FIVE YEAR PLAN IN INDIA
The objective of India’s development strategy has been to establish a socialistic pattern of society through economic growth with self-reliance, social justice and alleviation of poverty. India initiated planning for national economic development with the establishment of the Planning Commission by a Resolution of the Government of India in March 1950. Planning Commission was chaired by Prime Minister with a Minister in charge to transact its business and a Deputy Chairman with Cabinet rank and full time Members of MOS rank and Cabinet Ministers as ex-officio Members.
Goals of Five-Year Plans
The goals of the five-year plans were: growth, modernization, self-reliance and equity. This does not mean that all the plans gave equal importance to all these goals. Due to limited resources, a choice has to be made in each plan about which of the goals is to be given primary importance. Nevertheless, the planners have to ensure that, as far as possible, the policies of the plans do not contradict these four goals:
a). Growth: It refers to increase in the country’s capacity to produce the output of goods and services within the country. It implies either a larger stock of productive capital, or a larger size of supporting services like transport and banking, or an increase in the efficiency of productive capital and services. It is necessary to produce more goods and services if the people of India are to enjoy a more rich and varied life.
b). Modernization: To increase the production of goods and services the producers have to adopt new technology. Adoption of new technology is called modernization. However, modernization does not refer only to the use of new technology but also to changes in social outlook such as the recognition that women should have the same rights as men. In a traditional society, women are supposed to remain at home while men work. A modern society makes use of the talents of women in the workplace - in banks, factories, schools etc. and such a society will be more civilized and prosperous.
c). Self-reliance: A nation can promote economic growth and modernization by using its own resources or by using resources imported from other nations. The first seven five year plans gave importance to self-reliance which means avoiding imports of those goods which could be produced in India itself.
d). Equity: Now growth, modernization and self-reliance, by themselves, may not improve the kind of life which people are living. A country can have high growth, the most modern technology developed in the country itself, and also have most of its people living in poverty. It is important to ensure that the benefits of economic prosperity reach the poor sections as well instead of being enjoyed only by the rich.
1. FIRST FIVE-YEAR PLAN : 1951-1956
i). It is also known as Harrod and Domar model.
ii). Harrod and Domar model helps to explain how growth has occurred and how it may occur again in the future. Growth strategies are the things a government might introduce to replicate the outcome suggested by the model.
iii). Basically, the model suggests that the economy's rate of growth depends on: The level of national saving (S). The productivity of capital investment (this is known as the capital-output ratio).
iv). Based on the model therefore the rate of growth in an economy can be increased in one of two ways: 1). Increased level of savings in the economy. 2). Reducing the capital output ratio
v). In this plan, major focus was given on Development of Agriculture and allied sectors.
vi). The government established Dams and Irrigation projects e.g DVC, Bhakra dam.
vii). Establishment of IITs and UGC to foster higher education.
viii). The growth target was set at 2.1% (although India achieved 3.6%).
2. SECOND FIVE-YEAR PLAN : 1956-1961
i). It is also called Mahalanobis model. The strategy suggests in order to reach a high standard in consumption, investment in building a capacity in the production of capital goods is firstly needed. A high enough capacity in the capital goods sector in the long-run expands the capacity in the production of consumer goods.
ii). Therefore, the focus was given on development of Rapid industrialization in the country.
iii). Government established steel plants at Bhilai, Durgapur, and Rourkela with joint investment from Russia and Germany.
iv). The target for Growth was set at- 4.5% (although only 4.2% achieved).
3. THIRD FIVE-YEAR PLAN: 1961-1966
i). It was based on John Sandy and Sukhamoy Chakravarty model.
ii). It is sometimes also called Gadgil Yojana.
iii). This plan emphasized on becoming a self-reliant and self-sustained economy.
iv). During Third FYP, growth rate of only 2.6% was achieved although target was 5.6%.
4. ROLLING PLANS : 1966-1969
Due to war with China (1962) and Pakistan (1965), the production growth was in turmoil and total loss due to one reason or another has been estimated at Rs. 92,400 crores (at current prices) or roughly the income generated during the whole of the third plan. The average rate of growth of GNP has been of the order of 3.5 per cent per year as against the plan target of 5 to 5.5. per cent. Thus, emphasis was given on employment creation, in contrast to Nehru Model which has led to concentration of power, widening inequality and mounting poverty.
i). New plans were made and implemented on annual basis based on changing economic demands.
ii). It is also known as plan holidays.
5. FOURTH FIVE-YEAR PLAN : 1969-1974
i). It was based on Allen S manne and Ashok Rudra model.
ii). Government gave emphasis on means to attain self-reliance and Growth with stability.
iii). A major thrust was given to GREEN REVOLUTION under the supervision of M.S Swaminathan.
iv). To make availability of finance more inclusive the government Nationalized 14 major Banks in 1969.
v). The growth target was set at 3.6%(also called Hindu rate of Growth) though the economy achieved only of 5.6%.
6. FIFTH FIVE-YEAR PLAN : 1974-1979
i). It was formed as Minimum Needs programme under D.P. Dhar.
ii). Government gave major emphasis was on Poverty eradication and strengthening agri-production.
7. ANNUAL PLANS: 1978-1979
i). During this period, Plans kept changing due to political confrontations and change of government.
ii). Junta Party win post Emergency era (1975-1977) led to slew of changes in planning process and economic goals were more leaned toward social equality.
iii). New government introduced Rolling Plans to revive the economy from low growth.
8. SIXTH FIVE-YEAR PLAN : 1980-1985
i). A new institution-based Planning commission model was framed which gave special emphasis on economic liberalization.
ii). Government policies gave emphasis on employment generation.
iii). Several steps were taken towards ending license price control regime.
iv). The commission set a target 5.2% although growth target of 5.6% was achieved.
9. SEVENTH FIVE YEAR PLAN : 1985- 1990
i). It gave emphasis on establishing India as a self-sufficient economy.
ii). Target was to Modernize economy for productive employment.
iii). Government pursued Idea of Social Justice in its schemes.
iv). It was the beginning of liberal approach towards private sectors.
v). Economy was in gloom and financial indiscipline led to steep surge in inflation and Balance of Payments.
10. ANNUAL PLANS : 1990-1991,1991-1992
i). Disintegration of USSR and Balance of Payment(BoP) crisis led to Political crisis in homogeneity of consensus.
ii). The government was forced to take steps for opening of Indian economy to Liberalization-Privatization-Globalization.
11. EIGHTH FIVE YEAR PLAN : 1992-1997
i). It gave major thrust on development of Human Resource for productive employment.
ii). Government followed policies for modernization of industries- New Economic Policy,1991.
iii). Major emphasis on developing Indian information industry.
iv). Opening of economy led to India becoming member of World Trade Organization(WTO).
v). The growth rate was of 6.8% as against a target of 5.6%.
12. NINTH FIVE YEAR PLAN : 1997-2002
i). The emphasis was given on Growth and social Justice.
ii). Government took efforts for poverty alleviation and employment creation.
iii). It also structured Special Action Plans (SAPs) in area of agriculture, information. technology, social infrastructure and Water policy.
iv). The achieved GDP growth rate was of 5.4% as against a target of 6.5%.
13. TENTH FIVE YEAR PLAN : 2002-2007
i). The objective was for Growth with emphasis on increasing literacy rates.
ii). Government took steps to attain GDP growth of 8%.
iii). Several measures were taken to reduce poverty and double per-capita income20-point program.
14. ELEVENTH FIVE YEAR PLAN: 2007-2012
i). It was Planned by C. Rangarajan with objective of ‘Fast and inclusive growth’.
ii). The plan gave focus to incorporate factors of Environmental sustainability.
iii). Government pursued Skill development goals and steps to increase agricultural growth rate to 4%.
iv). Government also took steps for reducing Total Fertility Rate(TFR) to 2.1%.
15. TWELFTH FIVE YEAR PLAN : 2012- 2017
i). The objective of plan was to give emphasis on Sustainable Growth.
ii). Government set target of electrification of all Indian villages.
iii). Several steps were taken to reduce social and gender gap in education.
iv). On economic footage, the target was set for penetrating Banking services to 90% of households.
PLANNING COMMISSION was dissolved by the government in 2014 and replaced with NITI Aayog.