
Failures of Economic Planning

Following observations highlight failures of planning in India:

 No Substantial Increase in the Standard of Living

 Rise in Prices
 Increase in Unemployment
 Inadequate Increase in Production
 Inadequate Development of Infrastructure
 Inefficient Administration
 High Capital Output Ratio

Plans Target Achieved Priority Given Features and Mottos

ed Growth
Growt
h
1st Five 2.1% 3.6% Agriculture, It is based on the
Year Plan power, Harrod-Domar Model.
(1951-56) transport, Community
price stability, Development program
irrigation and was launched in 1952.
electricity
2nd Five 4.5% 4.2% Heavy It is also known as
Year Plan Industries P.C.Mahalanbis Plan
(1956- after its architect.
1961) Its main objective was
rapid industrialization.
3rd Five 5.6% 2.8% Food grains, Its aim was to make
Year Plan Heavy India “Self Reliant” and
(1961- Industries “Self-Generating”.
1966) It was a complete failure
due some misfortunes
like Chinese Aggression,
Indo-Pak war, severe
drought.
Plan An agricultural strategy
Holiday was taken involving
(1966- distribution of high-
1969) yielding seeds, use of
fertilizers, exploitation
of irrigation potential,
soil conservation etc.
4th Five 5.7% 3.2% Agriculture Did well in first two
Ye years, later failed due to
ar Plan poor monsoon.
(1969- Had to tackle
1974) Bangladesh Refugees
after Indo-Pak war.
5th Five 4.4% 5.0% Removal of It was proposed by D D
Year Plan Poverty, Dhar.
(1974- “attainment of Distribution of income,
1978) self-reliance” significant growth in
domestic rate of
savings.
Rolling It was made by Janata
Plans Dal (then Ruling Party)
for two years.
6th Five 5.2% 5.5% Agriculture Major aims were –
Year Plan Industries increase in National
(1980- Income, advancement of
1985) technology, decrease of
poverty and
unemployment,
population control.
7th Five 5.0% 6.0% Energy and It increases employment
Year Plan Food grains opportunities and
(1985- productivity.
1990
Annual
Plans
8th Five 5.6% 6.6% Human Rapid economic growth,
Year Plan Resource high growth of
(1992- Education agriculture and allied
1997) sectors, manufacturing
sectors, better import
and export,
improvement in trade
and current account
deficits.
9th Five 6.5% 5.4% Social Justice It has four important
Year Plan dimensions. i.e. quality
(1997- of life, generation of
2002) productive employment,
 regional balance and
self reliance.
10th Five 8.1% 7.6% Increased literacy rate,
Year Plan Income and universal access to
(2002- Energy primary   education.
2007)
11th Five 8.0% 7.9% Inclusive Increased GDP,
Year Plan Growth increased literacy rate,
(2007- reduced infant   
2012) mortality rate, increased
sex ratio.
12th Five 8% --- Faster, Reduce poverty, growth
Year Plan sustainable in agriculture and
(2012- and Inclusive manufacturing
2017) Growth industry, reduced infant
mortality rate and
increase job op

Planning Commission NITI Aayog

Enjoyed the powers to allocate funds to To be an advisory body, or a think-tank. The
ministries and state governments. powers to allocate funds might be vested in the
finance ministry.
The last Commission had eight full-time The number of full-time members could be fewer
members than Planning Commission
States' role was limited to the National State governments are expected to play a more
Development Council and annual significant role than they did in the Planning
interaction during Plan meetings. Commission.
Secretaries or member secretaries were Secretaries to be known as the CEO and to be
appointment through the usual process appointed by the prime minister.
Full Planning Commission had no provision To have a number of part-time members,
for part-time members. depending on the need from time to time.
The commission reported to National Governing Council has state chief
Development Council that had state chief ministers and lieutenant governors.
ministers and lieutenant governors.
Had deputy chairperson, a member New posts of CEO, of secretary rank, and Vice-
secretary and full-time members Chairperson. Will also have five full-time
members and two part-time members. Four
cabinet ministers will serve as ex-officio
members.
Policy was formed by the commission and Consulting states while making policy and
states were then consulted about allocation deciding on funds allocation. Final policy would
of funds. be a result of that.
Had power to decide allocation of No power to allocate funds
government funds for various programmes
at national and state levels.
Imposed policies on states and tied NITI is a think-tank and does not have the
allocation of funds with projects it power to impose policies.
approved.