Ramanpreet Kaur
When India gained independence, its economy was in disarray. The British had left the Indian economy crippled and the fathers of development formulated 5 years plan to develop the Indian economy. The five years plan in India is framed, executed and monitored by the Planning Commission of India. Currently, India is in its 11th five year plan. Following is a brief synopsis of the five year's plan in India
1st Plan (1951-56)
Year: 1951 to 1956
Total budget: 206.8 billion (INR) or USD$23.6 billion.
Target growth:2.1% (yearly) growth in gross domestic product.
Areas covered: India's five year plans, the 1st plan dealt with seven categories.
- Agriculture as well as community development
- Energy as well as Irrigation
- Communications and transport
- Land rehabilitation
- Social services
- Miscellaneous
- Industrial sector
The first five year plan was presented by Jawaharlal Nehru in 1951. The First Five Year Plan was initiated at the end of the turmoil of partition of the country. It gave importance to agriculture, irrigation and power projects to decrease the countries reliance on food grain imports, resolve the food crisis and ease the raw material problem especially in jute and cotton. Nearly 45% of the resources were designated for agriculture, while industry got a modest 4.9%.The focus was to maximize the output from agriculture, which would then provide the impetus for industrial growth.
Though the first plan was formulated hurriedly, it succeeded in fulfilling the targets. Agriculture production increased dramatically, national income went up by 18%, per capita income by 11% and per capita consumption by 9%
2nd Plan (1956-61)
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.
The second five year plan was initiated in a climate of economic prosperity, industry gained in prominence. Agriculture programmes were formulated to meet the raw material needs of industry, besides covering the food needs of the increasing population. The Industrial Policy of 1956 was socialistic in nature. The plan aimed at 25% increase in national income.
In comparison to First Five Year plan, the Second Five Year Plan was a moderate success. Unfavorable monsoon in 1957-58 and 1959-60 impacted agricultural production and also the Suez crisis blocked International Trading increasing commodity prices.
3rd Plan (1961-66)
Objectives of the 3rd five year plan:
- 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.
While formulating the third plan, it was realized that agriculture production was the destabilizing factor in economic growth. Hence agriculture was given due importance. Also allotment for power sector was increased to 14.6% of the total disbursement.
Emphasis was on becoming self reliant in agriculture and industry. The objective of import substitution was seen as sacrosanct. In order to prevent monopolies and to promote economic developments in backward areas, unfeasible manufacturing units were augmented with subsidies. The plan aimed to increase national income by 30% and agriculture production by 30%.
The wars with China in 1962 and Pakistan 1965 and bad monsoon in almost all the years, meant the actual performance was way of the target.
4th Plan (1969-74)
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:
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.
At the time of initiating the fourth plan it was realized thatGDP growth and rapid growth of capital accumulation alone would not help improve standard of living or to become economically self-reliant. Importance was given to providing benefits to the marginalized section of the society through employment and education.
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.
At the time of initiating the fourth plan it was realized that
Disbursement to agricultural sector was increased to 23.3% .Family planning programme was given a big stimulus.
The achievements of the fourth plan were below targets. Agriculture growth was just at 2.8% and green revolution did not perform as expected. Industry too grew at 3.9%.
5th Plan (1974-79)
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.
As a result of inflationary pressure faced during the fourth plan, the fifth plan focused on checking inflation. Several new economic and non-economic variables such as nutritional requirements, health, family planning etc were incorporated in the planning process. Investment mix was also formulated based on demand estimated for final domestic consumption.
Industry got the highest allocation of 24.3% and the plan forecasted a growth rate of 5.5% in national income.
The fifth plan was discontinued by the new Janata government in the fourth year itself.
6th Plan (1980-85)
The Janata government moved away from GNP approach to development, instead sought to achieve higher production targets with an aim to provide employment opportunities to the marginalized section of the society. But the plan lacked the political will.
The Congress government on taking office in 1980 formulated a new plan with a strategy to lay equal focus on infrastructure and agriculture.
The plan achieved a growth of 6% pa.
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 Plan (1985-89)
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 productivityThis 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.
The first three years of the seventh plan saw severe drought conditions, despite which the food grain production rose by 3.2%.Special programmes like Jawahar Rozgar Yojana were introduced. Sectors like welfare, education, health, family planning, employment etc got a larger disbursement.
It may be noticed that the period between 1989 to 1991 seems to lie idle. But according to the trend, these years should have been included. But this period was characterized by political unrest. This period witnessed many changes.
8th Plan (1992-97)
The eighth plan was initiated just after a severe balance of payment crisis, which was intensified by the Gulf war in 1990.several structural modification policies were brought in to put the country in a path of high growth rate. They were devaluation of rupees, dismantling of license prerequisite and decrease trade barriers.
The plan targeted an annual growth rate of 5.6% in GDP and at the same time keeping inflation under control.
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 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.
9th Plan (1997-2002)
It was observed in the eighth plan that, even though the economy performed well, the gains did not percolate to the weaker sections of the society. The ninth plans therefore laid greater impetus on increasing agricultural and rural incomes and alleviate the conditions of the marginal farmer and landless laborers.
The main objectives of the Ninth Five Year Plan India were:
- 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 cen
10th Plan (2002-2007)
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 aim of the tenth plan was to make the Indian economy the fastest growing economy in the world, with a growth target of 10%.It wanted to bring in investor friendly market reforms and create a friendly environment for growth. It sought active participation by the private sector and increased FDI's in the financial sector.
Emphasis was laid on corporate transparency and improving the infrastructure.
It sought to reduce poverty ratio by 5 percentage points by 2007and increase in literacy rates to 75 per cent by the end of the plan.
Increase in forest and tree cover to 25 per cent by 2007 and all villages to have sustained access to potable drinking water.
11th Plan (2007-2012)
The eleventh plan has the objective to increase GDP growth to 10%.
Increase agricultural GDP growth to 4% per year to ensure a wider spread of benefits. Create 70 million new work opportunities. Augment minimum standards of education in primary school.
Reduce infant mortality rate to 28 and malnutrition among children of age group 0-3 to half of its present level. Ensure electricity connection to all villages and increase forest and tree cover by five percentage points.
The eleventh plan has the following objectives:
- 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.
- 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
- 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
- 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
- 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
- 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
