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Amity School of Business
MODULE – 5
ECONOMIC PLANNING AND
DEVELOPMENT
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Amity School of Business
Module V- ECONOMIC PLANNING
AND DEVELOPMENT
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Planning in India- needs and objectives
Five year plans, planning commission
11th five year plan
Green and white revolution- achievements and
failures, Second green revolution
• foreign trade policy 2009
• Export processing zones, Export oriented units,
Special economic zones (EPZ’s, EOU’s, SEZ’s)
and trading houses in India.
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Objectives of Economic Planning in India
Amity School of Business
The Directive Principles of State Policy lay down that: “the
State shall direct policy towards securing –
(a) that all citizens have the right to adequate means of
livelihood;
(b) that ownership and control of resources in the community
are so distributed as to subserve the common good;
(c) that the operation of the economic system does not result
in concentration of wealth and means of production to the
common detriment.”
The Directive Principles of the Indian Constitution, thus,
express the will of the People of India for rapid economic
growth. Accordingly, the Government of India adopted
planning as a means of fostering economic development.
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Objectives of Economic Planning in India
Amity School of Business
Consequently, the Government of India set up Planning
Commission in 1950, and entrusted it with the task of
formulating economic plans on a continual basis, towards
the country’s socio-economic development.
Long-term objectives of economic planning in India:
1. Rapid economic growth;
2. Expansion of employment;
3. Reduction of disparities in income and wealth;
4. Prevention of concentration of economic power; and
5. Setting up of a socialistic society based on equality,
justice and absence of exploitation.
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Five Year Plans in India
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First five year plan (1951-1956)
Second five year plan (1956-1961)
Third five year plan (1961-1966)
Fourth five year plan (1969-1974)
Fifth five year plan (1974-78)
Sixth five year plan (1980-1985)
Seventh five year plan (1985-1990)
Eighth five year plan (1992-1997)
Ninth five year plan (1997-2002)
Tenth five year plan (2002-2007)
Eleventh five year plan (2007-2012)
Twelth five year plan (2012-17)
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First five year plan (1951-56)
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Objectives:
1. To correct the disequilibrium in economy caused by
World War –II and partition;
2. Rehabilitation of refugees;
3. Rapid agricultural development (to tackle the problem of
severe food shortage and mounting inflation in food
items, i.e. to make India self-sufficient in food);
4. To initiate the process of all-round balanced
development.
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Second five year plan (1956-61) –
Conceived in the atmosphere of economic stability;
agricultural targets fixed in 1st plan been achieved, and
stable prices. Thus stage was set for the industrial
development of the country on socialistic pattern.
Objectives:
1. To lay foundation for industrial progress (thrust towards
heavy and basic industries); and
2. to achieve a socialistic pattern of society (Industrial
Policy, 1956 – assigning lead role to the public sector).
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Third five year plan (1961-66) –
Set as its goal the establishment of self-reliant economy in
the areas of agriculture and industry. However, because
of India’s conflicts with China in 1962 and with Pakistan
in 1965, the approach was shifted from development to
defence and development.
Fourth five year plan (1969-74) –
Originally planned to commence in 1966. However, got
delayed by three years on account of drought, rupee
devaluation and inflationary recession in the economy.
Instead, three Annual Plans (1966-69) were implemented.
This three year period is also known as “Plan Holiday.”
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Fourth five year plan (1969-74) –
• This plan was aimed at “growth with stability” and
“progressive achievement of self-reliance”.
• Real GDP growth rate was targeted at 5.5 per cent per
annum.
• Care for economically weaker section of the society was
also included – “Garibi Hatao”.
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Fifth Five Year Plan (1974-78)
The objective of 5th five year plan was removal of
poverty and achievement of economic selfreliance.
The plan specifically aimed at:
- Increasing income and consumption of the lowest
30 per cent of the population (BPL families); and
- Eliminating special forms of external assistance,
particularly as regards food and fertilizer imports.
However, this plan was terminated in its 4th year
by the Janata Party Govt. in 1978.
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Sixth Five Year Plan (1980-85)
The sixth five year plan aimed at providing
impetus to the pace of economic
development and strengthening the
impulse of modernization and
technological self reliance.
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Seventh Five Year Plan (1985-90)
The seventh five year plan laid emphasis on
development, equity and social justice,
self-reliance, higher efficiency, and
increased food and industrial production.
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Eighth Five Year Plan (1992-97)
The eighth five year plan focused on
generation of adequate employment
opportunities, containing population
growth, and strengthening infrastructure.
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Ninth Five Year Plan (1997-2002)
The ninth plan focused on accelerating the
rate of economic growth giving priority
to agriculture and rural development.
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Tenth Five Year Plan (2002-07)
Tenth five year plan aimed at an
average annual GDP growth rate of
8%, with major focus on human
development and family welfare
programs.
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Eleventh Five Year Plan (2007-12)
• Title of the 11th plan document “Towards faster and more inclusive
growth.”
• This plan began in favorable economic
conditions.
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Targets and objectives of the 11th Plan
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• Average GDP growth rate of 9% p.a.
• Average agricultural growth rate of 4 % p.a.
• Generation of 58 million employment
opportunities;
• Increasing literacy rate for persons 7 years or more
to 85% by 2011-12;
• Infant mortality rate (IMR) to be reduced to 28
and maternal mortality rate (MMR) to 1 per 1,000
by 2011-12;
• Clean drinking water to all by 2009.
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Targets and objectives of the 11th Plan
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• Malnutrition among children of age 0-3 years to be
reduced to half its present level;
• Sex ratio for age group 0-6 years to be raised to
935 by 2011-12 and to 950 by 2016-17;
• Ensuring that at least 33% of beneficiaries of all
government schemes are women and girl children;
• Electricity & telephone /broadband connectivity to
all villages of the country by 2009;
• All-weather road connection to all habitations with
population 1000 and above (500 and above for
hilly areas) by 2009;
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Targets and objectives of the 11th Plan
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• To increase forest and tree cover by 5 per cent;
• To attain World standards of air quality in all major cities
by 2011-12;
• To treat all urban waste water by 2011-12 for clean river
waters;
• To increase energy efficiency by 20 per cent;
• Investment rate (% of GDP) of 36.7%;
• Domestic saving rate (% of GDP) of 34.8%;
• Exports growth projected at 20% per year (in US dollar
terms). As a result share of exports in GDP to rise from
14% in 2006-07 to 22.5% by 2011-12;
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Five year plans –
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Significance/Achievements
andof Business
failures
Achievements • Successful in laying a strong infrastructure and
broad industrial development.
• Self-reliance in agricultural and industrial
production. Thereby achieving price stability.
• Balanced regional development.
• Poverty alleviation – to an extent.
• Structural change in the economy;
• Employment generation.
• Enhancements in the areas of health and education.
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Failures • Unsatisfactory per capita income growth;
• Population growth;
• Poverty still exists both in urban and rural areas;
• Slower agricultural growth (less than 2 % p.a.);
• Continuing inflation;
• Increasing fiscal deficits.
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Five Year Plan
2012-17
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Targets and objectives of the 12th Plan
• Average GDP Growth of 8 percent
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Agriculture Growth of 4 percent
Reducing head-count poverty by 10 percentage point
Generating 50 million work opportunities
Eliminating gender and social gap in education
• Reducing IMR to 25, MMR to 100 and TFR to 2.1
• Enhance infrastructure investment to 9% of GDP
• Achieve universal road connectivity and access to power for all
villages
• Access to banking services for 90 percent households
• Major welfare benefits and subsidies via Aadhaar
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Green revolution
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• The Green Revolution has also been criticized as
unsustainable. It requires immense amounts of capital each
year to purchase equipment and fertilizers. This may lead to a
cycle of debt if a farmer is unable to pay off the loans required
each year. Additionally, the crops require so much water that
water tables in some regions of India have dropped
dramatically. If this drop continues, it is possible that the
process of desertification may take place. Already, the low
water is starting the process of salinization. If continued, this
would leave the land infertile, spelling disaster for India.
• In 2006, Dr Norman Borlaug, widely known as the 'Father of
India's Green Revolution', was presented India's second
highest civilian honour, the Padma Vibhushan, by India's
ambassador in Mexico City.
• In 2009, Norman Borlaug, India's 'annadaata', dies at 95 The
Times of India, Chidanand Rajghatta, 13 September 2009.
White Revolution in India
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• Lovingly called the Father of the White Revolution in India, Dr
Verghese Kurien was born on November 26, 1921
• Credited with architecting the Operation Flood -- the largest dairy
development program me in the world -- Dr Kurien set up the Anand
model of cooperative dairy development, engineered the White
Revolution in India, and made India the largest milk producer in the
world.
• Dr Kurien has since then built this organization into one of the
largest and most successful institutions in India. The Amul pattern of
cooperatives had been so successful, in 1965, then Prime Minister
of India, Shri Lal Bahadur Shastri, created the National Dairy
Development Board (NDDB) to replicate the program on a
nationwide basis citing Dr Kurien's "extraordinary and dynamic
leadership" upon naming him chairman.
• Kurien also set up GCMMF (Gujarat Cooperative Milk Marketing
Federation) in1973 to sell the products produced by the dairies.
Today GCMMF sells AMUL brand products not only in India but also
overseas.
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Foreign Trade policy 2009-14
• Anand Sharma, Minister of Commerce &
Industry has announced new foreign trade
policy in Sept. 2009.
• The short term objective of new policy is
to arrest and reverse the declining trend of
exports and to provide additional support
especially to those sectors which have
been hit badly by recession in the
developed world.
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Other Objectives
• To achieve an annual export growth of
15% with an annual export target of US$
200 billion by March 2011.
• In the last three years of this Foreign
Trade Policy i.e. upto 2014, the country
should be able to come back on the high
export growth path of around 25% per
annum.
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Other Objectives
• To double India’s exports of goods and
services by 2014.
• The long term policy objective for the
Government is to double India’s share in
global trade by 2020.
• A special thrust needs to be provided to
employment intensive sectors which have
witnessed job losses in the wake of this
recession, especially in the fields of textile,
leather, handicrafts, etc.
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Policy measures
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fiscal incentives
institutional changes
Procedural rationalization
Enhanced market access across the world
Diversification of export markets
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SEZ, EPZ, EOU & Trading
Houses
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EPZ
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• The concept of Export Processing Zones
was introduced to enhance exports in
India with the help of tax holidays and
lucrative incentive packages, which are
the most important aspects About EPZ in
India.
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Stages of Development
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The Export Processing Zones in India had gone
through four significant stages of development.
The initial stage witnessed the establishment of the
Kandla Free Trade Zone in the city of Gujarat in the
year 1965 and the consequent establishment of the
Santacruz Electronics Export Processing Zone
The second stage witnessed the Second Oil Price
Shock, which hampered the export activities
significantly and led the establishment of a number of
Export Processing Zones to boost the export sector.
Thus, Export Processing Zones were set up in West
Bengal, Tamil Nadu, Kerala, Uttar Pradesh and in
Andhra Pradesh
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The third stage witnessed economic liberalization in India
and restructuring of the entire export processing zone
framework in the year 1991. The stage incorporated
various measures for example:
More Fiscal Incentives
Simplification of Policy Provisions
Incorporation of more industries like horticulture, reengineering, agriculture, aqua culture
The fourth stage witnessed the introduction of the
concept of special economic zones in the EXIM policy of
1997-2002. Presently, most of the export-processing
zones have been transformed into special economic
zones. The special economic zones extended their scope
to include private companies together with the
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government organizations
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Features of the EPZs in India
• EPZs allow subcontracting activities in case of
manufactured goods within India as well as in foreign
countries
• Licenses are required for IT industries only
• Tax Holidays allowed for raw materials and capital goods
• Exemption from Corporate Income Tax
• Private bonded warehouses for the purpose of import, reexport, marketing etc.
• Exemption from Customs Duty
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Facilities offered by the EPZs in India:
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Uninterrupted Power Supply
Single Window Clearance
Cost Effective and Skilled Labor
Water Connection
Location advantage
Proper Infrastructure
Medical Facilities
SEZ
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• Special Economic Zones (SEZs) Policy was announced
in
April
2000.
This policy intended to make SEZs an engine for
economic growth supported by quality infrastructure
complemented by an attractive fiscal package, both at
the Centre and the State level, with the minimum
possible regulations.
• SEZ Act, 2005, supported by SEZ Rules, came into
effect on 10th February, 2006
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Objectives of SEZ in India
– generation of additional economic
activity
– promotion of exports of goods and
services
– promotion of investment from domestic
and foreign sources
– creation of employment opportunities
– development of infrastructure facilities
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Approval mechanism
• The developer submits the proposal for establishment of
SEZ to the concerned State Government. The State
Government has to forward the proposal with its
recommendation within 45 days from the date of receipt
of such proposal to the Board of Approval. The applicant
also has the option to submit the proposal directly to the
Board of Approval.
• The Board of Approval has been constituted by the
Central Government in exercise of the powers conferred
under the SEZ Act. All the decisions are taken in the
Board of Approval by consensus. The Board of Approval
has 19 Members.
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Major incentives offered to firms
under SEZ
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Duty free import/domestic procurement of goods for
development, operation and maintenance of SEZ units
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100% Income Tax exemption on export income for
SEZ units under Section 10AA of the Income Tax Act
for first 5 years, 50% for next 5 years thereafter and
50% of the ploughed back export profit for next 5
years.
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Exemption from minimum alternate tax under section
115JB of the Income Tax Act.
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External commercial borrowing by SEZ units upto US
$ 500 million in a year without any maturity restriction
through recognized banking channels.
Exemption from Central Sales Tax.
Exemption from Service Tax.
Single window clearance for Central and State level
approvals.
Exemption from State sales tax and other levies as
extended by the respective State Governments.
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EOU
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• The Export Oriented Units (EOUs) scheme,
introduced in early 1981, is complementary to
the SEZ scheme. It adopts the same production
regime but offers a wide option in locations with
reference to factors like source of raw materials,
ports of export, hinterland facilities, availability of
technological skills, existence of an industrial
base and the need for a larger area of land for
the project. As on 31st December 2005, 1924
units are in operation under the EOU scheme.
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Objective of EOU
• The main objectives of the EOU scheme is
to increase exports, earn foreign exchange
to the country, transfer of latest
technologies stimulate direct foreign
investment and to generate additional
employment.
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Status Holders/ Trading Houses
• Earlier the status holders in exports were
categorized under following heads:
One star export house
Two star export house
Three star export house
Four star export house
Five star export house
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The classification of status holders at present is Export house
 Star export house
 Trading house
 Star trading house
 Premier trading house
They will be granted such status on achieving
aggregate exports of Rs.20 crore, Rs.100 crore,
Rs.500 crore, Rs.2500 crore and Rs.10000
crore respectively over a period of four years.
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THANK YOU
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