Five Year Plans in India
For the smooth functioning of any economy,
planning plays an important role. The Planning Commission has been entrusted
with the responsibility of the creation, development and execution of India's
five year plans. India's five year plans are also supervised by the Planning
commission.
Currently, the 12th Five Year Plan, is underway. Here is an
overview of India's Five Year Plans:
1st five year plan(1951 to 1956):
The 1st five year plan was presented by Jawaharlal Nehru, who was
the Prime Minister during that period. It was formulated for the execution of
various plans between 1951 to 1956. The Planning Commission was responsible for
working out the plan.
The primary aim of the 1st five year plan was to improve living
standards of the people of India. This could be done by making judicious use of
India's natural resources.
The total outlay of the 1st five year plan was worth Rs.2,069
crore. This amount was assigned to different sectors which included:
· Industrial sector
· Energy, Irrigation
· Transport, Communications
· Land rehabilitation
· Social services
· Development of agriculture and community
· Miscellaneous issues The target set for the growth in the
gross domestic product was 2.1percent every year. In reality, the actual
achieved with regard to gross domestic product was 3.6 percent per annum. This
is a clear indication of the success of the 1st five year plan.
Some important events that took place during the tenure of the 1st
five year plan:
· The following Irrigation projects were started during that
period:
· Mettur Dam
· Hirakud Dam
· Bhakra Dam.
· The government had taken steps to rehabilitate the
landless workers, whose main occupation was agriculture. These workers were
also granted fund for experimenting and undergoing training in agricultural
know how in various cooperative institutions. Soil conservation, was also given
considerable importance.
· The Indian government also made considerable effort in
improving posts and telegraphs,railway services, road tracks, civil aviation.
· Sufficient fund was also allocated for the industrial
sector. In addition measures were taken for the growth of the small scale
industries.
2nd Five year plan(1956 to 1961):
With India's five year plans the country has attained a more or
less stable economic setup down the years. The 1st five year plan ended in the
year 1956. The 2nd five year plan was effective from 1956 to 1961.
Objectives of the 2nd five year plan (1956 to 1961): Industries got more importance in the 2nd five year plan. The
focus was mainly on heavy industries. The Indian government boosted
manufacturing of industrial goods in the country. This was done
primarily to develop the public sector.
Mahalanobis Model:
The 2nd year five year plan, functioned on the basis of
Mahalanobis model. The Mahalanobis model was propounded by the famous Prasanta
Chandra Mahalanobis in
the year 1953. His model addresses different issues pertaining to
economic development.
Assumptions made by the Mahalanobis model:
· According to this model, it is assumed that the economy is closed and has two segments.
1. Segment of consumption goods
2. Segment of capital goods.
· Capital goods cannot be moved or are “non shiftable”.
· Production is at its peak.
· Depending on the availability of capital goods, investments are decided upon.
· Capital is the scarce factor.
· Capital goods production is not influenced by consumer goods production. By following the Mahalanobis model, the then
government wanted that there should be
optimum assignment of the fund among the various productive
segments. This was aimed with a view to achieve maximum returns on a long term
basis.
As many as five steel plants including the ones in Durgapur,
Jamshedpur as well as Bhilai were set up as per the 2nd five year plan.
Hydroelectric power plants were formed during the tenure of the 2nd five year
plan. There was considerable increase in production of coal. The North eastern
part of the country, witnessed increase in the number of railway tracks.
During the term of the 2nd five year plan, Atomic Energy
Commission came into being. The Commission was
established in the year 1957. During the same period, Tata Institute of
Fundamental Research was born. The institute conducted several programs to
search for talented individuals. These individuals would eventually be absorbed
into programs related to nuclear power.
3rd five year plan (1961 to 1966):
India's 1st and 2nd five year plans paved the way for the 3rd five
year plan, the term of this plan being from the year 1961 to 1966. Five year
plans were introduced by the Indian government, so that people could make the
optimum use of the resources better their living standards. Effective usage of
the resources would eventually ensure an enhancement in output.
Main events of the 3rd five year plan (1961
to 1966):
1. 3rd five year plan laid considerable stress on the agricultural
sector. However, with the short lived Sino Indian War of 1962 India diverted
its attention to the safety of the country. Again, during the period 1965 to
1966, owing to Green Revolution, once again agricultureattracted attention.
2. Due to the Sino Indian War, India witnessed increase in price
of products. The resulting inflation was cost push in nature. Many dams were
constructed during this period. It may be recalled, that when the 1st five year
plan was tabled, construction of Hirakud dam, Mettur dam and Bhakra dam had
taken place. Along with dams, India got many fertilizer plants and cement
making plants. Abundant production of wheat took place in Punjab.
3. When the 1st five year plan was introduced people were slightly
apprehensive about the success of the plan. So, when it was discovered that the
1st and the 2nd five year plans were successful, people pinned their hopes on
the next five year plan.
4. Role of the states increased and they were given more
prominence. Many primary schools had started functioning in the village areas.
Various bodies looking into matters related to secondary education were also
formed. To promote democracy, there was commencement of the Panchayat elections.
5. There was formation of state electricity boards. The state
governments were entrusted with the responsibility of constructing roads.
Objectives of the 3rd five year plan:
In addition to the above measures and proposals, the Planning
Commission aimed at the following:
· Increasing the national income by 5 percent per annum.
· Making India self sufficient by increasing agricultural
production. This step was taken to ensure that India does not have to bank
on others for food products.
· Minimizing rate of unemployment.
· Ensuring that people enjoy equal rights in the country.
4th five year plan(1969 to 1974):
The 4th five year plan of India also served as a stepping stone
for the economic growth. The following section will highlight the main events that had taken place under the
4th five year plan.
Main events of the 4th five year plan(1969
to 1974):
1. India had to reform and restructure its
expenditure agenda, following the attack on India in the year 1962 and for the
second time in the year 1965. India had hardly recuperated when it was struck
by drought. India also had a stint of recession. Due to recession, famine and
drought, India did not pay much heed to long term goals.
Instead, it responded to the need of the hour. It started taking
measures to overcome the crisis.
2. Food grains production increased to bring about self
sufficiency in production. With this attempt, gradually a gap was created
between the people of the rural areas and those of the urban areas.
3. The need for foreign reserves was felt. This facilitated growth
in exports. Import substitution drew considerable attention. All these
activities widened the industrial platform.
Following the 4th Five Year Plan an alteration in the socio
economic structure of the society was observed.
India's development in every sector takes place through the five
year plans which are laid out by the Planning Commission. They not only lay out
the plans but also monitor the execution of those plans and make sure that all
the machineries of the Center and the state work in coordination. The 5th Five
Year Plan was also developed by the Planning Commission. The Commission has a
Deputy Chairman and along with the Prime Minister, who acts as the Ex Officio
Chairman, the plan is laid out.
5th five year plan (1974-1979):
The 5th Five Year Plan commenced on 1974 and extended till 1979.
Objective of the Fifth Year Plan The objective of the 5th Five Year Plan was to
increase the level of employment, reduce poverty and to attain self sufficiency
in agriculture.
Backdrop of the 5th Five Year Plan
The world economy was in a troublesome state when the fifth five
year plan was chalked out. This had a negative impact on the Indian economy.
Prices in the energy
and food sector skyrocketed and as a consequence inflation became
inevitable. Therefore, the priority in the fifth five year plan was given to
the food and energy sectors . In the later stages the increase in the supply of
food grains and the export of minerals and oil reserve earned quite a good
amount of foreign exchange to the Indian Economy.
Contents of the 5th Five Year Plan
The 5th Five Year Plan was laid out during a crisis period to
overcome the impediments posed by the wavering economic condition. The 5th Five
Year Plan was designed in a way to meet the needs of the time. The issues that
were emphasised were:
· Reducing the discrepancy between the economic development
at the regional, national, international level. It emphasized on putting the
economic growth at par with each other.
· Improving the agricultural condition by implementing land
reform measures.
· Improving the scope of self-employment through a well
integrated program.
· Reducing the rate of unemployment both in the urban and
the rural sectors.
· Encouraging growth of the small scale industries.
· Enhancing the import substitution in the spheres including
chemicals, paper, mineral and equipment industries.
· Applying policies pertaining to finance and credit in the
industrial sector.
· Stressed on the importance of a labour intensive
production technology in India.
6th five year plan(1980-1985):
6th Five Year Plan is also referred to as the Janata Government
Plan and it was revolutionary since it marked a change from the Nehruvian model
of Five Year Plans. The sixth five year plan has changed a lot of things in
India. On one hand it had improved the tourism industry in India and on the
other hand it aimed at development in the Information Technology sector.
Issues within the 6th Five Year Plan
The 6th Five Year Plan started from 1980 and covered a timespan of
another five years that is till 1985. During this time the Prime Minister was
Rajiv Gandhi and hence industrial development was the emphasis of this plan.
His idea about the betterment of the industrial sector was welcomed by some and
opposed by lot others specially the communist groups. Even the workers who were
more inclined towards the leftist ideology were not much convinced. This slowed
down the pace of progress.
Transport and Communication System
The transport and communication system also improved under this
Plan. The National Highways were all built during this time. Apart from the
construction of new highways, the condition of the roads were meliorated. This
helped in the betterment of the traffic system in India. During this time the
Indian currency was devalued and this led to a dramatic increase in the number
of foreign travelers in India thus helping India to become a tourist
destination.
New Introduction on the Economic Front
Economic Liberalization was introduced for the first time in India
during this period. Ration shops were closed because government no more
produced articles at a subsidized rate. Price control measures were no more
useful. As a consequence the prices of various goods increased leading to
growth in the standard of living of the residents of India.
Measures against Population Explosion
Family Planning was implemented for the first time in India.
Family Planning helped to create awareness among the Indians regarding
population. However, this measure to control population was not accepted across
India. It was readily accepted by the people residing in the developed areas of
the country but the mass of the less developed areas refused to accept the plan
and never implemented it.
7th five year plan(1985-1989):
7th Five Year Plan which covered a time span of another five years
started on 1985 and went on till 1989. This Five Year Plan was the come back
vehicle of the Indian National Congress Party into power. The primary aim of
the five year plan was to upgrade the industrial sector and enable India to
establish itself as one of the developed countries of the world. This Plan was
released under the National Development Council of India.The objective of the
7th Five Year Plan was to generate more scope of employment for the people of
India, to produce more in terms of food which would lead to an overall increase
in productivity.
Backdrop of the 7th Five Year Plan
The 7th Five Year Plan started off on a string ground since the
foundation for economic development was laid by the 6th Five Year Plan. The
Sixth Five Year Plan had already paved the way for economic development by
increasing the production in the agricultural and industrial sector, curbing
the rate of inflation and maintaining a balance in the transaction of goods,
services and money. Therefore, the 7th Five Year Plan had a strong base on
which it could built the superstructure of industrial development for the
betterment of India's economic position. This plan strove to achieve socialism
and expand the production of energy.
Contents of the 7th Five Year Plan
The basic issues on which this plan put stress were:
· Introduction and application of modern technology
· Justice meted out to people from various social stratas
· Improving the position of the weak in the Indian society
· Development of agriculture
· Reducing poverty in India
· Assuring the essentials of food, shelter and clothing to
the people
· Striving to achieve independence as per the Indian economy
is concerned
· Help the small as well as the large farmers to increase
their productivity This time Indian government was adamant to achieve
self-sufficiency in the economic and production sector. They endeavored to
develop on the factors that ensure a persistent growth in the economy. The rate
of employment was anticipated to rise by 4% every year and the labor force was
anticipated to grow by 39 million at the end of fifth year.
Overall improvement was the aim of the 7th Five Year Plan.
Therefore care was taken to establish a harmony in all the sectors that are
contained in an economy.
Special care was taken to spread education among girls, enhance
telecommunication within the country. The government of India also strove to
maintain a balance in the economy and by striking a balance within export and
import.
8th five year plan(1992-1997):
8th Five Year Plan commenced on 1992 and carried on till 1997. The
basic objective of this period was the modernization of industrial sector. This
plan focused on technical development. Through this plan the reduction of
deficit and foreign debt was aimed at. The rectification of certain flawed
plans and policies were also done under this five year plan. During this period
only India received a coveted opportunity to become a member of the World Trade
Organization on January 1st 1995.
Agricultural Activities During this Period
Agriculture happens to be the largest contributor to the GDP of
India. In fact two third of the work force was dependent on agriculture.
Industries also made use of agricultural produce as inputs in their production
process.
Self-Sufficiency in Agricultural Production
Self-sufficiency in agricultural production was a top priority
during India's eighth Five Year Plan since most of the population depended on
that. Production of food increased to 176.22 million from 51 million which was
a huge leap in comparison to the previous years.
Results show that the 8th Five Year Plan had been more successful
in this regard as the deficit was reduced by 0.7% in the 8th Five Year Plan and
by only 0.1% in the 7th
Five Year Plan. With regard to domestic savings as a percentage of
GDP the 8th Five Year Plan reached 24.4% while in the 7th Year Plan the figure
was 20.2%. As far as the contribution of the export earnings is concerned the
8th Year Plan contributed 10.1% to the GDP while the 7th Year Plan contributed
9.9% to the GDP. The import volume as a percentage of GDP was also more during
the 8th Five Year Plan (10.9% ) compared to the 7th Five Year Plan (10.3%). In
a nutshell the 8th five year Plan was more successful in meeting its objectives
as compared to the previous five
9th five year plan (1997-2002):
Like all other Five Year Plans made so far, the 9th Five Year Plan
(1997-2002) is formulated, executed and supervised by the Planning Commission.
In the Ninth Five Year Plan period from 1997 to 2002, the recorded
rate of growth was merely 5.35%. However, this economic growth rate is a
percentage point lesser than the GDP growth of 6.5% targeted during this
period.
Evolution of the 9th Five Year Plans: Some facts
Passed after 50 years of Indian independence, the 9th Five Year
Plan was formulated to act as a tool for solving the economic and social
problems existing in the country. The Plan in fact, was born out of the
government’s realization that the latent economic reserves of the country which
were still not explored, should be utilized for the overall development and
benefit of the Indian economy in the coming five years. However, this could
only be done when the Indian government offers strong support and priority to
the social spheres of the country, focusing especially on the complete
elimination of poverty.
Taking into consideration the past weaknesses, the 9th Five Year
Plan endeavored to formulate fresh actions to initiate improvement in the
overall economic and social sectors of the nation. To this effort, there was
mutual contribution from the general population of India as well as the
governmental agencies. This joint private and public attempt ultimately assured
development of the Indian economy.
Primary objectives of the 9th Five Year Plan:
Each and every Five Year Plan of the Indian government is
formulated, keeping in mind the fulfillment of certain objectives. The 9th Five
Year Plan is no exception. The main objective of this Plan is to achieve the
following goals:
· Industrialization at a rapid pace
· Reduction in poverty level
· Gaining self-sufficiency on local resources
· Complete employment for all countrymen
· Price stabilization should be initiated to hasten up the
rate of growth of the Indian economy
· Control the ever-increasing rate of population
· Creating an independent market, for enhancing private
financial investments
· Promotion of social events like conservation of specific
benefits for special social groups, female empowerment, etc.
· Achieving self sufficiency in food production
· Generation of equal opportunities for employment and
taking steps to reduce poverty
10th five year plan(2002-2007):
The 10th Five Year Plan (2002-2007) targets at a GDP growth rate
of 8% per annum. Taking note of the inabilities of the earlier Five Years
Plans, especially that of the 9th Five Year Plan, the Tenth Five Year Plan
decides to take up a resolution for immediate implementation of all the
policies formulated in the past. This amounts to making appeals to the higher
government authorities, for successful completion of their campaigns associated
with the rapid implementation of all past policies.
The primary aim of the 10th Five Year Plan is to renovate the
nation extensively, making it competent enough with some of the fastest growing
economies across the globe. It also intends to initiate an economic growth of
10% on an annual basis. In fact, this decision was taken only after the nation
recorded a consistent 7% GDP growth, throughout the past decade.
The 7% growth in the Indian GDP is considered to be considerably
higher that the average growth rate of GDP in the world. This enabled the
Planning Commission of India to extend the GDP limit further and set goals,
which will drive India to become one of the best industrial countries in the
world, to be clubbed and recognized with the world’s best industrialized
nations.
Like all other Five Year Plans, the 10th Five Year Plan is also
devised, executed and supervised by the Planning Commission of India.
Chief Objectives of the 10th Five Year Plan:
· The Tenth Five Year Plan proposes schooling to be
compulsory for children, by the year 2003.
· The mortality rate of children must be reduced to 45 per
1000 livings births and 28 per 1000 livings births by 2007 and 2012
respectively
· All main rivers should be cleaned up between 2007 and 2012
· Reducing the poverty ratio by at least five percentage
points, by 2007
· Making provision for useful and lucrative employments to
the population, which are of the best qualities
· According to the Plan, it is mandatory that all infants
complete at least five years in schools by 2007.
· By 2007, there should be a decrease in gender
discriminations in the spheres of wage rate and literacy, by a minimum of 50%
· Taking up of extensive afforestation measures, by planting
more trees and enhance the forest and tree areas to 25% by 2007 and 33% by 2012
· Ensuring persistent availability of pure drinking water in
the rural areas of India, even in the remote parts
· The alarming rate at which the Indian population is
growing must be checked and fixed to 16.2%, between a time frame of 2001 and
2011
· The rate of literacy must be increased by at least 75%,
within the tenure of the Tenth Five Year Plan
· There should be a decrease in the Maternal Mortality Ratio
(MMR) to 2 per 1000 live births by 2007. The Plan also intended to bring down
the Maternal Mortality
Ratio to 1 per 1000 live birth by the year 2012.
The 10th Five year Plan of India in a nutshell:
· Increasing the mobility of all the available financial
resources of India, and optimizing them as well
· Setting up of a state-of-the-art infrastructure for all
the existing industries in India.
· Encourage the initiative of capacity building within the
Indian industrial sector
· Creating a friendly, amiable and pleasant investment
environment in India
· Encouraging sufficient transparency in the corporate
sectors of India
· Introduction of reforms in the industrial sectors, which
are more investor-friendly in nature
11th five year plan (2007-2012):
India has emerged as a super power. The transition was not easy.
Guidelines for operating the economy was provided by the five year plans.
Owing to India's five year plans, great advancement has been made with
regard to India's national income. Since 1951, the year when the 1st five year
plan was presented by the then Prime Minister Jawaharlal Nehru, India has come
a long way. India has taken giant strides and today it is considered as one of
the emerging powers.
12th five year plan (2012-2017):
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