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Salient Features of India’s Five Year Plan

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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.
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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.
Thus under the present regulatory mechanism, every planning decision in India
originates from the Planning Commission and being finally approved by the
National Development Council. Moreover, the Planning Commission of India is also
having adequate regulatory mechanism over the successful implementation of
planning.
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:
ADVERTISEMENTS:
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
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(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:
Indian planning system is broadly supported by programme implementation
machinery, which 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 concept of economic planning in India is derived from the Russia (then
USSR). India has launched 12 five year plans so far. First five year plan was
launched in 1951. Now the present NDA government has stopped the
formation of five year plans. So 12th five year plan would be called the last five
year plan of India.
1. First Five Year Plan:
I. It was made for the duration of 1951 to 1956.
II. It was based on the Harrod-Domar model.
III. Its main focus was on the agricultural development of the country.
IV. This plan was successful and achieved growth rate of 3.6% (more than its
target)
2. Second Five Year Plan:
I. It was made for the duration of 1956 to 1961.
II. It was based on the P.C. Mahalanobis Model.
III. Its main focus was on the industrial development of the country.
IV. This plan was successful and achieved growth rate of 4.1%
3. Third Five Year Plan:
I. It was made for the duration of 1961 to 1966.
II. This plan is called ‘Gadgil Yojna’ also.
III. The main target of this plan was to make the economy independent and to
reach self active position of take off.
IV. Due to china war, this plan could not achieve its growth target of 5.6%
4. Plan Holiday:
I. The duration of plan holiday was from 1966 to 1969.
II. The main reason behind the plan holiday was the Indo-Pakistan war &
failure of third plan.
III. During this plan annual plans were made and equal priority was given to
agriculture its allied sectors and the industry sector.
5. Fourth Five Year Plan:
I. Its duration was from 1969 to 1974.
II. There were two main objective of this plan i.e. growth with stability and
progressive achievement of self reliance.
III. During this plan the slogan of “Garibi Hatao” is given during the 1971
elections by Indira Gandhi.
IV. This plan failed and could achieve growth rate of 3.3% only against the
target of 5.7%.

6. Fifth Five Year Plan:

I. Its duration was 1974 to 1979.
II. In this plan top priority was given to agriculture, next came to industry and
mines.
III. Overall this plan was successful which achieved the growth of 4.8%
against the target of 4.4%.
IV. The draft of this plan was prepared and launched by the D.P. Dhar. This
plan was terminated in 1978.
7. Rolling Plan: This plan was started with an annual plan for 1978-79 and as a
continuation of the terminated fifth year plan.
8. Sixth Five Year Plan:
I. Its duration was from 1980 to 1985.
II. The basic objective of this plan was poverty eradication and technological
self reliance.
III. It was based on investment yojna, infrastructural changing and trend to
growth model.
IV. Its growth target was 5.2% but it achieved 5.7%.
9. Seventh Five Year Plan:
I. Its duration was from 1985 to 1990.
II. Objectives of this plan include the establishment of the self sufficient
economy, opportunities for productive employment.
III. For the first time the private sector got the priority over public sector.
IV. Its growth target was 5.0% but it achieved 6.0%.
Annual Plans: Eighth five Plan could not take place due to volatile political
situation at the centre. So two annual programmes are formed in 1990-91&
1991-92.
Five Year Plans before the Liberalisation
10. Eighth Five Year Plan:
I. Its duration was from 1992 to 1997.
II. In this plan the top priority was given to development of the human
resources i.e. employment, education, and public health.
III. Duing this plan Narasimha Rao Govt. launched New Economic Policy of
India.
IV. This plan was successful and got annual growth rate of 6.8& against the
target of 5.6%.
11. Ninth Five Year Plan:
I. Its duration was from 1997 to 2002.
II. The main focus of this plan was “growth with justice and equity”.
III. It was launched in the 50th year of independence of India.
IV. This plan failed to achieve the growth target of 7% and grow only at the
rate of 5.6%.
12. Tenth Five Year Plan:
I. Its duration was from 2002 to 2007.
II. This plan aims to double the per capita income of India in the next 10 years.
III. It aims to reduce the poverty ratio 15% by 2012.
IV. Its growth target was 8.0% but it achieved only 7.2%.
13. Eleventh Five Year Plan:
I. Its duration was from 2007 to 2012.
II. It was prepared by the C. Rangarajan.
III. Its main theme was “faster and more inclusive growth”
IV. Its growth rate target was 8.1% but it achieved only 7.9%
14. Twelfth Five Year Plan:
I. Its duration is from 2012 to 2017.
II. Its main theme is “Faster, More Inclusive and Sustainable Growth”.
III. Its growth rate target is 8%.
IV. It is the current five year plan of India.

Five Years Plans in India

The main features of first five year plan (1951-1956)

 To reconstruct the economy that was damaged due to repercussion effect of

partition of India and world war.2nd
 Construction of the roads, extending the transport and communication
facilities and constructing the irrigation and water electricity projects were
given priority which helps in proper growth and development of the country.
 Community development program was launched in 1952.
 It plans to constitute administrative and organizational set up necessary for
enforcing the development programmes.
 To introduce the mechanism in the economy this helps in checking the
Inflationary pressure.
 To enhance the capacity of production in the economy.
 To improve the food availability in the country.

Under the first year plan provision was made to spend a sum of Rs 2378 crore. But
the actual expenditure amounted to Rs.1960 crore. In this plan agriculture was
given highest priority.

Target growth rate was 2.1% in the plan period. But this plan was more than a
success, achieve annual compound growth rate of 3.6% because of good harvest of
last two years.

The main features of Second five year plan (1956-1961)

Model prepared by Professor P.C. Mahalanobis is being used in this plan.

The fundamental objective of this plan was to initiate and accelerate the process
of industrialization in a country.

 Hydroelectric power projects and five steel power plants were established in
Durgapur ,Rourkela and Bhilai

o The actual growth rate achieved in this plan was 4.2% as compared
to the target rate, which was 4.5%.
o To increase the annual capital investment rate from 7% to 11% by
1960-61.
o Expansion in employment opportunities.
o During the plan period, per capita income growth rate was only 1.9%
per annum but the growth rate of national income was 4.27% in the
same period.
 o This plan was hindered by the rising inflation rate in the economy.
The price level in the economy was become more than double as
compared to the first plan.
o The atomic energy commission in department of atomic energy was
established on March 1st 1958.
o The main stress was on the development of heavy industries which
helps in the fast progress of industrialization in the country.
o Hypothetical capital output ratio is being used which is 2:1 but in
actuality in this plan period it was 3.40:1 on the basis of 1980-81
prices.

The Main Features of Third Five Year Plan (1961-1966)

To push up the economy to the take off stage of development and self-sustaining
growth in the country is the basic objective of this plan.

 To attain more than 5% annual growth rate.

 National income should grow at 30%.
 Per capita income should grow at annual level of 17%.
 To restrict the import of foodgrains there is a need of attaining the
self-sufficient position in foodgrain availability.
 A target of 6%annual growth rate for foodgrains and 14% annual growth
rate target was fixed for industrial production.
 The actual achieved growth rate of national income was 2.5%, against the
target of 5% per annum.
 The actual growth rate of per capita was only 0.2% per annum.
 This plan miserably fails due to war with china and Pakistan during this plan
period.
 Drought was faced by India which also plays its role in the failure of plan.
 It also aims at expanding the basic good industries to follow up the
industrialization process in the economy.
 It ensures the proper utilization of all resources which are available to the
country.

Three annual plans (plan holiday 1966-1969)

The fourth plan was scheduled to begin from April 1, 1966, but due failure of the
third plan, production in various sector became stagnant.

 In 1966 the government of India declared devaluation of rupees but

favorable results could not be obtained.
 During this period main focus is on the agricultural activities.
 The transition period of agriculture begins in 1966 when green revolution
takes place in the country. High yielding varieties of seeds is being used in
the production of rice, wheat, jowar, bajra, and maize to enhance their
productivity level. For efficient use of this technique better irrigation facility,
fertilizers, pesticides have being developed in the country.
 The growth target was not set for these three years but the actual growth
rate was 3.9%
 In this plan economy tries to overcome from the failure faced by the country
during third plan.
 After absorbing the shocks of third plan period it tries to make a way out for
growth and development in the country.

The Main Features Of Fourth Five Year Plan (1969-1974)

The two principal objectives of 4 th plan were sustainable growth and self
dependence. To achieve these two objectives certain targets were laid down -:

 To ensure growth rate of 5.7% for economic development of the country.

 In agriculture 5% and in industrial production 8% to 10% growth target is
set.
 To develop backward areas and to remove the regional imbalances.
 Regulation and control over the money supply for the purpose of stabilizing
the prices in the economy.
 Maintaining the buffer stock so that problem of food crises does not arises in
the country.
 Family planning programmes was introduced during this plan period, for
improving the living standard and to keep a check on population growth in
the country.
 To create employment opportunities for reducing the involuntary
unemployment.
 To establishes the economic equality.
 Production of commodities of general consumption has been increased.

During the fourth plan, the annual growth rate of national income (1993-94 prices)
was only 3.8% lower than the target growth. The annual growth rate of industrial
production was only 4% which was lower than the target growth rate. In 1971
India’s war with Pakistan and liberation war in Bangladesh hampers the industrial
development because the funds which are supposed to be used for industrial
development are utilized on after war effort. Prices increased about
61%.Nationalisation of 14 banks and first under ground nuclear test was also
performed during this period.

The Main Features of Fifth Five Year Plan (1974-1979)

The fifth plan was structured by DD Dhar. The basic objectives of the plan were
‘removal of poverty’ (Garibi Hatao) and self-dependence

 National programmes for essential needs in which supply of drinkable water, education
at primary level, provide medical help to rural households, and electrification of the
villages and cleanliness of the suburbs were included.
 In this plan more emphasis is placed on the policy of import substitution and export
promotion for the betterment of the people of the country.
 There should be optimum collection and distribution system to provide benefits to the
weaker section of the country.
 Unnecessary consumption should be avoided.
 For reducing the regional and social inequalities various fiscal policies and institutional
measures have been introduced by the government.
 Production of commodities of general use which plays important role in day to day life
was emphasized.
 Many programs were introduced in the plan period on social welfare.
 The target growth rate was 4.4% but the actual growth rate achieved was 4.7%.
 When the janta government came into power, this plan was closed in 1978 one year
before its closing period which is in 1979.

Rolling Plan (1978 – 1980)

After fifth plan ended before its time period there are two phases of sixth
plan.

When janta government in power the plan for (1978-1983) were introduced but this
plan lapses before its time period because the congress came into power and
terminated the plan and a new plan was introduced in the country for the period of
(1980-1985).

Rolling plan is plan by janta government for two years which is (1978-1980).

In 1979-1980 growth rate was -5.2 %( negative).

The Main Features Of Sixth Five Year Plan (1980-1985)

 The first phase of sixth plan was introduced by janta government but it was
abandoned by the congress and a new Sixth plan was introduced for the
period 1980-1985.
 Increase in national income, modernization of technology, rapid
development of the domestic sources of energy and stress on the efficient
use of the energy resources.
 Ensure continuous decrease in poverty and unemployment.
 Minimum need programme was introduced for the qualitative improvement
in the living standard of the poor people of the country.
 Stress on minimization of regional disparities.
 To ensure the participation of all categories of people in development
process by adopting institutional strategies.
 Family planning methods was adopted for population control.
 5.2% was the growth target but the economy has achieved the growth rate
of 5.7%.

The Main Features Of Seventh Five Year Plan (1985-1990)

 This plan emphasis on self dependence on foodgrains production, increase in

the rate of employment, with special focus on social justice.
 The major objectives was to establish a social system based on equality and
justice, to encourage self reliance by export promotion and import
substitution, energy protection and development of non traditional energy
sources, ecological and environmental protection.
 The growth rate of 5.8% was achieved in the economy during the plan as
compared to the target growth rate which was 5.0%.

Annual Plan (1990-1992)

 Due to political changes at the centre the government was not able to
introduce the eighth plan on the scheduled time.
 Balance of payments account is worsening during this time.
 Inflation rate in 1991 was at high level specially prices of food items
increases rapidly in this year.
 The government was under the danger of falling into the debt trap.
 The growth rate of 3.4% was achieved during this period.

The Main Features Of Eighth Five Year Plan (1992-1997)

 Human development in various aspects is the basic motto of eighth plan.

 Priorities were given in the plan to create sufficient employment
opportunities, to impose restrictions on population explosion by seeking
people’s cooperation, to make provision for primary health care facilities and
vaccination in all the villages to cover entire population, to strengthen the
 basic infrastructure (energy, transport, communication, irrigation,) in order
to support the development process.
 The average annual growth rate in agricultural and ailed activities has been
estimated at 3.9% while the target was 3.5%.
 During the 8th plan the services like trading, hotels, transport and
communication made a good progress.
 The inflation rate based in whole sale price index was come down to 3.8%
which was 16.3% in 1991.
 The fiscal deficit during 1990-1991 was 8.3% of GDP but during the plan
period it came down to 5.23%.
 The plan has achieved a growth rate of 5.8% but the target was set to the
level of 5.6% in the economy.

The Main Features Of Ninth Five Year Plan (1997-2002)

The main focus of the ninth plan was ‘growth with equity and distributive justice’.

In order to achieve this objective following four fields were identified -:

 Quality of life – To ensure a better life to the poor people, measures for
poverty elimination and providing minimum basic services were adopted
which help in creating assets and integrate these people for the development
of the country. Private investors are interested only in profits so they
generally do not participate in basic service sector. The state takes the
responsibility of this sector to improve the quality of life of the people in the
country.
 Employment promotion – It focused in creating job opportunities by
developing technology in various sectors. To break the vicious circle of
poverty national employment assurance scheme is introduced in this period.
 Regional imbalances – For removing regional imbalance, the speed of
industrialization in the less developed area was given priority in the ninth
plan.
 Self- dependence – In order to achieve self dependence the following areas
are given priority-:

i) To ascertain the balance of payment.

ii) To check the burden of foreign debt and also give measure to curtail them.

iii) Proper utilization and protection of natural resources.

iv) To attain self sufficiency in foodgrains and technology.

v) To increase dependence on non- debt income for the purpose of

development.

The economy was only able to achieve the growth rate of 5.5% as compared to the
target which was set to 6.5%.

The Main Features Of Tenth Five Year Plan (2002-2007)

The main focus of the Tenth Five-Year Plan was:

  Universal access to primary education by 2007.
 15% in poor blocks and 25% in normal blocks is the essential amount
required to extend the funds of gram-sabha during 10th plan.
 Food for work programme in place of employment programmes.
 For improving the conditions of the poor people especially agricultural labor
great stress is given to agricultural sector.
 Sectors like real estate, transport small scale industries, transport,
IT-enabled services should grow at the accelerated rate during the 10 th plan
period to get high job opportunities in these sectors of the economy.
 Maternal mortality rate (MMR) should be reduced to twenty per thousand
live births at the end of 2007 and to ten per thousand live births at the end
of 2012.
 Infant mortality rate (IMR) should be reduced to forty five per thousand live
births by 2007 and to twenty eight per thousand live births at the end of
2012.
 The target growth rate was 8.1% but the economy was able to achieve only
7.8%.

This picture belongs to the first session of the regional consultations

meeting with the state governments of north India in New Delhi on
3rd July, 2006.

The Main Features of Eleventh Five Year Plan (2007-2012)

The basic components of this plan include broad based improvement in life of
weaker /backward section of the society like SCs/STs, other backward classes
(OBCs) etc.

Major objectives of 11th plan are as follows -:

 Manufacturing sector is targeted to grow at 12%

 Total fertility rate stand at 2.1 with the completion of the plan.
 Reduce anemia among women and girls by 50%with completion of the plan.
 It ensures the electricity connection to the rural people.
 Create 58 million new work opportunities.
 Ten percent decrease in the headcount ratio of poverty.
 33% share in government schemes belongs to the female members of the
country.
 Treatment of water waste by the end of 2011-2012.
 Efficiency of energy should be increased to 20% by 2016-2017.
 Educational unemployment should be below 5%.
 Increase of 20% in the real wage rate of those workers who are unskilled.
 Five percent increase in forest and tree cover.

The target growth rate was 8.1% but the economy in this period achieves a growth
rate of 7.9%.

In this picture prime minister Dr Manmohan singh chairing the full

planning commission meeting to approve the draft for 12thfive year plan in
New Delhi on 20th august 2011.
The Main Features of Twelfth Five Year Plan (2012-2017)

The basic components are to enhance the capacity for rapid growth in various
sectors of the economy.

The main objectives of the plan -:

 Real GDP must grow at the rate of 8%.

 Agriculture sector must grow at the rate of 4%
 Manufacturing sector must grow at the rate of 7.1%.
 Industrial sector must grow at the rate of 7.6%.
 Service sector must grow at the rate of 9%.
 On an average the states of the country grows at a rate which is more than
the rate of growth in 11th plan.
 Head count ratio of consumption poverty to be reduced by 10 percentage
points over the preceding estimates by the end of twelfth five year plan.
 Employment opportunities around 50 million in sectors other than
agricultural.
 On completion of 12th plan mean years of schooling should be seven years.
 Reduce infant mortality rate (IMR) to 25 per 1000 live births and maternal
mortality rate to 1 per 1000 live births, and child sex ratio (0-6) to 950 by
the end of twelfth five year plan.
 Reduce total fertility rate to 2.1 by the end of twelfth five year plan.
 Increase rural tele density to 70 percent with the completion of twelfth five
year plan.
 Eastern and western freight corridors must be completed by the end twelfth
five year plan.
 Technology and innovation is the key of higher productivity so the resources
should be moved towards this direction.
 Funds should be allocated to provide adequate transport infrastructure to
minimize the cost of transportation.
 Increase the banking services so that every household enjoy the facility of
banking.
 Direct cash payment method came in place of subsidies so that it will help in
keeping the track of government money.
 To over the food and nutritional insecurities steps taken for sustainable
growth in agricultural sector.
 One million hectare increase in green cover.
 Various measures should be taken to improve the health indicators.

Growth Rates during Five Year Plans:

Particulars Target growth rate Actual growth rate

First plan 2.1% 3.6%

Second plan 4.5% 4.2%

Third plan 5.6% 2.8%

Annual plan NA 3.9%

Fourth plan 5.7% 3.3%

Fifth plan 4.4% 4.7%

Annual plan NA -5.2%

Sixth plan 5.2% 5.7%

Seventh plan 5.0% 5.8%

Annual plan NA 3.4%

Eighth plan 5.6% 5.8%

Ninth plan 6.5% 5.5%

Tenth plan 8.1% 7.8%

Eleventh plan 8.1% (MYR) 7.9%

Twelfth plan(initial) 9-9.5 %(Approach paper) 8.0 %(plan

document)

Note-National accounts statistics (2000).

Na-(not applicable) Targets are not set for annual plans.

National income is being used in first three plans for measuring the growth rates.
NDP has been used in the fourth plan and from the fifth plan onwards, the growth
figures are with respect the GDP at factor cost.

Meaning of Industrial Policy

The industrial policy refers to such formal declaration by the government through which
general policies for industries adopted by the govt. are made public. Any industrial policy may
have mainly two parts first, the ideology of the govt. which determines the nature of
industrialisation, and second, the governing rules and principles which provide a certain
framework behind existing ideology. Thus, industrial policy is a comprehensive concept which
provides guidance and out-lines of the policy for establishment and working of industries.

Need, Objectives and Importance of Industrial Policy

The need, objectives and importance of an industrial policy can be explained through following
points :

Deployment of Natural Resources

The industrial policy helps in full deployment of natural resources of the country. It helps in
identifying, collecting and using resources properly. It facilitates increase in national income
of the country.

To Augment Industrial Production

The main objective of the industrial policy is to augment industrial production of the country.
It provides an impetus to rapid development of industries and industrial growth.

Modernisation

The industrial policy encourages modernisation for increasing industrial output and
productivity. It envisages the use of modem and latest production techniques m industrial
sector. It facilitates maximum output at minimum cost of production.

Balanced Industrial Development

The industrial policy envisages balanced industrial development of the country. It also
facilitates balanced development of various sectors of the economy.
Balanced Regional Development

The industrial policy helps in balanced regional development of the country. The industrial
policy may contain provisions regarding providing facilities or concessions for rapid
development of industrially backward areas/regions of the country.

Coordination between Basic and Consumer Industries

The balanced development of basic and consumer industries is essential for economic growth.
The industrial policy encourages development of basic and key industries on the one hand,
while attention is paid to the development of consumer industries also on the other. Thus, by
balanced and coordinated development of both type of industries it provides a pace to
economic growth.

Coordination between Small Scale and Large Scale Industries

The industrial policy plays a vital role in coordinated development of small scale or cottage
industries and large scale industries. These industries can be made mutually helpful to each
other through the provisions of industrial policy.

Area Determination

The industrial policy determines the area of operation under public and private sector. Proper
direction can be shown to private sector through the country’s industrial policy.

Cordial Industrial Relations

A comprehensive industrial policy is needed to establish cordial relations between workers and
management. Cordial industrial relations are essential for rapid and sustainable
industrialisation.

Proper Utilisation of Foreign Assistance/investment

An appropriate industrial policy envisages to attract foreign capital and entrepreneurs. It helps
rapid industrial development of the country; A well thought of industrial policy checks the
demerits of “foreign assistance. The foreign aid can be used in the national interest if an
appropriate industrial policy is pursued by the country.

PRE REFORM POLICY Industries

(Development and Regulation) Act (IDRA), 1951 The main provisions of

the IDRA, 1951 were;

a) All existing undertakings at the commencement of the Act, except those

owned by the Central Government were compulsorily required to register with
the designated authority.

b) No one except the central Government would be permitted to set up any

new industrial undertaking “except under and in accordance with a license
issued in that behalf by the Central Government.”
c) Such a license or permission prescribed a variety of conditions, such as,
location, minimum standards in respect of size and techniques to be used,
which the Central Government may approve.

d) Such licenses and clearances were also required in cases of ‘substantial

expansion’ of an existing industrial undertaking.

Industrial Policy Resolution, 1956

(1) New classification of Industries: IPR, 1956 divided the industries into the
following three categories:

(a) Schedule A industries: The industries that were the monopoly of state
or Government. It included 17 industries. The private sector was allowed
to operate in these industries if national interest so required.

(b) Schedule B industries: In this category of industries state was allowed

to establish new units but the private sector was not denied to set up or
expand existing units e.g. chemical industries, fertilizer, synthetic, rubber,
aluminum etc.

(c) Schedule C industries: The industries not mentioned in the above

category formed pat of Schedule C. Thus the IPR, 1956 emphasized the
mutual existence of public and private sector industries.

(2) Encouragement to Small-scale and Cottage Industries: In order to

strengthen the small-scale sector supportive measures were suggested in
terms of cheap credit, subsidies, reservation etc.

(3) Emphasized on Reduction of Regional Disparities: Fiscal concessions were

granted to open industries in backward regions. Public sector enterprises were
given greater role to develop these areas.

Major Features of Pre-1991 Industrial Policy

Protection to Indian Industries: Local industries were given shelter from

international competition by introducing partial physical ban on the imports
of products and high imports tariffs. Protection from imports encouraged
Indian industry to undertake the manufacture of a variety of products. There
was a ready market for all these products.

• Import-Substitution Policy: Government used its import policy for the

healthy development of local industries. Barring the first few years after
Independence, the country was facing a shortage of foreign exchange, and so
save scarce foreign exchange imports-substitution policy was initiated i.e.
Government encouraged the production of imported goods indigenously.

• Control over Indian Industries: Indian industries were highly regulated

through legislations such as Industrial licensing, MRTP Act, 1969 etc. These
legislations restricted the production, expansion and pricing of output of
almost all kinds of industries in the country.

• Encouragement to Small Industries: Government encouraged small-scale

industries (SSIs) by providing a number of support measures for its growth.
Policy measures addressed the basic requirements of the SSI like credit,
marketing, technology, entrepreneurship development, and fiscal, financial
and infrastructural support.

• Emphasis on Public Sector: The Government made huge investments in

providing infrastructure and basic facilities to industries. This was achieved by
establishing public sector enterprises in the key sectors such as power
generation, capital goods, heavy machineries, banking, telecommunication,
etc.

POST REFORM POLICY

India’s New Industrial Policy announced in July 1991 (hereafter NIP) was
radical compared to its earlier industrial policies in terms of objectives and
major features.

It emphasized on the need to promote further industrial development

based on consolidating the gains already made and correct the distortion or
weaknesses that might have crept in, and attain international competitiveness.
(Ministry of Industry, 1991).

The liberalized Industrial Policy aims at rapid and substantial economic

growth, and integration with the global economy in a harmonized manner.
The Industrial Policy reforms have reduced the industrial licensing
requirements, removed restrictions on investment and expansion, and
facilitated easy access to foreign technology and foreign direct investment.

Features of New Economic Policy,1991

Since ‘91, India has been following a threefold strategy of ;

Liberalization

Privatization

Globalization

The aims of these reforms are:

• To modernize the country‘s industrial system

• To remove unproductive controls

 • To encourage private investment (including foreign investment)

GLOBALISATION “Integration of our economy with world economy” It

aims at; a. Import liberalization b. Export promotion c. Foreign Exchange
Reforms It involves an increased level of interaction and inter dependence
among the various nation of the global economy.

PRIVATISATION Refers to the reduction of the role of the public sector in

the economy of a country. Transfer of ownership and control from the private
to the public sector (disinvestment) can be done by : Sale of all/some asses of
the public sector enterprises. Leasing of public enterprises to the private
sector Transfer of management of the public enterprise to the private sector

LIBERALISATION a. Abolishing licensing b. Freedom in deciding the

scale of operations c. Removal of restrictions on movement of goods and
services. d. Freedom in fixing prices. e. Reduction in tax rates and
unnecessary controls f. Simplifying procedures for import and exports g.
Making it easy to attract foreign capital.

TRADE REFORMS

Introduction Trade reforms have had a positive effect on total factor O

productivity growth by a Paul Romer type 'endogenous growth' mechanisms
where TFPG is positively impacted by an increasing variety of capital goods.
Trade reforms of the 1980s and 1990s allowed firms access O to capital and
intermediate goods from abroad.

The current trade policy reforms seem to have been guided mainly by the
concerns over globalization of the Indian economy, improving
competitiveness of its industry, and adverse balance of payments situation.
Main features of trade policies (trade reforms) since 1991 are as follows: 1.
Freer Imports and Exports: Substantial simplification and liberalization has
been carried out in the reform period. The tariff line wise import policy was
first announced on March 31, 1996 and at that time itself 6,161 tariff lines were
made free.
 4

2, Rationalization of Tariff Structure: Acting on the recommendations of

the Chelliah Committee, the government has, over the years, reduced the
maximum rate of duty. The 1993-94, Budget had reduced it from 110 per cent
to 85 per cent. The successive Budgets have reduced it further in stages. The
peak import duty on non-agricultural goods is now only 12.5 per cent.

3, Decentralization: A large number of exports and imports used to be

centralized through the public sector agencies in India. The supplementary
trade policy announced on August 13, 1991 reviewed these centralized items
and decentralized 16 export items and 20 import items. The 1992-97 policy
decentralized imports of a number of items including newsprint, non-ferrous
metals, natural rubber, intermediates and raw materials for fertilizers.

4, Devaluation and Convertibility of Rupee on Current Account : The

government made a two- step downward adjustment of 18-19 per cent in the
exchange rate of the rupee on July 1 and July 3, 1991. This was followed by the
introduction of LERMS i.e., partial convertibility of rupee in 1992-93, full
convertibility on the trade account in 1993-94 and full convertibility on the
current account in August 1994.

5, Trading Houses: The 1991 policy allowed export houses and trading
houses to import a wide range of items. The government also permitted the
setting up of trading houses with 51 per cent foreign equity for the purpose of
promoting exports.
 8

6, Special Economic Zones: A scheme for setting up Special Economic

Zones (SEZs) in the country to promote exports was announced by the
government in the Export and Import Policy of March 31, 2000. The SEZs are
to provide an internationally competitive and hassle-free environment for
exports and are expected to give a boost to the country's exports.

7, Agriculture Export Zones: The Exim Policy 2001 introduced the concept
of Agri- Export Zones (AEZs) to give primacy to promotion of agricultural
exports and effect a reorganization of our export efforts on the basis of specific
products and specific geographical areas.

10

atures of Trade o e orm in India Rationalization of tariff

structure/reducing tariffs. Decentralization. Free imports and Exports.
Liberalization of the exchange rate regime. Setting up of trading houses, SEZ's
and Export promotion industrial parks. Various exemptions under the EXIM
policies to boost exports and imports and make the trade policy regime
transparent and less cumbersome.

11

Trade Policy Reforms in India The most significant step for trade policy
reform in India was in the 1990s, to move away from import substitution and
enhance reliance on the international economy. Since 1991, India has been
gradually moving away from a closed and protectionist economy and has been
orienting itself towards the market, both in terms of disinvestment
(privatization) and opening up markets to foreign players (liberalization).

12

The trade reform was accompanied by major modifications of the labor

regime in order to reduce labor rigidities, and reforms in the financial sector
for the purpose of enhancing resource mobility. The purpose of the trade
reforms was to expose domestic producers to international competition,
increase efficiency, accelerate growth and reduce at the same time the prices
faced by consumers.

13

However, in adapting to such a market oriented economy, it has not

assumed a "shock therapy approach and has instead embraced a gradual
approach.2 Unlike many countries, such as in Latin America and Eastern
Europe, India did not succumb to international pressures (from IMF or the
World Bank) to liberalize overnight and went in for unilateral liberalization.

14

CONCLUSION:- Trade reform programs have two main objectives, The

first is to help raise economic growth and employment generation by
improving resource allocation and economy wide efficiency. The second is to
help improve the balance of payments by strengthening the competitiveness of
the external sector and expanding exports and efficient import substitutes.

15
 Trade policy reform, when implemented well, O has contributed to
improved economic performance in developing countries. The paper also finds
that well-designed trade policy reforms do not conflict with other priorities
except in special cases; usually they enhance growth.

Introduction


Infrastructure is an indispensable tool for the development of an

economy, as it facilitates supporting services, such as −

 Transportation

 Aviation

 Telecommunication

 Power supply

 Education system (research and development)

 Banking system

 Hospitals

 Trade, etc.

Infrastructure facilitates not only economic development of a nation,

but also improves the overall quality of life (of the people).


 

Initially, the development of infrastructure in India was seen as the

responsibility of the Indian Government; however, later private
players also came into the picture and started developing
infrastructure as government alone was not in a position to take care
of the entire development.

Still, a large portion of India has no basic infrastructure in place.

People are using wood, cow dung patties, and other primitive means
for cooking.

About 76% of the Indian population drinks water from open sources
such as tanks, wells, ponds, etc.

Energy
Energy is an essential element for the development of any nation.

India has two sources of energy. They are −


  Commercial sources of energy

 Non-commercial sources of energy

Coal, petroleum, and electricity come under commercial sources of

energy. They are exhaustible and non-renewable sources of energy
(except hydroelectricity); that get depleted with use.

Firewood, dried dung, and agricultural waste come under

non-commercial sources of energy. These are directly available from
nature. They are renewable in nature.


 

The sources of energy, which are exhaustible and can be used only
once, are known as conventional sources of energy. They could be
both commercial and non-commercial sources of energy.

The major sources of non-conventional sources of energy are −

 Solar energy

 Wind energy

 Tidal energy etc.

By virtue of being a tropical country, India has a great potential of

non-conventional sources of energy.

74% of the total energy production is consumed for the commercial

purposes.

Coal energy contributes about 54%, oil energy contributes about

32%, natural gas contributes about 10% and hydro energy
contributes about 2% of the total energy consumption.

Non-commercial sources of energy — cow dung, firewood, and

agricultural wastes collectively contribute about 26% of the total
energy consumption.


 Power/Electricity is an essential element for the development of any
economy. Research says that in order to have 8% growth rate in GDP,
power supply needs to go up by 12% annually.

Thermal power produces about 70% of total electricity.

Wind and hydel power collectively contribute about 16% to the total
power production.

Nuclear power contributes only about 2%; while the global average
is 13%.


Challenges of Energy Generation

There are many challenges related to power generation and

consumption.

India does not produce as much power as it actually requires.

There is a disparity in power distribution system.

Poor power sector management has given way to electricity thefts

and distribution losses.
 

The Private sector has very little to contribute in the power sector.

High tariff rates and power cuts are the other challenges.

A major portion of India’s electricity is coming from thermal power,

but the source (raw material i.e. coal) is getting exhausted.

Health Sector


Health status of a country reflects the level of development, i.e.,

overall development of the nation.

The development of health infrastructure leads to healthy manpower.

And, healthy manpower ensures higher efficiency in production of
goods and services.


Health Issues

Meeting the challenges of health infrastructure challenges is a tough

one for India.

Major health-related issues that India has been facing since

independence are −
 

Medical education,

Research and development for the medicines,

Adulteration of drugs or duplicate poisonous drugs,

Scarcity of medical professionals, etc.

Poor infrastructure (such as scarcity of hospitals, medicines,

doctors, medical equipment, etc.)

In India, about 70% of the hospitals and 60% of the dispensaries are
being run by the private sector.

They provide treatment to 80% out-patients and 46% in-patients.

The Government has implemented various healthcare policies and

programs to overcome the health-related issues but, there is still a
long way to go.
 
Indian Systems of Medicine

Indian System of Medicine (ISM) − The ISM integrates six

systems of treatment under it. They are as follows −

 Ayurveda

 Yoga

 Siddha

 Unani

 Naturopathy

 Homeopathy

Other Facts


Medical infrastructure in India is poorly developed; there is a lack of

funds as well as will-power to invest in the research and
development of medicines.


Currently, there are about 7 lakh registered practitioners, 3167 ISM
hospitals, and 26,000 dispensaries in India.

The health status of a country normally is evaluated on the basis of

some indicators such as −

 Maternal mortality rates

 Infant mortality rate

 Life expectancy

 Nutritional level

In addition to these, current status of non-communicable and

communicable diseases is also considered (to measure the health
status).

Indian government expends about 8.2% of the total GDP on health

sector, which is very low in comparison to other countries.

India has about 17% (population) of world’s total population, but

unfortunately, it bears about 20% of global burden of diseases
(GBD).

GBD is an indicator that measures the number of people who are

dying prematurely because of a particular disease. It also considers
the number of years they spent in a state of ‘disability’ (owing to the
disease).
 

In India, maximum number of people die because of communicable

diseases like malaria, diarrhoea, and tuberculosis.

About 5 lakh children die because of water-borne diseases.

2.2 million children die because of poor supply of vaccines and

malnutrition.

Though about 70% of the Indian population lives in rural area, rural
areas account to only one-fifth of the total hospitals (collectively
private and public).


 

There are only 0.36 hospitals per one lakh people, whereas urban
areas have 3.6 hospitals per one lakh people. This figure is
comparatively better, but even this is poor on an overall basis.

20% of the poorest people in India, spend about 12% of their income
on healthcare, whereas the rich people spend merely 2% of their
income on healthcare.

There is a great disparity between women’s health and men’s health.

Women suffer many health problems and because of lack of health

care systems, most of them are left at god’s mercy.
 

The discrimination between male child and female child is another

big issue; this is the reason behind a very low sex ratio — 940
females /1000 males (2011 census), and 927 females/1000 males
(2001 census).

More than 50% of married women aged between 15 and 49 suffer

from the problem of anaemia and other nutritional problems.
Surprisingly, this is the reason for 19% of maternal deaths.

Abortions (especially of girl child) are also a major cause of maternal

deaths in India.

As discussed above, health of people is the symbol of nation’s growth.

In addition to this, a better health is the right of every person that
need to be taken care of in a proper manner.

The Following Table illustrates Share of Commercial Energy

Consumption (in %) −

Sector 1953-54 1970-71 1990-91 2012-13

Household 10 12 12 22

Agriculture 1 3 08 18

Transport 44 28 22 02

Industry 40 50 45 45
Others 05 07 13 13

The Following Table illustrates Public Health Infrastructure in

India −

Items 1951 1981 2000 2013-14

Hospital 2,694 6,805 15,888 19,817

Beds 1,17,000 5,04,538 7,19,860 6,28,708

Dispensaries 6,600 16,745 23,065 24,392

PHCs 725 9,115 22,843 24,448

Sub-centres - 84,735 1,37,311 1,51,684

The Following Table illustrates Health status of India in

Comparison to Other Countries (2012) −

Indicators India China USA

Infant Mortality Rate/1,000 live births 44 12 6

Birth by Skilled Attendants (% of total) 67 96 99

Fully Immunised 72 99 99

Health Expenditure as % of GDP 3.9 5.1 17.7

Govt. Health Spending to total Govt. Spending (%) 8.2 12.5 20.3

Private Expenditure on Health (%) 86 79 22