Acknowledgement

I would like to express my deep gratitude to all the people who inspired me to do this project.
I would also like to thank my professor for Economics, Ms. Aishwarya Kaushik who gave me
the opportunity to research on the subject matter of the project and learn about it. I am also
thankful to my batch mates and my family who motivated me and helped this project become
a success. I would also like to extend my token of gratitude to my university, Dr. B. R.
Ambedkar National Law University for providing me with the necessary resources required
to complete this project. I hope that the knowledge gained by me while doing this project
will be helpful for me in doing future projects and research work.
INTRODUCTION

The term economic planning is used to describe the long term plans of the government of
India to develop and coordinate the economy with efficient utilization of resources.
Economic planning in India started after independence in the year 1950 when it was deemed
necessary for economic growth and development of the nation.

Long term objectives of Five Year Plans in India are:

 High Growth rate to improve the living standard of the residents of India.

 Economic stability for prosperity.

 Self-reliant economy.

 Social justice and reducing the inequalities.

 Modernization of the economy.
The idea of economic planning for five years was taken from the Soviet Union under the
socialist influence of first Prime Minister Pt. Jawahar Lal Nehru.

The first eight five year plans in India emphasised on growing the public sector with huge
investments in heavy and basic industries, but since the launch of Ninth five year plan in
1997, attention has shifted towards making government a growth facilitator.

The following were the original objectives of economic planning in India:

 Economic Development: This is the main objective of planning in India. Economic

Development of India is measured by the increase in the GDP and Per Capita Income
 Increased Levels of Employment: An important aim of economic planning in India is
to better utilise the available human resources of the country by increasing the
employment levels.

 Self Sufficiency: India aims to be self-sufficient in major commodities and also

increase exports through economic planning. The Indian economy had reached the
take-off stage of development during the third five-year plan in 1961-66.
 Economic Stability: Economic planning in India also aims at stable market conditions
in addition to the economic growth of India. This means keeping inflation low while
also making sure that deflation in prices does not happen. If the wholesale price index
 rises very high or very low, structural defects in the economy are created and
economic planning aims to avoid this.

 Social Welfare and Provision of Efficient Social Services: The objectives of all the
five year plans as well as plans suggested by the NITI Aayog aim to increase labour
welfare, social welfare for all sections of the society. Development of social services
in India, such as education, healthcare and emergency services have been part of
planning in India.
 Regional Development: Economic planning in India aims to reduce regional
disparities in development. For example, some states like Punjab, Haryana, Gujarat,
Maharashtra and Tamil Nadu are relatively well developed economically while states
like Uttar Pradesh, Bihar, Orissa, Assam and Nagaland are economically backward.
Others like Karnataka and Andhra Pradesh have uneven development with world
class economic centres in cities and a relatively less developed hinterland. Planning in
India aims to study these disparities and suggest strategies to reduce them.

 Comprehensive and Sustainable Development: Development of all economic sectors

such as agriculture, industry, and services is one of the major objectives of economic
planning.
 Reduction in Economic Inequality: Measures to reduce inequality through progressive
taxation, employment generation and reservation of jobs has been a central objective
of Indian economic planning since independence.
 Social Justice: This objective of planning is related to all the other objectives and has
been a central focus of planning in India. It aims to reduce the population of people
living below the poverty line and provide them access to employment and social
services.
 Increased Standard of Living: Increasing the standard of living by increasing the per
capita income and equal distribution of income is one of the main aims of India’s
economic planning.

HISTORY OF ECONOMIC PLANNING

Economic planning in India dates back to pre-Independence period when leaders of the
freedom movement and prominent industrialists and academics got together to discuss the
future of India after Independence which was soon to come. Noted civil engineer and
administrator M. Visvesvaraya is regarded as a pioneer of economic planning in India. His
book “Planned Economy for India” published in 1934 suggested a ten year plan, with an
outlay of Rs. 1000 crore and a planned increase of 600% in industrial output per annum based
on economic conditions of the time.

The Industrial Policy Statement published just after independence in 1948 recommended
setting up of a Planning Commission and following a mixed economic model. Here are the
major milestones related to economic planning in India:

 Setting up of the Planning Commission: 15 March 1950

 First Five Year Plan: 9 July 1951

 Dissolution of the Planning Commission: 17 August 2014

 Setting up of NITI (National Institution for Transforming India) Aayog: 1 January

2015
Setting up the NITI Aayog was a major step away from the command economy structure
adopted by India till 1991. The Planning Commission’s top down model of development had
become redundant due to present economic conditions and NITI Aayog approaches economic
planning in a consultative manner with input from various state governments and think tanks.

While preparing for the UPSC Exam, Economic Planning should be approached in a
systematic manner. The major achievements of economic planning in India remain an
important part of the UPSC Syllabus. The strategy of economic planning in India under the
Planning Commission as well the NITI Aayog are important as well. As a rule, IAS aspirants
should focus on:

 Objectives of Economic Planning In India

 Major Achievements of Economic Planning in India

 The Planning Commission and Five Year Plans
 NITI Aayog Action Agenda and Annual Reports

 Sustainable Development Goals

 Economic Reforms in India and Various Government Programmes

 Current Affairs related to all of the topics mentioned above.

Though the planned economic development in India began in 1951 with the inception of First
Five Year Plan , theoretical efforts had begun much earlier , even prior to the independence.
Setting up of National Planning Committee by Indian National Congress in 1938 , The
Bombay Plan & Gandhian Plan in 1944, Peoples Plan in 1945 (by post war reconstruction
Committee of Indian Trade Union), Sarvodaya Plan in 1950 by Jaiprakash Narayan were
steps in this direction. Five-Year Plans (FYPs) are centralized and integrated national
economic programs. Joseph Stalin implemented the first FYP in the Soviet Union in the late
1920s. Most communist states and several capitalist countries subsequently have adopted
them. China and India both continue to use FYPs, although China renamed its Eleventh FYP,
from 2006 to 2010, a guideline (guihua), rather than a plan (jihua), to signify the central
government’s more hands-off approach to development. After independence, India launched
its First FYP in 1951, under socialist influence of first Prime Minister Jawaharlal Nehru. The
process began with setting up of Planning Commission in March 1950 in pursuance of
declared objectives of the Government to promote a rapid rise in the standard of living of the
people by efficient exploitation of the resources of the country, increasing production and
offering opportunities to all for employment in the service of the community. The Planning
Commission was charged with the responsibility of making assessment of all resources of the
country, augmenting deficient resources, formulating plans for the most effective and
balanced utilisation of resources and determining priorities. The first Five-year Plan was
launched in 1951 and two subsequent five-year plans were formulated till 1965, when there
was a break because of the Indo-Pakistan Conflict. Two successive years of drought,
devaluation of the currency, a general rise in prices and erosion of resources disrupted the
planning process and after three Annual Plans between 1966 and 1969, the fourth Five-year
plan was started in 1969. The Eighth Plan could not take off in 1990 due to the fast changing
political situation at the Centre and the years 1990-91 and 1991-92 were treated as Annual
Plans. The Eighth Plan was finally launched in 1992 after the initiation of structural
adjustment policies. For the first eight Plans the emphasis was on a growing public sector
with massive investments in basic and heavy industries, but since the launch of the Ninth
Plan in 1997, the emphasis on the public sector has become less pronounced and the current
thinking on planning in the country, in general, is that it should increasingly be of an
indicative nature.

OBJECTIVES

The Fifth Five-Year Plan aimed to achieve several key objectives:

Poverty Alleviation:
Addressing poverty was a central goal, with a focus on income redistribution and social
justice. The plan aimed to reduce poverty levels through targeted programs and policies.

Economic Growth:

Economic growth was a fundamental objective, with the plan aiming to increase the Gross
Domestic Product (GDP) and industrial production.

Industrialization:

The plan promoted industrialization and aimed to develop heavy industries and increase
manufacturing output.

Infrastructure Development:

Infrastructure development was crucial to support economic growth, and the plan sought to
improve transport, communication, and power infrastructure.

Social Development:

The plan aimed to improve social indicators by focusing on education, healthcare, family
planning, and poverty alleviation schemes.

THE GARIBI HATAO PROGRAMME

 In the late sixties, it was increasingly being realised that the economic policies and power
structures had only brought about limited growth. But there had hardly been equitable
distribution of its benefit.
 Indira was aware of these ground realities and was by no means separated from the
broader leftist ideological paradigm vis-a-vis development. As the Prime Minister, she
was concerned about the steep prices affecting the economy and was also aware that the
poor were the worst hit by the situation. The radical Naxalite movement was gaining
ground in different parts of the country. She was aware of the implications of the massive
land grab movements inspired by leftist ideology.
 When the Congress split in 1969, Indira became the leader of one faction of the party and
she proved that she was no less radical than the leftists in waging struggle against poverty.
In the preparations of the Fourth Five Year Plan, she constantly expressed her special
 concerns for the weaker sections of the population. She told her supporters that with their
support, she was determined to fight against poverty effectively. She pursued the
Nehruvian model of development with a greater degree of zeal and enterprise.
 Indira’s political opponents campaigned on the slogan “Indira Hatao,“ (Remove Indira),
Indira retooled it to “Garibi Hatao,“ (Remove Poverty). This slogan had a considerable
impact; Indira was now looked upon by many as India’s saviour. Her election campaign
was more energetic than it had ever been before.
 This was the backdrop of the Garibi Hatao desh bachavo (meaning ’Abolish Poverty
rescue the country’) slogan of Indira Gandhi’s 1971 election bid and later also used by her
son Rajiv Gandhi.
 The slogan and the proposed anti-poverty programmes that came with it were designed to
reach out directly to the poor and marginalised, by-passing the dominant rural castes. For
their part, the previously voiceless poor would at last gain both political worth and
political weight.
 In the 1971 elections, she popularised the slogan of Garibi Hatao and made it a point to
reach out to the various sections of the unprivileged groups of the rural India. Babu
Jagjivan Ram, who was made the president of the party, functioned as a spokesman of the
depressed groups. He observed, “The Hindu society is a confederation of different caste ...
and the dominant castes which so far been enjoying the fruits of all government measures
even today has to expropriate to themselves the advantage provided by the government.
We have the challenge from the dominant castes in certain areas and from what is known
as left adversaries. We have to meet all these challenges. The congress is pledged to
promote with special care, the educational, employment and economic interest of the
weaker sections of the people particularly the S C’s, S T’s and the O B C’s.“
 The early seventies carried the expectations of real social democratic possibilities in India.
However these experiments did not often yield the expected results because Indira often
faced a great deal of resistance from the dominant class interests. In this regard, she stated
that “One can bully state leaders so much and no more…“
 Indira often stood in an open car for hours addressing the crowds invoking radical rhetoric
to arouse the masses, but at the same time, reassured the higher classes that she would be
mindful of their interests as well. As a result, Indira and her supporters triumphed in the
parliamentary elections.
 In her speech delivered at the Red Fort on 15th August, 1975, Indira warned, “Please do
not expect magic remedies and dramatic results, there is only one magic which can
 remove poverty, and that is hard work, sustained by clear vision, iron will and the strictest
discipline“
Twenty Point Programme
 The Twenty Point Programme was launched by Indira Gandhi in 1975 and was
subsequently restructured in 1982 and again in 1986.
 Prime Minister Indira Gandhi, in a radio broadcast, announced measures to revive the
economy and reinforce her image as a leader with socialist leanings. Among the
announcements were: raising the income tax exemption limit from Rs. 6,000 to Rs.
8,000, confiscation of properties owned by smugglers, ceilings on ownership and
possession of vacant land, and acquisition of excess land. Land ceiling laws would be
strictly implemented and surplus land distributed among the rural poor. The Twenty
Point Programme included steps to bring down prices of essential commodities,
promote austerity in government spending, crackdown on bonded labour, liquidate
rural indebtedness and make laws for a moratorium on recovery of debt from landless
labourers, small farmers and artisans.
 The twenty points of the Programme were carefully designed and selected to achieve
the above objectives.
 The Twenty Point Programme consisted of the following:
1. Attack on rural poverty
2. Strategy for rained agriculture
3. Better use of irrigation water
4. Bigger harvest
5. Enforcement of land reforms
6. Special programmes for rural labour
7. Clean drinking water
8. Health for all
10. Two child norm
11. Justice for SC/ST
12. Equality for women
13. New opportunities for women
14. Housing for the people
15. Improvement for slums
16. New strategy for forestry
17. Protection of environment
 18. Concern for the consumer
19. Energy for the villages
20. A responsive administration

COMMAND AREA DEVELOPMENT PROGRAMME (CADP)

• In December 1974, the Government of India launched the Command Area Development
Programme (CAD) to improve the utilization of irrigation potential and optimize agriculture
production. Its purpose was to develop adequate delivery of irrigation water to the fields,
optimum use of underground & surface water resources, and improvement of socioeconomic
conditions of farmers.
• CADP started to increase the productivity in the irrigation command areas through an
integrated approach with the following components:
• Construction of field channels and field drains.
• Land leveling wherever necessary.
• Introduction of rational supply of water.
• Demonstration and training to farmers.
REGIONAL RURAL BANK
• In 1975, on the recommendations of Narasimhan Working Group (1975), Regional Rural
Banks (RRBs) were set up under the provisions of an ordinance passed on 26 September 1975
and the Reginal Rural Bank Act of 1976. Prathama Grameen Bank was the first Regional
Rural Bank set up on 2 October 1975.
• RRBs jointly owned by the:
• Central Government with 50% shareholding.
• Sponsoring banks with 35% shareholding.
• State government with 15% shareholding.
• RRBs provided sufficient banking and credit facilities for agriculture and other rural
facilities. Its purpose was to include the rural areas into the
economic mainstream by connecting rural areas with basic banking and financial services.
• The main objectives of RRBs are:
• To provide credit and other facilities to the small & marginal farmers, agricultural labourers,
artisans and small entrepreneurs in rural areas.
• To check the outflow of rural deposits to urban areas.
 • In 1977, the Reserve Bank of India (RBI) appointed the Dantwala Committee led by Prof.
M. L. Dantwala to review the working of RRBs, which recommended continuing RRBs. The
committee suggested that RRBs should become an integral part of the rural credit structure.
• In 1984, the working group on RRBs, S. M. Kelkar Committee, recommended that small
and uneconomic RRBs should merge in the interest
of economic viability.
• In 1989, the Khusro Committee, also known as Agricultural Credit Review Committee, led
by Dr. A. M. Khusro, recommended that the RRBs have no justifiable cause for the
continuance. The Khusro committee also suggested the RRBs merge with sponsor banks.
• In 2003, the Government appointed the Chalapathi Rao Committee for restructuring of
Regional Rural Banks in India. The committee suggested that the entire system of RRBs
maybe consolidate while retaining the advantages of the regional character of these
institutions.
FOOD FOR WORK PROGRAMME
• In April 1977, the government introduced the "Food for Work" Programme as a non-plan
scheme. The objectives of the program were:
• To eradicate hunger and unemployment.
• Strengthening of the rural infrastructure.
• Utilization of surplus food grains.
• Creation of durable community assets.
• The main feature of the Food for Work Programme was that it parts the Wage payment in
food-grains at subsidized prices. As some surplus food stocks were available with the
government, it planned to use them in employment generation.
• The Food for Work Programme continued up to 1980. During the Sixth Plan, the
government incorporated the Food for Work program as the National Rural Employment
Programme (NREP) in 1980.

ACHIEVEMETNS OF 5th FIVE YEAR PLAN

The main achievements of the Fifth Five Year Plan include the following:

 The economy grew at an annual rate of about six per cent.

 Inflation was brought under control.
 The balance of payments position improved.
 The rate of investment increased.
 Agricultural production registered healthy growth.
 Industry expanded at a rapid pace.
 Employment opportunities increased.
 The standard of living of the people improved.
 Social justice was promoted.
 Several basic needs were met.
 The target of eradicating poverty was nearly achieved.
 Infrastructure development took place on a large scale.
 The quality of life improved significantly.
 The plan helped in the overall development of the country.

CONCLUSION

The Fifth Five-Year Plan was a success in many ways. It helped to increase production and
employment, while also reducing poverty and inequality. The Plan was able to achieve these
objectives due to its focus on investment in infrastructure and industry, as well as its
emphasis on agricultural development. While the Fifth Five-Year Plan did have some
shortcomings. The main objective of the Fifth Five-Year Plan was to accelerate the rate of
economic growth and reduce inequalities in income and wealth. The Plan focused on
investment in infrastructure and industry, as well as agricultural development. These
investments helped to increase production and employment, while also reducing poverty and
inequality.
BIBLIOGRAPHY

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3. Garibi Hatao Programme by Indira Gandhi
4. Five_Year_Plan.pdf (mospi.gov.in)
5. 5-year plans- Overview, Outline, Planning Process, Origin and more (oliveboard.in)
6. All About The Fifth Five-Year Plan Of India (unacademy.com)