FIVEYEARPLANSOFINDIA:

The economy of India is based in part on planning through its fiveyear plans, which are
developed,executedandmonitoredbythePlanningCommissionofIndia.Theeleventhplan
completeditsterminMarch2012andthetwelfthplaniscurrentlyunderway.Priortothefourth
plan,theallocationofstateresourceswasbasedonschematicpatternsratherthanatransparent
andobjectivemechanism,whichledtotheadoptionofthegadgilformulain1969.Revised
versions of the formula have been used since then to determine the allocation of central
assistanceforstateplans.
ThefirstIndianPrimeMinister,JawaharlalNehrupresentedthekushagranijhara.firstfiveyear
plantotheParliamentofIndiaandneededurgentattention.Thetotalplannedbudgetof 2069
crorewasallocatedtosevenbroadareas:irrigationandenergy(27.2percent),agricultureand
communitydevelopment(17.4percent),transportandcommunications (24percent),industry
(8.4percent),socialservices(16.64percent),landrehabilitation(4.1percent),andforother
sectorsandservices(2.5percent).Themostimportantfeatureofthisphasewasactiveroleof
stateinalleconomicsectors.Sucharolewasjustifiedatthattimebecauseimmediatelyafter
independence,Indiawasfacingbasicproblemsdeficiencyofcapitalandlowcapacitytosave.
Thetargetgrowthratewas2.1%annualgrossdomesticproduct(GDP)growth;theachieved
growthratewas3.6%Thenetdomesticproductwentupby15%.Themonsoonwasgoodand
therewererelativelyhighcropyields,boostingexchangereservesandthepercapitaincome,
whichincreasedby8%.Nationalincomeincreasedmorethanthepercapitaincomeduetorapid
population growth. Many irrigation projects were initiated during this period, including the
BhakraDamandHirakudDam.TheWorldHealthOrganization,withtheIndiangovernment,
addressedchildren'shealthandreducedinfantmortality,indirectlycontributingtopopulation
growth.
Attheendoftheplanperiodin1956,fiveIndianInstitutesofTechnology(IITs)werestartedas
majortechnicalinstitutions.TheUniversityGrantCommissionwassetuptotakecareoffunding
]
andtakemeasurestostrengthenthehighereducationinthecountry. Contractsweresignedto
startfivesteelplants,whichcameintoexistenceinthemiddleofthesecondfiveyearplan.The
planwassuccessful.

1FirstPlan(19511956)
2SecondPlan(19561961)
3ThirdPlan(19611966)
4FourthPlan(19691974)
5FifthPlan(19741979)
6SixthPlan(19801985)
7SeventhPlan(19851990)
8EighthPlan(19921997)
9NinthPlan(19972002)
10TenthPlan(20022007)
11EleventhPlan(20072012)

12TwelfthPlan(20122017)

FirstPlan(19511956):

IndustrialsectorEnergyandIrrigationTransportandCommunicationsLandrehabilitation
SocialservicesDevelopmentsofagricultureandcommunityMiscellaneousissues
Thetargetsetforthegrowthinthegrossdomesticproductwas2.1percenteveryyear.Inreality,
theactualachievedwithregardtogrossdomesticproductwas3.6percentperannual.Thisisa
clearindicationofthesuccessofthe1stfiveyearplan.
Someimportanteventsthattookplaceduringthetenureofthe1stfiveyearplan:Thefollowing
Irrigationprojectswerestartedduringthatperiod:MutterDamHirakudDamBhakraDam.
Thegovernmenthadtakenstepstorehabilitatethelandlessworkers,whosemainoccupationwas
agriculture.Theseworkerswerealsograntedfundforexperimentingandundergoingtrainingin
agricultural know how in various cooperative institutions. Soil conservation, was also given
considerableimportance.TheIndiangovernmentalsomadeconsiderableeffortinimproving
posts and telegraphs, railway services, road tracks, civil aviation. Sufficient fund was also
allocatedfortheindustrialsector.Inadditionmeasuresweretakenforthegrowthofthesmall
scaleindustries.1stthreeplans(19511965)hadindustrialgrowthof8%steadygrowth.
SecondPlan(19561961):
Thesecondfiveyearplanfocusedonindustry,especiallyheavyindustry.UnliketheFirstplan,
whichfocusedmainlyonagriculture,domesticproductionofindustrialproductswasencouraged
intheSecondplan,particularlyinthedevelopmentofthepublicsector.Theplanfollowedthe
Mahalanobis model, an economic development model developed by the Indian statistician
PrasantaChandraMahalanobisin1953.Theplanattemptedtodeterminetheoptimalallocation
ofinvestmentbetweenproductivesectorsinordertomaximizelongruneconomicgrowth.It
usedtheprevalentstateofarttechniquesofoperationsresearchandoptimizationaswellasthe
novelapplicationsofstatisticalmodelsdevelopedattheIndianStatisticalInstitute.Theplan
assumedaclosedeconomyinwhichthemaintradingactivitywouldbecenteredonimporting
capitalgoods.
Hydroelectric power projects and five steel mills at Bhilai, Durgapur, and Rourkela were
established.Coalproductionwasincreased.Morerailwaylineswereaddedinthenortheast.
TheAtomicEnergyCommissionwasformedin1958withHomi.J.Bhabhaasthefirstchairman.
TheTataInstituteofFundamentalResearchwasestablishedasaresearchinstitute.In1957a
talentsearchandscholarshipprogramwasbeguntofindtalentedyoungstudentstotrainfor
workinnuclearpower.
ThetotalamountallocatedunderthesecondfiveyearplaninIndiawasRs.4,800crore.This
amountwasallocatedamongvarioussectors:

Powerandirrigation
Socialservices
Communicationsandtransport
Miscellaneous

TargetGrowth:4.5%Growthachieved:4.0%

ThirdPlan(19611966):
Thethirdplanstressedonagricultureandimprovementintheproductionofwheat,butthebrief
SinoIndianWarof1962exposedweaknessesintheeconomyandshiftedthefocustowardsthe
DefenseindustryorIndianarmy.In19651966,Indiafoughta[IndoPak]WarwithPakistan.
Duetothistherewasaseveredroughtin1965.Thewarledtoinflationandtheprioritywas
shiftedtopricestabilization.Theconstructionofdamscontinued.Manycementandfertilizer
plantswerealsobuilt.Punjabbeganproducinganabundanceofwheat.
Manyprimaryschoolshavebeenstartedinruralareas.Inanefforttobringdemocracytothe
grassroot level, Panchayat elections have been started and the states have been given more
developmentresponsibilities.
Stateelectricityboardsandstatesecondaryeducationboardswereformed.Statesweremade
responsible for secondary and higher education. State road transportation corporations were
formedandlocalroadbuildingbecameastateresponsibility.
TargetGrowth:5.6%ActualGrowth:2.4%
FourthPlan(19691974)
AtthistimeIndiraGandhiwasthePrimeMinister.TheIndiraGandhigovernmentnationalized
14majorIndianbanksandtheGreenRevolutioninIndiaadvancedagriculture.Inaddition,the
situationinEastPakistan(nowBangladesh)wasbecomingdireasthe[IndoPakistanWarof
1971]andBangladeshLiberationWartookFundsearmarkedfortheindustrialdevelopmenthad
tobedivertedforthewareffort.IndiaalsoperformedtheSmilingBuddhaundergroundnuclear
testin1974,partiallyinresponsetotheUnitedStatesdeploymentoftheSeventhFleetinthe
[BayofBengal].ThefleethadbeendeployedtowarnIndiaagainstattackingWestPakistanand
extendingthewar.
TargetGrowth:5.7%ActualGrowth:3.3%
FifthPlan(19741979):
Stresswasbylaidonemployment,povertyalleviation,andjustice.Theplanalsofocusedon
selfrelianceinagriculturalproductionanddefense.In1978thenewlyelectedMorarjiDesai
governmentrejectedtheplan.ElectricitySupplyActwasenactedin1975,whichenabledthe
CentralGovernmenttoenterintopowergenerationandtransmission.

The Indian national highway system was introduced and many roads were widened to
accommodatetheincreasingtraffic.Tourismalsoexpanded.
TargetGrowth:4.4%ActualGrowth:5.0
SixthPlan(19801985):
The sixth plan also marked the beginning of economic liberalization. Price controls were
eliminatedandrationshopswereclosed.Thisledtoanincreaseinfoodpricesandanincreasein
the cost of living. This was the end of Nehruvian socialism and Rajeev Gandhi was prime
ministerduringthisperiod.
Familyplanningwasalsoexpandedinordertopreventoverpopulation.IncontrasttoChina's
strict and binding onechild policy, Indian policy did not rely on the threat of force More
prosperous areas of India adopted family planning more rapidly than less prosperous areas,
whichcontinuedtohaveahighbirthrate.Thesixthfiveyearplanwasagreatsuccesstoindian
economy.
TargetGrowth:5.2%ActualGrowth:5.4%
SeventhPlan(19851990):
TheSeventhPlanmarkedthecomebackoftheCongressPartytopower.Theplanlaidstresson
improvingtheproductivitylevelofindustriesbyupgradingoftechnology.
Themainobjectivesofthe7thfiveyearplansweretoestablishgrowthinareasofincreasing
economicproductivity,productionoffoodgrains,andgeneratingemployment.
Asanoutcomeofthesixthfiveyearplan,therehadbeensteadygrowthinagriculture,control
onrateofInflation,andfavorablebalanceofpaymentswhichhadprovidedastrongbaseforthe
seventhfiveYearplantobuildontheneedforfurthereconomicgrowth.The7thPlanhad
strivedtowardssocialismandenergyproductionatlarge.Thethrustareasofthe7thFiveyear
planhavebeenenlistedbelow:

SocialJustice
Removalofoppressionoftheweak
Usingmoderntechnology
Agriculturaldevelopment
Antipovertyprograms
Fullsupplyoffood,clothing,andshelter
Increasingproductivityofsmallandlargescalefarmers
MakingIndiaanIndependentEconomy

Based on a 15year period of striving towards steady growth, the 7th Plan was focused on

achievingtheprerequisitesofselfsustaininggrowthbytheyear2000.ThePlanexpecteda
growthinlaborforceof39millionpeopleandemploymentwasexpectedtogrowattherateof4
percentperyear.
SomeoftheexpectedoutcomesoftheSeventhFiveYearPlanIndiaaregivenbelow:

BalanceofPayments(estimates):Export 33,000crore(US$5.7billio),Imports()
54,000crore(US$9.3billion),TradeBalance() 21,000crore(US$3.6billion)
Merchandiseexports(estimates): 60,653crore(US$10.4billion)
Merchandiseimports(estimates): 95,437crore(US$16.4billion)
ProjectionsforBalanceofPayments:Export 60,700crore(US$10.4billion),Imports
() 95,400crore(US$16.4billion),TradeBalance() 34,700crore(US$6.0billion)

UndertheSeventhFiveYearPlan,Indiastrovetobringaboutaselfsustainedeconomyinthe
countrywithvaluablecontributionsfromvoluntaryagenciesandthegeneralpopulace.
TargetGrowth:5.0%ActualGrowth:6.1%
EighthPlan(19921997):
198991 was a period of economic instability in India and hence no fiveyear plan was
implemented.Between1990and1992,therewereonlyAnnualPlans.In1991,Indiafaceda
crisisinForeignExchange(Forex)reserves,leftwithreservesofonlyaboutUS$1billion.Thus,
underpressure,thecountrytooktheriskofreformingthesocialisteconomy.P.V.Narasimha
RaowasthetwelfthPrimeMinisteroftheRepublicofIndiaandheadofCongressParty,andled
oneofthemostimportantadministrationsinIndia'smodernhistoryoverseeingamajoreconomic
transformationandseveralincidents affectingnationalsecurity.AtthattimeDr.Manmohan
Singh(currently,PrimeMinisterofIndia)launchedIndia'sfreemarketreformsthatbroughtthe
nearly bankrupt nation back from the edge. It was the beginning of privatization and
liberalizationinIndia.
Modernization of industries was a major highlight of the Eighth Plan. Under this plan, the
gradualopeningoftheIndianeconomywasundertakentocorrecttheburgeoningdeficitand
foreigndebt.MeanwhileIndiabecameamemberoftheWorldTradeOrganizationon1January
1995.ThisplancanbetermedasRaoandManmohanmodelofEconomicdevelopment.The
major objectives included, controlling population growth, poverty reduction, employment
generation,strengtheningtheinfrastructure,Institutionalbuilding,tourismmanagement,Human
Resource development, Involvement of Panchayat raj, Nagar Palikas, N.G.O'S and
Decentralizationandpeople'sparticipation.Energywasgivenprioritywith26.6%oftheoutlay.
Anaverageannualgrowthrateof6.78%againstthetarget5.6%wasachieved.
To achieve the target ofan average of 5.6%per annum, investment of 23.2%of the gross
domesticproductwasrequired.Theincrementalcapitalratiois4.1.Thesavingforinvestment
wastocomefromdomesticsourcesandforeignsources,withtherateofdomesticsavingat
21.6%ofgrossdomesticproductionandofforeignsavingat1.6%ofgrossdomesticproduction.

NinthPlan(19972002):
NinthFiveYearPlanIndiarunsthroughtheperiodfrom1997to2002withthemainaimof
attainingobjectiveslikespeedyindustrialization,humandevelopment,fullscaleemployment,
povertyreduction,andselfrelianceondomesticresources.
BackgroundofNinthFiveYearPlanIndia:NinthFiveYearPlanwasformulatedamidstthe
backdropofIndia'sGoldenjubileeofIndependence.
ThemainobjectivesoftheNinthFiveYearPlanofIndiaare:

toprioritizeagriculturalsectorandemphasizeontheruraldevelopment
togenerateadequateemploymentopportunitiesandpromotepovertyreduction
tostabilizethepricesinordertoacceleratethegrowthrateoftheeconomy
toensurefoodandnutritionalsecurity.
toprovideforthebasicinfrastructuralfacilitieslikeeducationforall,safedrinkingwater,
primaryhealthcare,transport,energy
tocheckthegrowingpopulationincrease
toencouragesocialissueslikewomenempowerment,conservationofcertainbenefitsfor
theSpecialGroupsofthesociety
tocreatealiberalmarketforincreaseinprivateinvestments

DuringtheNinthPlanperiod,thegrowthratewas5.35percent,apercentagepointlowerthan
thetargetGDPgrowthof6.5percent.
TenthPlan(20022007):

Attain8%GDPgrowthperyear.
Reductionofpovertyrateby5percentagepointsby2007.
Providing gainful and highquality employment at least to the addition to the labour
force.
Reductioningendergapsinliteracyandwageratesbyatleast50%by2007.
20pointprogrammewasintroduced.

Targetgrowth:8.1%Growthachieved:7.7%
EleventhPlan(20072012):
Theeleventhplanhasthefollowing
objectives:1.Income&Poverty
o

AccelerateGDPgrowthfrom8%to10%andthenmaintainat10%inthe12th

2.

3.

4.

5.

6.

Planinordertodoublepercapitaincomeby201617
o IncreaseagriculturalGDPgrowthrateto4%peryeartoensureabroaderspread
ofbenefits
o Create70millionnewworkopportunities.
o Reduceeducatedunemploymenttobelow5%.
o Raiserealwagerateofunskilledworkersby20percent.
o Reducetheheadcountratioofconsumptionpovertyby10percentagepoints.
Education
o Reducedropoutratesofchildrenfromelementaryschoolfrom52.2%in200304
to20%by201112
o Developminimumstandardsofeducationalattainmentinelementaryschool,and
byregulartestingmonitoreffectivenessofeducationtoensurequality
o Increaseliteracyrateforpersonsofage7yearsoraboveto85%
o Lowergendergapinliteracyto10percentagepoint
o Increasethepercentageofeachcohortgoingtohighereducationfromthepresent
10%to15%bytheendoftheplan.
Health
o Reduceinfantmortalityrateto28andmaternalmortalityratioto1per1000live
births
o ReduceTotalFertilityRateto2.1
o Providecleandrinkingwaterforallby2009andensurethattherearenoslip
backs
o Reducemalnutritionamongchildrenofagegroup03tohalfitspresentlevel
o Reduceanaemiaamongwomenandgirlsby50%bytheendoftheplan
WomenandChildren
o Raisethesexratioforagegroup06to935by201112andto950by201617
o Ensure that at least 33 percent of the direct and indirect beneficiaries of all
governmentschemesarewomenandgirlchildren
o Ensurethatallchildrenenjoyasafechildhood,withoutanycompulsiontowork
Infrastructure
o EnsureelectricityconnectiontoallvillagesandBPLhouseholdsby2009and
roundtheclockpower.
o Ensureallweatherroadconnectiontoallhabitationwithpopulation1000and
above (500 in hilly and tribal areas) by 2009, and ensure coverage of all
significanthabitationby2015
o ConnecteveryvillagebytelephonebyNovember2007andprovidebroadband
connectivitytoallvillagesby2012
o Providehomesteadsitestoallby2012andstepupthepaceofhouseconstruction
forruralpoortocoverallthepoorby201617
Environment
o Increaseforestandtreecoverby5percentagepoints.
o AttainWHOstandardsofairqualityinallmajorcitiesby201112.
o Treatallurbanwastewaterby201112tocleanriverwaters.
o Increaseenergyefficiencyby20%

Targetgrowth:8.3%Growthachieved:7.9%

TwelfthPlan(20122017):
12thFiveYearPlanoftheGovernmentofIndia(201217)haddecidedforthegrowthrateat
8.2%butNDCon27thDec2012approved8%growthratefor12thfiveyearplan.;
Withthedeterioratingglobalsituation,theDeputyChairmanofthePlanningCommissionMr.
MontekSinghAhluwaliahassaidthatachievinganaveragegrowthrateof9percentinthenext
fiveyearsisnotpossible.TheFinalgrowthtargethasbeensetat8%bytheendorsementofplan
attheNationalDevelopmentCouncilmeetingheldinNewDelhi.
"Itisnotpossibletothinkofanaverageof9percent(in12thPlan).Ithinksomewherebetween
8and8.5percentisfeasible,Mr.AhluwaliasaidonthesidelinesofaconferenceofState
PlanningBoardsanddepartments.Theapproachedpaperforthe12thPlan,approvedlastyear,
talkedaboutanannualaveragegrowthrateof9percent.
WhenIsayfeasible...thatwillrequiremajoreffort.Ifyoudontdothat,thereisnoGodgiven
righttogrowat8percent.Ithinkgiventhattheworldeconomydeterioratedverysharplyover
thelastyear...thegrowthrateinthefirstyearofthe12thPlan(201213)is6.5to7percent.
HealsoindicatedthatsoonhewouldsharehisviewswithothermembersoftheCommissionto
choose a final number (economic growth target) to put before the countrys NDC for its
approval.
Thoughthe12thPlanhastakenoff,itisyettobeformallyapproved.ThePlanningCommission
hassetadeadlineofSeptemberfortakingtheapprovaloftheNationalDevelopmentCouncil.
ThecouncilisexpectedtomeetafterJulysubjecttotheconvenienceofthePrimeMinister.
PovertyThegovernmentintendstoreducepovertyby10percentduringthe12thFiveYear
Plan. MrAhluwalia said,We aim to reduce poverty estimates by9 percent annually on a
sustainablebasisduringthePlanperiod.
Earlier,addressingaconferenceofStatePlanningBoardsandPlanningdepartments,hesaidthe
rateofdeclineinpovertydoubledduringthe11thPlan.Thecommissionhadsaid,whileusing
theTendulkarpovertyline,therateofreductioninthefiveyearsbetween200405and200910,
wasabout1.5percentagepointseachyear,whichwastwicethatwhencomparedtotheperiod
between199395to200405.whatisthegovernmentfocusofnowafiveyearplan,i.e.2012
2017