Five-Year plans of India

The economy of India is based in part on planning through its five-year plans, which
are developed, executed and monitored by thePlanning Commission. The tenth plan
completed its term in March 2007 and the eleventh 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 lead 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]

First Five-Year Plan, 1951–1956

The first Indian Prime Minister, Jawaharlal Nehru presented the first five-year plan to
the Parliament of India on 8 December 1951. The plan addressed, mainly, the agrarian
sector, including investments in dams and irrigation. The agricultural sector was hit
hardest by the partition of India and needed urgent attention.[3] The total planned budget
of 206.8 billion (US$23.6 billion in the 1950 exchange rate) was allocated to seven
broad areas: irrigation and energy (27.2 percent), agriculture and community
development (17.4 percent),transport and communications (24 percent), industry (8.4
percent), social services (16.64 percent), land rehabilitation (4.1 percent), and for other
sectors and services (2.5 percent).[4] 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 Dam and Hirakud Dam.
The World Health Organization, 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 Grant Commission was set up to
take care of funding and take measures to strengthen the higher education in the
country.[5]Contracts were signed to start five steel plants, which came into existence in
the middle of the second five-year plan.

Second Five-Year Plan, 1956–1961

This plan functioned on the basis of a nude model. The Mahalanobis model was
propounded by Prasanta Chandra Mahalanobis in the year 1953. The second five-year
plan focused on industry, especially heavy industry. Unlike the First plan, which focused
mainly on agriculture, domestic production of industrial products was encouraged in the
Second plan, particularly in the development of the public sector. The plan followed
the Mahalanobis model, an economic development model developed by the
Indian statisticianPrasanta 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 Statiatical Institute. The plan assumed a closed
economy in which the main trading activity would be centered on importing capital
goods.[6][7]

Hydroelectric power projects and five steel mills at Bhilai, Durgapur, and Rourkela were
established. Coal production was increased. More railway lines were added in the north
east.

The Atomic Energy Commission was formed in 1958 with Homi J. Bhabha as the first
chairman. The Tata Institute of Fundamental Research was established as a research
institute. 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. 4,800 crore.
This amount was allocated among various sectors:

 Mining and industry

 Community and agriculture development
 Power and irrigation
 Social services
 Communications and transport
 Miscellaneous

Target Growth: 4.5% Actual Growth: 4.27%

Third Five-Year Plan, 1961–1966
The third plan stressed on agriculture and improving production of rice, but the
brief Sino-Indian War of 1962 exposed weaknesses in the economy and shifted the
focus towards the Defence industry. In 1965-1966, India fought a war with Pakistan.
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
grassroot 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. The
target growth rate of GDP(gross domestic product)was 5.6 percent.The achieved
growth rate was 2.84 percent.

Fourth Five-Year 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-Pakistani War of 1971 and Bangladesh Liberation
War took place.
Funds earmarked for the industrial development had to be diverted for the war effort.
India also performed the Smiling Buddhaunderground nuclear test in 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.

Target Growth: 5.7% Actual Growth: 3.30%

Fifth Five-Year Plan, 1974–1979

Stress was laid on employment, poverty alleviation, 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. Electricity Supply Act was enacted in 1975, which
enabled the Central Government to enter into power generation and transmission.[citation
needed]
leaders.

The Indian national highway system was introduced for the first time and many roads
were widened to accommodate the increasing traffic. Tourism also expanded.

Target Growth: 4.4% Actual Growth: 4.8%

Sixth Five-Year Plan, 1980–1985

The sixth plan also marked the beginning of economic liberalization. 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 Plan and Rajiv Gandhi was
prime minister during this period.

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. More prosperous areas of India adopted family planning more rapidly than less
prosperous areas, which continued to have a high birth rate.

Target Growth: 5.2% Actual Growth: 5.66%

Seventh Five-Year Plan, 1985–1990

The Seventh 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 7th five year plans were to establish growth in areas of
increasing economic productivity, production of food grains, and generating employment
opportunities.

As an outcome of the sixth five year plan, there had been steady growth in agriculture,
control on 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 7th Plan had strived towards socialism and energy production at large. The
thrust areas of the 7th Five year plan have been enlisted below:

 Social Justice
 Removal of oppression of the weak
 Using modern technology
 Agricultural development
  Anti-poverty programs
 Full supply of food, clothing, and shelter
 Increasing productivity of small and large scale farmers
 Making India an Independent Economy

Based on a 15-year period of striving towards steady growth, the 7th Plan was focused
on achieving the pre-requisites of self-sustaining growth by the year 2000. The Plan
expected a growth in labour force of 39 million people and employment was expected to
grow at the rate of 4 percent per year.

Some of the expected outcomes of the Seventh Five Year Plan India are given below:

 Balance of Payments (estimates): Export - 33,000 crore (US$7.3 billion),

Imports - (-) 54,000 crore (US$12 billion), Trade Balance - (-) 21,000 crore (US$4.7
billion)
 Merchandise exports (estimates): 60,653 crore (US$13.5 billion)
 Merchandise imports (estimates): 95,437 crore (US$21.2 billion)
 Projections for Balance of Payments: Export - 60,700 crore (US$13.5 billion),
Imports - (-) 95,400 crore (US$21.2 billion), Trade Balance- (-)
34,700 crore (US$7.7 billion)

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.

Target Growth: 5.0% Actual Growth: 6.01%

Period between 1989–1991

1989-91 was a period of political 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 twelfth 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(currently, 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 privatisation and liberalisation in
India.

Eighth Five-Year Plan, 1992–1997

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 deficit and foreign debt. Meanwhile India became a member of the World
Trade Organization on 1 January 1995.This plan can be termed as Rao and Manmohan
model of Economic development. The major objectives included, controlling population
growth, poverty reduction, employment generation, strengthening the infrastructure,
Institutional building,tourism management, Human Resource development, Involvement
of Panchayat raj, Nagarapalikas, N.G.O'S and Decentralisation and people's
participation. Energy was given prority with 26.6% of the outlay. An average annual
growth rate of 6.78% against the target 5.6% was achieved.

Ninth Five-Year Plan, 1997–2002

Ninth Five Year Plan India runs through the period from 1997 to 2002 with the main aim
of attaining objectives like speedy industrialization, human development, full-scale
employment, poverty reduction, and self-reliance on domestic resources.

Background of Ninth Five Year Plan India: Ninth Five Year Plan was formulated amidst
the backdrop of India's Golden jubilee of Independence.

The main objectives of the Ninth Five Year Plan of India are:

 to prioritize agricultural sector and emphasize on the rural development

 to generate adequate employment opportunities and promote poverty reduction
 to stabilize the prices in order to accelerate the growth rate of the economy
 to ensure food and nutritional security
 to provide for the basic infrastructural facilities like education for all, safe drinking
water, primary health care, transport, energy
 to check the growing population increase
 to encourage social issues like women empowerment, conservation of certain
benefits for the Special Groups of the society
 to create a liberal market for increase in private investments
During the Ninth Plan period, the growth rate was 5.35 per cent, a percentage point
lower than the target GDP growth of 6.5 per cent. [8]

Tenth Five-Year Plan, 2002–2007

 Attain 8% GDP growth per year.

 Reduction of poverty ratio by 5 percentage points by 2007.
 Providing gainful and high-quality employment at least to the addition to the
labour force;*All children in India in school by 2003; all children to complete 5 years
of schooling by 2007.
 Reduction in gender gaps in literacy and wage rates by at least 50% by
2007;*Reduction in the decadal rate of population growth between 2001 and 2011 to
16.2%;*Increase in Literacy Rates to 75 per cent within the Tenth Plan period (2002
to 2007).

Eleventh Five-Year Plan, 2007–2012

The eleventh plan has the following objectives:

1. Income & Poverty

 Accelerate GDP growth from 8% to 10% and then maintain at 10% in the
12th Plan in order to double per capita income by 2016-17
 Increase agricultural GDP growth rate to 4% per year to ensure a broader
spread of benefits
 Create 70 million new work opportunities.
 Reduce educated unemployment to below 5%.
 Raise real wage rate of unskilled workers by 20 percent.
 Reduce the headcount ratio of consumption poverty by 10 percentage
points.
2. Education
 Reduce dropout rates of children from elementary school from 52.2% in
2003-04 to 20% by 2011-12
 Develop minimum standards of educational attainment in elementary
school, and by regular testing monitor effectiveness of education to ensure
quality
 Increase literacy rate for persons of age 7 years or above to 85%
  Lower gender gap in literacy to 10 percentage point
 Increase the percentage of each cohort going to higher education from the
present 10% to 15% by the end of the plan
3. Health
 Reduce infant mortality rate to 28 and maternal mortality ratio to 1 per
1000 live births
 Reduce Total Fertility Rate to 2.1
 Provide clean drinking water for all by 2009 and ensure that there are no
slip-backs
 Reduce malnutrition among children of age group 0-3 to half its present
level
 Reduce anaemia among women and girls by 50% by the end of the plan
4. Women and Children
 Raise the sex ratio for age group 0-6 to 935 by 2011-12 and to 950 by
2016-17
 Ensure that at least 33 percent of the direct and indirect beneficiaries of all
government schemes are women and girl children
 Ensure that all children enjoy a safe childhood, without any compulsion to
work
5. Infrastructure
 Ensure electricity connection to all villages and BPL households by 2009
and round-the-clock power.
 Ensure all-weather road connection to all habitation with population 1000
and above (500 in hilly and tribal areas) by 2009, and ensure coverage of all
significant habitation by 2015
 Connect every village by telephone by November 2007 and provide
broadband connectivity to all villages by 2012
 Provide homestead sites to all by 2012 and step up the pace of house
construction for rural poor to cover all the poor by 2016-17
6. Environment
 Increase forest and tree cover by 5 percentage points.
 Attain WHO standards of air quality in all major cities by 2011-12.
 Treat all urban waste water by 2011-12 to clean river waters.
 Increase energy efficiency by 20 percentage points by 2016-17.
References

1. ^ http://www.planningcommission.nic.in/plans/planrel/fiveyr/welcome.html
2. ^ Planning Commission (1997-02-24). "A Background Note on Gadgil Formula
for distribution of Central Assistance for State Plans". Retrieved 2010-09-17.
3. ^ Politics in India since Independence, Chp 3, Politics of Planned Development
4. ^ http://planningcommission.gov.in/plans/planrel/fiveyr/welcome.html First Five
Year Plan, Planning Commission, Government of India
5. ^ Economy Watch Website-First Five Year Plan Review
6. ^ Jalal Alamgir, India's Open-Economy Policy: Globalism, Rivalry, Continuity
(London and New York: Routledge 2008), Chapter 2.
7. ^ Baldev Raj Nayar, Globalization And Nationalism: The Changing Balance Of
India's Economic Policy, 1950-2000 (New Delhi: Sage, 2001)
8. ^ http://business.mapsofindia.com/india-planning/ninth-five-year.html