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  • 1. Amity Law School, LucknowECONOMICS ASSIGNMENT ‘FIVE YEARS PLANS IN INDIA’Submitted to: Submitted by:Dr. A. K. Sharma Animesh Kumar B.A.LL.B.(H) 2009-14 Enrol.No.A8108309035
  • 2. Five Year Plans in India BRIEF STUDIES PREFACEThis assignment take cares of the topic “FIVE YEAR PLANS IN INDIA” ofEconomics- III from social development perspective. Brief introduction,objectives and outcomes & achievements of plans, all have acquired veryimportant place as a subject of Economic planning. I am sure my effort wouldthese inclusions and will keep on guiding me as faculty have done earlier. I amextremely thankful to my faculty Dr. Anuj Kumar Sharma sir for the specialcare and extra time given to me for preparation of this assignment I took toomuch time to complete the given task. Animesh Kumar’s Economics Assignment | Amity Law School, Lucknow i
  • 3. Five Year Plans in India BRIEF STUDIES ACKNOWLEDGMENTThis assignment is intended to cover the “Five Years Plans in India”. Basicand pre-requisite information have been included.I acknowledge the inspiration and blessing of my respected faculty Dr. AnujKumar Sharma. He made my all doubt crystal clear.I am full of gratitude to my seniors Pratik Mishra, Mayank Dubey, SwastikViswakarma and Abhas Sharma for the patience shown and encouragementgiven to complete this assignment.My heartful thanks are due to my friends Priyanshu, Gaurav and Purusharth forproviding relevant resources.In the last but not the least, my sense of gratitude is due to AMITY LAWSCHOOL, LUCKNOW.Every effort has been made to avoid errors and mistakes; however theirpresence cannot be ruled out. Animesh Kumar Animesh Kumar’s Economics Assignment | Amity Law School, Lucknow ii
  • 4. Five Year Plans in India BRIEF STUDIES INDEX 1. INTRODUCTION..........................................................................................................1 2. FIRST FIVE YEAR PLAN (1951-56)...........................................................................2 3. SECOND FIVE YEAR PLAN (1956-61)......................................................................6 4. THIRD FIVE YEAR PLAN (1961-66).........................................................................8 5. FOURTH FIVE YEAR PLAN (1969-74)....................................................................10 6. FIFTH FIVE YEAR PLAN (1974-79).........................................................................14 7. SIXTH FIVE YEAR PLAN (1980-85)........................................................................17 8. SEVENTH FIVE YEAR PLAN (1985-90).................................................................19 9. EIGHTH FIVE YEAR PLAN (1992-97).....................................................................24 10. NINTH FIVE YEAR PLAN (1997-2002)...................................................................26 11. TENTH FIVE YEAR PLAN (2002-07).......................................................................27 12. ELEVENTH FIVE YEAR PLAN (2007-2012)...........................................................28 13. INDIA’S 12TH FIVE YEAR PLAN TO FOCUS ON ‘INCLUSIVE GROWTH’.....30 14. CONCLUSION............................................................................................................31 Animesh Kumar’s Economics Assignment | Amity Law School, Lucknow iii
  • 5. Five Year Plans in India BRIEF STUDIESINTRODUCTIONWhen India gained independence, its economy was grovelling in dust. The British had left theIndian economy crippled and the fathers of development formulated 5 years plan to developthe Indian economy. The five years plan in India is framed, executed and monitored by thePlanning Commission of India. The economy of India is based in part on planning throughits Five-Year Plans, which are developed, executed and monitored by the PlanningCommission. The Planning Commission was set up in March, 1950 by a Resolution of theGovernment of India which defined the scope of its work in the following terms:“The Constitution of India has guaranteed certain Fundamental Rights to the citizens of Indiaand enunciated certain Directive Principles of State Policy, in particular, that the State shallstrive to promote the welfare of the people by securing and protecting as effectively as it maya social order in which justice, social, economic and political, shall inform all the institutionsof the national life, and shall direct its policy towards securing, among other things,—  that the citizens, men and women equally, have the right to an adequate means of livelihood;  that the ownership and control of the material resources of the community are so distributed as best to sub serve the common good ; and  that the operation of the economic system does not result in the concentration of wealth and means of production to the common detriment.The Planning Commission will— 1. make an assessment of the material, capital and human resources of the country, including technical personnel, and investigate the possibilities of augmenting such of these resources as are found to be deficient in relation to the nations requirements ; 2. formulate a Plan for the most effective and balanced utilisation of the countrys resources ; 3. on a determination of priorities, define the stages in which the Plan should be carried out and propose the allocation of resources for the due completion of each stage ; 4. indicate the factors which are tending to retard economic development, and determine the conditions which, in view of the current social and political situation, should be established for the successful execution of the Plan ; 5. determine the nature of the machinery which will be necessary for securing the successful implementation of each stage of the Plan in all its aspects ; 6. appraise from time to time the progress achieved in the execution of each stage of the Plan and recommend the adjustments of policy and measures that such appraisal may show to be necessary ; and 7. make such interim or ancillary recommendations as appear to it to be appropriate either for facilitating the discharge of the duties assigned to it ; or, on a consideration of the prevailing economic conditions, current policies, measures and development programmes ; or on an examination of such specific problems as may be referred to it for advice by Central or State Governments." Animesh Kumar’s Economics Assignment | Amity Law School, Lucknow 1
  • 6. Five Year Plans in India BRIEF STUDIESMajor Bodies Behind the Making of Five Year PlansThe organisation was set up to formulate basic economic policies, draft plans and watch itsprogress and implementation. It consists of: (i) Planning Commission of India (ii) National Planning Council (iii) National Development Council and State Planning CommissionsFIRST FIVE YEAR PLAN (1951-56)In July, 1951 the Planning Commission presented a draft outline of a plan of development forthe period of five years from April, 1951 to March, 1956. The Plan included a number ofdevelopment projects which had been already taken in hand as well as others which had notyet been begun. The Draft Plan was divided into two parts, the first involving an expenditureof Rs. 1,493 crores and consisting largely of projects in execution which were to beimplemented in any case, and the second proposing an outlay of Rs. 300 crores which was tobe undertaken if external assistance were available. While the execution of developmentschemes which had been included in the plan after consultation with the Central Ministriesand the State Governments was not to be affected, the Draft Outline was addressed to thecountry for general discussion and comment in the following words :“Planning in a democratic State is a social process in which, in some part, every citizenshould have the opportunity to participate. To set the patterns of future development is a taskof such magnitude and significance that it should embody the impact of public opinion andthe needs of the community. We have, therefore, felt it necessary, before presenting ourproposals in complete detail, to offer a Draft Outline of the Plan. The Draft is intended to be adocument for the widest possible public discussion. We hope to have further consultationswith the Central Ministries, State Governments and our own Advisory Board and Panels, andalso to obtain the views of Members of Parliament before we finalise the Plan."Objectives:i) To increase food production.ii) To fully utilise available raw materials.iii) To check inflationary pressure.Since its publication, the Draft Outline has been examined in detail by the CentralGovernment and the State Governments. ) It was based on Harrod-Domar Model. It has beendiscussed in Parliament and most of the Legislatures in the States. A large number oforganisations representing industry, commerce, labour, farmers and other interests haveexpressed their views. At the request of the Planning Commission, many educationalinstitutions set up seminars of teachers and students to study the plan and send theircomments to the Commission. Many district boards and municipal committees alsocommented on the Plan. In every district groups of officials and non-officials met together tostudy the Plan in relation to their local problems. Ever since its publication the Draft Outlinehas been a subject of extensive comment in the daily press and in periodicals. A considerablevolume of literature in the form of books and pamphlets prepared by independent writers hasalso become available. Thus, as a result of the discussion which has taken place, every aspectof the proposals in the Draft Outline has been subjected to the fullest possible examination.The Planning Commission has endeavoured to make a careful study of the material which hasbeen received during the past eighteen months. It has had the opportunity also of working out Animesh Kumar’s Economics Assignment | Amity Law School, Lucknow 2
  • 7. Five Year Plans in India BRIEF STUDIESdetails of many projects and pursuing its own studies in different fields. In each sphere ofnational development the Commission has conferred with the Central and State Governmentsand their experts as well as with men and women of knowledge and experience outside theGovernment. The Commission also consulted its Advisory Board and some of its Panels.Recently, the Commission has held consultations with representatives of the principalpolitical parties, leading women workers and some members of Parliament.The first Indian Prime Minister, Jawaharlal Nehru presented the first five-year plan tothe Parliament of India on 8 December 1951. The plan addressed, mainly, the agrarian sector,including investments in dams and irrigation. The agricultural sector was hit hardest bythe partition of India and needed urgent attention.[3] The total planned budget of 206.8billion (US$23.6 billion in the 1950 exchange rate) was allocated to seven broadareas: irrigation and energy (27.2 percent), agriculture and community development (17.4percent), transport and communications (24 percent), industry (8.4 percent),socialservices (16.64 percent), land rehabilitation (4.1 percent), and for other sectors and services(2.5 percent).[4] The most important feature of this phase was active role of state in alleconomic sectors. Such a role was justified at that time because immediately afterindependence, India was facing basic problems—deficiency of capital and low capacity tosave.The target growth rate was 2.1% annual gross domestic product (GDP) growth; the achievedgrowth rate was 3.6%. The net domestic product went up by 15%. The monsoon was goodand there were relatively high crop yields, boosting exchange reserves and the per capitaincome, which increased by 8%. National income increased more than the per capita incomedue to rapid population growth. Many irrigation projects were initiated during this period,including the Bhakra Dam and Hirakud Dam. The World Health Organization, with theIndian government, addressed childrens health and reduced infant mortality, indirectlycontributing to population growth.At the end of the plan period in 1956, five Indian Institutes of Technology (IITs) were startedas major technical institutions. The University Grant Commission was set up to take care offunding and take measures to strengthen the higher education in the country. Contracts weresigned to start five steel plants, which came into existence in the middle of the second five-year plan. All the development projects included in the Draft Outline are of course included in the Planas it has been now prepared and, as mentioned earlier, many of them are in progress. Anumber of additions and changes in presentation have been made. The principal changesmade in the Plan as compared to the Draft Outline are explained, however, by the attempt tostrengthen the Plan, with due regard to the resources which could be foreseen, at those pointsat which it was felt that the earlier proposals fell short of the needs of the country. In the fieldof agriculture and community development, for instance, additional programmes have beenintroduced with a view to ensuring that the targets of agricultural production will be reached.These include a provision of Rs. 90 crores for community development projects, Rs. 30crores for additional minor irrigation programmes and provision for the establishment of anational extension organisation. Among other urgent problems for which provision has beenmade may be mentioned soil conservation, resettlement schemes for landless agriculturalworkers, and training and experiments in co-operative organisation. In the field of irrigationand power development, in addition to providing for projects already in hand, funds havebeen allocated for undertaking certain new river valley schemes which are considered vital Animesh Kumar’s Economics Assignment | Amity Law School, Lucknow 3
  • 8. Five Year Plans in India BRIEF STUDIESfor the development of large regions served by them. To keep pace with progress in othersectors of the economy, especially in industry and irrigation and power, increased provisionhas been made for railways, roads, civil aviation, posts and telegraphs and ports. Programmesfor major ports which did not find a place in the Draft Outline have now been included in thePlan.In the Draft Outline, owing to the greater urgency of the programmes for agriculture andirrigation, the provision made for the development of industry in the public sector wasinsufficient. In the Plan as now presented, in addition to providing for an integrated steelplant, Rs. 50 crores have been allocated for further expansion of basic industries,includingmanufacture of heavy electrical equipment and fertilisers, and for increased transportfacilities required for industry and mineral development. Village industries, small-scaleindustries and handicraft, whose importance for the economy as a whole can scarcely beexaggerated, have been given greater emphasis in the Plan. In addition to the setting up ofnew boards for khadi and village industries and for handicrafts, the imposition of a cess onmill made cloth to assist the development of khadi and handloom, and measures taken for thereservation of certain lines of production in favour of the handloom industry, the CentralGovernments plan provides Rs. 15 crores for cottage and small-scale industries.In the field of social services also, the Plan has several important programmes. These includea national malaria control scheme estimated to cost Rs. 10 crores, increased provision forscheduled tribes and scheduled areas and for scheduled castes and other backward classes,including criminal tribes, a programme for industrial housing costing about Rs. 49 crores,increased allocation for technical education and provision for youth camps and labour servicefor students. Provision is also made for carrying forward the rehabilitation of displacedpersons from West Pakistan and it has been made clear that if circumstances so warrant it willbe necessary to provide larger funds for the rehabilitation of displaced persons from EastPakistan.In three other directions important additions have been made. In order to avoid adverseeffects on the implementation of the Plan in the States on account of monsoon failures whichoccur from time to time in different parts of the country, a provision of Rs. 15 crores forassistance to scarcity-affected areas has been made in the Central Governments plan.Secondly, each State plan is being broken up into plans for districts and sub-divisions ofdistricts so that these may be further supplemented through the effort and co-operation of thelocal people. In the nature of things, State plans cannot provide for all the possible needs ofthe people and it is necessary both to integrate them with the programmes of district boardsand municipalities and to add to them other local programmes designed to meet the felt needsof the people. In addition, to assist local works to which the people themselves contribute inlabour and otherwise, the Plan allocates a sum of Rs. 15 crores over the next three years.Finally, a national plan which embraces both the public and the private sectors may yet beincomplete unless the enthusiasm and support of large numbers of voluntary organisationsand voluntary workers engaged in constructive work can be harnessed for nationaldevelopment. To provide an increasing field of work for the peoples sector , as it were, thePlan provides a sum of Rs. 4 crores to be utilised for assistance to voluntary social welfareorganisations at the instance of a social welfare board to which a great deal of administrativeauthority may be devolved. A word may also be added about the provision of Rs. 50 lakhsmade in the Plan for research and investigation into social, economic and administrativeproblems relating to national development. In many fields sufficient data are wanting toenable policies to be formulated. It is proposed, therefore, to organise, in co-operation with Animesh Kumar’s Economics Assignment | Amity Law School, Lucknow 4
  • 9. Five Year Plans in India BRIEF STUDIESuniversities and other institutions, special investigations into selected problems ofdevelopment.Besides the plan for the public sector, the Planning Commission has formulated developmentprogrammes for forty-two industries in the private sector. These programmes have beenprepared in co-operation with the Ministry of Commerce and Industry and after fulldiscussion with representatives of individual industries. The programmes for industrialdevelopment have been indicated briefly in this report and are to be presented in a separatevolume.The Five Year Plan sets out the programmes of development and also outlines generalproposals and policies in each field of development. The report is divided into three parts.The first part contains an analysis of the process of development in an under-developedeconomy and indicates the long-term goals towards which national effort is to be directed.The objectives, priorities and techniques of planning are set out at some length and anassessment is made about the resources which have to be mobilised in order to carry out thePlan. The first part of the report concludes with a summary statement of the Five Year Planand of what is sought to be achieved through it. The second part of the report is concernedwith administration and public co-operation. Several suggestions are offered for the reform ofpublic administration. On the question of administration of development programmes at thedistrict level, where vital nation-building work is undertaken and the participation of thepeople is all-important, a number of proposals are offered for consideration and action on thepart of State Governments and other authorities. This portion of the report closes with theconsideration of the problems of public co-operation in national development, a theme which,because of its high importance and urgency, recurs throughout the report. In the third part ofthe report, we outline the various programmes of development. These are grouped underthree broad heads, namely, agriculture, irrigation and community development; industry andcommunications; and social services and employment. Each aspect of development is takenup in turn, needs and resources assessed and the Commissions own proposals for policy andaction presented. In a separate volume, details are given concerning the principaldevelopment schemes included in the Five Year Plan.Important questions of policy relating, for instance, to the land problem, the food problem,provision of finance for agriculture, common production programmes for small-scale andlarge-scale industries, selection of irrigation and power schemes and conservation of mineralresources have been under close examination in the Planning Commission. In making itsrecommendations, the Commission is conscious that the framing of social and economicpolicies in different fields is a continuous process and that, within the framework of prioritiesand objectives now formulated, such changes as may be necessary in the interest of nationaldevelopment will be made as further experience is gained and ideas are tested in practice. Inthe field of policy the Central and State Governments have to act in close co-operation withone another. Such co-operation will be greatly facilitated as a result of the setting up inAugust, 1952 of the National Development- Council which includes the Prime Minister ofIndia and the Chief Ministers of all States.The fulfilment of the Five Year Plan calls for nation-wide co-operation in the tasks ofdevelopment between the Central Government and the States, the States and the localauthorities, with voluntary social service agencies engaged in constructive work, between theadministration and the people as well as among the people themselves. Although severalprogrammes included in the Plan are already under way, it is important that, through sacrifice Animesh Kumar’s Economics Assignment | Amity Law School, Lucknow 5
  • 10. Five Year Plans in India BRIEF STUDIESborne equally by all citizens, the effort and resources of the entire nation should be mobilisedin support of the Plan so that, during the coming years, the tempo of development can begreatly increased and the Plan becomes a focus of intense activity and a field of commonendeavour throughout the country.SECOND FIVE YEAR PLAN (1956-61)The second five-year plan focused on industry, especially heavy industry. Unlike the Firstplan, which focused mainly on agriculture, domestic production of industrial products wasencouraged in the Second plan, particularly in the development of the public sector. The planfollowed the Mahalanobis model, an economic development model developed by theIndian statistician Prasanta Chandra Mahalanobis in 1953. The plan attempted to determinethe 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 andoptimization as well as the novel applications of statistical models developed at the IndianStatiatical Institute. The plan assumed a closed economy in which the main trading activitywould be centered on importing capital goods.The main objective was to launch upon industrialisation and strengthen the industrial base ofthe economy. It was in this light that the 1948 Industrial Policy Resolution was revised and anew resolution of 1956 was adopted. The Second Plan started with an emphasis on theexpansion of the public sector and aimed at the establishment of a socialistic pattern ofsociety.Objectives:i) A sizeable increase in national income so as to raise the level of living.ii) Rapid industrialisation of the country with particular emphasis on the development ofbasic and key industries.The Plan was considered in draft by the National Development Council which passed thefollowing Resolution on the 2nd May, 1956:"HAVING considered the Draft Second Five Year Plan,"THE National Development Council places on record its general approval and acceptance ofthe objectives, priorities and programmes embodied in the Plan; and"RELYING on the enthusiasm and support of the people;"AFFIRMS the common determination of the Central Government and the Governments ofall the States of the Union of India to carry out the Plan, and to improve upon the targets setout in it; and"CALLS upon all the citizens of India to work wholeheartedly for the full and timelyrealisation of the tasks, targets and aims of the Second Five Year Plan."The beginning and the end of a Five Year Plan are vital dates in the nations history. EachFive Year Plan is both an assessment of the past and a call for the future. It seeks to translateinto practical action the aspirations and ideals of the millions in the country and gives to each Animesh Kumar’s Economics Assignment | Amity Law School, Lucknow 6
  • 11. Five Year Plans in India BRIEF STUDIESof us the opportunity of service in the common cause of eliminating poverty and raisingstandards of living.The First Five Year Plan ended in March 1956. Its approach and outlook are part of ourcommon thinking. It has laid the foundations for achieving the socialist pattern of society—asocial and economic order based upon the values of freedom and democracy, without caste,class and privilege, in which there will be a substantial rise in employment and productionand the largest measure of social justice attainable.Work on the Second Five Year Plan has been in progress for about two years. In April 1954,the Planning Commission requested State Governments to arrange for the preparation ofdistrict and village plans, especially in relation to agricultural production, rural industries andco-operation. The preparation of such plans was undertaken as it was felt that in sectorswhich bear closely on the welfare of large numbers of people, local planning is an essential.means for securing the maximum public participation and voluntary effort. While plans fordistricts and villages and for national extension and community project areas have to be fittedwithin the framework of State plans which, in turn, take cognizance of plans prepared fromthe point of view of the economy of the country as a whole, the district is still the pivot of thewhole structure of planning. At this point plans from different sectors come intimately intothe life of the people.The study of wider aspects of national planning also commenced during 1954. Towards theend of the year the assistance of the Indian Statistical Institute was obtained for the study oftechnical and statistical problems relating to national planning, and a number of workingpapers were prepared at the Institute. In March 1955, the results of these and other studieswere brought together in Professor P. C. Mahalanobiss Draft Recommendations for theFormulation of the Second Five Year Plan (referred to as the plan-frame) and in a TentativeFramework for the Second Five Year Plan which was prepared by the Economic Divisions ofthe Ministry of Finance and the Planning Commission. These documents were considered inApril 1955 by the Planning Commissions Panel of Economists, which drew up aMemorandum on Basic Considerations Relating to the Plan-Frame. Members of the Panelalso prepared a number of studies on individual aspects.The plan-frame and the other documents mentioned above were considered by the NationalDevelopment Council early in May 1955. The National Development Council generallyagreed with the basic approach of the draft plan-frame and tentative framework and withthe policy considerations relating to it which were put forward in the Memorandum of thePanel of Economists. The Council also agreed that the Second Five Year Plan should bedrawn up so as to be capable of leading to an increase in national income of about 25 per centover a period of five years and of providing employment opportunities to 10 to 12 millionpersons. Further, the Council directed that the Second Five Year Plan should be drawn up soas to give concrete expression to policy dficisions relating to the socialist pattern of society.Between July and December 1955, the Planning Commission held discussions with CentralMinistries and with State Governments. Discussions with each State afforded an opportunityto review the broader aspect of individual State plans in consultation with Chief MinistersDetailed examination of the proposals of States took place in working groups in which seniorofficials from the Central Ministries, State Governments and the Planning Commissioncollaborated. Animesh Kumar’s Economics Assignment | Amity Law School, Lucknow 7
  • 12. Five Year Plans in India BRIEF STUDIESDuring January 1956, a Draft Memorandum embodying the proposals which emerged fromthese discussions was considered by the National Development Council and the ConsultativeCommittee of the Members of Parliament. In the light of these discussions and othercomments, a Draft Outline was published in February 1956 for general information and foreliciting comments and suggestions. Suggestions received on the Draft Outline were takeninto consideration in the preparation of the Draft Second Five Year Plan.In the course of the past year certain considerations have impressed themselves upon theminds of those concerned with the formulation of the Second Five Year Plan. A Plan for aperiod of five years has to be viewed in the social and economic perspective of a longerperiod. It has to be worked in a flexible manner so that, through annual plans, adjustments areeffected in the light of economic and financial trends, increase in production in agricultureand industry, and progress in different sectors of the Plan. Close coordination has to bearranged in the related fields of industry, transport, minerals and power, so that theexpenditure incurred on each group of connected projects yields the maximum return. As theNational Development Council recognised, to offset inflationary pressures associated with aperiod of rapid development, it is imperative that the targets of agricultural productionproposed in the Plan should be further improved upon. At each stage adequate supplies offood and cloth and of essential consumer goods will have to be provided at reasonable pricesand a careful watch on the working of the national economy maintained.Our Second Five Year Plan seeks to rebuild rural India, to lay the foundations of industrialprogress, and to secure to the greatest extent feasible opportunities for weaker and under-privileged sections of our people and the balanced development of all parts of the country.For a country whose economic development was long retarded these are difficult tasks but,given the effort and the sacrifice, they are well within our capacity to achieve.The Plan which is now presented to Government for submission to Parliament is a result ofthe labours of large numbers of persons in the Central Government, in the States at variouslevels and leaders of thought and opinion in every part of the country. In its preparation menand women in all walks of life have given generously of their time and experience. Theenthusiasm and the widespread participation which have gone into the making of the SecondFive Year Plan are the best augury for its fulfilment.THIRD FIVE YEAR PLAN (1961-66)In the third Plan, the emphasis was on long-term development. The Third Plan report statedthat during the five-year period concerned, the Indian economy “must not only expandrapidly but, at the same time, become self-reliant and self-generating.”Objectives:i) An increase in national income of more than 5 per cent annually. The investment patternlaid down must be capable of sustaining this growth rate in the subsequent years.ii) An increase in the agricultural produce and to achieve self sufficiency by increasing foodgrain production.iii) Greater equality of opportunities, more even distribution of economic power and reducingwealth and income disparities.The third plan stressed on agriculture and improving production of wheat, but the brief Sino-Indian War of 1962 exposed weaknesses in the economy and shifted the focus towardsthe Defence industry. In 1965-1966, India fought a war with Pakistan. The war led to Animesh Kumar’s Economics Assignment | Amity Law School, Lucknow 8
  • 13. Five Year Plans in India BRIEF STUDIESinflation and the priority was shifted to price stabilisation. The constructionof dams continued. Many cement and fertilizer plants were also built. Punjab beganproducing an abundance of wheat.Many primary schools were started in rural areas. In an effort to bring democracy to thegrassroots level, Panchayats elections were started and the states were given moredevelopment responsibilities.State electricity boards and state secondary education boards were formed. States were maderesponsible for secondary and higher education. State road transportation corporations wereformed and local road building became a state responsibility. The target growth rate of GDP(gross domestic product) was 5.6 percent. The achieved growth rate was 2.84 percent.Two Five Year Plans have helped strengthen the foundations of economic and social life andstimulated industrial and economic growth and scientific and technological advance.The Third Five Year Plan seeks to give a more precise content to the social objectives of theConstitution and represents a large advance towards their realisation. It takes account of thesuccesses and the failures in the first two Plans and sets the tasks to be fulfilled in theperspective of development over the next fifteen years and more.Work on the preparation of the Third Plan commenced towards the end of 1958 and wascarried out in three main stages. The first, leading to the publication of the Draft Outline earlyin July, 1960, comprised detailed studies by working groups set up at the Centre and in theStates. Parliament gave its general approval to the Draft Outline in August, 1960.The Draft Outline was discussed throughout the country and served as the basis for thepreparation of the plans of States. These were considered with the Chief Ministers of Statesbetween September and November, 1960. In January, 1961, the National DevelopmentCouncil made its recommendations concerning the overall size and the structure of the ThirdPlan; the Council also set up a Committee on Savings to suggest ways of securing themaximum mobilisation of resources for the Third Plan. Finally, on May 31 and June 1, 1961,the National Development Council considered the Draft Report on the Third Plan andgenerally approved it.The objectives and priorities of the Third Plan were considered carefully by fiveParliamentary Committees in November, 1960, and every effort has been made in this Reportto avail of the suggestions and comments offered by these Committees. Several aspects of thePlan were placed from time to time before the Committee of Members of Parliament fromdifferent political parties presided over by the Prime Minister. The Consultative Committeeof Members of Parliament associated with the Planning Commission also reviewed the Planat various stages.Throughout the preparation of the Plan, leading public men and scholars, professionalassociations, organisations representing industry and labour, and independent expertsgenerously gave of their time and experience. The Planning Commission had the benefit ofadvice and suggestions from its Panel of Economists, Panel of Scientists, and Panels on LandReform, Agriculture, Education, Health and Housing. It was also helped by studies initiatedby the Programme Evaluation Organisation, the Research Programmes Committee, theCommittee on Plan Projects, the Central Statistical Organisation, the Indian StatisticalInstitute and other leading organisations engaged in research. Efforts to prepare plans at the Animesh Kumar’s Economics Assignment | Amity Law School, Lucknow 9
  • 14. Five Year Plans in India BRIEF STUDIESdistrict, block and village level, specially for the development of agriculture, cooperation,education and rural industries, were an integral part of the process of drawing up the plans ofStates as well as the National Plan. These local plans are a vital element in the success ofPanchayati Raj, which places in the hands of the people of each area the initiative andresponsibility for their own development and the means and resources for rapid advance.The preparation of the Third Plan has been, thus, a vast national undertaking in whichvaluable contributions have come from many sources, and at every stage there has been theclosest collaboration with the State Governments and the Central Ministries.The Third Plan represents the first phase in a scheme of long-term development extendingover the next fifteen years or so, the preparation of which will now be taken in hand. In thecourse of this period, Indias economy must not only expand rapidly but must, at the sametime, become self-reliant and self-generating. This long-term approach is intended to providea general design of development for the countrys natural resources, agricultural andindustrial advance, changes in the social structure and an integrated scheme of regional andnational development.The Plan sets large objectives and targets for the five-year period. They are large only incomparison with the past, not in relation to needs or to the nations capacity to achieve. Theyconstitute a minimum which must be assured, but their true purpose is to open the way to astill more intensive endeavour and a deeper sense of urgency.The size of the task and the many-sided challenge should not be underestimated. The greateststress in the Plan has to be on implementation, on speed and thoroughness in seekingpractical results, and on creating conditions for the maximum production and employmentand the development of human resources. Discipline and national unity are the very basis ofsocial and economic progress and the achievement of socialism. At each step, the Third Planwill demand dedicated leadership at all levels, the highest standards of devotion andefficiency from the public services, widespread understanding and participation by thepeople, and willingness on their part to take their full share of responsibility and to bearlarger burdens for the future.FOURTH FIVE YEAR PLAN (1969-74)At this time Indira Gandhi was the Prime Minister. The Indira Gandhigovernment nationalised 14 major Indian banks and the Green Revolution in India advancedagriculture. In addition, the situation in East Pakistan (now Bangladesh) was becoming direas the Indo-Pakistani War of 1971 and Bangladesh Liberation War took place.Funds earmarked for the industrial development had to be diverted for the war effort. Indiaalso performed the Smiling Buddha underground nuclear test in 1974, partially in response tothe United States deployment of the Seventh Fleet in the Bay of Bengal. The fleet had beendeployed to warn India against attacking West Pakistan and extending the war. After the„Plan Holiday‟, the Fourth Plan was begun in 1969.Objectives:i) To achieve stability and progress towards self-reliance.ii) To achieve an overall rate of growth of 5.7 per cent annually.iii) To raise exports at the rate of 7 per cent annually. Animesh Kumar’s Economics Assignment | Amity Law School, Lucknow 10
  • 15. Five Year Plans in India BRIEF STUDIESPlanning is the vital instrument we have adopted to realise the social objective enshrined inour Constitution. Though the Five Year Plans we have already achieve a significant increasein the national income in the past eighteen years and laid the foundations of technologicaladvance. The Plan is fast modernising our agriculture and strengthening and diversifying ourindustry. Above all, it has reinforced national unity and purpose.The attack on our territory in 1962 and again in 1965 forced us to modify the pattern ofnational expenditure. Before we could reconcile the competing claims of development anddefence, drought struck us. Foreign credits became uncertain, Recession followed. All theseseriously restricted our freedom of choice. We had to divert our energies to fight drought andnean famine and their aftermath. For some time, long-term planning had to be virtuallysuspended. But we succeeded in turning adversity to good use. We concentrated on importsubstitution which further enlarged our industrial base. This along with the need for moreforeign exchange put us on the path of a more fruitful export drive. We maintained ourinvestment in development work, especially in intensive agricultural programmes.A new period has how opened. There is a welcome upsurge in the economy, and the increasesin agricultural production have brought us nearer to self-sufficiency in food grains. But,inevitably, there are other problems, and a fresh challenge to face. Rural disparities haveincreased, partly owing to the very efforts we have made to move rapidly towards self-sufficiency in food, and partly owing to certain tardiness in the matter of implementing theland reforms. Although the industrial recession has waned, new industries are not coming upfast enough and unemployment, especially of technically trained persons, continues to beacute. We have a larger and, understandably enough, a more articulate population.Planning is the method to which we are committed for meeting such challenges. We havecarried out three Five Year Plans. Each Five Year Plan has addressed itself especially toproblems which have emerged either because of new political and economic developments inthe country and in the world, or as a consequence of progress already achieved. The prioritiesand the emphasis have necessarily changed and have had to be adjusted from Plan to Plan,but we have always kept in view our long-term objectives.The Fourth Plan represents a conscious, internally consistent and careful!} thought outprogramme for the most efficient exploitation of our resources possible in existingconditions. The basic aim is to raise the standard of living of the people, especially of the lessprivileged sections of society. Our planning should result not only in an integrated process ofincreased production, but rational distribution of the added wealth. The overriding inspirationmust be a burning sense of social justice. While increased production is of the utmostimportance it is equally important to remove or reduce, and prevent the concentration ofwealth and economic power. The benefits of development should accrue in increasingmeasure to the common man and the weaker sections of society, so that the forces ofproduction can be fully unleashed. A sense of involvement, of participation by the people as awhole, is vital for the success of any plan of rapid economic growth. This can only be evokedby securing social justice, by reducing disparities of income and wealth, and by redressingregional imbalances. A reorientation of our socio-economic institutions in this spirit isaccordingly, a first necessity.One year of this Plan has already gone by. Between the Draft Plan and the present document,certain important changes have been made. The projected investment in the public sector hasbeen stepped up so as to enable us to undertake a larger and bolder agenda of work. New Animesh Kumar’s Economics Assignment | Amity Law School, Lucknow 11
  • 16. Five Year Plans in India BRIEF STUDIESschemes have been added to help the small farmer throughout the country, especially in theun-irrigated areas. The emphasis is squarely on areas that have hitherto suffered from neglect.Transport and housing problems in urban regions will receive more attention. A small butsignificant beginning is also being made with special programmes for children.The Fourth Plan thus provides a necessary corrective to the earlier trend which helpedparticularly the stronger sections in agriculture as well as in industry to enable them rapidlyto enlarge and diversify the production base. In the long run, the full potential of growthcannot be realised unless the energies of all our people are put to profitable use. Theemphasis on spreading the impetus and benefits of economic growth to the weaker sections isthus necessary in the interest of equality as well as growth. The Plan will now assist the lessprosperous sections of our farming population to improve their position and make a yetbigger contribution to the national economy. Greater industrial activity and the modernisationof agriculture such as is proposed through the wider use of electric power and the adoption ofintensive methods of cultivation in both irrigated and dry areas, would mean that a largerproportion of young people seeking jobs could find employment nearer home. At the sametime, there are some new schemes, e.g.,for a network of service centres in the rural areas,which will open out opportunities for young entrepreneurs.The nationalisation of the fourteen big banks is evidence of our determination to bring agreater volume of resources within the area of social decision. It has effected a major changein our economic structure. It enables us to pay more attention to the "small mans" needs, andit restricts the scope for the monopolistic operations of the privileged few. Among other areaswhere social considerations have still to make a comparable impact are the enforcement ofland laws, the management of public sector enterprises, and the toning up of theadministration as a whole.There can be no doubt that the responsibilities devolving upon the public sector —withoutdiminishing those of the private sector, in our mixed economy—will grew in range andvolume. Socialism involves a reordering of society on a rational and equitable basis and thiscan only be achieved by assigning an expanding role to the public sector. Following thereorganisation of credit policies resulting from the nationalisation of major banks, the publicsector can be expected more and more to occupy the commanding heights of the economy. Italone would be in a position to undertake investments of the requisite magnitude in suchindustries of vital importance to us as steel, machinery, machine tools, power generation,ship-building, petrochemicals, fuels and drugs. Naturally, the administration of publicenterprises poses some problems of its own (here as in other countries) but they are notinsuperable and will be overcome as we gain experience.In addition to the fight against poverty and economic inequalities, the Plan seeks to enlargethe area of self-reliance in terms of financial resources and technological inputs. Here, too,the public sector has an important part to play. Besides striving^ to set an example in bettermanagement methods and ushering in a new pattern of worker management relations, thepublic sector should increasingly base itself on domestic know-how. The public and privatesectors have both been too ready to look to foreign collaboration not only for financial but fortechnological resources. Such collaboration may be unavoidable when new processes have tobe introduced but excessive reliance on it has induced a state of mind which inhibits thedevelopment of our own technological skills and managerial talents. We should rely moreand more on our own machinery and technical know-how, even though it may entail someinitial risks and difficulties. This does not mean that we should be indifferent to the latest Animesh Kumar’s Economics Assignment | Amity Law School, Lucknow 12
  • 17. Five Year Plans in India BRIEF STUDIESdevelopments in technology, especially in the fast growing sectors. But it would be folly toforget that a nations strength ultimately consists in what it can do on its own and not in whatit can borrow from others.There has been a noticeable change in recent years in the climate of international economiccooperation. It is now increasingly reaffirmed by responsible sections of public opinion in thelending as well as in the borrowing countries that development assistance should not beregarded as an instrument of foreign or commercial policy but as a means of correctingdangerous imbalances in the world economy. However, "aid" is in reality credits which haveto be repaid; and even if such credits are available on terms which are concessional in somerespects, they often have features which are not consistent strictly with the objective ofdevelopment. For some time to come we can benefit by more external credits, especiallyuntied credits on concessional terms. But we have to take note of international realities asthey are and reduce our reliance on foreign credits.The policy of self-reliance does not mean that we should be actually reducing imports fromthe rest of the world. In fact, as the pace of development quickens, imports of industrial rawmaterials, intermediates and special components will go up. But we propose to pay for themincreasingly through our own earnings from exports. Economic independence, therefore,hinges to a considerable extent on how we fare in export markets; and our exportperformance in turn would depend on the state of our economy at home and our success indeveloping a purposive, planned approach to the problem.The complaint that planning has led to a rise in prices and that planning is, therefore, harmful,is misconceived and unfounded. Consumers with fixed incomes, particularly in urban areasface hardship when prices rise; but at the other extreme, when prices are reduced or depressedto uneconomic level, producers suffer and employment sags. If development means largerreal incomes to ever larger numbers of people, some price increases can hardly be avoided.What we must ensure, however, is stability in respect of the core items of familyconsumption. An adequate supply of food grains and articles of everyday use must bemaintained at fairly stable prices. Agricultural scientists who have brought about such notableincreases in yields of wheat, and to some extent of millets and rice, have now turned to thetask of bringing about similar gains in pulses and cash crops like oilseeds, cotton andsugarcane. In general, the possible impact of development plans on the price situation hasbeen carefully studied, and every effort will be made to keep production and prices inbalance.Planning certainly has its critics, but the fact remains that in modern conditions, and in adeveloping country like ours, economic planning has become indispensable. Compared to thetasks to be accomplished, the resources of money, trained manpower and administrative andmanagerial skills are in short supply, and they have to be allocated primarily with a view tothe national interest rather than the interest of any private individual or group. This is, afterall, what the Plan seeks to do. At the same time, and through such rational allocation, it canlead to an augmentation of the now scarce resources, and this gradually extend the limits ofour economic freedom.For us in India, planning is a charter of orderly progress. It provides a framework of time andspace that binds sectors and regions together and relates each years effort to the succeedingyears, impelling us all constantly to greater cooperative endeavour. By strengthening the Animesh Kumar’s Economics Assignment | Amity Law School, Lucknow 13
  • 18. Five Year Plans in India BRIEF STUDIESeconomic fabric of the country as a whole and of the different regions, it makes a powerfulcontribution to our goal of national integration.FIFTH FIVE YEAR PLAN (1974-79)The Plan was formulated against the background of sever inflationary pressure.Objectives: In addition to removal of poverty and attainment of self-reliance, the Fifth Planhad the following major objectives.i) 5.5 per cent overall rate of growth in Gross Domestic objectives.ii) Expansion of productive employment and fuller utilisation of existing skills andequipment.iii) A national programme for minimum needs and extended programmes of social welfare.Stress was laid on employment, poverty alleviation, and justice. The plan also focusedon self-reliance in agricultural production and defence. In 1978 the newly elected MorarjiDesai government rejected the plan. Electricity Supply Act was enacted in 1975, whichenabled the Central Government to enter into power generation and transmission leaders.The Indian national highway system was introduced for the first time and many roads werewidened to accommodate the increasing traffic. Tourism also expanded.The Draft Fifth Five Year Plan was formulated in terms of 1972-73 prices and in the contextof the economic situation obtaining in the first half of the fiscal year 1973-74. Thereafter, twomajor developments took place. The inflationary pressures gathered momentum tillSeptember, 1974; and the balance of payment position worsened due to the steep rise in theprices of imported oil and other materials.The first intimations of the inflationary pressures came in 1972-73, thereafter these pressuresgathered strength in 1973-74 and continued unabated right upto September, 1974. During thisperiod, the index rose by 31.8%. Food articles and industrial raw materials accounted forabout two-third of the price increase. The prices of machinery, transport equipment andmanufactured goods contributed to a little over one-fourth to the overall increase in prices.These pressures were first felt as a result of severe drought conditions in 1 972-73, followedby shortages of various essential consumer goods and critical raw-materials and inputs.Shortage of power together with higher international prices of imported inputs and theirinadequate availability led to the stagnation of industrial production during 1973-74. Theprice situation was aggravated by continued expansion in money supply partly due to largedeficit financing and partly due to excessive expansion of bank credit to the commercialsector. Thus in 1973-74 the money supply increased by 15.4% over and above the increase of15.9% registered in 1972-73. Acting together with the unaccounted money unregulatedexpansion of money supply in a situation of shortages provided an added impetus to theactivities of speculative and unsocial elements. Owing to the escalation of costs and prices,even the administered prices of important intermediate goods such as steel, coal, cement andaluminium had to be raised as a defensive action. The procurement and issue prices ofimportant cereals such as rice and wheat were also increased significantly. This not only hada direct impact on the cost of living index but also strengthened the inflationary tendencies.The balance of payment position also came under severe strain. Large quantities of foodgrains and essential wage goods had to be imported. The four-fold increase in oil prices andincrease in prices of cereals, fertilisers, machinery and equipment, non-ferrous metals andother imported goods severely eroded the resources. The value of the three principal items of Animesh Kumar’s Economics Assignment | Amity Law School, Lucknow 14
  • 19. Five Year Plans in India BRIEF STUDIESimports, namely food, fertilisers and POL accounted for as much as 53.2% of the total importbill in 1974-75, as against 42.6% in 1973-74 and 23% in 1972-73. In absolute terms theimport bill for these items increased from Rs. 431 crores in 1972-73 to Rs. 1260 crores in1973-74 and to about Rs. 2500 crores in 1974-75. No doubt value of exports also increasedbut the balance of trade showed a deteriorating trend. The trade gap turned from a surplus ofRs. 103.4 crores in 1972-73 to a deficit of Rs. 432 crores in 1973-74 and Rs. 1190 crores in 1974-75. This trend was both on account of sharp deterioration in the terms of trade since 1973 and larger imports of certain commodities mentioned above. Borrowings from IMFincluding special oil facility to the extent of about Rs. 485 crores was resorted to in 1974-75to meet the deficit in balance of payment. These developments together with uneasyeconomic conditions in some countries abroad and unstable international monetary conditionscould not but have an adverse impact on the Plan.Inevitably, the financial and physical magnitudes of the Plan as well as the balance ofpayment position got distorted. Escalation in costs, higher outlays on public consumption andnon-development expenditure led to erosion of resources for the Plan resulting in staggeringof programmes owing to diminution in the size of investment in real terms. Investments in theprivate sector also felt the impact. With such fluidity both at home and abroad, thefinalisation of the Plan had to await the emergence of a more stable situation.Deferment of the finalisation of the Plan did not imply a Plan holiday but a rephrasing of thePlan outlays, in the light of emerging circumstances. It implied that while planning, one hadinevitably to pay considerable attention to the short-term management of the economy.Measures had to be devised urgently for containing inflation at home and for keeping theeconomy in proper alignment with the fast changing international developments. Necessarilypriorities had to be defined even amongst the stated priorities, consistent with the objectivesof the draft Plan. Naturally, food and energy became the most important sectors forinvestment planning. The successive Annual Plans had to be formulated on theseconsiderations.The Annual Plan 1 974-75 was formulated at a time when the inflation rate was quite high. Itwas, therefore, designed mainly to control inflation and increase production particularly inthe key sectors. The Plan outlays had to be kept at a modest level. Yet care was taken toensure adequate provisions for agriculture including irrigation and fertilisers, energy (power,coal and oil), ongoing projects in steel, non-ferrous metals and certain basic consumer goodsindustries. Emphasis was on fuller utilisation of the unutilised capacities. The piovision forsocial services was restrained but kept at a reasonable level.During the year, a comprehensive strategy was evolved and a package of measures—fiscal,monetary and administrative—was introduced. It included mobilisation of additionalresources (both by the Centre and the States), allocation of funds to high priority projects,restraint on growth of money supply and a crack down on anti-social elements. Disposableincomes were regulated through impounding of certain additional incomes, imposition ofrestrictions on dividends and compulsory savings by tax payers in the higher brackets. Theprocurement prices of major agricultural crops were not allowed to rise. These measureseffected deceleration in the rate of growth of money supply, significant improvement in pricesituation and easy availability of essential goods. The money supply increased by only 6.9%in 1 974-75 as against an increase of 1 5.4% in the previous year. The index of wholesaleprices declined by 7.1% between September, 1974 and March, 1975. Animesh Kumar’s Economics Assignment | Amity Law School, Lucknow 15
  • 20. Five Year Plans in India BRIEF STUDIESThough inflation was contained, yet the economy was still operating under variousconstraints. Agricultural production in 1 974-75 declined by 3.1 %. Industrial productiongrew at 2.5%. While the rate of aggregate investment (net) increased from 13.6%, in 1973-74to 14.8% in 1974-75, the rate of domestic savings (net) recorded a marginal increase from12.8% in 1973-74 to 13.1% in 1 974-75. As already mentioned the balance of paymentdeteriorated.Having achieved a certain measure of price stability by the end of 1974-75, the Annual Planfor 1975-76 could aim at growth under conditions of price stability. Agriculture, Irrigation,Power, Coal, Oil and Fertilisers, therefore, continued to receive priority. Projects capable ofyielding quick results received special attention. Labour discipline and sustained anti-hoarding/smuggling operations created an appropriate climate. An excellent harvest gavetimely vigour and push. The national income is estimated to have increased by 6 to 6.5%during 1 975-76—agricultural production by about 10% and industrial output by 5.7%.Procurement of nearly 1 3 million tonnes of food grains in 1 975-76, along with importsenabled the build-up of a high level of stocks of food grains (17 million tonnes). Thewholesale price index fell from 307.1 at end of March, 1975 to 283.0 at the end of March,1976—by about 8%,. The year 1975-76 closed with an overall budgetary surplus of over Rs.200 crores against a deficit of Rs. 490 crores estimated earlier. The balance of tradecontinued to be a matter for concern during 1975-76 and the trade gap was as high as Rs.1216 crores. This was in spite of the fact that the value of exports had increased by 18.4%and imports by only 14%. However, as a result of larger inflow of private remittancesbecause of effective action against smuggling and illegal dealings in foreign exchange andincrease in net foreign aid the balance of payments was not strained. The foreign exchangereserves reached a high level of Rs. 1885 crores at the end of the year as against Rs. 969crores at the end of the previous year.With stability of prices and growth in economy achieved during 1 975-76, a bolderprogramme of investment was drawn up for 1976-77. The Annual Plan 1976-77 envisages anoutlay of Rs. 7852 crores which represents an increase of 31.4% over the original Planallocation for 1975-76. The New Economic Programme and consideration of social justicecould receive greater attention. The high priority accorded to critical sectors of theeconomy—agriculture including irrigation, energy and intermediate goods was continued.Not only did on-going schemes receive full attention, but new starts in critical sectors couldalso be envisaged on a selected basis. This strategy together with mobilization of additionalresources was expected to maximise the growth potential of the economy.Thus, the efforts made so far have succeeded in checking inflationary tendencies and givingthe economic situation a promising turn. Some of the constraints which seriously hamperedthe process of growth in the earlier period have been removed to a considerable extent. Thereis easy availability of essential raw materials and inputs. There is greater economic disciplineand a renewed dynamism in the country at present. A considerable measure of price stabilityhas been achieved and it is hoped that the recent increase in price level will be contained byeffective measures which have been initiated. There is a large buffer stock of foodgrains withthe public agencies and the position of foreign exchange is satisfactory. The internationalmonetary system has also stabilised to a certain degree. The Planning Commission, therefore,consider this an appropriate time to finalise the Fifth Plan. With this end in view a meticulousand detailed examination of the development programme for the remaining two years of theFifth Five Year Plan has been undertaken. What emerges is a clearer delineation of the targetsand policies especially in relation to the priority sectors. Animesh Kumar’s Economics Assignment | Amity Law School, Lucknow 16
  • 21. Five Year Plans in India BRIEF STUDIESSIXTH FIVE YEAR PLAN (1980-85)The draft of the Sixth Five Year Plan (1978-1983) was presented in 1978. However, the planwas terminated with the change of Government in January 1980. The new Sixth Five YearPlan was implemented in April 1980.Objectives:i) To eliminate unemployment and underemployment.ii) To raise the standard of living of the poorest of masses.iii) To reduce disparities in income and wealth.Soon after its reconstitution in April, 1980, the Planning Commission started work on theSixth Five Year Plan 1980—85. A number of working groups were set up to do the necessarypreparatory work and consultations were held with the Central Ministries and theConsultative Committee of Members of Parliament on Planning. A basic paper entitled "SixthFive Year Plan 1980—85—A Framework" was presented to the National DevelopmentCouncil on its 34th meeting held on August 30 and 31, 1980. The Council considered thispaper and directed the Planning Commission to proceed with preparation of the final draft ofthe Sixth Plan. Thereafter, the Planning Commission held a series of wide rangingconsultations with groups of economists and other social scientists, experts on ruraldevelopment, eminent economic journalists, representatives of industry and trade, of tradeunions, credit institutions, and others. The Framework was also discussed in two meetings ofthe Parliamentary Consultative Committee of the Ministry of Planning and was circulated toall Members of Parliament and to editors of news papers for comments and suggestions.Finally, extensive discussions were held with the States and the Union Territories on the StatePlans for 1980—85. The Commission also benefited by the useful data collection andanalytical work done by the Planning Commission in the past three years.In the introduction to the Third Five Year Plan, Jawaharlal Nehru said "Planning is acontinuous movement towards desired goals". While the precise formulation of Planobjectives adopted in successive plans has varied, the essential goals of Indian Planning havebeen growth, removal of poverty and achievement of self-reliance. The Commission has keptin view the pledges given to the people in formulating its proposals. Further it has used theconsultative mechanism to elicit the views of as wide a cross section of national opinion aspossible so as to evolve a broad national consensus on the objectives, strategies andprogrammes of the Sixth Plan. Its overriding concern has been to give practical shape to thenations collective will for using all the latent resources and energies of the nation for aneffective attack on poverty, unemployment and inequalities.The final size of the public sector outlay has been fixed at Rs. 97,500 crores at 1979-80prices. This outlay is in real term 80 per cent higher than the outlay in the Fifth Five YearPlan. The Commission would have liked wry much to be in a position to recommend largeroutlays in several sectors. However, given the constraint on the size of the Plan, and keepingin view Plan objectives, an initially consistent and feasible inter-sectoral allocation has beenadopted to achieve a growth rate of 5.2 per cent. It should become possible to review theseallocations in the mid-Plan period as the combined efforts of the people and Governmentsucceed in raising resources and productivity. While the outlays on all major sectors of theeconomy will at least be double in nominal terms compared to the Fifth Plan, the growth rateof outlays in rural development and irrigation are even higher. This reflects the very high Animesh Kumar’s Economics Assignment | Amity Law School, Lucknow 17
  • 22. Five Year Plans in India BRIEF STUDIESpriority given in the Sixth Plan to the objectives of employment generation and removal ofpoverty. Similarly, the very high emphasis on investment in the energy sector represents ourresolve not to let energy availability become an undue constraint on the growth process.Substantial provisions have Ken made for the special component plans for Scheduled Castesand for tribal sub-plans. In addition, benefits will accrue to the Scheduled Castes andScheduled Tribes from the various sectoral programmes.A substantial increase has been provided in Plan outlays for the special areas programmes inkeeping with the Plan objective of reducing regional disparities. In view of the particularproblems of the North Eastern Region, a substantial step up in the plans of the constituentunits of the Region and of the North Eastern Council is envisaged. These outlays will be inaddition to greatly enhanced levels of Central sector investments in the Region.It has been possible to increase the size of the Sixth Plan over that envisaged in theFramework, partly on account of the determination expressed by some States during thecourse of final Plan discussions to exceed the estimates of additional resource mobilisationthat had originally been envisaged, for them. On this basis, the share of States and UnionTerritories in the Plan is Rs. 50,250 crores, which works out to 51.54 per cent of the totaloutlay. Determined efforts will have to be made by the Centre and States to realise the targetof additional resource mobilisation. This is an essential precondition for successfulimplementation of the Sixth Plan. This point needs particular emphasis, as a major task ofeconomic policy in the Sixth Plan would be to create the necessary conditions for themobilisation of resources in a non-inflationary manner. Inflation is the most regressive formof taxation. As the Framework points out, the Sixth Plan is being launched in difficultconditions. Fortunately, .the acute inflationary pressures which prevailed in 1979-80 haveshown some signs of abatement in 1980-81. However, the situation cannot be said to becompletely under control yet and a great deal of ingenuity and irnaginatio.i, not to speak ofresolve, will be needed to device effective economic policies to reconcile the requirements of.growth and stability.As regards the external environment, it must be recognised that the economy continues to beextremely vulnerable to increases in oil prices and to deterioration in our terms of tradegenerally. A major task facing the country is to reduce our dependence on energy imports andto promote exports and invisible earnings.. This is essential in order to achieve self-reliance.Self-reliance, as should be obvious, but often is not, does not necessarily mean self-sufficiency in all sectors of the economy. So long as the country is able to pay its way, itcannot be said to be dependent on others. This calls for an all out effort to accelerate the rateof growth of our exports to 9 to 10 per cent as envisaged. We must also rigorously promoteimport substitution in all those sectors of the economy where we have a comparativeadvantage.Meaningful solutions to the problems of poverty, under-employment and unemployment canonly be found within the framework of a rapidly expanding economy. To that end, everyeffort will have to be made to achieve the planned growth rate of 5.2 per cent in the SixthPlan. We recognise however that even this rate of growth will have to be supplemented bymore direct means of reducing the incidence of poverty, especially in the rural areas.Programmes of direct productive benefit to the poor involving the transfer of assets, theprovision of inputs, credit, training and services, the generation of wage employment throughthe National Rural Employment Programme and the provision of social services through theMinimum Needs and other programmes, will be drawn together so that they focus upon the Animesh Kumar’s Economics Assignment | Amity Law School, Lucknow 18
  • 23. Five Year Plans in India BRIEF STUDIESlevel of the individual household, and raise at least 3000 of the poorest households above thepoverty line in each block during the Plan. Necessary changes in the extension and deliveryservices will be given the highest priority. Simultaneously, every effort will be made tosecure voluntary adoption of the small family norm. In the ultimate analysis the success ofour efforts in eliminating poverty and unemployment will depend on the extent to which wesucceed in reducing the rate of population growth.It need hardly be emphasised that the success of the Plan depends crucially on the efficiency,quality and texture of implementation. The challenge ahead is to achieve an all roundimprovement in production and efficiency, not merely in the functioning of the infrastructureor the public sector, but in all segments of national life. We must get the most out of thecapital stock and human resources we have developed during the last thirty years. In thiscontext, a special responsibility devolves on that segment of the population which hasbenefited disproportionately from planned development sc far and also on those who havebeen fortunate enough to enjoy superior access to education and professional skills.Ultimately, the requisite effort and the required sacrifices will only be made if faith in thebasic equity of our economic and social system is maintained, and the task which we setourselves is bold enough to capture the imagination of our citizens. These considerationshave implications both for the distributional objectives we build into our Plans, and for thetotal size of the resources we mobilise for them. It is to be hoped that the Sixth Plan 1980-85,despite all the constraints it faces, will not be found wanting on either of these criteria. Thetranslation of the promise it holds out into actual performance, however, is something thatcan only be ensured by all of us collectively. It is only through sustained hard work,discipline and self-restraint, particularly on the part of the more privileged sections of oursociety, a willingness to subordinate narrow sectional loyalties to wider national interests; inshort; by recapturing some of the idealism and sense of adventure which inspired our freedomstruggle, that we can hope to meet effectively the formidable challenges that lie ahead.SEVENTH FIVE YEAR PLAN (1985-90)The draft of the Seventh Plan was approved on November 9, 1985 by the NationalDevelopment Council. The plan was part of the long-term plan for the period of 15 years.Objectives:i) Decentralisation of planning and full public participation in development.ii) The maximum possible generation of productive employment.iii) Removal of poverty and reduction in income disparities.The Seventh Plan marked the comeback of the Congress Party to power. The plan laid stresson 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 increasingeconomic productivity, production of food grains, and generating employment opportunities.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 strongbase for the seventh five Year plan to build on the need for further economic growth. The 7thPlan had strived towards socialism and energy production at large.The planning process is the precious gift of Pandit Jawaharlal Nehru to the people of India.Indiraji nursed this tender plant with great and loving care. As she once put it, planning in ourcountry is a charter of orderly progress. It provides a framework of time and space that binds Animesh Kumar’s Economics Assignment | Amity Law School, Lucknow 19
  • 24. Five Year Plans in India BRIEF STUDIESsectors, regions and States together and relates each years effort to the succeeding years. Bystrengthening the social and economic fabric of the country as a whole and of the differentregions and States, it makes a powerful contribution to the goal of national integration. Theplanning process has contributed a great deal to evolving a broad national consensusregarding the basic objectives, strategies and design of our development policies. This hashelped to generate broad mass support for national economic policies which has addedgreatly to the cohesion and stability enjoyed by our polity.Removal of poverty, the building of a modern society making maximum possible use ofscience and technology, and attainment of self-reliance are the basic objectives of planning inIndia. The previous Plans have made valuable contribution to the achievement of thesenational goals. I venture to think that the Seventh Plan consitutes yet another importantmilestone in the nations quest to rid this country of the ancient scourges of poverty,ignorance and disease.Effective planning must be based on a vision of the future. We need a long-term perspectiveto translate the vision into reality and to make it operational. The Seventh Plan is, therefore,set within a 15-year perspective. The aim is to create by the year 2000 the conditionsnecessary for self-sustaining growth and to provide the basic material requisites of well-beingfor all our people. This means that we have to sustain and accelerate the momentum ofeconomic growth. Agriculture, industry, the infrastructure and social services have tofunction at progressively higher levels of efficiency and productivity. Full advantage must betaken of advances in science and technology to bring about the needed structuraltransformation of our economy. Simultaneously, measures designed to raise the productivityand incomes of the poorer sections of society and poorer regions must be pursued withgreater vigour. The objectives and thrusts of the Seventh Plan have, therefore, beenformulated as part of the longer term strategy which seeks, by the year 2000, to virtuallyeliminate poverty and illiteracy, achieve near full employment, secure satisfaction of thebasic needs of food, clothing and shelter and provide health for all. The Plan thus seeks toassist in the establishment of an economy and polity which is modern, efficient, progressive,humane and is informed by equity and social justice.Indias growth performance has improved considerably in the last decade. The Seventh Planseeks to take advantage of this favourable trend by aiming to stabilise the growth rate of theeconomy at an average annual rate of 5 per cent. The targetted growth rates for the economyas a whole, as well as for outputs of both agriculture (4 per cent) and industry (8 per cent),imply a significant improvement over past trends. As such, major efforts will be needed toachieve the growth targets of the Seventh Plan.In formulating the Plan, the Planning Commission has kept in view the mandate given to it bythe National Development Council when it approved the Approach Paper last year. Food,work and productivity have been the three basic priorities which guided the preparation of thePlan. Furthermore, because of their critical importance in sustaining the growth process,particular attention has been paid to raising the capability of the infrastructure and humanresource development with substantial increases in the proportions of outlays for these twosectors as compared to the Sixth Plan.The proposed pattern of resource allocation is designed to ensure that the country will remainself-sufficient in food and that significant progress will be made in increasing the productionof vegetable oils, pulses, vegetables and horticulture. The objective is to build an expanded Animesh Kumar’s Economics Assignment | Amity Law School, Lucknow 20
  • 25. Five Year Plans in India BRIEF STUDIESsystem of food security, at rising levels of per capita consumption. As part of the strategy of amore regionally balanced agricultural development and production, special emphasis hasbeen laid on increasing the productivity of rice in the Eastern States and on the developmentof dryland agriculture. The Plan also lays considerable stress on enhancing the productivityand incomes of small and marginal farmers. The agricultural programmes of the plan wouldgreatly benefit from the creation of an additional irrigation potential of about f3 millionhectares. Since variations in the rate of growth of agriculture are a major factor accountingfor regional differences in the pace of development, the agricultural strategy of the plan, withits emphasis on more even and balanced distribution of agricultural growth, will also help toreduce regional disparities.In the field of employment, the major objective of the Plan is to ensure that the growth ofemployment opportunities is faster than the growth of the labour force. Rapid agriculturaldevelopment (especially in areas agriculturally backward) expansion of irrigation facilities,more intensive cropping and continuation of the employment-oriented programmes such asthe National Rural Employment Programme and the Rural Landless Employment GuaranteeProgramme, wouli contribute significantly to the generation of additional employmentopportunities in rural areas. The faster rate of growtl of industry and a considerably expandedhousing programme in the private sector—for which attempts would be madi to providefinance through institutional sources—would together generate a larger volume ofemployment in thi non-agricultural sector than in the past. The Seventh Plan is thus anemployment-oriented Plan. Over the Plan perioc employment potential is expected toincrease by 40 million standard person years against an addition to the labour fore of 39million persons. The employment potential will go up by 4 per cent per year, well above theexpected growth rat of labour force of about 2.5 to 2.6 per cent over the Seventh Plan.Removal of poverty remains a central concern of planning in India. Consistent with thisobjective, the Sevent Plans development strategy and the pattern of growth emerging from itare expected to lead to reduction in poverty at faster rate than in the past. The Plan envisagesan expanded coverage under the various anti-poverty programme. Taking into account thehighly comfortable position of food stocks with the public sector, it may be possible to expanthe employment-oriented anti-poverty programmes at a still faster rate than envisaged in thePlan document. Evei effort will be made to plug various loopholes in the operation of anti-poverty programmes and to integrate these an various sectoral and area developmentprogrammes into a comprehensive design of integrated development of eac area. The Planpays special attention to the problems faced by the more vulnerable sections of our societysuch t scheduled castes, scheduled tribes, women and children. The Plan recognises that in asituation where poverty pervasive, the perception of needs and priorities must not be a merelymale perception but must take into acconi explicitly the special needs and problems ofwomen. As a result of these measures, the poverty ratio will decline fro 37 per cent in 1984-85 to less than 26 per cent in 1989-90. In absolute terms, the number of poor personsexpected to fall from 273 million in 1984-85 to 211 million in 1989-90.Promotion of efficiency and higher productivity have been another major concern in thepreparation of this Pla Increased and more efficient utilisation of existing assets both inagriculture and industry will contribute to increasing ti efficiency of resource use and alsohelp in containing the rise in the capital output ratio. A coordinated approach irrigation,drainage and land use management will be adopted to realise the multiple cropping potentialof the ne agricultural technology. In industry, emphasis is being placed on modernisation,investment in balancing equipment ai technology up gradation to a much greater degree than Animesh Kumar’s Economics Assignment | Amity Law School, Lucknow 21
  • 26. Five Year Plans in India BRIEF STUDIESever before. The policy framework for industrial growth in the Seventh Five Year Plan laysspecial emphasis on setting up of plants of economic size and on the creation of anenvironment where business firms have an adequate incentive to modernise, reduce cost,improve the quality of th< products and upgrade their technology. New developments inmicro-electronics, informatics, telematics, biotechnol gies, material sciences, oceanography,instrumentation and space technology offer exciting opportunities. A w conceived andcoordinated approach to the introduction of these emerging technologies in our productionprocess v further accelerate the pace of technical progress, structural change and growth ofproductivity, efficiency and qual consciousness.In order that agriculture and industry may grow faster, increased emphasis has been placed oninvestments infrastructure so that shortages in power, transport and coal would not arise forthe scale of activities envisaged in t Plan. The Plan envisages a significant increase in theshare of energy in the public sector outlay. Nearly 31 per cent the total public sector outlay ismeant for energy. The generation of power is expected to grow at an average annual rate of12.2 per cent over the Plan period. The Plan pays considerable attention to meeting theenergy needs of rural are, It seeks to extend the benefit of electricity to 1.18 lakh villages andto energise 23.9 lakh pumpsets for irrigation. T supply of fuelwood has been included as anadditional component of the Minimum Needs Programme. The programi for the developmentand utilisation of biogas and for the installation of new smokeless chulas will be expandedvery substantially.Another major thrust area in the Seventh Plan is human resource development. Public sectoroutlays for social services show a significant increase as compared to the Sixth Plan. ThePlan seeks to facilitate development of 1 human potential in terms of self-respect, self-reliance and a life of dignity. Apart from expansion of the exist programmes in education,health, provision of clean drinking water and sanitation, new initiatives and innovat measuresare contemplated in these areas. The Plan seeks to provide adequate drinking water facilitiesfor the entire population both in urban and rural areas. By the end of the Plan period, theinfrastructure for primary health care will be fully operational with regard to village healthguides, sub-centres, primary health centres and multipurpose health workers. Thus, we wouldhave a country-wide system of health care, with a balanced mix of preventive, primitive andcurative services. Increased emphasis on protection and preservation of the ecologicalbalance and environment is another distinctive feature of the Seventh Plan.As regards the financing of the Plan, in broad macro terms, the Plan is eminently bankableand credible, as it projects only a modest increase in the rate of investment and domesticsavings during the Plan period. The rate of investment is projected to go up from 24.5 percent of GDP in 1984-85 to 25.9 per cent by 1989-90 and the rate of domestic savings isprojected to go up from 23.3 per cent to 24.5 per cent over the same period. The financingpattern of the Plan seeks to limit recourse to deficit financing within limits of safety andprudence. In the same manner, the external financing of the Plan is expected to involve adeficit of not more than 1.6 per cent of GDP in the balance of payments on current account.The debt service ratio will not exceed 20 per cent of current receipts during the Plan period.Thus care has been taken to ensure that internal and external financing of the Plan does notinvolve assumption of unacceptable risks.It is, however, to be recognised that financing of the Seventh Plan would require determinedand more intense efforts for resource mobilisation. The ratio of taxation to GDP will have toincrease by two percentage points over the Plan period. The success of the Plan is crucially Animesh Kumar’s Economics Assignment | Amity Law School, Lucknow 22
  • 27. Five Year Plans in India BRIEF STUDIESdependent on the achievement of this target. Subsidies and other non-Plan expenditure willhave to be firmly contained if excessive recourse to deficit financing is to be avoided. In thesame manner, the public sector enterprises will have to generate larger resources if therequirements of additional investments are to be financed in a non-inflationary manner. Tomaintain the viability of external payments, it will be necessary to pay greater attention toexport promotion and to containing the growth of imports. Our export performance stilldisplays major structural weaknesses and in the interest of an orderly management of ourbalance of payment, there will have to be a substantial improvement in the competitivenessand quality of our exports. Simultaneously, we must adopt effective measures to curb thegrowth of imports of petroleum, vegetable oils and sugar.In a truly moving foreword to the Sixth Five Year Plan, Indiraji reminded us that the measureof a Plan is not intention but achievement, not allocation but benefit. It is a statement ofuniversal validity and it applies as much to the Seventh Plan as to the earlier Plans. Thus theimpact of the Seventh Plan will depend on the earnestness and determination with which it isimplemented. The Seventh Plan document lists several areas where we must improve uponpast performance if we are to realise the objectives and goals of the Plan. This is not the placeto discuss these problem areas at length. However, since devising effective solutions for someof these problems is crucial to the success of the Plan, a brief reference to some majorproblem areas is justified.First of all, the rehabilitation and revitalisation of the agricultural credit system is essentialfor achieving the agricultural targets of the Plan. The mounting phenomenon of overduesmust be firmly controlled if the agricultural credit system is to finance adequately the inputrequirements of agriculture.Secondly, there must be a substantial improvement in the quality of agricultural and ruraldevelopment administration. The technical knowledge and skills of the official grass-rootslevel administration need to be greatly improved if we are to impart a scientific temper to ouragriculture. District and block level planning has yet to take firm roots. Without theintroduction of effective block level/district level planning, the impact of large flows ofmoney through the various anti-poverty programmes will remain limited.Thirdly, we must take a fresh look at not only the basic strategy but also the programmecontent of the family welfare programme, so as to bring about a faster reduction in the rate ofpopulation growth.Fourthly, there must be a major improvement in productivity, efficiency and internal resourcegeneration of the public sector enterprises both of the Centre and of the States. Internalresource generation is particularly weak in capital-intensive enterprises in sectors such aspower, coal, steel, transport and fertilisers. We need new administrative structures and newconcepts of management so as to enable the public sector to perform its dynamic role in theprocess of capital accumulation.Finally, we must adopt effective measures to bring about meaningful participation of thepeople in all phases of national development. We need to tap fully the latent potential of thePanchayati Raj institutions for harnessing the peoples energies for nation building activities.Simultaneously, we must also fully exploit the creative potential offered by voluntaryorganisations engaged in development work. Animesh Kumar’s Economics Assignment | Amity Law School, Lucknow 23
  • 28. Five Year Plans in India BRIEF STUDIESPlanning in our country is an instrument for achieving the nations basic goals and objectives.It was the dream of Mahatma Gandhi to wipe the tears from the eyes of each and everyindividual in our country. We can be legitimately proud of the phenomenal progress made bythe country since we embarked on the path ot planned development. However, there are stilltoo many people with tears in their eyes. Our task is thus clear. We have to wage a still moreintensive campaign against poverty. Recent experience suggests that by harnessing the forcesof modern science and technology, it is possible, as never before, to ensure that chronicpoverty need not be the inevitable lot of the majority of humankind. Poverty eradication is anattainable goal. However, it must not be assumed that development is like going to a freedinner party. The standard of living is a matter of high productivity, and there are no shortcuts to it. Hard decisions will be necessary to mobilise the needed resources and to sustain thetempo of modernisation and social development. Simultaneously, we must evolve newstructures, new attitudes, a new moral code, a new work ethic, a sort of cultural revolution, ifyou wish, which lays emphasis on dedication, commitment to national goals and pursuit ofexcellence so that we can make the best possible use of scarce national resources.The task ahead is not easy. We face many challenges and uncertainties. But our country has atremendous built-in resilience and strength. It has weathered many a storm in the past. Thenation is firm in its resolve to work out an autonomous path of development suited to thegenius and needs of our people. The Seventh Plan represents a massive national endeavour tobuild a new India free from the fear of want and exploitation. Its objectives, strategies andprogrammes are designed to assist in the realisation of the nations cherished goals. The Planis an expression of the collective will of the Indian people to move forward at a still fasterpace on the road to progress, prosperity, social justice and self-reliance.EIGHTH FIVE YEAR PLAN (1992-97)The Eighth Plan proposed a growth rate of 5.6 per cent per annum on an average during theplan period. The Eighth Plan focused on (i) clear prioritisation of sectors/projects forinvestment in order to facilitate implementation of the policy initiatives taken in the areas offiscal, trade and industrial sectors and human development.Objectives:i) Generation of adequate employment of achieve near full employment level by the turn ofthe century.ii) Containment of population growth through people‟s active co-operation and an effectivescheme of incentives and disincentives.iii) Universalisation of elementary education and complete eradication of illiteracy among thepeople in the age group of 15 to 35 years.The launching of the First Five Year Plan in April 1951 initiated a process of developmentaimed not only at raising the standard of living of the people but also opening out to themnew opportunities for a richer and more varied life. This was sought to be achieved byplanning for growth, modernisation, self-reliance and social justice. We have come a longway over the past forty years. A largely agrarian feudal economy at the time of independencehas been transformed into one based on a well developed and a highly diversifiedinfrastructure with immense potential for industrialisation. Income and consumption levelshave significantly risen. Consumption basket has diversified. Incidence of poverty has visiblydeclined. The average life expectancy has gone up. The death and the birth rates havedeclined. Literacy has improved and the educational base has widened. Animesh Kumar’s Economics Assignment | Amity Law School, Lucknow 24
  • 29. Five Year Plans in India BRIEF STUDIESWe now have a robust and resilient agricultural economy with near self-sufficiency in foodproduction. We have built a diversified industrial and service structure. We have a large poolof skilled manpower and ample entrepreneurial capabilities. The growth performance of atleast a decade preceding the Eighth Plan has been impressive. We have the wherewithal forfurther progress. Hence, the task before the Eighth Plan is to use these advantages for furthergrowth and lay strong foundations for even higher growth in the future.The economy has passed through difficult circumstances during the last couple of years. Thegrowing fiscal gap and the sudden depletion of foreign exchange resources created a situationwhich put severe strains on the economic system leading to drastic import curbs, high rate ofinflation and recession in industry. This in turn has led to the projection of very low growth in1991-92, which happens to be the base year of the Eighth Plan. Corrective measures havealready been initiated by way of planned fiscal reforms and policy changes. The Eighth Planwill thus have to reorient some of the development paradigms, since its objective is to lay asound foundation for higher growth and to achieve the most significant goals, namely,improvement in the levels of living, health and education of the people, full employment,elimination of poverty and a planned growth in population.The public sector was assigned a place of commanding height in the Indian economic scene.It was expected to create the basic infra-structure for development, be a pace setter in takingrisk and nurturing entrepreneurship, take care of the social needs, help the poor and the weakand create an environment of equal opportunities and social justice. The public sector hasexpanded considerably. Its expanse and its influence may not be measured just by the size ofits contribution to GDP or its share in investment, but by the fact that it touches every aspectof life. In the process, it has made the people take the public sector for granted, oblivious ofcertain crucial factors like efficiency, productivity and competitive ability. This has erodedthe public sectors own sense of responsibility and initiative. Many of the public sectorenterprises have turned into slow moving, inefficient giants. A certain amount ofcomplacency has set in which is not conducive to growth. While there are several social andinfrastructural sectors where only the public sector can deliver the goods, it has to be madeefficient and surplus generating. It must also give up activities which are not essential to itsrole. The Eighth Plan has to undertake this task of reorientation.The Eighth Plan will have to undertake re- examination and reorientation of the role of theGovernment as well as the process of planning. It will have to work out the ways and meansof involving people in the developmental task and social evolution. It will have to strengthenthe peoples participatory institutions. In keeping with these objectives, the process ofplanning will have to be re- oriented so as to make planning largely indicative. This, in turn,will imply a somewhat changed fole for the Planning Commission. The PlanningCommission will have to concentrate on anticipating future trends and evolve integratedstrategies for achieving the highest possible level of development of the country in keepingwith the internationally competitive standards. In place of the resource allocation role whichvery largely characterised the working of the Planning Commission in the past, it will have toconcentrate on optimal utilization of the limited available resources. This will call for thecreation of a culture of high productivity and cost efficiency in the Government both at theCentre and the States and the Planning Commission will have to play the role of a changeagent. At the same time, it must provide the broad blue-print for achieving the essential socialand economic objectives and indicate the directions in which the economy and the varioussub-sectors should be moving. It should pin-point areas in which advance action should betaken to avoid serious bottlenecks. Planning must thus proceed from a vision of the society to Animesh Kumar’s Economics Assignment | Amity Law School, Lucknow 25
  • 30. Five Year Plans in India BRIEF STUDIESbe created, and through an appropriate mix of policy instruments influence the decisions ofthe various economic agencies to achieve the desired goals. In this sense, indicative planningis a more difficult exercise.The Eighth Plan is being launched at a time which marks a turning point in both internationaland domestic economic environment. All over the world centralised economies aredisintegrating. On the other hand, economies of several regions are getting integrated under acommon philosophy of growth, guided by the market forces and liberal policies. Theemphasis is on autonomy and efficiency induced by competition. We cannot remainuntouched by these trends. We have to draw lessons from the development experience ofother nations during the last four decades. Development economics was largely theoreticalwhen India started her planning in 1951. It has now acquired considerable empiricalknowledge based on the rich applied experience of many nations, among whom there aresuccess stories as also failures. Indian planning needs to draw on some of these lessons. Italso needs to be guided by its own experience, gained during the last four decades. Ifplanning has to retain its relevance, it must be willing to make appropriate mid-coursecorrections and adjustments. In that process, it may be necessary to shed off some of thepractices and precepts of the past which have outlived their utility and to adopt new practicesand precepts, in the light of the experience gained by us and by other nations.NINTH FIVE-YEAR PLAN (1997-2002)It began on April 1, 1997. The Ninth Plan was the first concrete attempt to translate theprogramme of economic reforms and the New Economic Policy within the framework of anindicative Plan. The Approach Paper to the Ninth Plan (1997-2002) was approved by theN.D.C. on 16th January, 1997.Objectives:i.) Priority to agriculture and rural developmentii.) Accelerating growth rate of economyiii.) Food and nutritional security for alliv.) Containing growth rate of populationv.) Empowerment of women and socially disadvantaged groups such as SC/ST, backwardclasses and Promoting and developing participatory institutions like “Panchayati Raj” institutions,co-operatives and self-help groups.The Ninth Five Year Plan, launched in the 50th year of India‟s Independence, will take thecountry into the new millennium. Much has happened in the fifty years since independence.The people of India have conclusively demonstrated their ability to forge a nation uniteddespite its diversity, and their commitment to pursue development within the framework of afunctioning, vibrant and highly pluralistic democracy. In this process democratic institutionshave put down firm roots and flourished and development has also taken place on a widefront. As the millennium draws to a close, the time has come to redouble our efforts atdevelopment, especially in the social and economic spheres, so that the country will realise itsfull economic potential and the poorest and the weakest will be able to shape their destiny inan unfettered manner. This will require not only higher rates of growth of output andemployment, but also a special emphasis on all-round human development, with stress onsocial sectors and a thrust on eradication of poverty. Animesh Kumar’s Economics Assignment | Amity Law School, Lucknow 26
  • 31. Five Year Plans in India BRIEF STUDIESThe Approach Paper to the Ninth Five Year Plan, adopted by the National DevelopmentCouncil, had accorded priority to agriculture and rural development with a view to generatingadequate productive employment and eradication of poverty; accelerating the growth rate ofthe economy with stable prices; ensuring food and nutritional security for all, particularly thevulnerable sections of society; providing the basic minimum services of safe drinking water,primary health care facilities, universal primary education, shelter, and connectivity to all in atime bound manner; containing the growth rate of population; ensuring environmentalsustainability of the development process through social mobilization and participation ofpeople at all levels; empowerment of women and socially disadvantaged groups such asScheduled Caste, Scheduled Tribes and Other Backward Classes and Minorities as agents ofsocio-economic change and development; promoting and developing people‟s participatorybodies like Panchayati Raj institutions, co-operatives and self-help groups; and strengtheningefforts to build self-reliance. These very priorities constitute the objectives of the Ninth Plan.Some specific areas from within the broad objectives of the Plan as laid down by the NDChave been selected for special focus. For these areas, Special Action Plans (SAPs) have beenevolved in order to provide actionable, time-bound targets with adequate resources. Broadly,the SAPs cover specific aspects of social and physical infrastructure, agriculture, informationtechnology and water policy.The Ninth Plan is based on a careful stock taking of the strength of our past developmentstrategy as well as its weakness, and seeks to provide appropriate direction and balance to thesocio-economic development of the country. The principal task of the Ninth Plan will be tousher in a new era of growth with social justice and participation in which not only theGovernments at the Centre and the States, but the people at large, particularly the poor, canbecome effective instruments of a participatory planning process. In such a process, theparticipation of public and private sectors and all tiers of government will be vital forensuring growth with justice and equity.TENTH FIVE YEAR PLAN (2002-07)On December 21, 2002, the Tenth Five Year Plan was approved by the NationalDevelopment Council (NDC). The Plan has further developed the NDC mandated objectives,of doubling per capita income in 10 years, and achieving a growth rate of 8% of GDP perannum. An 8% growth rate is considered necessary for achieving the social and economictargets of Tenth Plan Keeping in mind decadal growth performance and the steadyacceleration that the country has recorded in growth over the past two decades, it is arealisable target. The plan has a number of new features, such as, for the first time(a) It recognises the rapid growth of labour force over the next decade(b) Addresses the issue of poverty and the unacceptably low levels of social indicators(c) Adopted a “differential development strategy” to equate national targets into balancedregional development as there is vast difference in the potentials and constraints of each state(d) Recognises that the governance is perhaps one of the most important factors for ensuringrealisation of the Plan(e) Identifies measures to improve efficiency, unleash entrepreneurial energy, and promoterapid and sustainable growth(f) Proposes major reforms for agricultural sector making „agriculture‟ the core element ofthe Plan.Since economic growth is not the only objective, the Plan aims at harnessing the benefits ofgrowth to improve the quality of life of the people by setting the following key targets: Animesh Kumar’s Economics Assignment | Amity Law School, Lucknow 27
  • 32. Five Year Plans in India BRIEF STUDIES1. All children to be in school by 2003 and all children to complete five years of schooling by20072. Reduction in poverty ratio from 26% to 21%3. Growth in gainful employment to, at least, keep pace with addition to the labour force4. Decadal population growth to reduce from 21.3% in 1991-2001 to 16.2% by 2001-115. Reducing gender gaps in literacy and wage rates by 50%6. Literacy rate to increase from 65% in 1999-2000 to 75% in 20017. Infant Mortality Rate (IMR) to be reduced from 72 in 1999-2000, to 45 in 20078. .Maternal Mortality Rate (MMR) to be reduced from 4 per 1000 in 1999-2000 to 2 per1000 in 20079. Providing portable drinking water in all villages10. Cleaning of major polluted river stretches11. Increase in forest/tree cover from 19% in 1999-2000 to 25% in 2007The Plan also set out to increase the growth rates of disposable income of urban residents andthe net income of rural residents to five percent each. In addition, objectives were set toincrease housing floor space per urban resident to 22 sq m by 2005, and to install 40 percentof all households in China with cable TV.Another key objective was to improve medical and health services in both urban and ruralareas, as was enriching peoples cultural lives, and enhancing social morality and security.ELEVENTH FIVE YEAR PLAN (2007-2012)The United Progressive Alliance government issued a paper in the eleventh plan titled“Towards faster and more inclusive growth.” The eleventh plan has the following objectives: 1. 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. 2. 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 3. Health  Reduce infant mortality rate to 28 and maternal mortality ratio to 1 per 1000 live births  Reduce Total Fertility Rate to 2.1 Animesh Kumar’s Economics Assignment | Amity Law School, Lucknow 28
  • 33. Five Year Plans in India BRIEF STUDIES  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 4. 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 5. 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 6. 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.Since the constitution of our democratic country has been formed, the frame-workers havebeen drafting out five-year plans to chalk out the development and progress to be brought inthe country as according to the conditions prevailing then. With the 60 years of independencecompleting its way, the National Development Council (NDC) is presenting the 11 th FiveYear Plan, 2007-2012. Recently on 9thNovember 2007, Planning Commission cleared thedraft of the plan.Expected to look after every sector of the nation and improve the conditions, let‟s see how farthey succeed. “What actually do they hold for us??” With the observed trend in productionand consumption, the problem of subsidies in food, fertilizers and petroleum is expected tohit hard the economy and the prosaic life of people. A sum of Rs1, 00,000 crores is likely tobe spent on the three commodities in the current financial year itself. But the thing is, will itbe really effective in bringing out relief for all, despite the tremendous increase in populationand demand patterns along with price-hike that will prevent it from providing any benefit.They also aim at raising the average Gross Domestic Product (GDP) rate from 7.6% to 9%.The planning commission has planned to reduce the poverty by 10% and generate 7crore newemployment opportunities and also to illuminate the lives of village people. All thesepromises look nice on paper work and estimation. No doubt, the government has beenworking with great fervour to improve the conditions, but the billion-plus nation with 64.8%literacy provides recession to the idea. Will it serve the population that is just above povertyline or bring up those below poverty line? Due to lack of educational amenities anttechnological know-how, agriculture has become the livelihood for 58.2% of the totalworking force and contributes 24% to GDP. So the 7crore employment opportunities are forthose who are already employed or in reserve for those who don‟t have the cult to deal with Animesh Kumar’s Economics Assignment | Amity Law School, Lucknow 29
  • 34. Five Year Plans in India BRIEF STUDIESit? With all the statistics documented and ignoring the basic conditions of the population, willthe 11th Five Year Plan serve the purpose of working for marginalized sections of society?They have set the target of industrial and services sector growth to 9-11% and investment rateto 36.7%. But at the elementary level, there is so much the need for advancement, that thesefigures seem to be meant just for the people who happen to read all this. Education sector isexpected to be the BIG beneficiary of the plan by allocating 19.36% of Gross BudgetarySupport (GBS) as compared to 7.68% in the previous plan along with the investment of Rs2,75,000crores and improving the education at primary, secondary and higher level. All of theabove sounds very fascinating, but who is going to mention about 27% of the OBCreservation that out-numbers the unreserved majority. India being a developing nation, thesituations need to be delicately handled. Reduction in unequal distribution of income andwealth, providing additional employment, adopting measures to boost agriculture andincrease in national income will definitely do a lot. All Five Year Plans are designed, draftedand publicly released. But if they happen to is so much promising, after the term why don‟tthey come out with a report of the accomplishments and shortcomings? Or is it so that theyhave the aims but scant means to accomplish them??INDIA’S 12TH FIVE YEAR PLAN TO FOCUS ON ‘INCLUSIVEGROWTH’ As India‟s government prepares to submit its approach paper for its 12th five-year plan (aplan which covers years 2012 to 2017), the Planning Commission‟s focus on instilling“inclusive growth” is making headway. The plan is expected to be one that encourages thedevelopment of India‟s agriculture, education, health and social welfare through governmentspending. It is also expected to create employment through developing India‟s manufacturingsector and move the nation higher up the value chain. Prime Minister Manmohan Singh,however, warned that maintaining fiscal discipline is important as well.The commission will likely strive to enact policies that will achieve somewhere around a 10percent growth rate in factories and a 4 percent growth rate in farm produce, though PrimeMinister Singh has asked the plan to set the nation‟s growth rate firmly at 9 percent to 9.5percent.Come May, a view into the implementation of these goals should be apparent. A question thatIndia‟s government will have to grapple with, much like that of any emerging market, iswhether to continue to focus on GDP growth in the face of soaring food prices and economy-wide inflation.An important aspect of generating “inclusive growth” is shifting the target of government aidto rural areas. Typically, large projects such as power generation, roads whereby freight cantravel, and airports receive the lion‟s share of government subsidies, while rural infrastructurereceives comparatively little.A recent op-ed piece in the Wall Street Journal by Saurabh Tripathi, a partner with BostonConsulting Group, echoed these sentiments.“Rural infrastructure, which serves 70 percent of the population, doesn‟t get the attention itdeserves. As the Planning Commission sets out to draft the country‟s planned investments for Animesh Kumar’s Economics Assignment | Amity Law School, Lucknow 30
  • 35. Five Year Plans in India BRIEF STUDIESthe next five years, it is important to take note of this gap, and the innovative solutionsneeded to fill it,” Tripathi wrote.As indicated from the planning commission‟s presentation to the prime minister on April 21,the quantitative metrics known thus far in the early stage of the five-year plan are: A target of GDP growth in the 9 percent to 9.5 percent range An increase in literacy rates to 100 percent between the plan‟s period from 2012 to 2017 An increased expenditure on health from 1.3 percent to 2.0 percent of GDPIn a boon for industry, the planning commission indicated that it aims to have industry andmanufacturing-related activities grow by 11 percent over the next five years, contrasted to 8percent over the previous 11th five-year plan. It also aims to undertake somewhat vaguelydefined, but certainly well-intentioned, structural and regulatory reforms to facilitateinvestment.The presentation highlighted the planning commission‟s views that commercial energydemand is expected to increase by 7 percent per year over the next five years.To address that increase in demand, the planning commission recommended that all methodsof current energy production and distribution be developed, from coal to nuclear energy tosolar and wind, and proposed that existing taxes on electricity should not be raised.Interestingly, the Planning Commission envisioned an expansive role for Indian SOE CoalIndia:“Coal India must become a coal supplier and not just a mining company. Should plan toimport coal to meet coal demands? This requires blending of imported and domestic coal assupplied by Coal India.”All told, in its early stages, the 12th five-year plan promises a lot for rural development andgrowth. In that sense, it is similar to China‟s latest iteration of its five-year plan, which seeksto improve the lot of rural Chinese people‟s by increasing urbanization and industrial effortsin central and western China. But, by contrast, while the Chinese government seems to becontinuing with nation-wide industrialization efforts, the Indian government may beattempting to promote a policy of reverse migration by making rural living more attractivewith some access to modern amenities, but hopefully without the accompanying chaos thatgoes with it.CONCLUSIONWith an overview of the Indian Five Year Plan we can say that they have undoubtedly beentools in the boosting and the shaping of our economy. We have been able to meet many of theobjectives laid down by the plans. These plans have succeeded in building the industrial andeconomic infrastructure of the country. The growth of the Private Sector can also beattributed to these plans. Animesh Kumar’s Economics Assignment | Amity Law School, Lucknow 31
  • 36. Five Year Plans in India BRIEF STUDIESThese plans have helped us in building ourselves, but, they are not without their limitationsand bottlenecks. The major setbacks are red tapism, bureaucratic delays, unstableGovernments, misallocation of resources to non priority areas. With these on going hazards,our economy faces a slowdown and thus, the growth rate is now less than 5%. The coresectors are being ignored by planners in the interest of their short term gains.While making such plans we must remember to project a well balanced plan so thatdevelopment of infrastructure and improvement of standard of living of the messes go handin hand. So, in brief, we can say that such plans form a very good and efficient system butsuch planning should be balanced and must be worked in a systematic way. Goals must be setfor all sections of our society and we must ensure that the implementation of these set goalsare followed to the last word and it must be seen that the goals must see that all sections ofthe society grow along simultaneously.However, down the line, there has been something wrong, somewhere and that is why as wesee the economic scenario in India there is a considerable gaping gap between the haves andthe Have Notes. This in itself indicates that there has been something intrinsically wrong inour economic policies which have made the rich become richer and the poor become poorer.This not the purpose of any develops in economy. The years financial programming must seethat the benefits accrue to the poorest of the poor. We have had slogans of “Garibi Hatao”but, in practice they were just eye catching slogans, not apparently meant to be followed bysuccessive Governments of the last fifty decades. If this slogan had been earnestly workedupon, be sure we would not find this poverty in India, and India trailing behind in the list ofthird world powers. Animesh Kumar’s Economics Assignment | Amity Law School, Lucknow 32