Planning in India
First Plan (1951 – 56) Target Growth : 2.1 % Actual Growth 3.6 % It was based on Harrod-Domar Model. Influx of refugees, severe food shortage & mounting inflation confronted the country at the onset of the first five year Plan. The Plan Focussed on agriculture, price stability, power and transport It was a successful plan primarily because of good harvests in the last two years of the plan.
Second Plan (1956 – 61) Target Growth: 4.5% Actual Growth: 4.3% Simple aggregative Harrod Domar Growth Model was again used for overall projections and the strategy of resource allocation to broad sectors as agriculture & Industry was based on two & four sector Model prepared by Prof. P C Mahalanobis. (Plan is also called Mahalanobis Plan). Second plan was conceived in an atmosphere of economic stability . It was felt agriculture could be accorded lower priority. The Plan Focussed on rapid industrialization- heavy & basic industries . Advocated huge imports through foreign loans. The Industrial Policy 1956 was based on establishment of a socialistic pattern of society as the goal of economic policy. Acute shortage of forex led to pruning of development targets , price rise was also seen ( about 30%) vis a vis decline in the earlier Plan & the 2nd FYP was only moderately successful.
Third Plan (1961 – 66) |Target Growth: 5.6% Actual Growth: 2.8% At its conception, it was felt that Indian economy has entered a “takeoff stage”. Therefore, its aim was to make India a ‘self-reliant’ and ‘self-generating’ economy. Based on the experience of first two plans (agricultural production was seen as limiting factor in India’s economic development) , agriculture was given top priority to support the exports and industry. The Plan was thorough failure in reaching the targets due to unforeseen events – Chinese aggression (1962), Indo-Pak war (1965), severe drought 1965-66. Due to conflicts the approach during the later phase was shifted from development to defence & development.
Three Annual Plans (1966- 69) euphemistically described as Plan holiday. Failure of Third Plan that of the devaluation of rupee( to boost exports) along with inflationary recession led to postponement of Fourth FYP. Three Annual Plans were introduced instead. 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. It involving wide-spread distribution of high-yielding varieties of seeds, extensive use of fertilizers, exploitation of irrigation potential and soil conservation. During the Annual Plans, the economy absorbed the shocks generated during the Third Plan It paved the path for the planned growth ahead.
Fourth Plan (1969 – 74) Target Growth: 5.7% Actual Growth: 3.3% Refusal of supply of essential equipments and raw materials from the allies during Indo Pak war resulted in twin objectives of “ growth with stability “ and “progressive achievement of self reliance “ for the Fourth Plan. Main emphasis was on growth rate of agriculture to enable other sectors to move forward . First two years of the plan saw record production. The last three years did not measure up due to poor monsoon. Implementation of Family Planning Programmes were amongst major targets of the Plan. Influx of Bangladeshi refugees before and after 1971 Indo-Pak war was an important issue along with price situation deteriorating to crisis proportions and the plan is considered as big failure.
Fifth Plan (1974-79) Target Growth: 4.4% Actual Growth: 4.8% The final Draft of fifth plan was prepared and launched by D.P. Dhar in the backdrop of economic crisis arising out of run-away inflation fuelled by hike in oil prices and failure of the Govt. takeover of the wholesale trade in wheat. It proposed to achieve two main objectives: ‘removal of poverty’ (Garibi Hatao) and ‘attainment of self reliance’ Promotion of high rate of growth, better distribution of income and significant growth in the domestic rate of savings were seen as key instruments Due to high inflation, cost calculations for the Plan proved to be completely wrong and the original public sector outlay had to be revised upwards. After promulgation of emergency in 1975, the emphasis shifted to the implementation of Prime Ministers 20 Point Programme. FYP was relegated to the background and when Janta Party came to power in 1978, the Plan was terminated. Rolling Plan (1978 – 80) There were 2 Sixth Plans. Janta Govt. put forward a plan for 1978- 1983 emphasising on employment, in contrast to Nehru Model which the Govt criticised for concentration of power, widening inequality & for mounting poverty . However, the government lasted for only 2 years. Congress Govt. returned to power in 1980 and launched a different plan aimed at directly attacking on the problem of poverty by creating conditions of an expanding economy.
Sixth Plan (1980 – 85) Target Growth: 5.2% Actual Growth: 5.7% The Plan focussed on Increase in national income, modernization of technology, ensuring continuous decrease in poverty and unemployment through schemes for transferring skills(TRYSEM) and seets(IRDP) and providing slack season employment (NREP), controlling population explosion etc. Broadly , the sixth Plan could be taken as a success as most of the target were realised even though during the last year (1984-85) many parts of the country faced severe famine conditions and agricultural output was less than the record output of previous year.
Seventh Plan (1985 – 90) Target Growth: 5.0% Actual Growth: 6.0% The Plan aimed at accelerating food grain production, increasing employment opportunities & raising productivity with focus on ‘food, work & productivity’. The plan was very successful as the economy recorded 6% growth rate against the targeted 5% with the decade of 80’s struggling out of the’ Hindu Rate of Growth’.
Eighth Plan The eighth plan was postponed by two years because of political uncertainty at the Centre (1992 – 97) Target Growth 5.6 % Actual Growth 6.8% Worsening Balance of Payment position, rising debt burden , widening budget deficits, recession in industry and inflation were the key issues during the launch of the plan. The plan undertook drastic policy measures to combat the bad economic situation and to undertake an annual average growth of 5.6% through introduction of fiscal & economic reforms including liberalisation under the Prime Minister ship of Shri P V Narasimha Rao. Some of the main economic outcomes during eighth plan period were rapid economic growth (highest annual growth rate so far – 6.8 %), high growth of agriculture and allied sector, and manufacturing sector, growth in exports and imports, improvement in trade and current account deficit. High growth rate was achieved even though the share of public sector in total investment had declined considerably to about 34 %.
Ninth Plan (1997- 2002) Target Growth: 6.5% Actual Growth: 5.4% The Plan prepared under United Front Government focussed on “Growth With Social Justice & Equality “ Ninth Plan aimed to depend predominantly on the private sector – Indian as well as foreign (FDI) & State was envisaged to increasingly play the role of facilitator & increasingly involve itself with social sector viz education , health etc and infrastructure where private sector participation was likely to be limited. It assigned priority to agriculture & rural development with a view to generate adequate productive employment and eradicate poverty
Tenth Plan (2002 – 2007) Target Growth 8 % Actual Growth 7.6 % Recognising that economic growth cant be the only objective of national plan, Tenth Plan had set ‘monitorable targets’ for few key indicators (11) of development besides 8 % growth target. The targets included reduction in gender gaps in literacy and wage rate, reduction in Infant & maternal mortality rates, improvement in literacy, access to potable drinking water cleaning of major polluted rivers, etc. Governance was considered as factor of development & agriculture was declared as prime moving force of the economy. States role in planning was to be increased with greater involvement of Panchayati Raj Institutions. State wise break up of targets for growth and social development sought to achieve balanced development of all states.
Eleventh Plan (2007 – 2012) 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). India had emerged as one of the fastest growing economy by the end of the Tenth Plan. 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 India. But the growth was not perceived as sufficiently inclusive for many groups , specially SCs , STs & minorities as borne out by data on several dimensions like poverty, malnutrition, mortality, current daily employment etc .
Twelfth Five Year Plan (2012-17): The Twelfth Plan commenced at a time when the global economy was going through a second financial crisis, precipitated by the sovereign debt problems of the Eurozone which erupted in the last year of the Eleventh Plan. The crisis affected all countries including India. Our growth slowed down to 6.2 percent in 2011-12 and the deceleration continued into the first year of the Twelfth Plan, when the economy is estimated to have grown by only 5 percent . The Twelfth Plan therefore emphasizes that our first priority must be to bring the economy back to rapid growth while ensuring that the growth is both inclusive and sustainable. The broad vision and aspirations which the Twelfth Plan seeks to fulfil are reflected in the subtitle: ‘Faster, Sustainable, and More Inclusive Growth’. Inclusiveness is to be achieved through poverty reduction, promoting group equality and regional balance, reducing inequality, empowering people etc whereas sustainability includes ensuring environmental sustainability ,development of human capital through improved health, education, skill development, nutrition, information technology etc and development of institutional capabilities , infrastructure like power telecommunication, roads, transport etc ,
- On the eve of independence India was largely a agrarian economy
- 70 pc of the workforce was engaged in agriculture; 50 pc of national income from it.
- To set India on a high economic growth path it was realised that savings need to be increased and it needs to be translated into investment.
- Hence, the focus of Indian planning was to direct public investment in the area of infrastructure, agriculture and industrial development
- While agriculture and infrastructure received main focus in the first FYP, industrial development was to preoccupy Indian planning process second plan onwards
- This was mainly because India was operating as, more or less, a closed economy. In such a situation, the capital goods for production and growth had to be produced indigenously. This was necessary to convert growing savings into investment. In addition, there could have been other considerations like self-reliance and building of defence capability.
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