India’s Five-Year Plans: A Comprehensive Overview of Economic Development Strategies

Introduction to Five Year Plans in India

Five Year Plans were first introduced in India in 1951 by the Planning Commission, which was later replaced by the NITI Aayog. The primary objective of these plans was to ensure a rapid and balanced economic development of the country. The first Five Year Plan focused on agriculture, and subsequent plans shifted their focus to different sectors of the economy.

First Five Year Plan (1951-56)

• It was based on Harrod-Domar Model.
• Influx of refugees, severe food shortage & mounting inflation confronted the country at the onset of the first five year Plan.
• The Plan Focused on agriculture, price stability, power and transport
• It was a successful plan primarily because of good harvests in the last two years of the plan. Objectives of rehabilitation of refugees, food self sufficiency & control of prices were more or less achieved

Second Five Year Plan (1956 – 61)

• Simple aggregative Harrod Domar Growth Model was again used for overall projections and the strategy of resource allocation to broad sectors as agriculture & Industry was based on two & four sector
• Model prepared by Prof. P C Mahalanobis. (Plan is also called Mahalanobis Plan).
• Second plan was conceived in an atmosphere of economic stability .
• It was felt agriculture could be accorded lower priority.
• The Plan Focussed on rapid industrialization- heavy & basic industries . Advocated huge imports through foreign loans.
• The Industrial Policy 1956 was based on establishment of a socialistic pattern of society as the goal of economic policy.
• Acute shortage of forex led to pruning of development targets , price rise was also seen ( about 30%) vis a vis decline

Third Five Year Plan (1961 – 66)

• At its conception, it was felt that Indian economy has entered a “takeoff stage”. Therefore, its aim was to make India a ‘self-reliant’ and ‘self-generating’ economy.
• Based on the experience of first two plans (agricultural production was seen as limiting factor in India’s economic development) , agriculture was given top priority to support the exports and industry.
• The Plan was thorough failure in reaching the targets due to unforeseen events – Chinese aggression (1962), Indo-Pak war (1965), severe drought 1965-66. Due to conflicts the approach during the later phase was shifted from development to defence & development.

Fourth Five-Year Plan (1969-74)

• During these plans a whole new agricultural strategy was implemented. It involving wide-spread distribution of high-yielding varieties of seeds, extensive use of fertilizers, exploitation of irrigation potential and soil conservation.

• Influx of Bangladeshi refugees before and after 1971 Indo-Pak war was an important issue along with price situation deteriorating to crisis proportions and the plan is considered as big failure.
• Main emphasis was on growth rate of agriculture to enable other sectors to move forward . First two years of the plan saw record production.
• The last three years did not measure up due to poor monsoon.
• Implementation of Family Planning Programmes were amongst major targets of the Plan.

Fifth Five-Year Plan (1974-79)

• The final Draft of fifth plan was prepared and launched by D.P. Dharin the backdrop of economic crisis arising out of run-away inflation fuelled by hike in oil prices and failure of the Govt. takeover of the wholesale trade in wheat.
• It proposed to achieve two main objectives: ‘removal of poverty’ (Garibi Hatao) and ‘attainment of self reliance’
• Promotion of high rate of growth, better distribution of income and significant growth in the domestic rate of savings were seen as key instruments
• Due to high inflation, cost calculations for the Plan proved to be completely wrong and the original public sector outlay had to be revised upwards. After promulgation of emergency in 1975, the emphasis shifted to the implementation of Prime Ministers 20 Point Programme.
• FYP was relegated to the background and when Janta Party came to power in 1978, the Plan was terminated.

Rolling Plan (1978 – 80)

There were 2 Sixth Plans. Janta Govt. put forward a plan for 1978-1983 emphasizing on employment, in contrast to Nehru Model which the Govt criticized for concentration of power, widening inequality & for mounting poverty . However, the government lasted for only 2 years. Congress Govt. returned to power in 1980 and launched a different plan aimed at directly attacking on the problem of poverty by creating conditions of an expanding economy.

Sixth Plan (1980 – 85)

The Plan focussed on Increase in national income, modernization of technology, ensuring continuous decrease in poverty and unemployment through schemes for transferring skills(TRYSEM) and seets(IRDP) and providing slack season employment (NREP), controlling population explosion etc. Broadly , the sixth Plan could be taken as a success as most of the target were realised even though during the last year (1984-85) many parts of the country faced severe famine conditions and agricultural output was less than the record output of previous year

Seventh Plan (1985 – 90)

• The Plan aimed at accelerating food grain production, increasing employment opportunities & raising productivity with focus on ‘food, work & productivity’.

• The plan was very successful as the economy recorded 6% growth rate against the targeted 5% with the decade of 80’s struggling out of the’ Hindu Rate of Growth’.

Eighth Plan (1992 – 97)

• The eighth plan was postponed by two years because of political uncertainty at the Centre

• Worsening Balance of Payment position, rising debt burden widening budget deficits, recession in industry and inflation were the key issues during the launch of the plan.

• The plan undertook drastic policy measures to combat the bad economic situation and to undertake an annual average growth of 5.6% through introduction of fiscal & economic reforms including liberalisation under the Prime Minister ship of Shri P V Narasimha Rao.
• Some of the main economic outcomes during eighth plan period were rapid economic growth (highest annual growth rate so far – 6.8 %), high growth of agriculture and allied sector, and manufacturing sector, growth in exports and imports, improvement in trade and current account deficit. High growth rate was achieved even though the share of public sector in total investment had declined considerably to about 34 %.

Ninth Plan (1997- 2002)

The Plan prepared under United Front Government focussed on “Growth With Social Justice & Equality “ Ninth Plan aimed to depend predominantly on the private sector – Indian as well as foreign (FDI) & State was envisaged to increasingly play the role of facilitator & increasingly involve itself with social sector viz education , health etc and infrastructure where private sector participation was likely to be limited. It assigned priority to agriculture & rural development with a view to generate adequate productive employment and eradicate poverty .

The Plan prepared under United Front Government focussed on “Growth With Social Justice & Equality “ Ninth Plan aimed to depend predominantly on the private sector – Indian as well as foreign (FDI) & State was envisaged to increasingly play the role of facilitator & increasingly involve itself with social sector viz education , health etc and infrastructure where private sector participation was likely to be limited. It assigned priority to agriculture & rural development with a view to generate adequate productive employment and eradicate poverty.

Tenth Plan (2002 – 2007)

Recognising that economic growth cant be the only objective of national plan, Tenth Plan had set ‘monitorable targets’ for few key indicators (11) of development besides 8 % growth target. The targets included reduction in gender gaps in literacy and wage rate, reduction in Infant & maternal mortality rates, improvement in literacy, access to potable drinking water cleaning of major polluted rivers, etc.

Governance was considered as factor of development & agriculture was declared as prime moving force of the economy. States role in planning was to be increased with greater involvement of Panchayati Raj Institutions. State wise break up of targets for growth and social development sought to achieve balanced development of all states

Eleventh Plan (2007 – 2012)

Eleventh Plan was aimed “Towards Faster & More Inclusive Growth “after UPA rode back to power on the plank of helping Aam Aadmi (common man).

The broad vision for 11th Plan included several inter related components like rapid growth reducing poverty & creating employment opportunities , access to essential services in health & education, specially for the poor, extension if employment opportunities using National Rural Employment Guarantee Programme , environmental sustainability , reduction of gender inequality etc.

Twelfth Five Year Plan (2012-17)

The Twelfth Plan commenced at a time when the global economy was going through a second financial crisis, precipitated by the sovereign debt problems of the Eurozone which erupted in the last year of the Eleventh Plan. The crisis affected all countries including India. Our growth slowed down to 6.2 percent in 2011-12 and the deceleration continued into the first year of the Twelfth Plan, when the economy is estimated to have grown by only 5 percent . The Twelfth Plan therefore emphasizes that our first priority must be to bring the economy back to rapid growth while ensuring that the growth is both inclusive and sustainable.

The broad vision and aspirations which the Twelfth Plan seeks to fulfil are reflected in the subtitle: ‘Faster, Sustainable, and More Inclusive Growth’. Inclusiveness is to be achieved through poverty reduction, promoting group equality and regional balance, reducing inequality, empowering people etc whereas sustainability includes ensuring environmental sustainability ,development of human capital through improved health, education, skill development, nutrition, information technology etc and development of institutional capabilities , infrastructure like power telecommunication, roads, transport etc

Creation of NITI (National Institution For Transforming India) Aayog

Planning Commission set up on the 15th of March, 1950 through a Cabinet Resolution was replaced by NITI Ayog through another such resolution on 1st January, 2015. Previously, the Planning Commission played a predominant role indetermination of Annual Plans & transfer of Plan funds to State Govts, a work now being undertaken by Ministry of Finance. However all that is set to change with constitution of NITI Aayog which has been mandated to work towards fostering cooperative federalism through structured support initiatives and mechanisms with the States on a continuous basis, recognizing that strong States make a strong nation.

An important evolutionary change from the past will be replacing a centre-to-state one-way flow of policy by a genuine and continuing partnership with the states. In this sense, the Planning Process in India , is poised for a change. The Chief Minister’s Sub-group on rationalization of Centrally sponsored Schemes (CSS) has recommended that the number of CSS should be reduced, states should be given more flexibility in implementation of the schemes, CSS be divided into core and optional schemes along with many other recommendations related to simplification in release of funds, certainty about availability of funds under these schemes in medium term etc