Economic development since independence objectives and achievements of planning
Objectives of Planning
Economic Growth and Development
Every five-year plan had a growth target that had to be achieved by the end of the planning period. In order to bring about an improvement in standard of living of the people, the per capita income has to rise. A rise in per capita income is necessary to overcome the problems of poverty and its effects.
Increase in Employment
The developing economies generally suffer from open unemployment and disguised unemployment. India is no exception to it. Slow growth of the agricultural sector and lack of investments in the industrial sector are major causes for high levels of unemployment in the country. Measures have been taken in every five- year plan to create employment opportunities, thereby, increasing labor productivity.
Increase in Investment
Economic growth cannot be achieved unless adequate investments are made to bring about an increase in output capacity. Investments help in creating employment opportunities. One of the objectives of planning is, thus, to push up the rate of investment to ensure smooth flow of capital to various sectors of the economy.
Social Justice and Equity
The five-year plans also focused on reducing inequalities in the distribution of income in order to ensure social justice. Prevalence of inequalities in the economy results in exploitation of the poor wherein the rich become richer and the poor become poorer.
Balanced Regional Development
In India, there exists a wide gap in the development of different states and regions. While Gujarat, Tamil Nadu, Maharashtra etc., enjoy high levels of development, there are states like Bihar, Odisha, Nagaland etc., which remain backward. Planning aims at bringing about a balanced regional development by diverting more resources to the poor and backward regions.
Modernisation
Modernisation refers to a shift in the composition of output, innovation and advancement in technology. Modernisation helps an economy to advance at a faster pace and compete with the developed nations of the world. The objective of planning is to encourage and incentivise investments into various sectors of the economy, especially the industrial sector, to help them adopt new technologies and thus, increase efficiency.
Achievements
First Five-Year Plan:
It was formulated for the period 1951-56, when India was confronting the problems of huge influx of refugees, food shortage and severe inflation. The plan, thus, focused on the primary sector, that is, the agricultural sector to increase the food production in India to overcome the crisis.
The monsoon was favorable to agriculture in those years and therefore, the production increased. The first five-year plan was quite successful as the targeted growth rate was 2.1 percent and the achieved growth rate was 3.6 percent.
Second Five-Year Plan:
It was formulated for the period 1956-61 and it focused on rapid industrialisation. The plan aimed at the development of heavy and basic industries and conceived that agricultural sector could be given lower priority as it has been able to achieve its targets in the previous plan. The second plan achieved only a moderate success due to the severe shortage of foreign exchange on account of huge imports to meet the requirements of the industrial sector. The actual growth rate achieved in the plan was 4.3 percent against the target of 4.5 percent.
Third Five-Year Plan:
It was formulated for the period 1961-66. The third five- year plan was prepared with the mindset that India has entered the ‘take-off stage’ and it is time for it to become a self-reliant and self-generating economy. The plan gave priority to both agriculture as well as the industrial sector.
However, the Indo-China conflict in 1962 and the Indo-Pakistan conflict in 1965 made the plan a complete failure as huge amount of expenditure had to be allocated to meet the defence requirements. The actual growth rate achieved in the plan was 2.8 percent as against the target of 5.6 percent.
The failure of the third plan led to the formulation of three annual plans for the years 1966-67, 1967-68 and 1968-69, before the launch of the fourth plan. The period from 1966 to 1969 was, therefore, termed as “Plan Holiday”. It was during this period that green revolution was introduced to overcome the food crisis. Green revolution advocated the use of high-yielding variety of seeds, fertilizers, pesticides and extensive use of irrigation.
It was formulated for the period 1969-74 and had two basic objectives growth with stability and progressive achievement of self-reliance. It stressed upon the growth of the agricultural sector and it was during this period that various family planning measures were introduced to control the rising population.
While the plan aimed at a highly ambitious growth rate of 5.7 per cent, it could achieve only 3.3 percent. This failure could be attributed to the huge influx of refugees from Bangladesh and the Indo-Pakistan war in 1972.
Fifth Five-Year Plan:
It was formulated for the period 1974-79 and proposed two main objectives removal of poverty and attainment of self-reliance. The plan aimed at achieving its objectives by achieving high growth rate, equitable distribution of income and increase in domestic savings. However, the plan was an utter failure due to high levels of inflation.
With the Janta Government taking over the power, the plan was terminated in 1978. The growth rate achieved during this period was 4.8 percent as against the target of 4.4 percent.
The Janta Government formulated the sixth five-year plan for the period 1978-83 with the objective of creating employment opportunities. The Janta Government, to its misfortune, lasted only for two years and was replaced by the Congress Government that came up with a different plan.
The Planning Commission, in the meanwhile, introduced the ‘Rolling Plan’ in 1978, which is said to incorporate three kinds of plans first plan for the current year, second plan for a specific period of 3, 4 or 5 years, according to the needs of the Indian economy and the third plan, for a longer term like 10, 15 or 20 years.
The rolling plan was, however, subjected to many criticisms and was later abandoned with Congress Government coming up with the sixth five-year plan.
Sixth Five-Year Plan:
It was introduced by the Congress Government for the period 1980-85. It was based on Nehru’s model of growth and aimed at a direct attack on the problem of poverty by creating conditions for increasing employment opportunities. Many employment generation schemes such as Training of Rural Youth for Self Employment (TRYSEM) and Integrated Rural Development Programme (IRDP) were introduced.
Though the plan progressed as perceived by the planners during the first four years, a severe famine occurred in the fifth year i.e., 1984-85. Therefore, the agricultural output declined drastically. However, the economy still managed to grow at 5.7 percent as against the target of 5.2 percent.
Seventh Five-Year Plan:
It was formulated for the period 1985-1990 and it aimed at accelerating food grain production, creating employment opportunities and raising labor productivity. The focus of the plan was on ‘food, work and productivity’. The plan was quite successful and recorded a growth rate of 6 per cent as against the targeted growth rate of 5 per cent.
Eighth Five-Year Plan:
This plan could not be formulated in 1990 due to uncertain political situation at the centre. Therefore, two annual plans for the years 1990-91 and 1991-92 were formulated. During 1991, India had to face severe balance of payment crisis. The debt burden was mounting and the fiscal deficit was widening.
The inflation level was rising and the industrial sector was going through a recession. Because of this crisis and the pressure from International Organisations such as IMF, the government led by P.V. Narasimha Rao introduced the economic reforms in 1991, post which the eighth plan was launched in 1992 for the period 1992-97 reflecting the reforms with various structural adjustment policies.
The role of the private sector increased and several liberalisation measures were introduced. As a result, the growth rate was the highest as compared to the previous plans. The eighth plan achieved a growth rate of 6.8 percent as against the targeted growth rate of 5.6 percent.
Ninth Five-Year Plan:
It was formulated for the period 1997-2002 and its aim was to achieve “growth with social justice and equality”. The plan recognised the critical role of the state in the social sectors such as health care, education and infrastructure, since the market forces, by themselves, may not make these areas attractive to the private sector.
The plan stressed upon the need for public investment in these areas. The ninth plan aimed at a GDP growth rate of 7 percent. However, due to poor performance of the economy during 1997-98, the growth target was revised to 6.5 percent. Yet, the target could not be achieved and the economy grew only at a rate of 5.4 percent.
Tenth Five-Year Plan:
It was formulated for the period 2002-2007. It was realised that the development goals cannot be achieved by targeting the economic growth alone. Therefore, the tenth five year plan set forth measurable targets on development indicators such as infant mortality rate, literacy, access to electricity, sanitation facilities, sustainable food production and environment.
The tenth plan targeted a growth rate of 8 percent. Further, it laid down targets for each state to ensure balanced development. The tenth plan was, however, not successful in terms of poverty reduction, generating employment opportunities and performance of agricultural sector. Many poor states faced decelerating growth.
Thus, the plan was not successful in bringing about balanced regional development as well. The plan also failed to achieve its target on infant mortality and maternal mortality rate. The tenth plan recorded a growth rate of 7.6 percent as against the targeted growth rate of 8 percent.
Eleventh Five-Year Plan:
It was formulated for the period 2007-2012 and the plan document was titled “Towards faster and more inclusive growth”. With the objective of achieving fast and inclusive growth, the eleventh plan had set targets for various socio-economic indicators.
It aimed at achieving a GDP growth rate of 9 percent, agricultural growth rate of 4 percent, generating 58 million employment opportunities, increase in wages of unskilled laborers, reduction in poverty by 10 percent, reduction in drop-out rate, increasing literacy to 85 percent, reducing gender gap, infant mortality rate and total fertility rate, reducing malnutrition among children, provision of safe drinking water, improvement in sex ratio, development of infrastructure and communication.
Twelfth Five-Year Plan
It was formulated for the period 2012-2017 and it focused on achieving faster, inclusive and sustainable growth. It aimed at achieving an inclusive growth by reducing poverty, reducing inequality, empowering people and by bringing in balanced regional development. The goals towards sustainable development focused on environmental sustain ability, improvements in health and education sector and development of physical infrastructure such as transport, telecommunication, power etc. It had set a growth target of 8 percent and had set monitor able targets for poverty, education, health, infrastructure, environment and sustainability. It also aimed at providing banking services to 90 percent of the households and introduced Adhaar based direct cash transfer of subsidies and welfare payments. The Planning Commission was replaced by the think tank called NITI Aayog (National Institution for Transforming India). The appraisal of the twelfth five year plan is now the responsibility of the NITI Aayog. Further, it has also been stated by the Vice Chairman of the NITI Aayog, Mr. Arvind Panagariya that the five year plans would now terminate with the end of the twelfth five-year plan and would be replaced by three documents.