Download Economic Planning in India

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Module- 5
Planning in India
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Objectives of Economic Planning in India
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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
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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)
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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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Targets & Objectives of the 11th Plan
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• Imports projected to grow at 23% per year (in US dollar
terms). As a result imports as percentage of GDP to rise
from 21% in 2006-07 to 38.5% in 2011-12;
• Invisibles surplus is projected to be around 13.5-14% of
GDP by 2011-12; As a result, the current account deficit
is expected to be around 2–2.5 % of GDP by 2011-12.
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Five year plans - Achievements and
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failures
Achievements • Successful in laying a strong infrastructure and
broad based 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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Summing up:
Over the past sixty years of economic planning in India,
though there has been an overall socio-economic progress.
However, there still exists regional and sectional disparities
in the society. The true success of the planning process
would be judged by the extent to which it is able to convert
such growth into pro-poor growth and reduce the urbanrural / rich-poor divide.
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THANK YOU
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