PLANING THE ECONOMIC CONDITIONS

1. 17UAEET605

2. Unit - II
 Planning the Economic Conditions

4.  Economic planning is the making of major economic
decision, what and how much is to be produced, and
to whom it is to be allocated by the conscious decision
of a determinate authority, on the basis of a
comprehensive survey of the economic system as a
whole.

5. Planning Commission
 The Planning Commission was an institution in
the Government of India, which formulates
India's Five-Year Plans.
 It was established on 15 March 1950, with Prime
Minister Jawaharlal Nehru as the Chairman.

6. Planning the Economic Conditions
 i. Well-Defined Aims and Objectives:
 Every plan must be associated with certain well
defined aims and objectives. In democratic planning
there must be a large measure of agreement in the
community with regard to these aims and objectives.

7.  Emerge Out of the Conscious Decisions:
 Planning must emerge out of the conscious decision of
a determinate authority.

8.  Purposive Direction:
 In a federal structure, where there is the diffusion of
power and responsibility, there must be an overall
unity of policy. The purposive direction, which
planning involves, must come from the Central
Government.

9.  Iv) Carefully Fix the Targets:
 The planning authority must carefully fix the targets
without illusions as to what is possible. If the targets are
fanciful, the whole plan will be fanciful. And this is as true
whether the targets are too large or too small. Planners,
who promise more than they can perform, throw
everything out of gear, so that the economy might use as
well not be planned at all. Over-fulfilment is just as much a
sign of bad planning as is under-fulfilment.


10.  v. Flexibility:
 There should be some measure of flexibility in
planning, which means that the plans can be revised
and rephrased if circumstances demand it.

11.  vi. Appropriate Duration:
 Planning very far ahead is not desirable. A general five-
year plan for the whole economy is no more than a
game, because it is not possible to foresee what will
happen to productivity in five years.


12.  vii. Scrupulously Earnest and Determined:
 Once the targets are carefully fixed, the government
must be scrupulously earnest and determined to
achieve the targets.

13.  viii. Adoption of Judicious Price Policy:
 In order that the objectives and targets, laid down in
the plan, might be achieved, there must be a judicious
price policy, which will not only secure an allocation of
the resources for making the fulfillment of the targets
possible, but will also maintain a certain balance
between the various classes of the community.

14.  ix. Enthusiasm:
 In a democracy the government should make the
objectives and targets known to the people and make
the final acceptance or rejection of the plan,
dependent on the will of Parliament. When the plan
emerges in its final shape, the government must try to
enlist the active cooperation of the citizens in
implementing the plan.

15.  x. Efficient Administrative System:
 Finally, there must be an administrative system with
efficiency and unimpeachable integrity, capable of
discharging its responsibilities in connection with the
execution of the plan.

16. List of Five Year Plans in India
 First Five Year Plan – 1951 to 1956
 Second Five Year Plan - 1956 to 1961
 Third Five Year Plan - 1961 to 1966
 Plan Holidays - 1966 to 1969
 Fourth Five Year Plan - 1969 to 1974
 Fifth Five Year Plan - 1974 to 1978
 Rolling Plan - 1978 to 1980
 Sixth Five Year Plan - 1980 to 1985

17.  Seventh Five Year Plan - 1985 to 1990
 Annual Plans - 1990-91& 1991-92
 Eighth Five Year Plan - 1992 to 1997
 Ninth Five Year Plan - 1997 to 2002
 Tenth Five Year Plan - 2002 to 2007
 Eleventh Five Year Plan – 2007 to 2012
 Twelfth Five Year Plan - 2012 to 2017

18. First Five Year Plan – 1951 to 1956
 under the leadership of Jawaharlal Nehru.
 focus was on the agricultural development of the
country.
 successful and achieved a growth rate of 3.6% (more
than its target of 2.1%).
 At the end of this plan, five IITs were set up in the
country.

19. Second Five Year Plan - 1956 to
1961
 under the leadership of Jawaharlal Nehru.
 focus was on the industrial development of the
country.
 This plan lags behind its target growth rate of 4.5%
and achieved a growth rate of 4.27%.

20. Third Five Year Plan - 1961 to
1966
 under the leadership of Jawaharlal Nehru.
 The main target of this plan was to make the economy
independent. The stress was laid on agriculture and the
improvement in the production of wheat.
 During the execution of this plan, India was engaged in two
wars: (1) the Sino-India war of 1962 and (2) the Indo-
Pakistani war of 1965. These wars exposed the weakness in
our economy and shifted the focus to the defense industry,
the Indian Army, and the stabilization of the price (India
witnessed inflation).
 The plan was a flop due to wars and drought. The target
growth was 5.6% while the achieved growth was 2.4%.

21. Plan Holidays - 1966 to 1969
 Due to the failure of the previous plan, the government
announced three annual plans called Plan Holidays
from 1966 to 1969.
 During this plan, annual plans were made and equal
priority was given to agriculture its allied sectors and
the industry sector.
 In a bid to increase the exports in the country, the
government declared devaluation of the rupee.


22. Fourth Five Year Plan - 1969 to
1974
 Under the leadership of Indira Gandhi.
 There were two main objectives of this plan i.e. growth
with stability and progressive achievement of self-reliance.
 During this time, 14 major Indian banks were nationalized
and the Green Revolution was started. Indo-Pakistani War
of 1971 and the Bangladesh Liberation War took place.
 Implementation of Family Planning Programmes was
amongst major targets of the Plan
 This plan failed and could achieve a growth rate of 3.3%
only against the target of 5.7%.

23. Fifth Five Year Plan - 1974 to 1978
 This plan focussed on employment, justice, agricultural
production and defense.
 The Electricity Supply Act was amended in 1975, a Twenty-
point program was launched in 1975, the Minimum Needs
Programme (MNP) and the Indian National Highway
System was introduced.
 Overall this plan was successful which achieved a growth of
4.8% against the target of 4.4%.
 This plan was terminated in 1978 by the newly
elected Moraji Desai government.

24. Rolling Plan - 1978 to 1990
 Three plans were introduced under the Rolling plan: (1) For
the budget of the present year (2) this plan was for a fixed
number of years-- 3,4 or 5 (3) Perspective plan for long
terms-- 10, 15 or 20 years.
 The plan has several advantages as the targets could be
mended and projects, allocations, etc. were variable to the
country's economy. This means that if the targets can be
amended each year, it would be difficult to achieve the
targets and will result in destabilization in the Indian
economy.


25. Sixth Five Year Plan - 1980 to 1985
 Under the leadership of Indira Gandhi.
 The basic objective of this plan was economic
liberalization by eradicating poverty and achieving
technological self-reliance.
 It was based on investment Yojna, infrastructural
changing, and trend to the growth model.
 Its growth target was 5.2% but it achieved a 5.7%
growth.


26. Seventh Five Year Plan - 1985 to
1990
 Under the leadership of Rajiv Gandhi.
 The objectives of this plan include the establishment
of a self-sufficient economy, opportunities for
productive employment, and up-gradation of
technology.
 The Plan aimed at accelerating food grain production,
increasing employment opportunities & raising
productivity with a focus on ‘food, work & productivity
 For the first time, the private sector got priority
over the public sector.
 Its growth target was 5.0% but it achieved 6.01%.


27. Annual Plans - 1990-91& 1991-92
 Eighth Five Year Plan could not take place due to the
volatile political situation at the center.
 Two annual programmes were formed for the year
1990-91& 1991-92.


28. Eighth Five Year Plan - 1992 to
1997
 Under the leadership of P.V. Narasimha Rao.
 In this plan, the top priority was given to the development of
human resources i.e. employment, education, and public health.
 During this plan, Narasimha Rao Govt. launched the New
Economic Policy of India.
 Some of the main economic outcomes during the eighth plan
period were rapid economic growth (highest annual growth rate
so far – 6.8 %), high growth of agriculture and allied sector, and
manufacturing sector, growth in exports and imports,
improvement in trade and current account deficit. A high growth
rate was achieved even though the share of the public sector in
total investment had declined considerably to about 34 %
 This plan was successful and got an annual growth rate of 6.8%
against the target of 5.6%.

29. Ninth Five Year Plan - 1997 to 2002
 Under the leadership of Atal Bihari Vajpayee.
 The main focus of this plan was “Growth with Social
Justice and Equality”.
 It was launched in the 50th year of independence of
India.
 This plan failed to achieve the growth target of 6.5%
and achieved a growth rate of 5.6%.

30. Tenth Five Year Plan - 2002 to
2007
 Under the leadership of Atal Bihari Vajpayee and
Manmohan Singh.
 This plan aimed to double the Per Capita Income of
India in the next 10 years.
 It also aimed to reduce the poverty ratio of 15% by
2012.
 Its growth target was 8.0% but it achieved only 7.6%.

31. Eleventh Five Year Plan – 2007 to
2012
 under the leadership of Manmohan Singh.
 It was prepared by the C. Rangarajan.
 Its main theme was “rapid and more inclusive
growth”.
 It achieved a growth rate of 8% against a target of 9%
growth.

32. Twelfth Five Year Plan - 2012 to
2017
 Under the leadership of Manmohan Singh.
 Its main theme is “Faster, More Inclusive
and Sustainable Growth”.
 Its growth rate target was 8%.

34. Planning the economic conditions
 the present state of affairs in the overall economy of a
country
 conditions evolve over time through various business
and economic cycles.
 Economies cycle through periods of contraction or
expansion – the former referring to an economy that is
weakening, and the latter referring to an economy that
is strengthening.


35.  Economic conditions refer to the state of an economy
that determine the scale of production and
consumption activities that relate to determining how
resources are allocated.
 all economies are based on market-based
economic principles, where the laws of supply and
demand determine prices.

36.  forces that influence the economy are monetary and
fiscal policy, global economic conditions,
unemployment levels, trade balances,
productivity, exchange rates, inflation, and interest.

37.  Economic conditions are monitored by many
stakeholders, government entities, corporations,
individuals, investors, etc.
 Various government entities systematically release the
economic data on either a weekly, monthly, quarterly,
or annual basis.

38.  Examples of economic indicators are:
 Balance of Trade
 Consumer Price Index (CPI)
 Corporate Earnings
 Gross Domestic Product (GDP)
 Interest Rates
 Unemployment Rate


39. 1. Balance of Trade (BOT)
 trade balance (visible goods)
 வர்த்தக சமநிலை
 the difference between the monetary value of a country’s
imports and exports over a given time period.
 important component in determining a country’s current
account (services) (Receipt of services – Payment for
services) – shipping, insurance, travel and tourism, transfer
of interest, dividend payments.
 Favourable Trade – Exports > Imports
 Unfavourable Trade – Imports > Exports
 Current a/c Position = BOT + Receipt of services – Payment
for services

40.  BOP – Capital transactions – purchase of assets, credit
loans, investments.
 BOP = Current a/c position + capital receipts – capital
payments.

41. 2. Consumer price Index
 நுகர்வவோர் விலை குறியீட்டு எண
்
 index measuring retail inflation in the economy by
collecting the change in prices of most common goods
and services used by consumers.
 calculated for a fixed list of items including food,
housing, apparel, transportation, electronics, medical
care, education,
 CPI = (Cost of basket divided by Cost of basket in the
base year) multiplied by 100

42. 3. Corporate Earnings
 economic indicators which show the earnings of
corporations in an observed time period.

43. 4. GDP
 Gross Domestic Product
 standard measure of a country’s economic health
 standard of living
 measured at current market price levels

44.  இந்தியோவிை் நோன் கு முலைகளிை் ஜிடிபி
கணக்கிடப்படுகிைது.
 1) கோரணி விலைலயப் பபோறுத்து (At factor cost)
- பபோருளோதோர நடவடிக்லககலளப் பபோறுத்து
 2) சந்லத விலைலயப் பபோறுத்து (At market price)
- பசைவுகலளப் பபோறுத்து
 3) பபயரளவிைோன ஜிடிபி (Nominal GDP) - நடப்பு
சந்லத விலைலயப் பபோறுத்து
 4) உண
் லமயோன ஜிடிபி (Real GDP)-
பணவீக்கத்லதப் பபோறுத்து

45.  8 துலைகள் ஜிடிபி கணக்கிட கருத்திை்
பகோள்ளபடுகின் ைன.
 விவசோயம், வனம் மை்றும் மீன்வளத்துலை சுரங்கம்
மை்றும் குவோரிகள் உை்பத்தித் துலை மின்சோரம்,
எரிவோயு, குடிநீ ர் விநிவயோகம் மை்றும் இதர
வசலவகள் கட்டுமோனம் வர்த்தகம், உணவுவிடுதி,
வபோக்குவரத்து, பதோலைத்பதோடர்பு மை்றும்
ஒளிபரப்புச் வசலவகள் நிதி, வீட்டுமலன,
பதோழிை்முலை வசலவகள் பபோது நிர்வோகம்,
போதுகோப்பு மை்றும் இதர வசலவகள்

46.  India's real GDP (Gross Domestic Product)is
estimated to contract by 7.7% in 2020-21, compared to
a growth rate of 4.2% in 2019-20

47. 5. Interest Rate
 Interest Rates
 Interest rates are the most significant indicators for
banks and other lenders. Banks profit from the
difference between the rates they pay depositors and
the rates that they charge to borrowers.

48. 6. Unemployment
 the percentage of unemployed workers in the total
labor force.
 India's unemployment rate stood at 7.8% Nov 2020