Economic Planning in India

The Visvesvaraya Plan:

The era of economic planning in India started with Visvesvaraya’s ten-year Plan. Sir M. Visvesvaraya published a book titled “Planned Economy in India” in 1934 wherein he presented a draft to double the national income in a decade. He proposed to shift the labour from the agrarian set up to the industries thereby advocating for democratic capitalism (similar to the USA) with emphasis on industrialization.

The National Planning Committee:

Rudimentary economic planning, deriving from the sovereign authority of the state, was first initiated in India in 1938 by Congress President Netaji Subhash Chandra Bose, Atul Tiwari, Jawaharlal Nehru who had been persuaded by Meghnad Saha to set up a National Planning Committee.

The Bombay Plan:

“The Bombay Plan” is the nickname of a 15-year economic plan for India proposed by a group of industrialists and technocrats in January 1944. It was authored by top industrialists such as JRD Tata, GD Birla and Lal Shri Ram. The economists who helped draft the plan were John Mathai (who went on to become the finance minister in Nehru's cabinet), Ardheshir Dalal, AD Shroff and PS Lokanathan.

The Gandhian Plan:

The Gandhian Plan was drafted by S. N. Aggarwal, the principal of Wardha Commercial College in 1944. The plan articulated a ‘decentralized economic structure’ for India with ‘self-contained villages’.

The Sarvodaya Plan:

This plan was drafted by Jai Prakash Narayan in 1950. It was inspired by Gandhi Plan and Vinoba Bhave’s principles of self-reliance. It laid stressed upon agriculture as well as small and cotton industries. It advocated self-sufficiency by curtailing the use of foreign technology and implementing land reforms and decentralized participatory planning.

Planning Commission of India:

The Planning Commission was formed in 1950. It was an institution in the Government of India, which formulated India's Five-Year Plans, among other functions. Pandit J. L. Nehru was its first chairman. The first five year plan was launched in 1951.

The NITI Aayog:

The Five-Year Plans were laid to rest by the Narendra Modi-led NDA government in 2015. Hence, the 12th five-year plan is considered the last five-year plan of India. National Institution for Transforming India (NITI Aayog), was formed via a resolution of the Union Cabinet on 1 January 2015.

First Five Year Plan:

I. It was launched for the duration of 1951 to 1956, under the leadership of Jawaharlal Nehru. 

II. It was based on the Harrod-Domar model with a few modifications. 

III. Its main focus was on the agricultural development of the country.

IV. This plan was successful and achieved a growth rate of 3.6% (more than its target of 2.1%). 

V. At the end of this plan, five IITs were set up in the country. 

Second Five Year Plan:

I. It was made for the duration of 1956 to 1961, under the leadership of Jawaharlal Nehru. 

II. It was based on the P.C. Mahalanobis Model made in the year 1953. 

III. Its main focus was on the industrial development of the country, especially heavy industries.

IV. This plan lags behind its target growth rate of 4.5% and achieved a growth rate of 4.27%. 

V. This plan was criticised by many experts and as a result, India faced a payment crisis in 1957.

Third Five Year Plan:

I. It was made for the duration of 1961 to 1966, under the leadership of Jawaharlal Nehru. 

II. This plan is also called ‘Gadgil Yojna’, after the Deputy Chairman of Planning Commission D.R. Gadgil.

III. The main target of this plan was to make the economy independent. The stress was laid on agriculture and the improvement in the production of wheat. 

IV. During the execution of this plan, India was engaged in two wars: (1) the Sino-India war of 1962 and (2) the Indo-Pakistani war of 1965. These wars exposed the weakness in our economy and shifted the focus to the defence industry, the Indian Army, and the stabilisation of the price (India witnessed inflation). 

V. The plan was a flop due to wars and drought. The target growth was 5.6% while the achieved growth was 2.4%.

Plan Holidays:

I. Due to the failure of the previous plan, the government announced three annual plans called Plan Holidays from 1966 to 1969.

II. The main reason behind the plan holidays was the Indo-Pakistani war and the Sino-India war, leading to the failure of the third Five Year Plan.

III. During this plan, annual plans were made and equal priority was given to agriculture and its allied sectors and the industry sector.

V. In a bid to increase the exports in the country, the government declared devaluation of the rupee.

Fourth Five Year Plan:

I. Its duration was from 1969 to 1974, under the leadership of Indira Gandhi. 

II. There were two main objectives of this plan i.e. growth with stability and progressive achievement of self-reliance.

III. During this time, 14 major Indian banks were nationalised and the Green Revolution was started. The Indo-Pakistani War of 1971 and the Bangladesh Liberation War took place. 

IV. Implementation of Family Planning Programmes was amongst major targets of the Plan

V. 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 1978.

II. This plan focussed on Garibi Hatao, employment, justice, agricultural production and defence.

III. The Electricity Supply Act was amended in 1975, a Twenty-point program was launched in 1975, the Minimum Needs Programme (MNP) and the Indian National Highway System was introduced. 

IV. Overall this plan was successful which achieved a growth of 4.8% against the target of 4.4%.

V. This plan was terminated in 1978 by the newly elected Moraji Desai government.

Rolling Plan:

I. After the termination of the fifth Five Year Plan, the Rolling Plan came into effect from 1978 to 1980. 

II. In 1980, Congress rejected the Rolling Plan and a new sixth Five Year Plan was introduced.

Sixth Five Year Plan:

I. Its duration was from 1980 to 1985, under the leadership of Indira Gandhi. 

II. The basic objective of this plan was economic liberalisation by eradicating poverty and achieving technological self-reliance.

III. It was based on investment Yojna, infrastructural changing, and trend to the growth model.

Seventh Five Year Plan:

I. Its duration was from 1985 to 1990, under the leadership of Rajiv Gandhi. 

II. The objectives of this plan include the establishment of a self-sufficient economy, opportunities for productive employment, and up-gradation of technology.

III. The Plan aimed at accelerating food grain production, increasing employment opportunities & raising productivity with a focus on ‘food, work & productivity

IV. For the first time, the private sector got priority over the public sector.

V. Its growth target was 5.0% but it achieved 6.01%.

Eighth Five Year Plan:

I. Its duration was from 1992 to 1997, under the leadership of P.V. Narasimha Rao. 

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. Some of the main economic outcomes during the eighth plan period were rapid economic growth (highest annual growth rate so far – 6.8 %), high growth of agriculture and allied sector, and manufacturing sector, growth in exports and imports, improvement in trade and current account deficit. A high growth rate was achieved even though the share of the public sector in total investment had declined considerably to about 34%.

V. 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, under the leadership of Atal Bihari Vajpayee. 

II. The main focus of this plan was “Growth with Social Justice and Equality”.

Tenth Five Year Plan:

I. Its duration was from 2002 to 2007, under the leadership of Atal Bihari Vajpayee and Manmohan Singh. 

II. This plan aimed to double the Per Capita Income of India in the next 10 years.

III. It also aimed to reduce the poverty ratio to 15% by 2012.

IV. Its growth target was 8.0% but it achieved only 7.6%.

Eleventh Five Year Plan:

I. Its duration was from 2007 to 2012, under the leadership of Manmohan Singh. 

II. It was prepared by C. Rangarajan.

III. Its main theme was “rapid and more inclusive growth”.

IV. It achieved a growth rate of 8% against a target of 9% growth.

Twelfth Five Year Plan:

I. Its duration is from 2012 to 2017, under the leadership of Manmohan Singh. 

II. Its main theme is “Faster, More Inclusive and Sustainable Growth”.