3rd and 4th Five-year plan (1961-1966)

3rd five-year plan

The main objective of 3rd five-year plan was to increase the quality of the life of the
citizens through effective use of the country resources.

The various tasks of Third five year plan are- To increase the national income by 5% per
year, to increase the production of agriculture so that the nation becomes self sufficient in
food grains, to provide employment opportunities for every citizens of the country, to
establish equality among all the people of the country. In the earlier two five years plan
government only focus on infrastructure and PSUs. However, in third five year plan of
India, government gave stress on agriculture because increase in agriculture provide growth
of Indian economy, sufficient subsidies were planned by government for the agriculture
sector.

Total Government allocation for third year plan was Rs 11600 crore in which Rs 7500
crore was for the public sector and Rs 4100 crore for the private sector.

Table clearly shows that government expenditure is less then allocation, with slight growth
in every sector. There are many reasons for this low growth rate, which we will be
discussing in different section.

Achievement

According to graph 1 there is slight growth in National Income, Mining and industries and
Agriculture and allied sector. During the third year plan national income at 1960-61 rose by
20% in the first four years and then decline by 5.6 % in last year. Growth in national
income and output of agriculture and industries during the last eight year is shown in Table
2.

NATIONAL INCOME ——— (1960-61=100)———

1960-61 61-62 62-63 63-64 64-65 65-66 66-67 67-68 68-69

Table 2 shows industrial production increased by only 0.2% in 1966-67 and there was
growth of 0.5% in 1967-68, there were many factors which contribute in decline of growth
rate: decline in purchasing power, less investment, shortage of foreign exchange because of
the need for high imports of food grains and raw material. In some important industries
such as fertilizers, petroleum products, non-ferrous metals, electrical machinery and pumps
shows satisfactory rate of growth.

The performance of agriculture during the first three years of the Third Plan was not
satisfactory. In 1964-65, was a year of favorable weather conditions shows increase in
harvest. However, this improvement is for short term, agriculture production decreases
gradually in subsequent two year due to draught. In 1967-68, however, sharp increase took
place due to combined result of the establishment of new varieties of cereal seeds, increase
in use of fertilizers, pesticides and water, favorable weather condition. The production of
food grains in 1969-70, estimated at 100 million tonnes, is higher than the 1968-69
production by about 6 million tonnes.

There has been negligible progress in education and public health, this is because facilities
as if primary health centers not covers all parts of country still there is wide gap between
states. However short progress in education is due to rapid spread of secondary and higher
education, special program have been started for development of rural area, establishment
of small industries in rural area.

One of the major objectives of the plan was to create more employment opportunities in
rural and urban sector on high scale. In the rural area this employment opportunities will be
through labor-intensive scheme such as minor irrigation, soil conservation. Extension of
irrigation and multiple cropping should result in a considerable increase in the demand for
agricultural labor in many areas. In urban area manufacturing industries play important role
in providing employment, employment in this sector is due to increase in PSUs.

4th Five-Year Plan (1969-1974)

1969, the year when the 4th Five Year Plan was presented by the Prime Minister of India
Smt. Indira Gandhi. After the attack in the year 1962 and 1965, India had reformed and
restructured its expenditure agenda. Due to recession, famine and drought, India did not pay
much attention to long-term goals. Instead, it responded to the need of the hour.

Government allocated Rs. 24882 crores for 4th Five Year Plan, in which Rs. 15,902 crores
was in respect of the public sector and Rs. 8,980 crores for the private sector. The Fourth
Five-Year Plan called for a 24 percent increase over the third plan in real terms of public
development expenditures. The public sector accounted for 60 percent of total plan
expenditures, and foreign aid contributed 13 percent of plan expenditure. Agriculture,
including irrigation, received 23 percent of public outlays; the rest was spent on electric
power, industry, and transportation.

The poor growth of agricultural production not only depressed the rate of growth of the
economy but also led to an increase in the dependence on imports of food grains and other
agricultural commodities during third five-year plan. During the Third Plan, the country
imported 25 million tons of food-grains, 3.9 million bales of cotton and 1.5 million bales of
jute.

Excessive import of food grains and other agricultural products created the shortage of
foreign reserve in the country, so the main objective of 4th Five Year Plan was to increase
the agricultural production and to increase the flow of foreign reserves in the country.
Following table shows the estimated agricultural production in 1968-69 and targets at the
end of the plan.

Table 1: Estimate and Target of Production

Agriculture has always enjoyed a high priority in Indian planning and emphasis on
irrigation, improved practices and community development given in fourth five-year plan.
Successful research in plant breeding using foreign genetic material has resulted in the
establishment of high yielding varieties of cereal seeds. A new awareness of the importance
of irrigation, intensive use of subsoil water in many areas has emerged. There has been
much greater demand and increasing use of chemical fertilizers, insecticides and other
inputs. Higher prices have made farmers in many parts of the country readily receptive to
new practices and inputs. The possibility of an upward surge in agricultural production
seems to be establishing during this plan.
Exports in 1969-70 were estimated to be around Rs. 1400 crores, representing an increase
of about 3 per cent over 1968-69. Subsequently, it was expected to rise progressively during
the period of the Fourth Plan and reach a level of around Rs. 1900 crores in 1973-74,
showing a rise of Rs. 540 crores over the base year (1968-69) level of Rs. 1360 crores. This
would mean an increase of about 40 per cent in exports over a period of five years of a
compound rate of growth of 7 per cent per year.

One of the important pre-condition of success in achieving the export goals during the
Fourth Plan was to maintain the internal price stability. In the interest of promoting exports
regulatory or restrictive measures in the form of bans or export quotas should be kept to the
minimum, especially in the case of primary agricultural products, unless there are
overriding considerations to justify such action.

Improvement in port and shipping facilities is of vital importance in the promotion of

export, the Fourth Plan provides for the development of major ports and their modernization
and re-equipment. Handling, loading and berthing facilities at the ports were improved.
Competitiveness in cost and quality is an important pre- requisite of success in the export
effort particularly in the case of manufactured products. A determined and constant effort
made in order to improve efficiency and to reduce cost.

In the case of major traditional exports like cotton textiles and jute manufactures, adequate
provision made for modernization and rehabilitation of manufacturing units as part of the
export promotion effort. Similarly, funds provided for replantation of tea bushes and
modernization of processing and packaging facilities.

At the end of fourth five year plan the objective has not been achieved to the great extent.
Main objective of the five year plan was to increase the agricultural production but at the
end of the plan the agricultural production is increased by only 2.8%. Severe drought in
1972 created the shortage of food grains in the country that resulted in the inflation in the
country and it strengthened in 1973-74. The balance of payment position also came under
severe strain. Large quantities of food grains and essential wage goods had to be imported.
The four-fold increase in oil prices and increase in prices of cereals, fertilizers, machinery
and equipment, non-ferrous metals and other imported goods severely eroded the resources.
The value of the three principal items of imports, namely food, fertilizers and POL
accounted for as much as 42.76% of the total import bill in 1973-74, as against 23% in
1972-73. In absolute terms the import bill for these items increased from Rs. 431 crores in
1972-73 to Rs. 1260 crores in 1973-74. No doubt value of exports also increased but the
balance of trade showed a deteriorating trend. The trade gap turned from a surplus of Rs.
103.4 crores in 1972-73 to a deficit of Rs. 432 crores in 1973-74.
Reference:

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