among some objectives. An achievement of one
6 per
particular objective can be at the expense of the
other objective. Therefore, the essential job of the
Planning Commission was to resolve the conflicts
among various objectives.
Objectives of Planning in India
at a Glance
1. Economic growth.
2. Reducing unemployment.
3. Reducing inequality of income.
4. Removal of poverty.
5. Establishment of a socialist society.
6. Modernisation of the economy.
7. Self-reliance.
9.4 MAJOR THRUSTS OF THE FIVE
YEAR PLANS IN INDIA
Since 1951, India has completed eleven Five-Year
Plans. In this section we shall give a broad
overview of the various Five-Year Plans.
First Five-Year Plan (1951-56): Indian economy
faced the problems of influx of refugees due to
the partition of the country, severe food shortage,
and sharp rise in prices at the time of the starting
of the First Plan. It also had to take care of
economic damage to the economy caused by
the Second World War and the partition of the
country. Therefore, while emphasising on the
all-round balanced development so as to bring
about an increase in national income and
improvement in the living standards of the
people, the First Plan also aimed at solving these
immediate problems. Accordingly, rehabilitation
of refugees, rapid agricultural development with
the objective of achieving food self-sufficiency,
and control of prices were emphasised as the
short-run or immediate objectives. Public sector
outlay was directed largely towards the creation
of infrastructure such as irrigation projects, power
supply, transport, etc. Private enterprises were
entrusted with the responsibility of developing
directly productive activities. The Plan set a
modest target of increasing national income at
arate of 2.1 per cent per annum.
The First Plan was a great success an achieving
its objectives, surpassing all expectations. National
120
income increased at a rate of 4.
per annum. cent
Agricultural sector showed remarkable
perfornance, partly because of good monsoons.
Increase in agriculture production exceeded the
targets. Short-run objectives of resettlement of
refugees, achieving food self-sufficiency and
controlling prices were, by and large, realised.
Second Five-Year Plan (1956-61): Second
Five-Year Plan was very ambitious as compared
to the First Plan. Once the immediate
problems
of resettlement of refugees,
increasing
agricultural output, controlling prices, etc., had
been somewhat solved, emphasis was rightly
placed on pursuing the long-term objective
of economic growth. The basic philosophy of
the Second Plan was to initiate the process of
industrialisation in order to achieve growth on
a long-term and sustainable basis. Accordingly,
the Second Plan aimed at rapid industrialisation,
with special emphasis on the development of
basic and heavy industries. The Plan gave the
highest priority to the development of basic
and heavy industries such as iron and steel,
chemicals, heavy engineering, and machine
building industries. Public sector outlay on
industries, transport and communication, and
power generation was increased significantly.
The goal of establishment of the socialist
pattern of society was brought out clearly for
the first time.
The Second Plan was only moderately
successful. The national income rose at a rate
of 4.1 per cent per annum, against a target
rate of 4.5 per cent per annum. The tempo of
industrial development gathered momentum,
and agricultural progress was satisfactory.
However, the country faced the balance of
payments crisis due to acute shortage of foreign
exchange. As a result, many of the targetsof the
Second Plan could not be realised. For example,
power generation programme suffered a setback.
The country also experienced the problem of
rising prices.
Third Five-Year Plan (1961-66): The Third Plan
set the objective of establishment of a self-reliant
and self-generating economy. The importance of
both the agricultural and the industrial sectors
was recognised and due emphasis was given to
their growth. The overall target of 5.6 per cent
INDIAN ECONOMIC DEVELOPMENT
ner annum growth of national income was set.
The developmental plan had to be modified in
hetween to lay emphasis on defence because of
India's conflicts with China in 1962 and with
Pakistarn in 1965.
The Third Plan was a complete failure on
account of () wars with China and Pakistan
and (ii) the failure of agriculture. The failure of
agriculture was the single most important factor
behind the failure of the Third Plan. Agricultural
production went down. In fact, the country
experienced a severe famine during the last year
of the Plan (1965-66). National income rose at
a rate of 3.3 per cent per annum, much below
the target of 5.6 per cent. This was the lowest
rate of growth of national income during the
planned era. There emerged excess capacity in
the industry due to slowing down in the rate of
economic growth. There was a general recession
in the economy, with sharp rise in prices along
with the low level of economic activity.
1966-69: No regular planning exercise was
undertaken for three years from 1966-67 to
1968-69. The period 1966-69 was the period
of Plan Holiday'. Instead, three successive
Annual Plans were adopted. The country
abandoned the regular full-fledged Plan due to
the two successive years (1965-66 and 1966-67)
of drought, and resultant scarcity of food,
inflationary pressures, and ill-advised policy of
devaluation of Indian rupee in June 1966. The
economy achieved amodest growth rate of
3.7 per cent in national income, as compared to
the targeted rate of 5 per cent per annum during
1966-69.
Fourth Five-Year Plan (1969-74): The Fourth
Plan started in 1969 with an emphasis on growth
with stability. It also placed much greater
emphasis on attaining self-reliance by reducing
reliance on foreign assistance. The Plan'set a
target of achieving 5.7 per cent rate of growth
of national income. But at the same time, it gave
priority to increasing the income of the weaker
sections as part of the objective of growth with
social justice. 'Garibi Hatao' (removal of poverty)
became the catchy slogan. Thus, Fourth Plan was
an ambitious plan.
The progress during the first two years
was very encouraging. Foodgrain production
PLANNING AND ECONOMIC DEVELOPMENT IN INDIA
increased remarkably, industrial production
rose, and national incomne registered sharp to
modest increase. But, performance during the
next three years was extremely disappointing.
The size of the Plan had to be reduced in the
first half of the Plan due to Bangladesh crisis
and Indo-Pakistan War of 1971. Foodgrain
production declined due to failure of monsoons.
Industrial output registered a slow increase due
to power breakdowns, transport bottlenecks,
industrial unrest, etc. Consequently, there was
a substantial shortfall in the targeted rate of
growth. National incomne increased at a rate of
3.0 per cent annum only, significantly lagging
behind the target of 5.7 per cent per annum.
Thus, the Fourth Plan failed halfway through.
Fifth Five-Year Plan (1974-79): The draft of
the Fifth Plan was formulated at a time when
the country was facing the problem of sharp
increase in the prices of food items, fertilisers,
and oil. Moreover, the balance of payments
situation worsened due to steep rise in oil and
fertiliser prices. Therefore, major corrections
had to be introduced in the Fifth Plan, both in
terms of financial outlays as well as shelving of
various development programmes. Moreover,
after the declaration of emergency in 1975,
emphasis was placed on the implementation
of new economic policy, popularly known as
'20-Point Economic Programme.' Nevertheless,
the Fifth Plan aimed at achieving primarily two
objectives, namely () removal of poverty and
(ii) attainment of self-reliance. The Plan proposed
to achieve these twin objectives by stepping up the
rate of economic growth and better distribution
of income, with an emphasis on a national
programme of meeting the minimum needs.
The Fifth Plan was terminated by the Janata
Party Government at the end of the fourth
year of the Plan in March 1978. The Plan was
fairly successful. The Plan was able to achieve
5 per cent per annum growth rate of national
income as compared to the target of 4.4 per cent
increase. Agricultural production also registered
a satisfactory increase, surpassing the targeted
increase.
Sixth Five-Year Plan (1980-85): The Sixth
Plan was originally introduced by the Janata
Party Government, covering the period 1978-83.
121
 Tt could hardly run for a
Party Government fell. year when the Janata
"The new Congress
Government
Sixth Plan for replaced
the Plan by a
the period 1980--85. The new
objectives of the Plan were: stepping up themajorrate
of economic growth,
emphasis
for achieving economic and
on modernisation
self-reliance, reduction in poverty,technological
and reducing
unemployment.
The Sixth Plan was
National income registered reasonably successful.
an
5.3 per cent per annum. Thus, the increase of
of the Plan was growth objective
realised. The economy made an
all-rournd progress. Good monsoons resulted in
successive bumnper crops and substantial increase
in agricultural output. Industrial output also
showed encouraging results.
Seventh Five-Ye ar Plan (1985-90): The
Seventh Plan covered the period 1985-90. Its
major immediate objectives were increase in
foodgrain production, increase in employment
opportunities,
the
and raising productivity. Thus,
Seventh Plan focused on food, work,
and productivity. The Plan also adopted the
development strategy of directly attacking the
problems of poverty, unemployment, and regional
imbalances. It aimed at bringing down the
number of people living below the poverty line.
With this aim in mind, the Seventh Plan placed
emphasis on poverty alleviation programmes.
The Plan targeted an annual growth rate of
national income of 5 per cent. This rate was
in line with the growth rate achieved in the
Sixth Plan, but a little higher than the average
for the past decade.
The economy performed remarkably
well during the Seventh Plan. It achieved
5.8 per cent per annum increase
in national
income. Thus, the growth rate target of
the Seventh Plan was more than
achieved.
Overall achievement in major sectors was
satisfactory. There was a significant increase in
rate
the growth in agricultural output. Growth
of industrial output during the Plan was over
However,
8per cent, nearly touching the target.
the level of deficit financing was rather high.
This led to increase in money supply and sharp
situation
rise in prices. The balance of payments
during the Plan was not satisfactory.
122
1990-92: The Eighth Five-Year Plan was to
begin on 1 April 1990. However, the country
was passing through difficult circumstances
during the period of two years, i.e., 1990-92.. The
political situation was very uncertain with the
country seeing three governments during this
period, The Gulf crisis, growing iscal dencit,
and depletion of foreign exchange reserves put
a serious strain on the Indian economy. This led
to high rate of inflation and recession in industry.
As a result, growth rate slumped to a low level
of 2.5 per cent in 1991-92. Such conditions of
uncertainty created problems in the finalisation
of the Eighth Plarn.
Eighth Five-Year Plan (1992-97): The Eighth
Plan could finally start on 1 April 1992. It covered
the period of 1992-97. The main objectives of
the Eighth Plan were: generation of adequate
employment, spread of education, expansion of
healthcare facilities, growth and diversification
of agriculture so as to achieve self-sufficiency
in food production, development of economic
infrastructure, and population control.
In view of the encouraging growth rate of the
economy during the Seventh Plarn, the Eighth Plan
set a target of 5.6 per cent per annum increase in
the national income. An important kingpin of the
Eighth Plan was the implementation of economic
reforms as part of the new economic policy
initiated since July 1991. The new economic policy
was characterised by various structural changes
in the economy and giving market-orientation
to the economy. Liberalisation, privatisation, and
globalisation were the main components of the
new economic policy.
All these elements of new economic
policy were incorporated in the framing and
implementation of the Eighth Plan. There was
a significant jump in economic growth initially
due to the spurt in economic reforms. But, there
was some loss of momentum subsequently
due to the slackening of economic reforms.
Notwithstanding, the Eighth Plan achieved an
average growth rate of 6.5 per cent in national
income,.1 per cent higher than the target rate of
5.6 per cent. A very important feature was that
the average growth during the last three years
of the Eighth Plan was 7.5 per cent per annum,
placing India among the top 10 performers in the
INDIAN ECONOMIC DEVELOPMENT
 world during this period. As far as the sectoral
performance is concerned, actual achievement in
general
surpassed the targets. The performance
the economy On the price front was somewhat
mixed. On the external front,
achieved
the country
reasonably good results, with a fall
ta the trade deficits due to high growth rate
of exports. Thus, the Eighth Plan gave a good
nerformance on the growth front and the external
sector. But in respect of infrastructure and social
sector, the growth was unsatisfactory.
Ninth Five-Year Plan (1997-2002): The Ninth
Plan was launched on 1 April 1997, covering
the five-year period from 1997 to 2002, and it
intended to take the economy to the 21st century.
Objectives of the Ninth Plan were reflected in the
Common Minimum Programme of the United
Front Government.
The Ninth Plan set the objective of achieving
growth with equity, with an emphasis on:
() improving the quality of life of the people,
(ii) generation of productive employment,
(ii) bringing about regional balance, and
(iv) achieving self-reliance.
For the achievement of the above-mentioned
objectives, the Ninth Plan set the target of
6.5 per cent annual growth rate of
national
income. The Plan gave priority to the development
of agriculture, rural sector, village and small
industries, infrastructure, and social sectors.
The average annual growth rate achieved during
the Ninth Five-Year Plan was 5.4 per cent, which
was lower than the Plarn target of 6.5 per cent.
Though still below the long-term performance of
some of the newly industrialised countries in
East
Asia, the Indian growth record was one of the
in
hughest among major economies of the world
Indian
recent years. This is despite the fact that the
during
economy went through a difficult phase several
Plan due to
the last two years of the
unfavourable dormestic and external developments.
Poor performance of the agricultural sector, adverse
Security environmnent, natural disasters such as
the Odisha cyclone and Gujarat earthquake were
Some of the unfavourable domestic developments.
The deceleration experienced by the global
economy, East Asian Crisis of 1997-98, rise in oil
prices, the terrorist attacks in United States in
September 2001, etc., were the important external
PLANNING AND ECONOMIC DEVELOPMENT IN INDIA
shocks, which had adverse effect on India's export
growth.
Tenth Five-Year Plan (2002-07): The Tenth
Five-Year Plan was launched on 1April 2002,
with the objective of transforming Indian
economy into the fastest growing economy of
the world. It set a target of achieving 8 per cent
annual growth rate of national income. The main
thrust of the Plan was on human and soCial
development along with high growth rate and
reduction in poverty. The major objectives of the
Tenth Plan were high growth rate, reduction in
poverty, generation of employment, expansion
of education by increasing the literacy ratio
and making school education compulsory for
all children, reduction in gender inequalities,
environmental protection, and checking the
growth rate of population.
Indian economy achieved a remarkable
growth rate of 7.6per cent during the Tenth Plan.
Transition to high growth rate during the
Tenth Plan showed underlying strength of the
fundamentals of the Indian economy. In fact,
Indian economy emerged as the second fastest
growing economy in the world, next to China.
Eleventh Five-Year Plan (2007-12): The
Eleventh Five-Year Plan started on 1 April 2007.
The core theme of the Eleventh Plan was
'rapid and inclusive growth'. Based on the
remarkable achievement of a high growth rate
during the Tenth Plan, it set a target of 10 per cernt
annual growth rate of national income for the
period 2007-12. With the objective of inclusive
growth, the emphasis of the Eleventh Plan was
to ensure that growth is widely spread so that
benefits of economic development are adequately
shared by the weaker and poor sections of the
society. In addition, the main emphasis of the
Eleventh Plan was on social sector. Education and
health and family welfare of women and children
in particular were accorded high priority in the
Plan. Thus, the main objectives of the Eleventh Plan
were: acceleration of income, reduction of poverty,
expansion of education and health facilities,
particularly for women and children, faster
employment generation, and expansion of physical
infrastructure (road, electricity, etc.).
India witnessed an impressive record of
around 7.5 per cent annual growth rate of
123
national income during the Eleventh Plan. India
was able to attain a high growth rate
financial crisis and slowdown in some despite
of the
developed countries in recent years. This shows
the strength of the Indiarn economy.
Twelfth Five-Year Plan (2012-17): The Twelfth
Five-Year was started on 1 April 2012 and was
concluded on March 2017. This Plan aimed at
achieving an average annual growth rate of
8per cernt during the Plan period. It laid emphasis
on incusive growth rate so as to bring more poor
and marginal people under its orbit, and regional
balanced growth. It sought to reduce poverty by
10 per cent in the five year period. The target of
the plan was to generate 50 million more jobs. The
Twelfth Plan aimed at increasing the growth rate
in the agricultural and manufacturing sectors in
particular so as to revive the growth rate in the
Indian economy. The emphasis of the Twelfth Plan
was on increasing investment in the infrastructure
sector by encouraging the private sector investment.
It aimed at improving the facilities in the field of
education, health, and sanitation. Indian economy
experienced an average annual growth rate of
about 6.7 per cent during the Twelfth Plan, which
was much below the target.
9.5 APPRAISAL OF PLANNING IN
INDIA
Indian economny has come a long way since
the starting of planning in 1950-51. It has
attained ahigh degree of maturity. But at the
same time, Indian Five-Year Plans have failed
to fulfil the hope of the general public. It is,
therefore, important to take a general appraisal
of the achievements and failures of the Five
Year Plans in India.
9.5.1 Achievements of Planning in
India*
The Indian economy has been developing
continuously over the past seven decades.
It has achieved an extremely positive and
vibrant growth in all the sectors -agriculture,
manufacturing and the service sectors.
*Students are expected to have a broad idea of the achievements rather than acquiring a detailed statistical infornmation.
124
Indian economy has
changes and improvements experienced several
as a result oE
economicplanning in India. Some of the changes
have put the economy on the course of
increased
production and productivity. Others have
brought about structural changes in the economy.
Most of these changes are of permanernt nature
which are capable of holding sustained economic
growth. These profound and everlasting changes
are a pointer to the fact that ndian economy is
a developing economy.
A general appraisal of economic planning in
India would reveal the following achievements:
1. Increase in National Income: An
important aspect of progress of the
Indian economy was continuous increase
in national incomne during the Five-Year
Plans. Table 9.2 gives detailed data on the
annual average growth rate of national
income and per capita income at constant
prices (i.e., increase in real income).
Table 9.2 shows that the total national
income has shown a tendency to increase
since 1950-51. Over the entire period
of over six-and-a-half decades (1950-51
to 2017-18), the real national income
increased at arn average rate of around
5.4 per cent per annum. This should be
compared with 0.7 per cent per annum
growth rate during the period 1901-51.
This suggests that Indian economy was
growing steadily during the period of
planning. This growth rate, however,
was very modest compared to the growth
rates achieved by many other developing
countries such as China, South Korea,
Hong Kong, and Singapore. But over the
years, there appears to be some acceleration
in the rate of economic growth. The growth
rate was slow during the first 25 years,
and it increased thereafter. From growth
rate of real national income of nearly
3.5 per cent between 1951 and 1974, i.e., up
to the Fourth Five-Year Plan, the growth
rate rose to over 5 per cent during the
period between 1974 and 1985. The rate
of growth during the period between 1985
INDIAN ECONOMIC DEVELOPMENT