Five Year Plans | 20 Aug 2022

What is the History of Five Year Plans?

The Idea of Planning as a process of rebuilding the economy gained prominence in the
1940s-50s.
Various Industrialists came together in 1944 and drafted a joint proposal for setting up a
planned economy in India. It is famously known as the Bombay Plan.
Planning for development was seen as a crucial choice for the country, following
Independence.
Joseph Stalin was the first person to implement the Five-Year Plan in the Soviet Union, in
the year 1928.
India launched a series of Five-Year Plans after independence to build its economy and
attain development.

What is the Concept of FYPs?

The idea of five-year plans is simple- The Government of India prepares a document with
all its income and expenditure for five years.
The budget of the central government and all the state governments is divided into two
parts: non-plan budget and plan budget.
The non-plan budget is spent on routine items yearly. The planned budget is spent on a
five-year basis as per the priorities fixed by the plan.
The model of the Indian Economy was premised on the concept of planning based on
five-year plans from 1951-2017.
The Five Year Plans were formulated, implemented and regulated by a body known as
the Planning Commission.
The Planning Commission was replaced by a think tank called NITI AAYOG in 2015.
The Niti Aayog has come out with three documents — 3-year action agenda, 7-year
medium-term strategy paper and 15-year vision document.

Five Year Highlights

Plan
First Five- The First Five Year Plan laid the thrust of economic development in India.
Year Plan It was presented by the first Indian Prime Minister, Jawaharlal Nehru to
(1951-56) the Parliament of India.
 K.N Raj, a young economist, argued that India should "hasten slowly" for
the first two decades.
It mainly addressed the agrarian sector, including investment in dams
and irrigation. Ex- Huge allocations were made for Bhakhra Nangal
Dam.
It was based on the Harrod Domar Model and emphasised increasing
savings.
By the end of 1956, five Indian Institutes of Technology were established.
The target growth rate was 2.1% and the achieved growth rate was 3.6%.

The Second Five year Plan stressed rapid industrialisation and the
public sector.
It was drafted and planned under the leadership of P.C Mahalanobis.
Second Five It emphasised quick structural transformation.
Year Plan The government imposed tariffs on imports to protect domestic industries
(1956-61) under this plan.
The target growth rate was 4.5% and the actual growth rate was slightly
less than expected, 4.27%.

The focus was on agriculture and improvement in the production of wheat.

States were entrusted with additional development responsibilities. Ex-
States were made responsible for secondary and higher education.
Panchayat elections were introduced to bring democracy to the
Third Five grassroots level.
Year Plan The target growth rate was 5.6% and the actual growth rate only achieved
(1961-66) 2.4%
This indicated a miserable failure of the Third Plan, and the government
had to declare "Plan Holidays" (1966-67, 1967-68, and 1968-69). The Sino-
Indian War and the Indo-Pak War, which caused the Third Five Year Plan
to fail, were the primary causes of the plan holidays.

It was introduced under the Prime Ministership of Indira Gandhi and

attempted to correct the previous failures.
Based on Gadgil Formula, a great deal of emphasis was laid on growth
Fourth Five- with stability and progress towards self-reliance.
Year Plan: The government nationalised 14 major Indian Banks and the Green
(1969-74) Revolution boosted agriculture.
The Drought Prone Area Programme was also launched.
The target growth rate was 5.6%, but the actual growth rate was 3.3%.

It laid stress on increasing employment and poverty alleviation (garibi

hatao).
In 1975, the Electricity Supply Act was amended, enabling the central
government to enter into power generation and transmission.
Fifth Five- The Indian National Highway System was introduced.
Year Plan The Minimum Needs Programme introduced in the first year of this plan,
(1974-78) aimed to provide basic minimum needs. MNP was prepared by D.P. Dhar.
The target growth rate was 4.4% and the actual growth rate turned out to
be 4.8%
In 1978, the newly elected Morarji Desai government rejected this plan.
Rolling Plan (1978-80)

This was a period of instability. The Janata Party government rejected the fifth five-year Plan
and introduced a new Sixth Five-Year Plan. This, in turn, was rejected by the Indian National
Congress in 1980 upon Indira Gandhi's re-election.

A rolling plan is one in which the effectiveness of the plan is evaluated annually and a new
plan is created the following year based on this evaluation. As a result, throughout this plan,
both the allocation and the targets are updated.
It underlined the beginning of economic liberation by eliminating price
controls.
It was seen as the end of Nehruvian Socialism.
Sixth Five To prevent overpopulation, family planning was introduced.
Year Plan On the recommendation of the Shivaraman Committee, the National
(1980-85) Bank for Agriculture and Rural Development was established.
The target growth rate was 5.2% and the actual growth rate was 5.7%,
implying that it was a success.

This plan was led by the Prime Ministership of Rajiv Gandhi.

It laid stress on improving Industrial productivity levels through the use
of technology.
Other objectives included increasing economic productivity, increasing the
production of food grains and generating employment by providing Social
Seventh Five Justice.
The outcome of the Sixth Five-Year Plan provided a robust base for the
Year Plan
success of the seventh five-year plan.
(1985-90)
It emphasised anti-poverty programmes, the use of modern technology,
and the need to make India an independent economy.
It focused on attaining prerequisites for self-sustained growth by 2000.
The target growth rate was 5.0%. However, the actual growth rate grew to
reach 6.01%

Annual Plans (1990-92)

The Eight Five Year Plan was not introduced in 1990 and the following years 1990-91 and 1991-
92 were treated as Annual Plans. This was largely because of the economic instability. India
faced a crisis of foreign exchange reserves during this time. Liberalisation, Privatisation,
Globalisation (LPG) was introduced in India to grapple with the problem of the economy
under prime minister P.V Narasimha Rao.
The Eighth Plan promoted the modernisation of Industries.
India became a member of the World Trade Organisation on 1 January
1995.
The goals were to control population growth, reduce poverty, generate
Eighth Five employment, strengthen the development of infrastructure, manage
Year Plan tourism, focus on human resource development etc.
(1992-97) It also laid emphasis on involving the Panchayats and Nagar Palikas
through decentralisation.
The target growth rate was 5.6% but the actual growth rate was an
incredible 6.8%.
 It marked India's fifty years since Independence and Atal Bihari Vajpayee
led the prime ministership.
It offered support for social spheres to achieve complete elimination of
poverty and witnessed the joint efforts of public and private sectors in
guaranteeing economic development.
The focus was also to balance the relationship between rapid growth and
Ninth Five the quality of life for the people.
Year Plan The objectives, further included, empowering socially disadvantaged
(1997-2002) classes, developing self-reliance and primary education for all children in
the country.
Strategies included enhancing the high rate of export to gain self-reliance,
efficient use of scarce resources for rapid growth etc.
The target growth rate was estimated at 7.1% but its actual growth rate fell
shorter to 6.8%

The features of this plan were to promote inclusive growth and equitable
development.
It intended for an 8% GDP growth per year.
Tenth Five It aimed at reducing the poverty by half and creating employment for
Year Plan 80million people. Further, it aimed to reduce regional inequalities.
(2002-07) It also emphasised reducing the gender gaps in the field of education and
wage rates by 2007.
The target growth rate was 8.1% while the actual growth was 7.6%.

The Eleventh Plan was significant in its aim to increase enrolment in

higher education and focused on distant education as well as IT institutes.
Ex: The Right to Education Act was introduced in 2009, and came into
effect in 2010, making education free and compulsory for children aged
Eleventh between 6-14 years.
Five Year Its main theme was rapid and more inclusive growth.
Plan (2007- It is aimed at environmental sustainability and reduction in gender
2012) inequality.
C.Rangarajan prepared the Eleventh Five Year Plan.
The focus was also laid on providing clean drinking water for all by 2009.
The target rate was 9% and the actual growth rate was 8%.

The last Five Year Plan had "Faster, More Inclusive and Sustainable
Growth" as its theme.
The plan aimed at strengthening infrastructure projects, and providing
electricity supply in all villages.
Twelfth Five It also aimed at removing the gender and social gap in admissions at
Year Plan school and improved access to higher education.
(2012-17) Further, it aspired to enhance the green cover by 1 million hectares each
year and to create new opportunities in the non-farming sector.
The target growth rate was 9% but in 2012, National Development Council
approved a growth rate of 8% for this twelfth plan.