Five-Year Plans of India
Since 1947, the Indian economy has been
premised on the concept of planning. This has
been carried through the Five-Year
Plans, developed, executed, and monitored by thePlanning Commission (NITI Aayog
after 2014). With the Prime Minister as
the ex-officio Chairman, the commission has a nominated Deputy Chairman, who
holds the rank of a Cabinet Minister. Montek Singh Ahluwalia is the last
Deputy Chairman of the Commission (resigned on 26 May 2014). The Eleventh Plan
completed its term in March 2012 and the Twelfth Plan is currently underway.[1] Prior to the
Fourth Plan, the allocation of state resources was based on schematic patterns
rather than a transparent and objective mechanism, which led to the adoption of
the Gadgil formula in 1969. Revised
versions of the formula have been used since then to determine the allocation
of central assistance for state plans.[2] The new government
led by Narendra Modi,
elected in 2014, has announced the dissolution of the Planning Commission, and
its replacement by a think tank called the NITI Aayog (an acronym for
National Institution for Transforming India).
History
Five-Year Plans
(FYPs) are centralized and integrated national economic programs. Joseph Stalin implemented the
first FYP in the Soviet Union in the late
1920s. Most communist states and several capitalist countries subsequently have
adopted them. China and India both continue to use FYPs, although China renamed
its Eleventh FYP, from 2006 to 2010, a guideline (guihua), rather than a plan
(jihua), to signify the central government’s more hands-off approach to
development. India launched its First FYP in 1951, immediately after
independence under socialist influence of first Prime Minister Jawaharlal
Nehru.[3]
The First
Five-Year Plan was one of the most important because it had a great role in the
launching of Indian development after the Independence. Thus, it strongly
supported agriculture production and it also launched the industrialization of
the country (but less than the Second Plan, which focused on heavy industries).
It built a particular system ofmixed economy, with
a great role for the public sector (with an emerging welfare state), as
well as a growing private sector (represented by some personalities as those
who published the Bombay Plan).
First Plan
(1951–1956)
The first Indian Prime Minister, Jawaharlal Nehru presented the
First Five-Year Plan to the Parliament
of India and
needed urgent attention. The First Five-year Plan was launched in 1951 which
mainly focused in development of the primary sector. The
First Five-Year Plan was based on the Harrod–Domar
model with
few modifications.
The total
planned budget of Rs.2069 crore(2378 crore later) was allocated to seven broad
areas: irrigation and energy (27.2%), agriculture and community development
(17.4%),transport and communications (24%), industry (8.4%), social services (16.64%), land
rehabilitation (4.1%),
and for other sectors and services (2.5%).
The most important feature of this phase was active role of state in all economic sectors.
Such a role was justified at that time because immediately after independence, India was
facing basic problems—deficiency of capital and low capacity
to save.
The target
growth rate was 2.1% annual gross domestic product (GDP) growth;
the achieved growth rate was 3.6% the net domestic product went up by 15%. The monsoon was good and
there were relatively high crop yields,
boosting exchange reserves and the per capita income,
which increased by 8%. National income increased more than the per capita
income due to rapid population growth. Many irrigation projects were initiated
during this period, including the Bhakra, Hirakud and Damodar Valley dams.
The World Health Organization (WHO), with the Indian government,
addressed children's health and reduced infant mortality,
indirectly contributing to population growth.
At the end of
the plan period in 1956, five Indian Institutes of Technology (IITs) were
started as major technical institutions. The University Grants Commission (UGC) was set up
to take care of funding and take measures to strengthen the higher education in the country.
Contracts were signed to start five steel plants, which came into existence in
the middle of the Second Five-Year Plan. The plan was quasi successful for the
government.
Second Plan
(1956–1961)
The Second Plan
was particularly in the development of the public sector and "rapid
Industrialisation". The plan followed the Mahalanobis model,
an economic
developmentmodel developed by the Indian statistician Prasanta Chandra Mahalanobis in 1953. The
plan attempted to determine the optimal allocation of investment between
productive sectors in order to maximise long-run economic growth. It used the
prevalent state of art techniques of operations research and optimization as
well as the novel applications of statistical models developed at the Indian Statistical Institute. The plan assumed a
closed economy in which the main trading activity would be centred on importing
capital goods.[4][5]
Hydroelectric power projects and
five steel plants at Bhilai, Durgapur, and Rourkela were established
with the help of Russia, Britain (the U.K) and West Germany respectively.Coal production
was increased. More railway lines were added
in the north east.
The Tata Institute of Fundamental Research and Atomic
Energy Commission (AEC) was established as research institutes. In 1957 a
talent search and scholarship program was begun to find talented young students
to train for work in nuclear power.
The total amount
allocated under the Second Five-Year Plan in India was Rs.48 billion. This
amount was allocated among various sectors: power and irrigation, social
services, communications and transport, and miscellaneous.
Third Plan
(1961–1966)
The Third
Five-year Plan stressed agriculture and improvement in the production of wheat,
but the brief Sino-Indian War of 1962 exposed
weaknesses in the economy and shifted the focus towards the defence industry
and the Indian Army. In 1965–1966, India fought a War with Pakistan. There was also a severe drought in
1965. The war led to inflation and the priority was shifted to price
stabilisation. The construction of dams continued.
Many cement and fertilizer plants were also
built. Punjab began producing
an abundance of wheat.
Many primary schools were started in
rural areas. In an effort to bring democracy to the grass-root level, Panchayat elections were
started and the states were
given more development responsibilities.
State
electricity boards and state secondary education boards were formed. States
were made responsible for secondary and higher education.
State road transportation corporations were formed and local road building
became a state responsibility.
Due to miserable
failure of the Third Plan the government was forced to declare "plan
holidays" (from 1966–67, 1967–68, and 1968–69). Three annual plans were
drawn during this intervening period. During 1966–67 there was again the
problem of drought. Equal priority was given to agriculture, its allied
activities, and industrial sector. The government of India declared
"Devolution of Rupee" to increase the exports of the country. The
main reasons for plan holidays were the war, lack of resources, and increase in
inflation after that plan holiday was created.
Fourth Plan
(1969–1974)
At this time Indira Gandhi was the Prime Minister. The Indira Gandhi government nationalised 14 major Indian
banks and the Green Revolution in India advanced
agriculture. In addition, the situation in East Pakistan (now Bangladesh) was
becoming dire as the Indo-Pakistan War of 1971 and Bangladesh Liberation War took funds
earmarked for industrial development. India also performed the Smiling Buddha underground nuclear test (Pokhran-1) in
Rajasthan on May 18,1974, partially in response to the United States deployment
of the Seventh Fleet in
the Bay of Bengal. The
fleet had been deployed to warn India against attacking West Pakistan and extending
the war.
Fifth Plan
(1974–1978)
The Fifth
Five-Year Plan laid stress on employment, poverty alleviation (Garibi Hatao), and justice. The plan
also focused on self-reliance in agricultural
production and defence. In 1978 the newly elected Morarji Desai government
rejected the plan. The Electricity Supply Act was amended in 1975, which
enabled the central government to enter into power generation and transmission.[7][citation needed]
The Indian national highway system was introduced
and many roads were widened to accommodate the increasing traffic. Tourism also expanded.
The twenty-point programme was launched in 1975. It was followed from 1974 to
1979.
Rolling Plan
(1978–1980)
The Janata Party government
rejected the Fifth Five-Year Plan and introduced a new Sixth Five-Year Plan
(1978–1980). This plan was again rejected by the Indian National Congress government in
1980 and a new Sixth Plan was made.The Rolling Plan consists of three kind of
plans that were proposed. The First Plan is for the present year which
comprises the annual budget and Second is a plan for a fixed number of years,
which may be 3, 4 or 5 years. Plan number two is kept changing as per the
requirements of theIndian
economy. The Third Plan is a perspective plan which is for long
terms i.e. for 10, 15 or 20 years. Hence there is no fixation of dates in for
the commencement and termination of the plan in the rolling plans. The main
advantage of the rolling plans is that they are flexible and are able to
overcome the rigidity of fixed five year plans by mending targets,the object of
the exercise, projections and allocations as per the changing conditions in the
country’s economy. The main
disadvantage of this plan is that if the targets are revised each year, it
becomes very difficult to achieve them which are laid down in the five-year
period and it turned out to be a complex plan. Frequent revisions make them
resulted in instability of the economy which are essential for its balanced
development and progress.
Sixth Plan
(1980–1985)
The Sixth
Five-Year Plan marked the beginning of economic liberalisation. Price controls were eliminated
and ration shops were closed. This led to an increase in food prices and an
increase in the cost of living. This
was the end of Nehruvian
socialism. The National Bank for Agriculture
and Rural Development was
established for development of rural areas on 12 July 1982 by recommendation of
the Shivaraman Committee. Family planning was also
expanded in order to prevent overpopulation.
In contrast to China's strict and binding one-child policy,
Indian policy did not rely on the threat of force[citation needed].
More prosperous areas of India adopted family planning more rapidly than less
prosperous areas, which continued to have a high birth rate.
The Sixth
Five-Year Plan was a great success to the Indian economy. The target growth
rate was 5.2% and the actual growth rate was 5.4%.[6] The only
Five-Year Plan which was done twice.[clarification needed]
Seventh Plan
(1985–1990)
The Seventh
Five-Year Plan marked the comeback of the Congress Party to
power. The plan laid stress on improving the productivity level of industries
by upgrading of technology.
The main
objectives of the Seventh Five-Year Plan were to establish growth in areas of
increasing economic productivity, production of food grains, and generating
employment through "Social Justice".
As an outcome of
the Sixth Five-Year Plan, there had been steady growth in agriculture, controls
on the rate of inflation, and favourable balance of payments which had provided
a strong base for the Seventh Five-Year Plan to build on the need for further
economic growth. The Seventh Plan had strived towards socialism and energy
production at large. The thrust areas of the Seventh Five-Year Plan were:
social justice, removal of oppression of the weak, using modern technology,
agricultural development, anti-poverty programmes, full supply of food,
clothing, and shelter, increasing productivity of small- and large-scale
farmers, and making India an independent economy.
Based on a
15-year period of striving towards steady growth, the Seventh Plan was focused
on achieving the prerequisites of self-sustaining growth by the year 2000. The
plan expected the labour force to grow by 39 million people and employment was
expected to grow at the rate of 4% per year.
Some of the
expected outcomes of the Seventh Five-Year Plan India are given below:
·
Balance of
payments (estimates): Export – ₹330
billion (US$4.9 billion), Imports – (-)₹540 billion (US$8.0 billion),
Trade Balance – (-)₹210 billion (US$3.1 billion)
·
Merchandise
exports (estimates): ₹606.53
billion (US$9.0 billion)
·
Merchandise
imports (estimates): ₹954.37
billion (US$14.2 billion)
·
Projections for
balance of payments: Export – ₹607
billion (US$9.0 billion), Imports – (-) ₹954 billion (US$14.2 billion),
Trade Balance- (-) ₹347
billion (US$5.2 billion)
Under the
Seventh Five-Year Plan, India strove to bring about a self-sustained economy in
the country with valuable contributions from voluntary agencies and the general
populace.
Annual Plans
(1990–1992)
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. The
Eighth Plan was finally formulated for the period 1992-1997.
Eighth Plan
(1992–1997)
1989–91 was a
period of economic instability in India and hence no five-year plan was
implemented. Between 1990 and 1992, there were only Annual Plans. In 1991,
India faced a crisis in foreign exchange (forex)
reserves, left with reserves of only about US$1 billion.
Thus, under pressure, the country took the risk of reforming the socialist
economy. P.V.
Narasimha Rao was
the tenth Prime Minister of the Republic of India and head of Congress Party, and led one of the most important
administrations in India's modern history, overseeing a major economic
transformation and several incidents affecting national security. At that time
Dr. Manmohan Singh (later Prime
Minister of India) launched India's free market reforms that brought the nearly
bankrupt nation back from the edge. It was the beginning of liberalization, privatisation and
globalization (LPG) in India.
Modernization of industries
was a major highlight of the Eighth Plan. Under this plan, the gradual opening
of the Indian economy was undertaken to correct the burgeoning deficitand foreign debt. Meanwhile, India became a
member of the World Trade Organization on 1 January
1995. The major objectives included, controlling population growth, poverty
reduction, employment generation, strengthening the infrastructure,
institutional building, tourism management, human resource development,
involvement of Panchayati rajs,Nagar Palikas, NGOs, decentralisation and people's participation.
Energy was given
priority with 26.6% of the outlay. An average annual growth rate of 6.78%
against the target 5.6%[6] was achieved.
To achieve the
target of an average of 5.6% per annum, investment of 23.2% of the gross
domestic product was required. The incremental capital ratio is 4.1. The saving
for investment was to come from domestic sources and foreign sources, with the
rate of domestic saving at 21.6% of gross domestic production and of foreign
saving at 1.6% of gross domestic production.[9]
Ninth Plan
(1997–2002)
The Ninth
Five-Year Plan came after 50 years of Indian Independence. Atal
Bihari Vajpayee was
the Prime Minister of India during the Ninth Five-Year Plan. The Ninth
Five-Year Plan tried primarily to use the latent and unexplored economic
potential of the country to promote economic and social growth. It offered
strong support to the social spheres of the country in an effort to achieve the
complete elimination of poverty. The satisfactory implementation of the Eighth
Five-Year Plan also ensured the states' ability to proceed on the path of
faster development. The Ninth Five-Year Plan also saw joint efforts from the
public and the private sectors in ensuring economic development of the country.
In addition, the Ninth Five-Year Plan saw contributions towards development
from the general public as well as governmental agencies in both the rural and urban
areas of the country. New implementation measures in the form of Special Action
Plans (SAPs) were evolved during the Ninth Five-Year Plan to fulfill targets
within the stipulated time with adequate resources. The SAPs covered the areas
of social infrastructure, agriculture, information technology and Water policy.
Budget
The Ninth
Five-Year Plan had a total public sector plan outlay of ₹859,200 crore (US$130 billion).
The Ninth Five-Year Plan also saw a hike of 48% in terms of plan expenditure
and 33% in terms of the plan outlay in comparison to that of the Eighth
Five-Year Plan. In the total outlay, the share of the center was approximately
57% while it was 43% for the states and the union territories.
The Ninth
Five-Year Plan focused on the relationship between the rapid economic growth
and the quality of life for the people of the country. The prime focus of this
plan was to increase growth in the country with an emphasis on social justice
and equity. The Ninth Five-Year Plan placed considerable importance on
combining growth oriented policies with the mission of achieving the desired
objective of improving policies which would work towards the improvement of the
poor in the country. The Ninth Five-Year Plan also aimed at correcting the
historical inequalities which were still prevalent in the society.
Objectives
The main
objective of the Ninth Five-Year Plan was to correct historical inequalities
and increase the economic growth in the country. Other aspects which
constituted the Ninth Five-Year Plan were:
·
Population
control
·
Generating
employment by giving priority to agriculture and rural development
·
Reduction of
poverty
·
Ensuring proper
availability of food and water for the poor
·
Availability of
primary health care facilities and other basic necessities
·
Primary
education to all children in the country
·
Empowering the
socially disadvantaged classes like Scheduled castes, Scheduled tribes and other
backward classes
·
Developing
self-reliance in terms of agriculture
·
Acceleration in
the growth rate of the economy with the help of stable prices
Strategies
·
Structural
transformations and developments in the Indian economy.
·
New initiatives
and initiation of corrective steps to meet the challenges in the economy of the
country.
·
Efficient use of
scarce resources to ensure rapid growth.
·
Combination of
public and private support to increase employment.
·
Enhancing high
rates of export to achieve self-reliance.
·
Providing
services like electricity, telecommunication, railways etc.
·
Special plans to
empower the socially disadvantaged classes of the country.
·
Involvement and
participation of Panchayati Raj institutions/bodies and Nagar Palikas in the
development process.
Performance
·
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%
·
The industrial
growth in the country was 4.5% which was higher than that of the target of 3%
·
The service
industry had a growth rate of 7.8%.
·
An average
annual growth rate of 6.7% was reached.
The Ninth
Five-Year Plan looks through the past weaknesses in order to frame the new
measures for the overall socio-economic development of the country. However,
for a well-planned economy of any country, there should be a combined
participation of the governmental agencies along with the general population of
that nation. A combined effort of public, private, and all levels of government
is essential for ensuring the growth of India's economy.
The target
growth was 7.1% and the actual growth was 6.8%.
Tenth Plan
(2002–2007)
The main
objectives of the Tenth Five-Year Plan were:
·
Attain 8% GDP
growth per year
·
Providing
gainful and high-quality employment at least to the addition to the labor force
·
Reduction in
gender gaps in literacy and wage rates by at least 50% by 2007
·
20-point program
was introduced
·
Target growth:
8.1% – growth achieved: 7.7%
·
The tenth plan
was expected to follow a regional approach rather than sectoral approach to
bring down regional inequalities
·
Expenditure of ₹43,825 crore (US$6.5 billion)
for tenth five years
Out of total
plan outlay, ₹921,291
crore (US$140 billion) (57.9%) was for central
government and ₹691,009
crore (US$100 billion) (42.1%) was for states and
union territories.
Eleventh Plan
(2007–2012)
·
Rapid and
inclusive growth.(Poverty reduction)
·
Emphasis on
social sector and delivery of service therein.
·
Empowerment
through education and skill development.
·
Reduction of
gender inequality.
·
Environmental
sustainability.
·
To increase the
growth rate in agriculture,industry and services to 4%,10% and 9% respectively.
·
Reduce Total
Fertility Rate to 2.1
·
Provide clean
drinking water for all by 2009.
·
Increase
agriculture growth to 4%.
Twelfth Plan
(2012–2017)
The Twelfth
Five-Year Plan of the Government
of India has
been decided for the growth rate at 8.2% but the National Development Council
(NDC) on 27 Dec 2012 approved 8% growth rate for 12th five-year plan.[10]
With the
deteriorating global situation, the Deputy Chairman of the Planning Commission
Mr Montek Singh Ahluwalia has said that achieving an average growth rate of 9
percent in the next five years is not possible. The Final growth target has
been set at 8% by the endorsement of plan at the National Development Council
meeting held in New Delhi.
"It is not
possible to think of an average of 9% (in 12th Plan). I think somewhere between
8 and 8.5 percent is feasible,” Mr Ahluwalia said on the sidelines of a conference
of State Planning Boards and departments. The approached paper for the 12th
Plan, approved last year, talked about an annual average growth rate of 9%.
“When I say
feasible... that will require major effort. If you don’t do that, there is no
God given right to grow at 8 percent. I think given that the world economy
deteriorated very sharply over the last year...the growth rate in the first
year of the 12th Plan (2012–13) is 6.5 to 7 percent.”
He also
indicated that soon he should share his views with other members of the
Commission to choose a final number (economic growth target) to put before the
country’s NDC for its approval.
The government
intends to reduce poverty by 10% during the 12th Five-Year Plan. Mr Ahluwalia
said, “We aim to reduce poverty estimates by 9% annually on a sustainable basis
during the Plan period. Earlier, addressing a conference of State Planning
Boards and Planning departments, he said the rate of decline in poverty doubled
during the 11th Plan. The commission had said, while using the Tendulkar poverty line,
the rate of reduction in the five years between 2004–05 and 2009–10, was about
1.5%points each year, which was twice that when compared to the period between
1993–95 to 2004–05.[11] The plan aims
towards the betterment of the infrastructural projects of the nation avoiding
all types of bottlenecks. The document presented by the planning commission is
aimed to attract private investments of up to US$1 trillion in the
infrastructural growth in the 12th five-year plan, which will also ensure a
reduction in subsidy burden of the government to 1.5 percent from 2 percent of
the GDP (gross domestic product). The UID (Unique Identification Number) will
act as a platform for cash transfer of the subsidies in the plan.
Comments
Post a Comment