About Five Year Plan
- Economic planning in India began after the country’s independence in 1950 when it was thought important for the country’s economic growth and development.
- This was carried out through the Planning Commission (1951-2014) and the NITI Aayog’s (2015-2017) Five-Year Plans, which were established, implemented, and monitored.
- Under the socialist influence of first Prime Minister Pt. Jawahar Lal Nehru, the idea of five-year economic planning was borrowed from the Soviet Union.
About Planning Commission
- The Planning Commission of India was a government body that formulated India’s Five-Year Plans, among other things. The planning commission was tasked with ensuring that everyone could participate in community service.
- The Planning Commission reported directly to the Prime Minister of India. It was founded on March 15, 1950, under Prime Minister Jawaharlal Nehru’s presidency. The Central/Union Government established the Planning Commission, which was not established by the Constitution or statute.
- The Planning Commission was established by a resolution issued by the Indian government in March 1950. The government’s key objectives were to push for a rapid rise in Indians’ living standards through successful resource exploitation, higher output, and opportunities for everyone to engage in the service of society.
- The Planning Commission was entrusted with assessing all of the country’s resources, enhancing valuable resources, developing plans for the most productive and balanced use of resources, and establishing priorities. Pandit Nehru was the first Chairman of the Planning Commission.
- It was dissolved in 2014, and NITI Aayog took its place.
First Five-Year Plan
- It was established under the leadership of Jawaharlal Nehru from 1951 to 1956.
- It was based on the Harrod-Domar model, but with some modifications.
- Its main focus was on the country’s agricultural development.
- This plan was a success, with a 3.6% growth rate (more than its target of 2.1% ).
- At the conclusion of this strategy, the country had five IITs.
Second Five-Year Plan
- It was established between 1956 and 1961, under Jawaharlal Nehru’s leadership.
- It was created using the P.C. Mahalanobis Model from 1953.
- Its main focus was on the country’s industrial development.
- This plan fell short of its target growth rate of 4.5%, achieving 4.27% instead.
- However, many experts rejected this idea, and India suffered a payment problem in 1957 as a result.
Third Five-Year Plan
- It was created between 1961 and 1966, under Jawaharlal Nehru’s leadership.
- The plan is also known as the ‘Gadgil Yojna,’ after D.R. Gadgil, the Deputy Chairman of the Planning Commission.
- The plan’s principal goal was to make the economy self-sufficient. Agriculture was emphasized, as was the improvement in wheat production.
- India was involved in two wars during the implementation of this plan: (1) the Sino-India conflict of 1962 and (2) the Indo-Pakistani war of 1965.
- These battles exposed our economy’s weaknesses and moved attention to the defense industry, the Indian Army, and price stabilization (India witnessed inflation).
- Due to China wars and drought, the plan failed. The target growth rate was 5.6%, but the actual rate was only 2.4%.
- From 1966 to 1969, the government announced three annual plans known as Plan Holidays in response to the failure of the previous plan.
- The Indo-Pakistani and Sino-Indian wars were the primary causes of the plan’s cancellation, resulting in the failure of the third Five-Year Plan.
- Annual plans were made during this period, and agriculture, its related sectors, and the industry sector were given equal attention.
- In order to boost the country’s exports, the government announced a rupee devaluation.
Fourth Five-Year Plan
- Under the leadership of Indira Gandhi, it lasted from 1969 to 1974.
- This plan had two primary objectives: expansion with stability and gradual self-sufficiency.
- 14 major Indian banks were nationalized during this period, and the Green Revolution began. The 1971 Indo-Pakistani War and the Bangladesh Liberation War occurred.
- One of the Plan’s major goals was to implement family planning programs.
- This plan failed, with a growth rate of only 3.3% compared to the aim of 5.7%.
Fifth Five-Year Plan
- It lasted from 1974 to 1978.
- The Garibi Hatao, employment, justice, agricultural output, and defense were all prioritized in this plan.
- In 1975, the Electricity Supply Act was changed, a Twenty-Point Program was started, the Minimum Needs Programme (MNP) was established, and the Indian National Highway System was established.
- This plan was overall successful, with a growth rate of 4.8% vs the aim of 4.4%.
- The freshly elected Moraji Desai government put an end to this scheme in 1978.
- The Rolling Plan had effect from 1978 to 1990, following the end of the fifth Five-Year Plan.
- The Rolling Plan was rejected by Congress in 1980, and a new sixth Five-Year Plan was introduced.
- Under the Rolling plan, three plans were introduced:
(1) This plan was for the current fiscal year’s budget;
(2) it was for a definite number of years— 3, 4, or 5 years;
(3) it was a long-term perspective plan— 10, 15, or 20 years.
- The plan has various advantages, including the ability to change targets and the ability to adapt projects, allocations, and other aspects of the plan to the economy of the country. This indicates that if the aims can be changed each year, it will be difficult to meet the goals and the market will become unstable.
Sixth Five-Year Plan
- Under the leadership of Indira Gandhi, it lasted from 1980 until 1985.
- The plan’s main goal was to achieve economic liberalization by eliminating poverty and creating technological self-sufficiency.
- It was built on Yojna investment, infrastructure changes, and a growth model trend.
- Its target growth rate was 5.2%, but it really grew at 5.7%.
Seventh Five-Year Plan
- It lasted from 1985 to 1990, and Rajiv Gandhi was the prime minister during that time.
- This plan’s aims include the creation of a self-sufficient economy, possibilities for gainful employment, and technological advancement.
- With a focus on ‘food, work, and productivity,’ the Plan planned to increase foodgrain output, increase employment possibilities, and raise productivity.
- The private sector was given precedence over the public sector for the first time.
- Its goal growth rate was 5.0%, but it ended up at 6.01%.
- Because of the volatile political climate in the country’s capital, the Eighth Five-Year Plan could not be implemented.
- For the years 1990-91 and 1991-92, two annual programs were established.
Eighth Five-Year Plan
- It lasted from 1992 to 1997, with P.V. Narasimha Rao as its leader.
- The development of human resources, such as employment, education, and public health, was given primary importance in this strategy.
- The New Economic Policy of India was launched by the Narasimha Rao government during this plan.
- Rapid economic growth (highest annual growth rate so far – 6.8%), high growth in agriculture and allied sectors, and manufacturing sector, growth in exports and imports, and improvement in trade and current account deficit were some of the significant economic outcomes during the eighth plan period. Despite the fact that the public sector’s portion of total investment had fallen to around 34%, a strong growth rate was attained.
- This plan was a success, with an annual growth rate of 6.8% compared to the aim of 5.6.
Ninth Five-Year Plan
- Under the leadership of Atal Bihari Vajpayee, it lasted from 1997 to 2002.
- The plan’s main goal was “Growth with Social Justice and Equality.”
- It was launched on the 50th anniversary of India’s independence.
- This strategy fell short of its 6.5% growth target, achieving a rate of 5.6% instead.
Tenth five-year plan
- It lasted from 2002 to 2007, with Atal Bihari Vajpayee and Manmohan Singh as its leaders.
- The goal of this strategy was to double India’s per capita income in the next ten years.
- It aimed to get the poverty rate down to 15% by 2012.
- Its goal growth rate was 8.0%, but it only reached 7.6%.
Eleventh Five-Year Plan
- It lasted from 2007 to 2012, and Manmohan Singh was the prime minister during that time.
- C. Rangarajan was in charge of preparing it.
- The main focus of the conference was “rapid and more inclusive growth.”
- It grew at an annual pace of 8%, compared to a projection of 9% growth.
Twelfth Five-Year Plan
- It lasted from 2012 to 2017, with Manmohan Singh as its head.
- The main focus of the conference is “Faster, More Inclusive, and Sustainable Growth.”
- Its target growth rate was set at 8%.
Post Five Year Planning era
- For a long time, there had been a feeling that centralized planning, with its one-size-fits-all approach, could only go so far in a country as diverse and large as India.
- As a result, the NDA government abolished the Planning Commission and replaced it with the NITI Aayog. As a result, there were no thirteen Five Year Plans, but a five-year defense plan was created.
- It’s vital to understand that the NITI Aayog’s documents have no financial implications. They are only government policy guide maps.
- Because it lacks financial powers, the three-year action plan simply serves as a general road map for the government. It does not define any plans or allocations.