ECONOMIC PLANNING IN INDIA
- Economic Planning is the process in which the limited natural resources are used skilfully so as to achieve the desire goals.
- Planning in India derives its objectives and social premises from the Directive Principles of State Policy enshrined in the constitution.
- Desired goals of planning in India are financial gain to eradicate social and economic disparity, impediment of poverty and increase in opportunities of employment.
- In the year1934, the proposal of economic planning came for the first time in the book of Vishveshwaraiya titled Planned Economy for India. Thereafter in 1935, the All India Congress Committee demanded the same. In 1944 efforts were made by eight industrialists under the Bombay Plan.
- Thereafter, in the same year, Gandhian Plan by Mr Mannaragan; in 1945 the People's Plan by labour leader M. N. Rai; and in 1950 the Sarodaya Plan by Mr Jai Parkash Narayan wcrc presented.
- After independence, in 1947, the committee on economic planning was constituted under the chairmanship of Jawaharlal Nehru. Thereafter, on the recommendation of this committee, the Planning Commission was constituted in March 1950 and the format of first Five-year plan was prepared in 1951.
- The Planning Commission was constituted in India in 1950 as a non-constitutional and advisory corporation. The Indian Constitution did not provide for the formation of the Planning Commission.
- In India, ten Five-year plans have been implemented so far. The target and achievements of these plans are given in the following table:
- In addition to this, six yearly plans were also made. These yearly plans were made for the years between 1966-67, 1968-69, 1979-80,1990-91, and 1991-92. The plan for the year 1978-79 was continuously implemented.
Previous Five-Year Plans
First Five-Year Plan (1951-56)
- First Five-Year plan was based on the Harold-Domar Model.
- The aim of this plan was to start the process of a balanced development of the economy.
- Agriculture was the top priority in this plan.
- Food production went up by 20%.
- This plan was successful and achieved the growth rate of 3.6%, which was more than its aim.
- During this plan there was an increase of 18% in the national and 11% in the per capita income.
- In this plan, development of public sector industries was neglected and only 6% fund was spent on this item.
Second Five-Year Plan (1956-61)
- This plan was based on the P. C. Mahalanobis model.
- Its main aim was to establish a socialist order.
- In this plan, industries and minerals were on top priority and 20.1% of the total outlay was allocated for this sector.
- Second priority was given to transport and communication for which 27% of the total plan outlay was allocated.
- This plan was also successful and it achieved 4.1% rate of growth.
- Various important large industries like steel plants at Durgapor, Bhilai, and Rourkela were established during this plan.
Third Five-Year Plan (1961-66)
- The aim of this plan was to make the economy independent and to reach upto the take off stage of development.
- This plan could not achieve its aim of 5.6% growth rate and got only 2.8% rate of growth per year.
- In this plan, agriculture and industry were its priority.
- The main reason of failure of this plan was Indo-China war, Indo-Pakistan war, and the unprecedented drought.
Planning Holiday (From 1966-67 to 1968-69)
- The miserable failure of the Third plan forced the government to decline the 'plan holiday'. Three annual plans were drawn in this intervening period. The economy faced another year of drought during 196647.
- During this period three separate plans were prepared.
- Equal priorities were given to agriculture and its allied sectors, and the industry sector.
- The main reason of the plan holiday was the Indo-Pakistan war, lack of resources, and increasing prices.
Fourth Five-Year Plan (1969-74)
- Thu main aim of this plan was development with stability and achievement of economic independence.
- In this plan the establishment of socialist order was also especially aimed.
Fifth Five-Year Plan (1974-79)
- The fifth plan draft as originally drawn up was part of a long term prospective plan covering a period of ten years for 1974-75 to 1985-86.
- The two main objectives of this plan were poverty eradication and attainment of self reliance.
- In this plan, top priority was given to bringing about economic stability.
- During the plan, initially, the growth rate target was fixed at 5.5%, however, it was amended to 4.4% later on.
- In this plan, for the first time, major attention was given to the removal of poverty and unemployment.
- Top priority was given to agriculture, next came industry and mines.
- This plan was generally successful. However there was no significant decline in poverty and unemployment.
- This plan, which was started by the then ruling Janata Government was later terminated in the year 1978.
Rolling Plan (1978-80)
- The new pattern started by Janata Government, which meant that every year performance of the plan would be assessed and a new plan based on such assessment be made for the subsequent year.
- The rolling plan started with an annual plan for 1978-79 and as a continuation of the terminated Fifth plan.
Sixth Five-Year Plan (1980-85)
- The Janta Government originally introduced this plan for the period 1978-83, but later a new sixth plan replaced it, for the period 1980-85.
- The basic objective of the sixth plan was removal of poverty. The plan aimed at achieving economic and technological self-reliance, reducing poverty, generating employment, and improving the quality of life of the poorest through the Minimum Needs Programme, etc.
- During this period the Indian economy made all round progress and most of the largest fixed by the Planning Commission were realized though the last year of the plan (1984-85) since many parts of the country faced severe drought conditions.
- The target growth rate, in this plan, was fixed at 5.2% and it achieved successfully 5.7% of the annual growth rate.
- In this plan, important programmes like Integrated Rural Development Programme-(IRDPL), Minimum Needs Programme (MNP) were started.
Seventh Five-Year Plan (1985-1990)
- The objectives of this plan include the establishment of a self-sufficient economy, creation of more opportunities for productive employment, slowing down the rate of population growth, to provide people with adequate nutrition and energy, and environment protection. But the main aim of the plan was to increase production in all sectors and to generate opportunities for employment.
- Majority of the targets set by this plan were achieved. The annual aver-age growth rate of GDP was approximately 6% which was more than the targeted 5%.
- There was increase in per capita income at the rate of 3.6% per annum.
- In this plan, employment generating programmes like Jawahar Rozgar Yojana were started.
- One of the major worries during this period was widening gap between the income and expenditure of the Government, which led to mounting fiscal deficit.
- The eighth Five-year plan (1990-95) could not take off due to the changing political situation at the Centre. The new government, which assumed power at the Centre in June 1991, decided that the eighth Five-year plan would commence on 1 April 1992 and that 1990-91 and 1991-92 should have separate annual plans. Formulated within the framework of the approach to the Eighth Five-year plan (1990-95) the basic thrust of these annual plans was on maximization of employment and social transformation.
Eighth Five-Year Plan (1992-97)
- In this plan the utmost priority was given to development of human re-sources: employment, education, and public health.
- In addition to this, the important aim made in this plan was to strengthen the basic infrastructure by the end of the decade.
- This plan was successful and got 6.8% annual rate of growth, which was more than its target of 5.6%.
- During this period, Pradhan Mantri Rozgar Yojana (Prime Minister Employment Scheme) was started in the year 1993.
Ninth Five-Year Plan (1997-2002)
- The ninth plan was launched in the fiftieth (50th) year of India's independence.
- Planning Commission released the draft of the ninth plan document on 1 March 1998. The focus of the plan was 'Growth with Social Justice and Equity'.
- Mid-term assessment is not satisfactory as growth rate during 1997-2000 remained 6.1% against the target of 6.5%.
- The recession in international economy was held responsible for the failure of ninth plan.
Tenth Five-Year Plan (2002-07)
- The tenth five-year plan proposed to eradicate poverty and unemployment and to double the per capita income in the next ten years.
- The tenth plan expected to follow a regional approach rather than sector approach to bring down the regional inequalities. The plan detailed into regional specific sub-plans which will focus on poor and backward states.
- The approach paper proposed that the tenth plan should aim at an indicative target of 8% GDP growth for 2002-07. The other important targets proposed for the tenth plan in the approach paper are the following:
(i) Reduction of poverty ration of 21% from present 26% by 2007.
(ii) Children to complete at least five years of schooling by 2007.
(iii) 50 million new jobs, almost entirely in the non-farm and non-industrial sector.
(iv) Increase in literacy to 75% by 2007 from present 65%.
(v) Reduction of infant mortality rate (IMR) to 72 per 1000 live births by 2007.
(vi) Increase in forest and tree cover to 25% by 2007. At that time it was 20%.
(vii) All villagesto have access to portable drinking water.
- During the plan the aim of foreign direct investment was $7.5 billion per year.
Eleventh Five-Year Plan (2007-12)
- Target Growth 9%
- Actual Growth 8%
- Eleventh Plan was aimed 'Towards Faster & More Inclusive Growth' after UPA rode back to power on the plank of helping Aam Aadmi (common man).
- The savings and investment rates had increased, industrial sector had responded well to face competition in the global economy and foreign investors were keen to invest in many groups, especially SCs, STs & minorities as borne out by data on several dimensions like poverty, mortality, current daily employment etc.
- The broad vision for 11rh Plan included several inter related components like rapid growth reducing poverty & creating employment opportunities, essential services in health & education, specially for the poor, extension if employment opportunities using Narional Rural Employment Guarantee programme, environmental sustainability, reduction of gender inequality etc.
- Accordingly various targets were laid down like reduction in unemployment (to less than 5% among educated youth)& head count ratio of poverty (by 10%), reduction in dropout rates, gender gap in literacy, infant mortality, total fertility, malnutrition in age group of 0-3 (to half its present level), improvement in sex ratio, forest & tree cover, air villages & BPL households (by 2009 & reliable power by end of 11th Plan, all weather road connection to habitations with population 1000 & above (500 in hilly areas) by 2009, connecting every village by telephone & providing broad connectivity to all villages by 2012.
Twelfth Five-Year Plan (2012-17)
Monitorable Targets of the Plan: Twenty Five core indicators listed below reflects the vision of rapid, sustainable & more inclusive growth of the twelfth Plan:
- Real GDP Growth Rate of 8.0 per cent.
- Agriculture Growth Rate of 4.0 percent.
- Manufacturing Growth Rate 10.0 per cent.
- Every state must have an average growth rate in the Twelfth Plan preferably higher than that achieved in the Eleventh Plan.
Poverty and Employment
- Head-count ratio of consumption poverty to be reduced by 10 percentage points over the preceding estimates by the end of Twelfth FYP.
- Generate 50 million new work opportunities in the non-farm sector and provide skill certification to equivalent number during the Twelfth FYP.
- Mean Years of Schooling to increase to seven years by the end of Twelfth FYP.
- Enhance access to higher education by creating two million additional seats for each age cohort aligned to the skill needs of the economy.
- Eliminate gender and social gap in school enrolment (the population) by the end of Twelfth FYP.
- Reduce IMR to 25 and MMR to 1 per 1,000 live births, and Child Sex Ratio (0-6 Years) to 950 by the end to the Twelfth FYP.
- Reduce Total Fertility Rate to 2.1 by the end of Twelfth FYP.
- Reduce under-nutrition among children aged 0-3 years to half of the NFHS-3 levels by the end of Twelfth FYP.
Infrastructure, including Rural Infrastructure
- Increase investment in infrastructure as a percentage of GDP to 9 per cent by the end of Twelfth FYP.
- Increase the gross irrigated area from 90 million hectare to 103 million hectare by the end of Twelfth FYP.
- Provide electricity to all the villages and reduce AT&C losses to 20 per cent by the end of Twelfth FYP.
- Connect all villages with all-weather roads by the end of Twelfth FYP.
- Upgrade national and state highways to the minimum two-lane standard by the end of Twelfth FYP.
- Complete Eastern and Western Dedicated Freight Corridors by the end of Twelfth FYP.
- Increase rural tele-densiry to 70 per cent by the end of Twelfth FYP.
- Ensure 50 per cent of rural population has access to lpcd piped drinking water supply, and 50 per cent gram Panchayats achieve Nirmal Gram Status by the end of the Twelfth FYP.
Environment and Sustain ability
- Increase green cover (as measured by satellite imagery) by 1 million hectare every year during the Twelfth FYP.
- Add 30,000 MW of renewable energy capacity in the Twelfth plan.
- Reduce emission intensity of GDP in line with the target of 20 per cent to 25 per cent reduction over 2005 levels by 2020.
- Provide access to banking services to 90 per cent Indian households by the end of the Twelfth FYP.
- Major subsidies and welfare related beneficiary payments to be shifted to a direct cash transfer by the end of the Twelfth plan, using the Aadhar platform with linked bank accounts.