Module 5. Programme planning

Lesson 16

FIVE-YEAR PLANS IN INDIA

16.1  Introduction

Plans need not be made for nuts and bolts, but are essential to prevent future bottlenecks. If enough cushions are provided for the future, the economy will grow smoother and faster.  The importance of plan is that when you design it before you implement it; you have a better chance of eliminating design flaws from the beginning. If you start out coding and later on figure out you have a design flaw, it is extremely painful to go back and re-implement everything. Certain software engineering experts have estimated that it can cost up to 10x more (time and money) to fix a design problem in the later stages of software development than in the early stages.

16.2  Five-Year Plans

The five-year plan in India is framed, executed and monitored by the Planning Commission of India, which is headed by the Prime Minister. Currently, India is in its 11^th five-year plan. A glimpse of the five-year plans of our country, along with the respective objectives in each plan, is as under:

16.2.1  1^st Plan (1951-56)

· The first five-year plan was presented by Jawaharlal Nehru in 1951. The First Five-Year Plan was initiated at the end of the turmoil of partition of the country. It gave importance to agriculture, irrigation and power projects to decrease the countries reliance on food grain imports, resolve the food crisis and ease the raw material problem especially in jute and cotton. Nearly 45% of the resources were designated for agriculture, while industry got a modest 4.9%.The focus was to maximize the output from agriculture, which would then provide the impetus for industrial growth.

· Though the first plan was formulated hurriedly, it succeeded in fulfilling the targets. Agriculture production increased dramatically, national income went up by 18%, per capita income by 11% and per capita consumption by 9%.

16.2.2  2^nd Plan (1956-61)

The second five-year plan was initiated in a climate of economic prosperity, industry gained in prominence. Agriculture programmes were formulated to meet the raw material needs of industry, besides covering the food needs of the increasing population. The Industrial Policy of 1956 was socialistic in nature. The plan aimed at 25% increase in national income.

• In comparison to first five-year plan, the second five-year plan was a moderate success. Unfavorable monsoon in 1957-58 and 1959-60 impacted agricultural production and also the Suez crisis blocked International Trading increasing commodity prices.

16.2.3  3^rd Plan (1961-66)

• While formulating the third plan, it was realized that agriculture production was the destabilizing factor in economic growth. Hence agriculture was given due importance. Also allotment for power sector was increased to 14.6% of the total disbursement.
• Emphasis was on becoming self reliant in agriculture and industry. The objective of import substitution was seen as sacrosanct. In order to prevent monopolies and to promote economic developments in backward areas, unfeasible manufacturing units were augmented with subsidies. The plan aimed to increase national income by 30% and agriculture production by 30%.
• The wars with China in 1962 and Pakistan in1965 as well as bad monsoon in almost all the years, meant the actual performance was way off the target.

16.2.4  Annual plans (1966-1969)

Due to failure of third five year plan Government of India did not implemented fourth five year plan, but implemented 3 Annual plans by replacing five year plan. This period (April 1, 1966 to March 31, 1969) known as plan holiday in Indian planning period. The main objective of Annual Plans are:

· To remove the strains in the economy arising from many unforeseen events during the third plan.

· To secure a feasible growth rate without generating inflationary pressures in the economy.

· To have fuller utilization of the infrastructure already created during previous plan periods.

Annual plans given more importance to irrigation and Agriculture sector and to control inflation increasing agricultural production

16.2.5  4^th plan (1969-74)

• At the time of initiating the fourth plan it was realized that GDP growth and rapid growth of capital accumulation alone would not help improve standard of living or to become economically self-reliant. Importance was given to providing benefits to the marginalized section of the society through employment and education.
• Disbursement to agricultural sector was increased to 23.3% .Family planning programme was given a big stimulus.
• The achievements of the fourth plan were below targets. Agriculture growth was just at 2.8% and green revolution did not perform as expected. Industry too grew at 3.9%.

16.2.6  5^th plan (1974-79)

• As a result of inflationary pressure faced during the fourth plan, the fifth plan focused on checking inflation. Several new economic and non-economic variables such as nutritional requirements, health, family planning etc were incorporated in the planning process. Investment mix was also formulated based on demand estimated for final domestic consumption.
• Industry got the highest allocation of 24.3% and the plan forecasted a growth rate of 5.5% in national income.
• The fifth plan was discontinued by the new Janata government in the fourth year itself.

16.2.7  Annual plan (1978-1980)

The Janata Government ended the fifth five year plan one year earlier to its term i.e. only within four years span (1974-78) and introduced a new plan since April 1, 1978. This plan was named as the Rolling plan. Rolling plan period was 1978-1980. In the first phase of this rolling plan, the sixth plan was initially started for 5 years (1978-83) on April 1, 1978. In 1980, the sixth plan (rolling plan) prepared by the Janata Government was abandoned by the congress Government and a new sixth plan was introduced for the period 1980-85.

16.2.8  6^th plan (1980-85)

• The Janata government moved away from GNP approach to development, instead sought to achieve higher production targets with an aim to provide employment opportunities to the marginalized section of the society. But the plan lacked the political will.
• The Congress government on taking office in 1980 formulated a new plan with a strategy to lay equal focus on infrastructure and agriculture.
• The plan achieved a growth of 6% pa.

16.2.9  7^th Plan (1985-90)

The first three years of the seventh plan saw severe drought conditions, despite which the food grain production rose by 3.2%. Special programmes like Jawahar Rozgar Yojana were introduced. Sectors like welfare, education, health, family planning, employment etc got a larger disbursement.

16.2.10  Annual plan (1990-1992)

This period was of political instability hence, no five year plan was implemented during the period; only annual plans were made for the period between 1990 and 1992. The country faced severe balance of payment crisis.

16.2.11  8^th plan (1992-97)

• The eighth plan was initiated just after a severe balance of payment crisis, which was intensified by the Gulf war in 1990. Several structural modification policies were brought in to put the country on a path of high growth rate. They were devaluation of rupees, dismantling of license prerequisite and decrease trade barriers.
• The plan targeted an annual growth rate of 5.6% in GDP and at the same time keeping inflation under control.

16.2.12  9^th  plan (1997-2002)

It was observed in the eighth plan that, even though the economy performed well, the gains did not percolate to the weaker sections of the society. The ninth plan therefore laid greater impetus on increasing agricultural and rural incomes and alleviates the conditions of the marginal farmers and land less labourers.

16.2.13  10^th  plan (2002-2007)

• The aim of the tenth plan was to make the Indian economy the fastest growing economy in the world, with a growth target of 10%.It wanted to bring in investor friendly market reforms and create a friendly environment for growth. It sought active participation by the private sector and increased FDI's in the financial sector.
• Emphasis was laid on corporate transparency and improving the infrastructure.
• It sought to reduce poverty ratio by 5 percentage points by 2007and increase in literacy rates to 75 per cent by the end of the plan.
• Increase in forest and tree cover to 25 per cent by 2007 and all villages to have sustained access to potable drinking water.

16.2.14  11^th plan (2007-2012)

• The eleventh plan has the objective to increase GDP growth to 10%.
• Increase agricultural GDP growth to 4% per year to ensure a wider spread of benefits. Create 70 million new work opportunities. Augment minimum standards of education in primary school.
• Reduce infant mortality rate to 28 and malnutrition among children of age group 0-3 to half of its present level. Ensure electricity connection to all villages and increase forest and tree cover by five percentage points.