FIVE YEAR PLANS IN

INDIA: GOALS AND

ACHIEVEMENTS
By
GEETA GHAI
PGT Economics
1. WHAT IS ECONOMIC
PLANNING?
 “Economic planning means utilization of
country’s resources in different development
activities in accordance with national
priorities” – planning commission
 In India, planning covers economic as well as
social spheres/areas of activity.
 Agriculture, industry, transportation and trade
are the examples of economic spheres of
planning.
 Education, health and housing are the
principal examples of social spheres of
planning.
PLANNING COMMISSION
 In India, the idea of economic
planning become a reality with the
setting up of planning commission in
1950, under the chairmanship of Prof.
Mahalanobis.
 In January 2015, it has been replaced
by “NITI Aayog” National institute of
transforming India.
 The role of NITI Aayog is to make such
policies that accelerate the pace of
GDP growth.
NEED FOR PLANNING IN INDIA
 India inherited from the British a backward
and stagnant economy.
 It was backward as the level of output and
productivity were low.
 And, it was stagnant as the GDP growth was
tardy(extremely low).
 Such an economy could not be left the market
forces of demand and supply to trace its path
of growth and development.
 It needed a big push of investment supported
by the government, hence, the recourse to
economic planning.
DIRECTIVE PLANNING AND
COMPREHENSIVE PLANNING
 Directive planning refers to a system in which
planning is introduced just to direct the forces
of supply and demand, so that the system
does not go wayward from the state of
equilibrium.
 It is pursued in capitalist economies.
 Comprehensive planning, on the other hand
refers to a system in which government
herself participates in the process of growth
and development.
 It is pursued in socialist as well as mixed
economies.
WHAT IS “FREE PLAY OF
MARKET FORCES”
 It refers to a situation when the government
of country does not interfere with the
market forces of supply and demand.
 Producers are free to allocate resources to
the production of different goods and
services with a view to maximizing their
profit.
 They will simply produce those goods which
fetch them high prices and high profits, no
matter whether the poor get even the
minimum of food, shelter and clothing.
TYPES OF ECONOMIES: CAPITALIST,
SOCIALIST AND MIXED ECONOMIES
 Capitalist economy: a capitalist economy is
defined as the one in which means of
production are owed by the individuals, and
the individuals are free to take their
economic decisions, as guided by the
principle of profit maximization.
 Features: private ownership
 Profit maximization
 Role of govt. confined to the maintenance of
law and order and defence of country.
SOCIALIST ECONOMY
 A socialist economy is the one in which there
is a social ownership of means of production,
and economic decisions are taken by some
central authority of the government with the
view to maximize social welfare.
 Features: means of production owned by
society as whole.
 Social welfare objective
 Direct participation of govt. in the process of
production.
MIXED ECONOMY
 A mixed economy is the one in which there is
private as well as public ownership of the
means of production.
 Production decisions are governed largely by
the principle of profit maximization, but not
without checks and balances of social
justice.
 Features: means of production owned by pvt
as well as govt.
 Pvt sector: profit maximization
 Govt sector: Welfare
LONG PERIOD AND SHORT PERIOD
GOALS OF PLANNING IN INDIA
 Long period goals are common to all the five
year plans and are therefore generally
studies as Common goals of five year plans
and objectives of planning.
 Short period Goals and plan specific and are
generally studied as Objectives of plans.
LONG PERIOD
GOALS/OBJECTIVES
 GDP growth
 Equitable distribution or Equity
 Modernization
 Self sufficiency
GDP GROWTH
 Increase in GDP implies increase in the level
of output in the economy.
 Increase in GDP depends on two factors:
 (i) increase in resource-base of the country,
 (ii) increase in productivity through
innovative technology.
 Planning in India is to ensure that natural
resources are fully explored and production
technology is continuously improved. So that,
GDP growth achieves a momentum.
FULL EMPLOYMENT
 Full employment refers to a situation when
all the people who are able to work and
willing to work at the market wage rate
getting work.
 Focuses on “inclusive growth”
 More and more people should participate in
the process of growth.
 Benefits of growth must be shared across
wider sections of the society.
EQUITABLE DISTRIBUTION OR
EQUITY
 Growth serves virtually no purpose in a
society where rich tend to become richer and
the poor continue to struggle even for the
essential of life.
 Benefits of growth must spread across all
sections of the society, so that the
distribution of income becomes equitable.
 Equitable distribution of income implies
social equality and this one of the principal
objectives or goals of planning in India.
MODERNIZATION
 It refer to updation and adoption of modern
technology in the process of growth.
 Modern age is the age of science and innovations.
Science has offered us new ways of doing things,
such that productivity in farms and factories has
shown an exponential rise over time.
 Modernization in the context of goals of plans in
India, has a social angle as well it refers to
modernization of social outlook.
 Conventional wisdom must give way to modern
outlook. It includes issues like empowerment of
women.
SELF-SUFFICIENCY
 It refers to the state of being able to provide
essential goods without the help of others.
 India wanted to be self sufficient in food
grain production to avoid the uncertainties of
supplies from rest of the world.
SHORT PERIOD
GOALS/OBJECTIVES
 1. First Five Year Plan:
 I. It was made for the duration of 1951 to 1956.
 II. It was based on the Harrod-Domar model.
 III. Its main focus was on the agricultural development of
the country.
 IV. This plan was successful and achieved growth rate of
3.6% (more than its target)
 2. Second Five Year Plan:
 I. It was made for the duration of 1956 to 1961.
 II. It was based on the P.C. Mahalanobis Model.
 III. Its main focus was on the industrial development of the
country.
 IV. This plan was successful and achieved a growth rate of
4.1%
 3. Third Five Year Plan:
 I. It was made for the duration of 1961 to 1966.
 II. This plan is called ‘Gadgil Yojna’ also.
 III. The main target of this plan was to make the
economy independent and to reach the self active
position of take-off.
 IV. Due to china war, this plan could not achieve its
growth target of 5.6%
 Plan Holiday:
 I. The duration of the plan holiday was from 1966
to 1969.
 II. The main reason behind the plan holiday was the
Indo-Pakistan war & failure of the third plan.
 III. During this plan annual plans were made and
equal priority was given to agriculture its allied
sectors and the industry sector.
 Fourth Five Year Plan:
 I. Its duration was from 1969 to 1974.
 II. There were two main objectives of this plan i.e.
growth with stability and progressive achievement of self-
reliance.
 III. During this plan, the slogan of “Garibi Hatao” is given
during the 1971 elections by Indira Gandhi.
 IV. This plan failed and could achieve a growth rate of
3.3% only against the target of 5.7%.
 Fifth Five Year Plan:
 I. Its duration was 1974 to 1979.
 II. In this plan top priority was given to agriculture, next
came to industry and mines.
 III. Overall this plan was successful which achieved a
growth of 4.8% against the target of 4.4%.
 IV. The draft of this plan was prepared and launched by
the D.P. Dhar. This plan was terminated in 1978.
 Rolling Plan: This plan was started with an
annual plan for 1978-79 and as a
continuation of the terminated fifth-five
year plan.
 Sixth Five Year Plan:
 I. Its duration was from 1980 to 1985.
 II. The basic objective of this plan was
poverty eradication and technological self-
reliance.
 III. It was based on investment Yojna,
infrastructural changing and trend to the
growth model.
 IV. Its growth target was 5.2% but it achieved
5.7%.
 Seventh Five Year Plan:
 I. Its duration was from 1985 to 1990.
 II. The objectives of this plan include the
establishment of a self-sufficient economy,
opportunities for productive employment.
 III. For the first time, the private sector got
the priority over public sector.
 IV. Its growth target was 5.0% but it achieved
6.0%.
 Annual Plans: Eighth five Plan could not take
place due to the volatile political situation at
the centre. So two annual programmes are
formed in 1990-91& 1991-92.
 Eighth Five Year Plan:
 I. Its duration was from 1992 to 1997.
 II. In this plan, the top priority was given to the
development of human resources i.e. employment,
education, and public health.
 III. During this plan, Narasimha Rao Govt. launched the
New Economic Policy of India.
 IV. This plan was successful and got an annual growth rate
of 6.8% against the target of 5.6%.
 Ninth Five Year Plan:
 I. Its duration was from 1997 to 2002.
 II. The main focus of this plan was “growth with justice
and equity”.
 III. It was launched in the 50th year of independence of
India.
 IV. This plan failed to achieve the growth target of 7% and
grow only at the rate of 5.6%.
 Tenth Five Year Plan:
 I. Its duration was from 2002 to 2007.
 II. This plan aims to double the Per Capita Income
of India in the next 10 years.
 III. It aims to reduce the poverty ratio of 15% by
2012.
 IV. Its growth target was 8.0% but it achieved only
7.2%.
 Eleventh Five Year Plan:
 I. Its duration was from 2007 to 2012.
 II. It was prepared by the C. Rangarajan.
 III. Its main theme was “faster and more inclusive
growth”
 IV. Its growth rate target was 8.1% but it achieved
only 7.9%
 Twelfth Five Year Plan:
 I. Its duration is from 2012 to 2017.
 II. Its main theme is “Faster, More Inclusive and
Sustainable Growth”.
 III. Its growth rate target is 8%.
 IV. It is the current five-year plan of India.
 The three-year action plan documents only provide
a broad roadmap to the government. The document
does not detail any schemes or allocations as it has
no financial powers. Since it need not be approved
by the Union Cabinet, its recommendations are not
binding on the government.

The documents of the Niti Aayog have no financial

role. They are only policy guide maps for the
government.
FEATURES OF ECONOMICS POLICY
PURSUED UNDER PLANNING TILL 1991
1. Heavy Reliance on public sector
2. Regulated development of private sector
3. Protection of small scale industry and
regulation of large scale industry
4. Development of heavy industry of strategic
significance
5. Focus on saving and investment
6. Protection from foreign competition
7. Focus on import substitution
8. Restriction on foreign capital (FDI-FERA)
9. Centralized planning
SUCCESS(ACHIEVEMENT) OF
PLANNING
 Increase in national income (4.6% to 6.8%)
 Increase in per capita income (2.7% to 5.5%)
 Rise in saving and investment (9.3% to 32.3%)
 Institutional and technical change in
agriculture.
 growth and diversification of industry
 Economic infrastructure
 Social infrastructure
 Employment
 International trade
FAILURES OF PLANNING IN
INDIA
 Abject poverty
 High rate of inflation
 Unemployment crises
 Inadequate infrastructure
 Skewed distribution
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