Five Year Plan
The economy of India
is based in part on planning through its five-year plans, which are developed,
executed and monitored by the Planning Commission. The eleventh plan completed
its term in March 2012 and the twelfth plan is currently underway. 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.
· 1 First Five-Year Plan (1951–1956)
· 2 Second Five-Year Plan (1956–1961)
· 3 Third Five-Year Plan (1961–1966)
· 4 Fourth Five-Year Plan (1969–1974)
· 5 Fifth Five-Year Plan (1974–1979)
· 6 Sixth Five-Year Plan (1980–1985)
· 7 Seventh Five-Year Plan (1985–1990)
· 8 Eighth Five-Year Plan (1992–1997)
· 9 Ninth Five-Year Plan (1997–2002)
· 10 Tenth Five-Year Plan (2002–2007)
· 11 Eleventh Five-Year Plan (2007–2012)
· 12 Twelfth
Five Year Plan(2012-17)
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 December 8, 1951.This plan was based on the Harrod-Domar model. 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 2069 crore 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). 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. Contracts were signed to start five steel plants, which came into
existence in the middle of the second five-year plan. The plan was successful.
Target Growth: 2.1%
Actual Growth: 3.6%
Second Five-Year Plan
(1956–1961)
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 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 centered on importing capital goods.
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. 4,600 crore. This
amount was allocated among various sectors:
·
Power
and irrigation
·
Social
services
·
Communications
and transport
·
Miscellaneous
Target Growth:4.5%
Growth achieved:4.0%
Third Five-Year Plan
(1961–1966)
The third plan
stressed on 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]. In 1965–1966, India fought a
[Indo-Pak] War with Pakistan. Due to this there was 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
have been started in rural areas. In an effort to bring democracy to the
grassroot level, Panchayat elections have been started and the states have been
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.
Target Growth: 5.6%
Actual Growth: 2.4%
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 Funds
earmarked for the industrial development had to be diverted for the war effort.
India also performed the Smiling Buddha underground 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: 3.3%
Fifth Five-Year Plan
(1974–1979)
Stress was by 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.
The Indian national
highway system was introduced and many roads were widened to accommodate the
increasing traffic. Tourism also expanded.
Target Growth: 4.4%
Actual Growth: 5.0
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: 5.4%
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.
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$6 billion), Imports – (-) 54,000 crore (US$9.8 billion), Trade Balance –
(-) 21,000
crore (US$3.8 billion)
·
Merchandise
exports (estimates): 60,653
crore (US$11 billion)
·
Merchandise
imports (estimates): 95,437
crore (US$17.4 billion)
·
Projections
for Balance of Payments: Export – 60,700 crore (US$11 billion), Imports – (-) 95,400 crore(US$17.4 billion), Trade Balance-
(-) 34,700
crore (US$6.3 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.
Target Growth: 5.0%
Actual Growth: 5.7%
Eighth Five-Year 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 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.
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, Nagar Palikas, N.G.O'S and
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% 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
invetsment 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.
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.
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.
·
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%
Eleventh Five-Year
Plan (2007–2012)
The eleventh plan has
the following objectives:
1. Income & Poverty
o 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
o Increase agricultural GDP growth rate to 4%
per year to ensure a broader spread of benefits
o Create 70 million new work opportunities.
o Reduce educated unemployment to below 5%.
o Raise real wage rate of unskilled workers by
20 percent.
o Reduce the headcount ratio of consumption
poverty by 10 percentage points.
2. Education
o Reduce dropout rates of children from
elementary school from 52.2% in 2003–04 to 20% by 2011–12
o Develop minimum standards of educational
attainment in elementary school, and by regular testing monitor effectiveness
of education to ensure quality
o Increase literacy rate for persons of age 7
years or above to 85%
o Lower gender gap in literacy to 10 percentage
point
o Increase the percentage of each cohort going
to higher education from the present 10% to 15% by the end of the plan
3. Health
o Reduce infant mortality rate to 28 and
maternal mortality ratio to 1 per 1000 live births
o Reduce Total Fertility Rate to 2.1
o Provide clean drinking water for all by 2009
and ensure that there are no slip-backs
o Reduce malnutrition among children of age
group 0–3 to half its present level
o Reduce anaemia among women and girls by 50% by
the end of the plan
4. Women and Children
o Raise the sex ratio for age group 0–6 to 935
by 2011–12 and to 950 by 2016–17
o Ensure that at least 33 percent of the direct
and indirect beneficiaries of all government schemes are women and girl
children
o Ensure that all children enjoy a safe
childhood, without any compulsion to work
5. Infrastructure
o Ensure electricity connection to all villages
and BPL households by 2009 and round-the-clock power.
o 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
o Connect every village by telephone by November
2007 and provide broadband connectivity to all villages by 2012
o 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
o Increase forest and tree cover by 5 percentage
points.
o Attain WHO standards of air quality in all
major cities by 2011–12.
o Treat all urban waste water by 2011–12 to
clean river waters.
o Increase energy efficiency by 20%
Target growth:8.33%
Growth achieved:7.9%
Twelfth five year plan
Five Year Plan(2012-17)
12th Five Year Plan of the Government of India (2012-17) is under
drafting which aims at the growth rate at 9.56%.
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 per cent in
the next five years is not possible.
"It is not
possible to think of an average of 9 per cent (in 12th Plan). I think somewhere
between 8 and 8.5 per cent 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 per cent.
“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 per cent. 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 per cent.”
He also indicated that
soon he would 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.
Though the 12th Plan
has taken off, it is yet to be formally approved. The Planning Commission has
set a deadline of September for taking the approval of the National Development
Council. The council is expected to meet after July subject to the convenience
of the Prime Minister.
Poverty
The Government intends
to reduce poverty by 10 per cent during the 12th Five-Year Plan. Mr Ahluwalia
said, “We aim to reduce poverty estimates by 2 per cent annually on a
sustainable basis during the Plan period.”
According to the
Tendulkar methodology, the percentage of population below the poverty line was
29.8 per cent at the end of 2009-10. This number includes 33.8 per cent in the
rural areas and 20.9 per cent in the urban areas.
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 percentage points each year, which
was twice that when compared to the period between 1993-95 to 2004-05.
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