Economic planning in india

Economic Planning of India
Speaker-SANDEEP

Economic Planning ?
Economic Planning is to make decision with respect to
the use of resources.
Economic Planning is a term used to describe the long
term plans of Govt. to co-ordinate and develop the
economy.
Objectives of Economic Planning-
Economic Growth
Reduction of Economic In-equalities
Balanced Regional Development
Modernization
Reduction of Unemployment

Need for Economic Planning
 When India gained independence, its economy was
groveling in dust.
 The British had left the Indian economy crippled and
the fathers of development formulated 5years plan to
develop the Indian economy. Some of the problems
necessitated need for an immediate plan-
• Vicious circle of poverty
• Foreign Trade
• Need for Rapid industrialization
• Population pressure
• Development of Natural resources

The planning commission is an institution in the
government of india which formulates economic
policies and drafts five year plan.
It was Set up on 15 March,1950 with Prime Minister
Jawaharlal Nehru as the chairman.
Planning commission of India
•The commission has a nominated
Deputy Chairman, who has rank of a
Cabinet Minister.
•Montek Singh Ahluvaliya is currently
the Deputy Chairman of the
Commission.

Functions of Planning
Commision
To estimate the physical, capital and human
resources of the country.
To prepare plan for making effective and balanced
utilization of human resources.
To determine the various stages of planning.
To indicate those factors to the Govt which check
the economic development.
To advise the Centre and State Govt on special
matters referred.

The economy of India is based in part on planning through its five
year plans which are developed, executed and monitored by
planning commission.
The Twelfth plan is currently underway.
1. First five year plan(1951-1956)
2. Second five year plan (1956-1961)
3. Third five year plan (1961-1966)
4. Fourth five year plan (1969-1974)
5. Fifth five year plan (1974-1979)
6. Sixth five year plan (1980-1985)
7. Seventh five year plan(1985-1990)
8. Eighth five year plan(1992-1997)
9. Ninth five year plan(1997-2002)
10. Tenth five year plan (2002-2007)
11. Eleventh five year plan (2007-2012)
12. Twelfth five year plan (2012-2017)
Five Year Plans of India

First Five Year Plan (1951-1956)
 The first Prime Minister, Jawaharlal Nehru presented the
first plan to the Parliament of India on 8 December 1951.
 Objectives
 To reconstruct the economy which was damaged as a
result of second world war.
 To increase food production capacity.
 To check the inflationary tendencies.
 To improve living standards of the people of India.
 The targeted growth in the GDP was 2.1% every year.
 The total outlay of this plan was worth ₹ 1960 crore.

 In reality, GDP of 3.6% per annum was achieved .
 The following Irrigation projects were started during this
period: Mettur Dam, Hirakud Dam and Bhakra Dam.
 The WHO with the Govt addressed children's health and
reduced infant mortality, indirectly contributing
to population growth.
 Effort were taken in improving posts and telegraphs, railway
services, road tracks, civil aviation etc.
 The UGC was set up to take care of funding the higher
education in the country.
 Contracts were signed to start five steel plants.
 The plan was quasi successful for the government.
What Was Achieved ?

 This plan was based Mahalanobis model. This model was
propounded by the famous statistician Prof P C
Mahalanobis in the year 1953. His model addresses
different issues related to economic development.
 Objectives
 The second five-year plan focused on industry, especially
heavy industry.
 The Indian Govt boosted manufacturing of industrial goods
in the country. This was done primarily to develop the public
sector.
 To increase the national income by 25% & growth rate 2.1%
 Total outlay was worth of Rs 4672 crore
Second Five Year Plan(1956-1961)

 Hydroelectric power plants and Five steel mills at Bhilai ,
Durgapur, Rourkela and Jamshedpur were set up.
 Coal production was increased.
 Railway lines were added in the north east.
 The Atomic Energy Commission was formed in 1957 with
Homi J. Bhabha as the first chairman.
 Tata Institute of Fundamental Research was born.
 Growth rate achieved in GDP 3.6%
 National Income increased 18%
What Was Achieved ?

Table 01 : Public sector outlay of Frist and Second Plan
Sectors
(criteria)
Outlay ₹ in crore
First
Plan
Per cent
%
Second
Plan
Per cent
%
1. Agriculture &
community Development
291 15 549 11.7
2. Large & medium
irrigation
310 16 430 9.2
3. Power 260 13 452 9.7
4.Village & small scale
industry
43 2 187 4.0
5.Industry & minerals 74 4 938 20.1
6.Transport &
communication
523 27 1261 27
7. Social services &
others
459 23 855 18.3

Third Five Year plan(1961-1966)
The third plan stressed on agriculture and improving
production of rice & wheat, but due to war between China-
India in 1962 and also war between India and Pakistan in
1965 exposed weaknesses in the economy and shifted the
focus towards defence.
The war led to inflation and the priority was shifted to price
stabilization.
 Objective
 Targeted growth rate of GDP was 5.6%
 To increase in national income by more than 5 per cent
annually.
 To get self sufficient by increasing agricultural production.

The third plan was failure due to the wars of 62s & 65s and
drought in 1965.
And actually achieved growth was 2.8%
 During the period 1965 -66, Green Revolution attracted
attention.
 Fertilizer plants were also built & the construction of Dams
continued.
 Punjab begun producing an abundance of wheat.
 Primary schools, State secondary education boards and
State electricity board were formed.
The Panchayat & Zila Parishads Organizations formed.
What Was Achieved ?

Table 02 : Public sector outlay of Third Plan
Sectors
(criteria)
Total Outlay ₹ in crore
Targeted
Expenditure
Per cent
%
Actual
Expenditure
Per cent
%
1. Agriculture &
1068 14 1089 12.7
2. Large & medium
irrigation
650 9 664 7.8
3. Power 1012 13 1252 14.6
industry
264 4 241 2.8
6.Transport &
communication
1486 20 2112 24.6
7. Social services & others 1500 20 1493 17.4
Total 7500 100 8577 100

Plan Holiday (1967-1969)
Due to severe drought and Indo-Pak War in 1965 the
third Plan was failed.
Failure of Third Plan led to postponement of Fourth
FYP.
Therefore three Annual Plans were introduced instead
of FYP.
During these plans a whole new agricultural strategy
was
Implemented as wide-spread distribution of high-
yielding varieties of seeds, extensive use of fertilizers,

Fourth Five Year plan(1969-1974)
 At this time Indira Gandhi was the Prime Minister
The Indira Gandhi government nationalised 14 major
Indian banks and the Green Revolution in India
advanced agriculture.
 In addition, the situation in East Pakistan
(now Bangladesh) was becoming dire as the Indo-
Pak War of 1971 and Bangladesh Liberation War
took funds earmarked for industrial development.
 The target growth rate was 5.6%, but the actual
growth rate was 3.3%.

Table 03 : Public sector outlay of Forth Plan
Sectors
(criteria)
Outlay ₹ in crore
Planned
Outlay
Per cent
%
Actual
Outlay
Per cent
%
1. Agriculture &
2728 17.2 2320 19.7
2. Large & medium
irrigation
1087 6.8 1354 8.6
3. Power 2448 15.5 2932 18.6
industry
293 1.8 243 1.5
6.Transport &
communication
3237 20.4 3080 19.5
others
2771 17.4 2986 18.9

Fifth Five Year plan(1974-1979)
Stress was laid on employment, poverty
alleviation (Garibi Hatao) and justice.
 The plan also focused on self-reliance in
agricultural production and defence.
 The Electricity Supply Act was amended in
1975.
 The Indian national highway system was
introduced.
 Food grain production was above 118 million
tons due to the improvement of infrastructural

• In 1975-1976 the Ministry of Agriculture initiated
• Desert Development Programme (DDP) in 1976.
• Integrated Rural Development Programme(IRDP)
in 1978
• Training of Rural Youth for Self-Employment
(TRYSEM) is launched by the Central
Government in August 1979
• The target growth rate was 4.4% and the actual
growth rate was 5.0%
Other activities

Table 04 : Sector wise Distribution of Public sector outlay during
Fifth Plan
Sectors
(criteria)
Outlay ₹ in crore
Total
Outlay
Per cent
%
1. Agriculture 4865 12.4
2. Irrigation & flood control 3577 9.8
3. Power 7400 18.8
4.Industry & minerals 9581 24.4
5.Transport & communication 6870 17.4
6. Social services & others 6833 17.3
Total 39,426 100

Rolling Plan (1978 - 80)
 In 1978 the newly elected Morarji Desai
govt. rejected the Fifth Five-Year Plan
and introduced a new Sixth Five-Year
Plan (1978-1980). This plan was again
rejected by the Indian National Congress
government in 1980 and a new Sixth
Plan was made

Sixth Five Year plan (1980-1985)
 The Sixth Five Year Plan was presented in
1978. However, the plan was terminated with
the change of Government in January 1980.
The new Sixth Five Year Plan was implemented
in April 1980.
 Rajiv Gandhi was elected as the prime minister,
He aimed for rapid industrial development,
especially in the area of information technology.
 The sixth plan also marked the beginning of
economic liberalization.

 Family Planning was implemented for the first time in
India.
 The target growth rate was 4.4% and the actual
growth rate was 5.0%
 Development of Women and Children in Rural Areas
(DWCRA) in 1982.
 NABARD – 12th July 1982
 Rural Landless Employment Guarntee Prorgamme
(RLEGP)-1983
 Crop Insurance Scheme was lunched in 1985
Achievements

Table 05 : Public sector outlay of Sixth Plan
Sectors
(criteria)
Total
Outlay
Per cent
%
Actual
Outlay
Per cent
%
1. Agriculture &
5695 5.9 6624 6.1
2. Rural development 5364 5.5 6997 6.4
3. Special area
programme
1480 1.5 1580 1.4
4.Irrigation & flood
control
12160 12.5 10930 10
5.Energy 26535 27.2 30751 28.1
6.Transport &
communication
15546 15.9 17677 16.2
7.Science and tech. 865 0.9 1020 0.9
8.Industry mineral 15018 15.4 16948 15.5
others
14837 15.2 16765 15.4

Seventh Five Year plan(1985-1989)
 The main objectives of the 7th five year plan were to
establish growth in production of food grains,
generating employment opportunities and increasing
economic productivity.
 Introduction and application of modern technology.
 Improved facilities for Education to girls.
 Increase productivity of small and large scale farmers.

Achievements of the Plan
 Special Food Production Programme (SFPP)– 1988
 Jawahar Rozgar Yojana -1989 (NREP & RLEGP was
merged)
 The plan was very successful as the economy recorded
6% growth rate against the targeted 5%

Table 06 : Public sector outlay of Seventh Plan
Sectors
(criteria)
Total
Outlay
Per cent
%
Actual
Outlay
Per cent
%
1. Agriculture 10524 5.8 12793 5.8
2. Rural development 8906 4.9 15246 7
3. Special area
programme
2804 1.6 3470 1.6
4.Irrigation & flood
control
16979 9.4 16590 7.6
5.Energy 54821 30.4 61789 28.6
6.Industry mineral 22415 12.5 29220 13.4
7.Transport &
communication
37119 15.1 37974 17.4
8.Science, Tech. &
Environment
2463 1.5 3024 1.4
9. Social services 31545 17.5 34960 16

 The Eighth Plan could not take off in 1990 due to the fast
changing political situation at the centre and the years 1990-
91 and 1991-92 were treated as Annual Plans.
 P.V. Narasimha Rao (aka Father of Indian Economic
Reforms) was the twelfth Prime Minister, and led the most
important administrations in India's modern history
overseeing a major economic transformation and several
incidents affecting national security.
 At that time Dr. Manmohan Singh launched India's free
market reforms that brought the nearly bankrupt nation back
from the edge.
 It was the beginning of privatisation and liberalisation in
India.
Period between 1989-91

 This plan can be termed as Rao and Manmohan Model of
Economic development.
 Modernization of industries was a major highlight of the
Eighth Plan.
 The major objectives of the eight plans were - control rapid
population growth, poverty eradication, increase
employment, strengthening the infrastructure, develop
tourism management, Human Resource Development,
Eight Five Year plan(1992-1997)

 During this Plan many programmes were
started like-
- Pradhan Manatri Rozgar Yojna (PMRY) -
1993
- Mahila Samrudhi Yojana – 1994
 India became a member of WTO on 1
January1995.
 An average annual growth rate of this Plan
was 6.7% against the target 5.6% was
achieved.
Achievements

Table 07 : Public sector outlay in Eighth Plan
Sectors
(criteria)
Proposed Outlay ₹
in crore
Outlay %
1. Agriculture 22467 5.2
2. Rural Development 34245 7.9
3. Specific Area Programme 6750 1.6
4.Iarrigation & Flood Control 32525 7.5
5.Energy 115561 26.6
6. Industry & Mineral 45922 10.8
7.Transport & Communication 81036 18.7
8.Science, Tech & Environment 9042 2.1
9 .Social Science & Other 85372 19.7
Total 4,34,100 100

Ninth Five Year Plan (1997 - 2002)
 The Ninth Five Year Plan, launched in the 50th year of
India's Independence. Atal Bihari Vajpayee was the Prime
Minister of India during this Plan. Government focused on
Growth With Social Justice & Equality
 Objective
 Priority to agriculture and rural development.
 Accelerating growth rate of economy.
 Food and nutritional security for all Containing growth rate
of population.
 Empowerment of women and socially disadvantaged
groups such as SC/ST, backward classes and minorities.

 The Ninth Five-Year Plan achieved a GDP growth rate of
5.4% against a target of 6.5%
 The agriculture industry grew at a rate of 2.1% against
the target of 4.2%
 During this Plan many programmes were started like-
- Swarana Jyanti Gram Swarozgar Yojana- 1999
- Indira Awas Yojna-2000
- Pradhan Mantri Gram Sadak Yojana – 2000
- Sampoorna Grameen Rozgar Yojana - 2001
Achievements of the Ninth plan

 Objective
 Reduction in poverty ratio from 26% to 21%
 To reduce population growth from 21% in 1991-2001
to 16% by 2001-11
 Literacy rate to increase from 65% in 1999-2000 to
75% in 2001
 Increase in forest/tree cover from 19% in 1999-2000
to 25% in 2007
 Cent per cent registration of children (age group 6-14
yrs)
 Cleaning of all major rivers by 2007.
Tenth Five Year Plan (2002-2007)

Achievements
The target growth rate was 8% and the actual
growth rate was 7%
National Commission on Farmer-2004
National Rural Employment Guarantee Act
(NREGA) - 6th February 2006
National Food Security Mission (NFSM) -2007

 Planning commission has released INDIA VISION-
2020 on January 23, 2003 which presents pre-
assessment of the progress of the Indian economy
for the next two decades.
Salient points of the vision-
 The expected growth rate by 2020 to be 9%
 Elimination of unemployment, illiteracy & poverty by 2020
 Per capita income to get doubled by 2020
 Present employment share in agriculture to come down
from 56% to 40% by 2020
 To overcome the water problem in metropolitan cities.
INDIA VISION-2020

Eleventh Five Year Plan (2007-2012)
Eleventh plan has the following objectives-
 To Accelerate GDP growth from 8% to 10% p.a.
 To Increase agricultural GDP growth rate to 4% per year.
 To Reduce dropout rates of children from elementary
school from 52.2% in 2003-04 to 20% in 2011-12
 Raise the sex ratio to 935 by the end of the 11th Plan.
 Increase literacy rate for persons of age 7 years or more to
85%
 To raise public health spending to 2% of GDP during the
plan.
The target growth rate was 9% and the actual growth rate
was 8.1%

Table: sectorial growth in recent yearsTable 8 : Sectoral Growth in Recent Plans
Sectoral Growth in Recent Plans ( % per annum )
Sector 8th Plan 9th Plan 10th Plan 11th Plan
1.Agricultur
e
4.72 2.44 2.30 4.0
2.Industry 7.29 4.29 9.17 10-11
3.Services 7.28 7.87 9.30 9-11
4.Total 6.54 5.52 7.74 9.0

The Twelfth Five-Year Plan of the Govt. has decided for
the growth rate at 8.2% but the National Development
Council (NDC) on 27 Dec 2012 approved 8% growth
rate for 12th five-year plan.
With the deteriorating global situation, the Deputy
Chairman of the Planning Commission Mr. Montek
Singh Ahluwalia has said that achieving an average
growth rate of 9 percent in the next five years is not
possible. The Final growth target has been set at 8% by
the endorsement of plan at the National Development
Council meeting held in New Delhi.
Twelfth Five Year Plan (2012-2017)

Objectives
 Basic objective: Faster, sustainable and more inclusive
growth
 The government intends to reduce poverty by 10% during
the 12th Five-Year Plan.
 For growth to be more inclusive we need: Better
performance in agriculture
 Faster creation of jobs, especially in manufacturing
 Stronger efforts at health, education and Infrastructure.
 Special plans for disadvantaged/backward regions.

Growth performance in various plans (in % per annum)
Plan Target Actual
First plan 2.8 3.6
Second Plan 4.5 4.2
Third Plan 5.6 2.8
Fourth Plan 5.6 3.3
Fifth Plan 4.4 5
Sixth Plan 5.2 5.5
Seventh Plan 6 5
Eighth Plan 6.7 5.6
Ninth Plan 5.4 6.5
Tenth Plan 8 7
Eleventh Plan 9 8.1
Table 09 : Evaluation of Growth in Several Plans

Growth Performance in Five Year Plans
0
1
2
3
4
5
6
7
8
9
1st 2nd 3rd 4th 5th 6th 7th 8th 9th 10th 11th 12th
Targete
d
Actual

Replacement of Planning
Commission
 NITI Aayog or National Institution for Transforming
India Aayog is a policy think-tank of Government of
India that replaces Planning Commission and aims to
involve the states in economic policy-making in India.
 Union Govt of India had announced formation of NITI
Aayog on 1 January 2015.
 Chairperson:
Prime Minister Narendra Modi
 Vice Chairperson: Arvind
Panagariya
 CEO: Sindhushree Khullar IAS

Objective of NITTI Aayog
 To evolve a shared vision of
national development priorities,
sectors and strategies with the
active involvement of states in
the light of national objectives.
A pre-people, pro-active and participative development
agenda is the guiding principle behind NITTI Aayog.
-Prime Minister Narendra Modi

Economic planning help in mobilizing and allocating the
resources in desired manner.
Objective of economic planning is to reduce inequality,
economic growth, balanced regional growth,
modernization.
Each five year plan aims to achieving certain target. Five
year plan constitute the steps toward the fulfillment of
objectives of economic planning. But most of the Plans
could not achieve the targets
 The 12th Plan has taken off; it is yet to be formally
approved with the aim of the growth rate at 8%.
Conclusion

Economic planning in india

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