Planning in India

Economic Planning
Economic Planning is to make decision with respect to the
use of resources.

An economic plan is an outline of schemes designed to

achieve multiple and pre-determined economic objectives, in
a particular order of priorities within a specified period of
time.

This is the technique that a state follows to achieve economic

development.

The economy, which makes efforts to achieve development

through economic plans, is known as planned economy.
 Need for Economic Planning

• Vicious circle of poverty

• Foreign Trade
• Need for Rapid industrialization
• Population pressure
• Development of Natural resources
• Backward population
• Capital Deficiency
• Market Imperfection
 Objective of Economic Planning:
 Economic Growth
 To Increase Per capita and National Income
 Reduction of In-equalities of Income
 Welfare to all rather than a few group of people
 Growth with social justice
 Increase Industrial output
 Balanced Regional Development
 Modernization
 Self-Reliance
 Reduction of Unemployment
 Planning commission of India
The planning commission is an institution in the government of india
which formulates economic policies and drafts five year plan.
It was Set up on 15 March,1950 with Prime Minister Jawaharlal Nehru as
the chairman.

The Commission was instructed to:

 To make an assessment of Material capital and Human resources of
the country, and formulate a plan for the most effective and balanced
utilization of them;
 To determine priorities , define the stages for carrying the plan and
propose the allocation of resources;
 To act as an advisory body to the union Government ;
 Determine the condition which should be established for the
execution of plan.
 To advice the centre and state Governments.
 Five Year Plans of India
Five year plan are developed, executed, and monitored by Planning
commission of India to achieve the economic goals setup by the Indian
government. The 1st five year plan was executed on 1st April 1951 under
the leadership of our 1st Prime Minister Pandit Jawaharlal Nehru. Then
after every five years our government follows a five year plan in order to
boost our economy by bringing changes in agricultural, social, and
economical sectors.
1. First five year plan(1951-1956)
2. Second five year plan (1956-1961)
3. Third five year plan (1961-1966)
4. Fourth five year plan (1969-1974)
5. Fifth five year plan (1974-1979)
6. Sixth five year plan (1980-1985)
7. Seventh five year plan(1985-1990)
8. Eighth five year plan(1992-1997)
9. Ninth five year plan(1997-2002)
10. Tenth five year plan (2002-2007)
11. Eleventh five year plan (2007-2012)
12. Twelfth five year plan (2012-2017)
 First Five Year Plan (1951-1956)
 The first Prime Minister, Jawaharlal Nehru presented the first
plan to the Parliament of India on 8 December 1951.
 It was based on the Harrod-Domar model.
 Objectives
 To reconstruct the economy which was damaged as a result of
second world war.
 To achieve self-sufficiency in Food grains Production and to
improve availability of raw materials.
 To Control inflationary tendencies.
 To improve living standards of the people of India.
 The targeted growth in the GDP was 2.1% every year.
 The total expenditure of this plan was worth Rs. 1960 crore.
 Achievements:
 In reality, GDP of 3.6% per annum was achieved .
 Community Development program launched in 1952.
 The following Irrigation projects were started during this period:
Mettur Dam, Hirakud Dam and Bhakra Dam.
 The WHO with the Govt addressed children's health and
reduced infant mortality.
 The UGC was set up to take care of funding the higher education
in the country.
 At the end of the plan period in 1956, five Indian Institutes of
Technology (IITs) were started as major Technical institutes.
 Second Five Year Plan(1956-1961)
 This plan was based Mahalanobis model.
 This model was propounded by the famous statistician Prof P.C.
Mahalanobis in the year 1953. His model addresses different
issues related to economic development.
 Objectives
 The second five-year plan focused on industry, especially heavy
industry and to generate more employment opportunities by
doing so.
 The Indian Govt boosted manufacturing of industrial goods in the
country. This was done primarily to develop the public sector.
 To increase the national income by 25% & targeted GDP was 4.5%
 Total outlay was worth of Rs 4672 crore .
 Achievements:
 Hydroelectric power plants and Five steel mills at Bhilai ,
Durgapur, Rourkela and Jamshedpur were set up.
 Coal production was increased.
 Advocated huge imports through foreign loans.
 Railway lines were added in the north east.
 Shifted basic emphasis from agriculture to industry far too soon.
 The Atomic Energy Commission was formed in 1957 with Homi J.
Bhabha as the first chairman.
 Effort were taken in improving posts and telegraphs, railway
services, road tracks, civil aviation etc.
 Growth rate achieved in GDP 4.2% & National Income increased
by 18%
 Third Five Year plan(1961-1966)
The third plan stressed on agriculture and improving production
of rice & wheat.
But due to war between China- India in 1962 and also war
between India and Pakistan in 1965 exposed weaknesses in the
economy and shifted the focus towards defense industry and
Indian army.
Objective
 Targeted growth rate of GDP was 5.6%
 It was felt that Indian economy has entered a take-off stage.
Therefore, its aim was to make India a 'self-reliant' and 'self-
generating' economy.
 To get self sufficient by increasing agricultural production to
meet the requirement for industrial development and export
promotion.
 Achievements:
Complete failure in reaching the targets due to unforeseen events :
Chinese aggression (1962)
Indo-Pak war (1965)
severe drought 1965-66

And actually achieved growth was 2.8%

 During the period 1965 -66, Green Revolution attracted attention.
 Fertilizer plants were also built & the construction of Dams
continued.
 Primary schools, State secondary education boards and State
electricity board were formed.
 The Panchayat & Zila Parishads Organizations formed.
 Plan Holiday (1967-1969)
During the Annual Plans, the economy absorbed the shocks
generated during the Third Plan and thus it led to
postponement of Fourth FYP. Therefore three Annual Plans
were introduced instead of FYP.

Prevailing crisis in agriculture and serious food shortage

necessitated the emphasis on agriculture during the Annual
Plans

During these plans a whole new agricultural strategy was

Implemented as wide-spread distribution of high-yielding
varieties of seeds, extensive use of fertilizers, and soil
conservation.
 Fourth Five Year plan(1969-1974)

 At this time Indira Gandhi was the Prime Minister.

 14 major Indian banks nationalized by government and
the Green Revolution in India advanced agriculture.
 The target growth rate was 5.6%, but the actual growth
rate was 3.3%.
 During this plan the slogan of “Garibi Hatao” is given
during the 1971 elections by Indira Gandhi.
 It was a failure because of unfavourable monsoons and
arrival of Bangladeshi refugees.
 Fifth Five Year plan(1974-1979)
 The fifth plan was prepared and launched by D.P. Dhar.
 Eradication of poverty and making our economy self
sufficient were the main aim of this plan so the stress was
laid on employment, poverty alleviation (Garibi Hatao)
and justice.
 It was aimed to achieve 4.4% GDP but it achieved 5%.
 The plan also focused on self-reliance in agricultural
production and defence.
 The Electricity Supply Act was amended in 1975.
 National highway system was introduced.
 Food grain production was above 118 million tons due to
the improvement of infrastructural facilities.
 The plan was terminated in 1978 (instead of 1979)
when Janta Party Govt. rose to power.
 Rolling Plan (1978 - 80)

 In 1978 the newly elected Morarji Desai government

rejected the Fifth Five-Year Plan and introduced a new
Sixth Five-Year Plan (1978-1983).

 However, the government lasted for only 2 years.

 This plan was again rejected by the Indian National

Congress government as they took power in 1980 and
a new Sixth Plan was made.
 Sixth Five Year plan (1980-1985)

 The Sixth Five Year Plan was presented in 1978.

 Rajiv Gandhi was elected as the prime minister.
 He aimed for rapid industrial development, especially in
the area of information technology.
 Focus - Increase in national income, modernization of
technology, ensuring continuous decrease in poverty and
unemployment, population control through family
planning, etc.
 Achievements
 Family Planning was implemented for the first time in
India.
 The sixth plan also marked the beginning of economic
liberalization.
 Its growth target was 5.2% but it achieved 5.66%.
 Development of Women and Children in Rural Areas
(DWCRA) in 1982.
 NABARD – 12th July 1982
 Crop Insurance Scheme was lunched in 1985
 Seventh Five Year plan(1985-1989)
 Focus - rapid growth in food-grains production, increased
employment opportunities and productivity within the
framework of basic tenants of planning.
 Introduction and application of modern technology.
 Improved facilities for Education to girls.
 Increase productivity of small and large scale farmers.
 Special Food Production Programme (SFPP)– 1988
 Jawahar Rozgar Yojana -1989
 For the first time the private sector got the priority
over public sector.
 The plan was very successful, the economy recorded 6.01%
growth rate against the targeted 5%.
 Annual plans (1989-91)
 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.

 Worsening Balance of Payment position and inflation during

1990-91 were the key issues during the launch of the plan.

 At that time Dr. Manmohan Singh launched India's free market

reforms that brought the nearly bankrupt nation back from the
edge.
 It was the beginning of privatisation and liberalisation in India.
 Eight Five Year plan(1992-1997)

 This plan can be termed as Rao and Manmohan Model of

Economic development.
 The plan undertook drastic policy measures to combat the bad
economic situation and to undertake an annual average growth
of 5.6%.
 The major objectives of the eight plans were - control rapid
population growth, poverty eradication, increase employment,
strengthening the infrastructure, develop tourism management,
Human Resource Development.
 Achievements
 During this Plan many programmes were started like-
- Pradhan Manatri Rozgar Yojna (PMRY) -1993
- Mahila Samrudhi Yojana – 1994
 India became a member of WTO on 1 January1995.
 This plan was successful and got annual growth rate of 6.8&
against the target of 5.6%.
 Economic outcomes during eighth plan period were rapid
economic growth, high growth of agriculture and allied sector,
and manufacturing sector, growth in exports and imports,
improvement in trade and current account deficit.
 Modernization of industries was a major highlight of the Eighth
Plan.
 Ninth Five Year Plan (1997 - 2002)
 The Ninth Five Year Plan, launched in the 50th year of India's
Independence.
 Atal Bihari Vajpayee was the Prime Minister of India during this Plan.
 Government focused on Growth With Social Justice & Equality
 It was developed in the context of four important dimensions: Quality
of life, generation of productive employment, regional balance and
self-reliance.
Objective
 Priority to agriculture and rural development.
 Accelerating growth rate of economy.
 Food and nutritional security for all Containing growth rate of
population.
 Empowerment of women and socially disadvantaged groups such as
SC/ST, backward classes and minorities.
 Achievements

• 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%

 During this Plan many programmes were started like-

- Swarana Jyanti Gram Swarozgar Yojana- 1999
- Indira Awas Yojna-2000
- Pradhan Mantri Gram Sadak Yojana – 2000
- Sampoorna Grameen Rozgar Yojana - 2001
 Tenth Five Year Plan (2002-2007)
Goals:
 Reduction in poverty ratio from 26% to 21%
 To achieve 8% GDP growth rate.
 Reduction of Infant Mortality Rate (IMR) to 45 per 1000 live
births by 2007 and to 28 by 2012.
 To reduce population growth from 21% in 1991-2001 to 16% by
2001-11
 Universal access to primary education by 2007.
 Literacy rate to increase from 65% in 1999-2000 to 75% in 2001
 Increase in forest and tree cover to 25% by 2007 and 33% by
2012
 All villages to have sustained access to potable drinking water by
2012.
 Cleaning of all major rivers by 2007.
 Achievements

The target growth rate was 8% and the actual growth

rate was 7%
National Commission on Farmer-2004
National Rural Employment Guarantee Act (NREGA) -
6th February 2006
National Food Security Mission (NFSM) -2007
 Eleventh Five Year Plan (2007-2012)
 It was prepared by the C. Rangarajan.
 Its main theme was “faster and more inclusive growth”
Objectives-
 To Accelerate GDP growth from 8% to 10% p.a.
 Create 70 million new work opportunities and reduce educated
unemployment to below 5%.
 To Reduce dropout rates of children from elementary school from
52.2% in 2003-04 to 20% in 2011-12.
 Provide clean drinking water for all by 2009.
 Reduce malnutrition among children between 0-3 years to half its
present level.
 Raise the sex ratio for age group 0-6 to 935 by 2011-12 and to 950
by 2016-17 .
The target growth rate was 9% and the actual growth rate was 8.1%
 Sectoral
Table: Growth
sectorial in Recent
growth in recentPlans
years

Sectoral Growth in Recent Plans ( % per annum )

Sector 8th Plan 9th Plan 10th Plan 11th Plan

1.Agriculture 4.72 2.44 2.30 4.0

2.Industry 7.29 4.29 9.17 10-11

3.Services 7.28 7.87 9.30 9-11

4.Total 6.54 5.52 7.74 9.0

 Twelfth Five Year Plan (2012-2017)
 Basic objective: Faster, sustainable and more inclusive
growth.
 Its growth rate target was 8% and we have acheived
7.0%
 The government intends to reduce poverty by 10%
during the 12th Five-Year Plan.
 For growth to be more inclusive we need: Better
performance in agriculture
 Faster creation of jobs, especially in manufacturing
 Stronger efforts at health, education and Infrastructure.
 Special plans for disadvantaged/backward regions.
 Evaluation of Growth in Several Plans

Growth performance in various plans (in % per annum)

Plan Target Actual
First plan 2.8 3.6
Second Plan 4.5 4.2
Third Plan 5.6 2.8
Fourth Plan 5.6 3.3
Fifth Plan 4.4 5
Sixth Plan 5.2 5.5
Seventh Plan 6 5
Eighth Plan 6.7 5.6
Ninth Plan 5.4 6.5
Tenth Plan 8 7
Eleventh Plan 9 8.1
Twelfth Plan 8 -
 Growth Performance in Five Year Plans

5 Targeted

4 Actual

0
1st 2nd 3rd 4th 5th 6th 7th 8th 9th 10th 11th 12th
Replacement of Planning Commission

 NITI Aayog or National Institution for Transforming India

Aayog is a policy think-tank of Government of India that
replaces Planning Commission and aims to involve the states
in economic policy-making in India.
 Union Govt of India had announced formation of NITI Aayog
on 1 January 2015.

 Chairperson:
Prime Minister Narendra Modi
 Vice Chairperson: Arvind Panagariya
 CEO: Amitabh Kant, IAS
 Objective of NITI Aayog

 To evolve a shared vision of

national development priorities,
sectors and strategies with the
active involvement of states in the
light of national objectives.

A pre-people, pro-active and participative development agenda

is the guiding principle behind NITTI Aayog.
-Prime Minister Narendra
Modi
 Conclusion

Economic planning help in mobilizing and allocating the

resources in desired manner.
Objective of economic planning is to reduce inequality,
economic growth, balanced regional growth, modernization.
Each five year plan aims to achieving certain target. Five year
plan constitute the steps toward the fulfillment of objectives of
economic planning. But most of the Plans could not achieve the
targets.