Economic Planning in India | 12 five years plans
Table of Contents
Economic Planning in India
Economic planning: Economic planning is the process under which efficient use of limited natural resources is accomplished for the fulfilment of pre-determined objectives.
The objective of economic planning is – Economic Growth, Poverty Alleviation, Increase in Employment opportunities and to remove Economic inequality and Social inequality.
The first economic planning proposal in India was introduced in 1934 in the book ‘Planned Economy for India’ by Moksha Gundam Visvesvaraya.
Then in 1938, the National Planning Committee was set up at the Haripura session of the Congress under the chairmanship of Jawaharlal Nehru.
In 1947, the ‘Economic Planning Committee’ was established under the chairmanship of Jawaharlal Nehru.
In 1944 Manvendra Nath introduced a scheme called The People’s Plan.
Subsequently such efforts were made in 1944 under the 'Bombay Plan or Bombay Plan'.
Bombay Plan: It was a proposal presented by 8 Industrialists for Economic Planning. Ardeshar Dalal was the architect of the scheme. This scheme is also known as Tata Birla Yojana.
It was introduced in 1944. It was titled- “A Brief Memorandum Outlining a Plan of Economic Development for India”. The names of the 8 Industrialists included in this scheme are as follows – J.R.D. Tata, Ghanshyam Das Birla, Ardeshar Dalal, Shri Ram, Kasturi Bhai Lalabhai, A.D. Shroff, John Mathai, Purushottam Das Tandon.
The objective of this scheme was to increase the production of Agriculture Sector by 2 times and industrial sector by 5 times in the next 15 years.
Sarvodaya Yojana was introduced by Jai Prakash Narayan in 1950. The main objective of Sarvodaya Yojana was to establish a society free from exploitation.
On 15 March 1950, the Planning Commission was formed on the recommendation of the Economic Planning Committee.
Audit year -1 July to 30 June
Financial year -1 April to 31st March
Planning commission
Establishment = 15 March 1950
It was another non constitutional and non-statutory body.
It was a Extra Constitutional Body.
On 1 January 2015, the NITI Aayog replaced the Planning Commission.
The Planning Commission consisted of a Chairman, a Deputy Chairman, Chief Ministers of all states and UTs, Lt. Governors and Administrators of all UTs and 9 ex-officio members.
In this, the number, age and tenure of the members were not fixed.
Ex-officio Chairman-Prime Minister
The first Chairman of the Planning Commission was Pandit Jawaharlal Nehru and the last Chairman was Narendra Modi.
The first Deputy Chairman of the Planning Commission was Gulzari Lal Nanda.
The last Deputy Chairman of the Planning Commission was M.S. Ahluwalia.
The Planning Commission had a Deputy Chairman who was appointed by the Cabinet. The Vice-Chairman used to get the status of Cabinet level ministers and members get the status of Minister of State.
The objective of the Commission was to create an Effective Plan for use of the country’s resources.
NDC – National Development Council:
Establishment = August 6, 1952
Ex-officio President = Prime Minister
Current President – Narendra Modi
It is a non-constitutional and non-statutory body.
It is an extra-constitutional body.
The final approval of the Planning Commission is made by the ‘National Development Council’.
The Secretary of the Planning Commission is also the Secretary of the NDC.
Functions of the National Development Council (NDC):
To give final approval to the plans made by the Planning Commission.
Approving Five Year Plans.
Periodically reviewing the Five-year Plan.
To consider aspects related to Economic and Social policy.
It prepares an informal business letter (Memorandum) of the Planning Commission for five-year plan based on regional programs prepared by working groups. It is placed before the Council of Ministers and the National Council.
Members of National Development Council:
Prime Minister
Chief Ministers of all states and UTs
Lt. Governor and Administrator of all UTS
All Members of the Planning Commission
National Institution for Transforming India:
Establishment – 1 January 2015
It is a non-constitutional body.
It is an extra-constitutional body.
It acts like the Think Tank of India.
Ex-officio President – Prime Minister
Current President = Narendra Modi
Current Vice President = Rajiv Kumar
First Vice President – Arvind Panagariya
The present C.E.O. = Amitabh Kant
First C.E.O. = Sindhushree Khullar
Members of NITI Aayog:
(i) Prime Minister
(ii) Vice President
(iii) C.E.O
(iv) Chief Ministers of all states and UTs
Director / President-Shri Narendra Modi, Honourable Prime Minister
Vice president -Dr Rajiv Kumar
Full time member
- Mr. V.K. Saraswat (DRDO Former President)
- Pro. Ramesh Chand (Agriculture Expert)
- Dr VK Paul (Public Health Expert)
Ex-officio member
- Shri Rajnath Singh, Minister of Defense
- Shri Amit Shah, Home Minister
- Smt Nirmala Sitharaman, Finance Minister and Corporate Affairs Minister
- Shri Narendra Singh Tomar; Minister of Agriculture and Farmers Welfare; Minister of Rural Development; Minister of Panchayati Raj.
Special invitee member
- Shri Nitin Jairam Gadkari, Minister of Road Transport and Highways;Minister of Micro, Small and Medium Enterprises
- Shri Thawar Chand Gehlot, Minister of Social Justice and Empowerment
- Shri Piyush Goyal, Railway Minister and Commerce and Industry Minister
- Shri Rao Inderjit Singh, Minister of State (Independent Charge), Ministry of Statistics and Program Implementation and Ministry of Planning
Chief Executive Officer -Mr. Amitabh Kant
Annual Plan: A plan that is made only for 1 year is called the Annual Plan.
Five Year Plan: A plan that is made for 5 years is called a FiveYear Plan.
Long-term planning: A plan that is made for 15-20 years, keeping in mind of Social and Political objectives, is called a long-term plan.
India Vision 2020: These are important documents predicting the progress of Indian economy in the coming two decades (20 years).
It has a total of 97 pages.
It was released by the Planning Commission on 23 January 2003 under the chairmanship of Shyam Prasad Gupta.
Gadgil Formula: In (1969-70), the then Deputy Chairman of Planning Commission gave Gadgil Formula to provide planned assistance to the States from the Central Government. Gadgil formed a base in 1969–70, known as the Gadgil formula. Under this formula, it was said to give priority to backward and poor states over rich states. According to this formula, 70 percent of planned aid was to be given as loans and 30 percent as grants.
Till now 12 Five Year Plans and 7 Annual Plans have been made in India.
The detailed description of 12 five-year plans and 7 annual plans is as follows:
- First Five Year Plan:
Tenure = 1951 to 1956.
In this Five-year Plan, emphasis was laid on ‘Small Industries and Agriculture’.
It had a target of 1.2% annual GDP and the achievement was 3.6% i.e. the scheme was successful.
The scheme was based on the model of ‘Hared – Domer’.
Many projects were started during this scheme, among which Bhakra-Nangal Dam, Hirakud Dam, Mentur Dam etc. are prominent.
During this Community Development Program was launched on October 2, 1952 and aimed at the overall development of India.
- Second Five Year Plan:
Heavy Industry started in it.
Tenure = 1956 to 1961
In this Five-year Plan, emphasis was laid on ‘Heavy Industries’.
It had an annual GDP growth target of 2.5% and attainment of 4.1%. This plan was also successful.
The plan was based on the model of Prashant Chandra Mahalanobis.
It is also known as the ‘Nehru Mahalanobis Model’.
During this plan Rourkela, Bhilai, Durgapur steel plants were set up.
- Third Five Year Plan:
Tenure = 1961 to 1966
In this Five-Year Plan, emphasis was laid on Agriculture.
It had an annual GDP growth target of 5.6%, but achieved only 2.5% and thus the plan was unsuccessful.
The main reason for the failure of this plan was the Indo-China War (1962), Indo-Pak war (1965) and drying out for 2 consecutive years. The plan was based on the models of John Sandy, Sukhmay Chakraborty and Performance Planning.
During this plan that the Bokaro Steel Plant was established.
Annual plans:
From April 1, 1966 to March 31, 1969, 3 Annual Schemes were run.
These Annual Plans are also known as ‘Plan Holiday’.
The suggestion to implement these schemes was given by then Deputy Chairman of Planning Commission Mr.D.R. Gadgil .
The main objective of these three annual plans (1966–67, 1967–68, 1968–69) was to end the Food Crisis and thus the Green Revolution was started in 1966–67.
- Fourth Five Year Plan
Tenure = 1969 to 1974
In this scheme emphasized was laid on Agriculture.
The plan had a target of 5.5% annual growth rate of GDP but achieved only 3.3% and thus the scheme also failed.
The reasons for its failure included Indo-Pak war (1971), arrival of Bangladesh refugees and weather adverseness.
The scheme was based on the model of Alan S. Manne and Ashok Rudra.
On July 19, 1969, the then P.M. Indira Gandhi Nationalized India’s 14 largest banks during this five-year plan.
5.Fifth Five Year Plan:
Tenure = 1974 to 1978.
It was the only five-year plan with a tenure of 4 years.
In this Five-Year Plan, emphasis was laid on Eradication of Poverty.
Model of this scheme was prepared by D.P. Dhar.
The duration of this plan was between 1974 and 1979.
But after the Janata Party government came to power in 1977, the plan was discontinued in 1978 instead of 1979.
The scheme had a target of 4.4% of annual GDP growth and achieved 5%. That is, this plan was successful.
Annual plans
The Janata Party, after coming to power, ran two annual schemes from 1978-79 and 1979-80, also known as the ‘Rolling Plan’.
But after the Congress party came to power in 1980, the Rolling Plan was closed and the five-year plans start again. The Continuous Plan was formulated by Gunnar Myrdal while the credit for implementing the Continuous Plan was goes to D.T. Lakdawala.
- Sixth Five Year Plan:
Tenure = 1980 to 1985.
It was the only five-year plan that was prepared twice.
The Janata Party had prepared the draft of the Sixth Five-Year Plan from 1978-83, but the Sixth Five-Year Plan 1980-85 was again made as soon as the Congress Party came to power in 1980. The plan emphasized Self-sufficiency and Poverty Alleviation.
The plan targets the annual growth rate of GDP at 5.2% and achieving 5.4%. That is, this plan was successful.
It was based on the model of Gunnar Myrdal.
On 15 April 1980, the then Prime Minister Indira Gandhi Nationalized 6 other big banks during this five-year plan.
- Seventh Five Year Plan:
Tenure = 1985 to 1990.
The plan emphasized ‘Economy’.
The scheme was based on the model of ‘Pranab Mukherjee’.
The target of annual growth rate of GDP was set at 5.4% and the achievement was 5.8%. That is, this plan was also successful.
Annual plans:
Two annual schemes ran from 1990–91 and 1991–92.
The main reason for starting these annual plans was the crisis of currency reserves.
- Eighth Five Year Plan:
Tenure – 1992 to 1997.
The plan mainly focused on ‘Development of Agriculture and Human Resources’.
In this plan, the annual GDP growth target was set at 5.6% and the achievement was 6.7% i.e. the scheme was also successful.
The plan was based on the model of John W. Muller.
Pradhan Mantri Rozgar Yojana (1993) and Rozgar Bema Yojana (1993) were run during this scheme.
Ninth Five Year Plan:
Tenure = 1997 to 2002.
The scheme was based on the Growth Model.
The scheme had a target of 6.5% of annual GDP growth and only 5.5% was achieved and thus the scheme failed.
‘International recession’ is considered to be the main reason for the failure of this plan.
- Tenth Five Year Plan:
Tenure = 2002 to 2007.
The main objective of this scheme was to establish Social justice and Equality.
This scheme was based on the Planning Commission model.
The target of annual growth rate of GDP was set at 8% in this scheme, but achieved only 7.8%. That is, this plan was almost successful.
- Eleventh Five Year Plan:
Tenure = 2007 to 2012.
This plan emphasized on ‘rapid and inclusive development’.
This plan was based on Rangarajan’s model.
There was a lot of emphasis on Education in this scheme.
In this scheme, the annual growth rate of GDP was targeted at 9% and the attainment was 8.3%, which is the highest rate achieved till date. That is, this five-year plan was successful.
- Twelfth Five Year Plan:
Tenure = 1 April 2012 to 31 March 2017.
The plan also stressed on ‘Faster sustainable and more inclusive development’.
By the end of this scheme, 50 percent Gram Panchayats will be given the level of Nirmal Gram.
By the end of this scheme, 90 percent of Indian families will be connected to banking facilities.
The plan targets the annual growth rate of GDP at 8%.
This Five-Year Plan was a success.
Plans have been launched by the Government of India from time to time to alleviate poverty and unemployment. Such major schemes were run by the Government of India.
- Grains for Work Program: Started 1977-78
Under this scheme, laborers are given grain instead of wages after work.
- Indira Awaas Yojana:
Start = 1985-86
The scheme provides free housing to people living below the poverty line.
- Pradhan Mantri Rozgar Yojana:
Start = 1993
The main objective of this scheme is to provide employment to the people.
- Mid-day meal scheme (MDMS):
Inception = 1995
Under this scheme, children up to class 8 are provided lunch with balanced diet.
The main goal of this scheme is to boost the number of Children in government schools.
- SJSRY (Swaran Jayanti Sheri Vikas Yojana):
Start = December 1, 1997
The main objective of this scheme is to provide employment to people under poverty prevention schemes in urban areas.
- Annapurna Scheme:
Inception = March 19, 1999
Under this scheme, Old citizens are provided free grain.
- Antodaya Anna Yojana:
Inception = 25 December 2000
Objective = To provide food grains to BPL families at cheap prices. Under this scheme, BPL families will be given Rs 2 per kg of wheat and Rs 3 per kg of rice.
- Sarva Shiksha Abhiyan:
Start = 2000-01
Under this scheme, compulsory and free education is provided to children from 6 years to 14 years.
It has been added to the Constitution under Article 21 (A) by the 86th Amended Act 2002.
RTE was implemented in India on 1 April 2010.
- National Highway Scheme (NHS) launched – 15 August 2001
The objective of this scheme is to develop National Highways as well as provide Employment Opportunities.
- Nirmal Bharat Yojana:
Start = August 15, 2002
Under this scheme, the facility of mass toilets in slums is provided by the government. Mumbai has the highest number of slums in India.
- Janani Suraksha Yojana:
Start = March 8, 2003
The scheme was launched on the occasion of International Women’s Day. The main objective of this scheme is to provide better facilities to pregnant women.
- Hariyali Yojana
Inception – 27 June 2003
The main objective of this scheme is to promote plantation in rural areas.
- Nirmal Gram Puraskar Scheme:
Commencement = August 15, 2003
Under this scheme, the Nirmal Gram Puraskar is given to the villages having cleanliness in rural areas and some amount is also given as a reward.
The main objective of this scheme is to promote cleanliness in rural areas.
- Vande Mataram Scheme:
Begin = January 14, 2004
Objective = To provide health related facilities to women of poor and backward classes.
Beginning = 23 January 2004
Objective = To provide family pension insurance and medical facilities to the unorganized sector workers.
Start = February 2, 2006
The objective of this scheme is to develop the Villages completely.
- NREGA – National Rural Employment Guaranteed Act:
Commencement = February 2, 2006
The scheme was started from Anantapur village in Bandwali district of Andhra Pradesh.
The policy maker of the National Rural Employment Guarantee Act (NREGA) is ‘Jaya Dredge’ (Belgian economist).
NREGA is implemented by the ‘Ministry of Rural Development’.
NREGA was started by merging the ‘Sampoorna Grameen Rozgar Yojana’ and the ‘Grain for Work Scheme’.
In this scheme, financial assistance is provided by the Central and State Governments in the ratio of 90: 10 respectively.
Under this scheme, the duration of work will not exceed 7 hours in 1 day and 6 days in 1 week.
Under this scheme, workplace is within 5 Km of house. If the distance from home to the workplace is more than 5 km, then 10% additional wages will be given.
An amount of Rs. 25,000 is given by the Central Government in the event of death or permanent disability at the workplace.
Under this scheme unemployment allowance is given in case of non-employment for 15 days.
Women have 33% participation in NREGA.
Under this scheme, each family is given 100 days of employment in 1 year. In drought-affected areas, each family is given 150 days of employment in 1 year.
On 2 October 2009, NREGA (NREGA) was renamed to MNREGA (MNREGA).
Now this scheme is known as ‘Mahatma Gandhi National Rural Employment Guarantee Act’ (MNREGA – Mahatma Gandhi National Rural Employment Guaranted Act).
The ‘right to work’ is a legal right.
| No. | FYP | Duration | Emphasis on | Result | Model |
| 1 | 1 | 1951-1956 | Small industries & agriculture | Successful | Hared- domer |
| 2 | 2 | 1956-1961 | Heavy industry | Successful | Prashant chander Mahalanobis |
| 3 | 3 | 1961-1966 | Agriculture | Failed | John sandy, Rukmani chakarwati |
| 4 | 4 | 1969-1974 | Agriculture | Failed | Allen S.Manne & Ashok Rudra |
| 5 | 5 | 1974-1978 | Poor elimination | Successful | DP Dhar |
| 6 | 6 | 1980-1985 | Poverty & Self- Sufficiency | Successful | Gunear Mirdal |
| 7 | 7 | 1985-1990 | Economy | Successful | Pranav Mukherjee |
| 8 | 8 | 1992-1997 | Development of agriculture &human resources | Successful | John W.Mooler |
| 9 | 9 | 1997-2002 | Fair dispensation | Failed | Growth |
| 10 | 10 | 2002-2007 | Social justice & Equally | Successful | Planning Commission
|
| 11 | 11 | 2007-2012 | Fastest &inclusive development | Successful | C.Rangarajan |
| 12 | 12 | 2012-2017 | Acute retention& more inclusive development | Successful | Planning Commission |
