Planning in India

THE EMERGENCE OF PLANNING

The need for planned, coordinated economic development under government guidance was recognized all along the freedom movement. In the 1930s, as the freedom struggle intensified, social and economic aims also became more well defined. The Planning Commission was set up in March 1950. Its task was to make an assessment of the material, the capital, and the most effective utilisation of these resources on a priority basis. Indias economic history may be broadly divided into the following phasesthe period from 1947 to the mid-1950s, which was the preparatory phase in planning for development; the period from mid1950s to mid-1960s, characterised by rapid industrialisation; the period of late 1960s and the 1970s, when the plans tried to focus on agriculture; and finally the phase of liberalisation starting tentatively in the 1980s, and gearing up from 1991 to the present.

THE PLANNING COMMISSION

The Commission comprises eight members
1. 2. 3. 4. 5. Prime Minister (Chairman), Four full-time members (including Deputy Chairman) Minister of Planning, Minister of Finance, and Minister of Defense.

The main functions of the Planning Commission include:

1. Making real assessment of various resources and investigating the possibilities of augmenting resources; 2. Formulating plans; 3. Defining stages of plan implementation and determining plan priorities; 4. Identifying the factors retarding economic growth and determining the conditions for its successful implementation; 5. Determining plan machinery at each stage of the planning process; 6. Making periodic policy measures to achieve objectives and targets of plan; and 7. Making additional recommendations as and when necessary.

THE NATIONAL DEVELOPMENT COUNCIL

The NDC is composed of the following members: 1. The Prime Minister of India, 2. Chief Ministers of all states, and 3. Members of Planning Commission.

The main functions of the NDC:

1. To review the National Plan periodically. 2. To consider important questions related to social and economic policy affecting national development. 3. To recommend various means of achieving aims and targets set out in the National Plan. The Council also recommends various measures for achieving active participation and cooperation of the people, for improving efficiency in administrative services, for ensuring fullest development in the backward regions and the backward sections of the community, and also for building up resources for national development. 4. The NDC also takes the final decision regarding the allocation of Central assistance for planning among different states. The Gadgil formula and all other systems followed in transferring Central assistance for plan to states are finalised by the NDC. 5. The NDC approves the draft plan prepared by the Planning Commission.

Rationale for planning

1.Need

for social justice 2.Resource mobilization and allocation in the context of overall development programme. 3 Limitations of the market mechanism

Features of Indian Plans

1.Indicative

economic planning 2. Physical Planning Implies allocation of resources in terms of men, material and power to accomplish targets. 3.Social Planning 4.Unreliable Data

OBJECTIVES OF PLANNING IN INDIA

The major objectives of economic planning in India can be summarised as follows: 1. Attainment of higher rate of economic growth, 2. Reduction of economic inequalities, 3. Achieving full employment, 4. Attaining economic self-reliance, 5. Modernisation of various sectors, and 6. Redressing imbalances in the economy.

Phases of planning
The

Earlier Phase:1951 to 1980 The era of economic planning ushered in 1951 The later phase:1981 onwards

FIVE-YEAR PLANS
First Five-Year Plan (195152 to 195256) Second Five-Year Plan (195657 to 196061) Third Five-Year Plan (196162 to 196566) Fourth Five-Year Plan (196970 to 197374) Fifth Five-Year Plan (197475 to 197879) Sixth Five-Year Plan (198081 to 198485) Seventh Five-Year Plan (198586 to 198990) Eighth Five-Year Plan (199293 to 199697) Ninth Five-Year Plan (199798 to 200102) Tenth Five-year Plan (200207)

First Five-Year Plan (195152 to 195256)

The First Five-Year Plan of India had mainly two objectives: 1. To correct the disequilibrium in the economy caused by Second World War and the partition and 2. To initiate the process of an all-round balanced development for ensuring a rising national income and improvement in the standard of living. Thus, the First Plan aimed at removing food crisis and shortages

Ctd
Target

of 2.1% p.a increase in national income. The performance was better and national income recorded a 3.5% p.a increase.

Second Five-Year Plan (195657 to 196061)

The Second Plan had the following four main objectives: 1. A sizeable increase in the national income to raise the level of living in the country, 2. Rapid industrialisation with particular emphasis on the development of basic and heavy industries,

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Target

of 4.5% was set Was bases on Mahalanobis strategy of development which gave the highest priority to Heavy Industries The implementation of this policy involved rapid development of the public sector The national income rose at a rate of 4.2% p.a

Third Five-Year Plan (196162 to 196566)

The following were the other objectives of the Third Five-Year Plan: 1. To secure an increase in the national income of over 5 per cent per annum, the pattern of investment being designed also to sustain the rate of growth during the subsequent plan period, 2. To achieve self-sufficiency in food grains and increase agricultural production to meet the requirements of industry and exports, 3. To expand basic industries like steel, chemicals, fuel, and power and establish machine building capacity, so that the requirements of further industrialisation could be met indigeneously within a period of 10 years or so, 4. To utilise the manpower resources of the country to the fullest extent possible and to ensure a substantial expansion in employment opportunities, and 5. To establish progressively, greater equality of opportunities and to bring about reduction in disparities in income and wealth and a more even distribution of economic power.

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Third

plan was a miserable FLOP and as a consequence economy found itself stranded in deep waters. Long term planning was suspended for full three years The fourth plan started in 1969 instead of 1966

Fourth Five-Year Plan (196970 to 197374)

The Fourth Plan aimed at two main objects: 1. Growth with stability and 2. Progressive achievement of self-reliance. Besides these two, the other objectives were as follows:

1. Attaining social justice and equality along with care of the weak and under-privileged, and the common man, 2. Generating more employment opportunities both in the rural and urban areas, 3. Assigning an increasing role to the public sector in the growth process, and 4. Correcting regional imbalances among different states.

Fifth Five-Year Plan (197475 to 197879)

The Fifth Plan had two main objectives: 1. Removal of poverty and 2. Achievement of economic self-reliance.

Sixth Five-Year Plan (198081 to 198485)

The Sixth Plan laid down the following objectives: 1. A significant step-up in the rate of growth of the economy by promoting efficiency in the use of resources and improved productivity, 2. Strengthening the impulses of modernisation for the achievement of economic and technological self-reliance, 3. Progressive reduction in the incidence of poverty and unemployment, 4. Speedy development of indigenous sources of energy with a proper emphasis on the conservation and efficiency in energy use, 5. Bringing about harmony between the long-term and the short-term policies,

Seventh Five-Year Plan (198586 to 198990)

The NDC approved the following objectives for the Seventh Five-Year Plan:
1.

Achievement of self-sufficiency in the production of food grains as well as increase in production of agro-raw materials like oil seeds, cotton, and sugarcane by raising the rate of growth of production in the agricultural sector;

2. Generation of productive employment for maximum utilisation of human resources and solving the problem of unemployment through the development of agriculture and industry in a manner that would create employment potential for a large number of people; 3. To promote efficiency and productivity through elimination of infrastructural bottlenecks and shortages by improving capacity utilisation, and by promoting modernisation of plan and equipment and more extensive application and integration of science and technology; 4. To promote equity and social justice through alleviation of poverty and reduction in interclass disparities in respect of income and wealth;

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5. To improve the equality of life and standard of living of the people in general with a special reference to the economically and socially weaker sections through an MNP; 6. To promote a speedy development of power generation and irrigation potential along with utilisation of existing capacities and also to conserve energy along with promotion of nonconventional energy sources; 7. To ensure growth with stability by restraining inflationary pressures through noninflationary financing; 8. To achieve self-reliance through attaining self-sufficiency in food grains and by reducing dependence on external finance through export promotion and import substitution; and 9. To decentralise planning and to achieve full public participation in development works

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In

the first three years of 7th plan GDP had increases at a modest rate of 3.8% p.a. however during 1989-90 due to bumper harvests the growth rate picked up sharply and the average annual increase in GDP during the whole of the7TH PLAN turned out to be 5.6%.

Eighth Five-Year Plan (199293 to 199697)

In order to meet the challenges faced by the economy, the Eighth Plan finalised the following objectives: 1. Generation of adequate employment opportunities to achieve near-full employment by the turn of the century, 2. Containing population growth through peoples active cooperation and an effective scheme of incentives and disincentives, 3. Universalisation of elementary education and eradication of illiteracy among people in the age group of 1533 years, 4. Provision of safe drinking water and primary health care including immunisation to all villages and the entire population and complete elimination of scavenging, 5. Growth and diversification of agriculture to achieve self-sufficiency in food and generate surplus for exports, 6. Strengthening of the infrastructure (energy, transport, communication, irrigation) in order to support the growth process on a sustainable basis.

Ninth Five-Year Plan (199798 to 200102)

The Ninth Plan outlined the following important objectives for the plan: 1. Accelerating the rate of economic growth with stable prices, 2. Containing the population growth of the country, 3. Strengthening efforts to build self-reliance.

TENTH FIVE-YEAR PLAN (200207)

Targets

Reduction of poverty ratio by 5 percentage points by 2007 and by 15 percentage points by 2012,
Gainful employment to the addition to the labour force over the Tenth Plan period, Universal access to primary education by 2007, Reduction in the decadal rate of population growth between 2001 and 2010 to 16.2 per cent, Increase in literacy to 75 per cent by 2007, Reduction in infant mortality rate (IMR) to 45 per 1,000 live births by 2007 and to 28 by 2012, and Reduction in maternal mortality ratio (MMR) to 2 per 1,000 live births by 2007 and to 1 by 2012.

The approach to the Tenth Five-Year Plan proposes to shift the focus of planning from merely resources to the policy, procedural, and institutional changes, which are considered essential for every Indian to realise his or her potential.
The minimum agenda on which there must be full political agreement, and for which the approval of the NDC is sought, is listed below:

1. 2. 3. 4. 5.

Reduction of Centrally sponsored schemes through transfer to states, convergence, and weeding out. Expansion of project-based support to states. Support to states made contingent on agreed programme of reforms. Adoption of core plan concepts at both Centre and states. Preference to be given to completion of existing projects than to new projects. Identification to be done by joint team from the states, central ministries, and Planning Commission. 6. Plan funds to be permitted for critical repair and maintenance activities as decided by a joint team. 7. Greater decentralisation to Peoples Representative Institutions (PRIs) and other peoples organisations. 8. Privatisation/closure of non-strategic PSUs at both Centre and states in a time-bound manner. 9. Reduction in subsidies in a time-bound manner to provide more resources for public investment. 10. Selected fiscal targets to be achieved at both Centre and states. 11. Accelerating tax reforms to move towards a full-fl edged VAT in a time-bound manner. 12. Legal and procedural changes to facilitate quick transfer of assets, such as repeal of SICA, introduction and strengthening of bankruptcy and foreclosure laws, and so on. 13. Reform of labour laws. 14. Reconsideration of all policies aff ecting the small-scale sector. 15. Adoption of a model blueprint for administrative reforms. 16. Reform and strengthening of judicial systems and procedures.

FIVE-YEAR PLANSACHIEVEMENTS AND FAILURES

ELEVENTH FIVE-YEAR PLAN (200712)