6.+Economic+Planning

7/31/2019 6.+Economic+Planning

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Economic Planning

KANIKA BAKSHI


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The two major agencies which are responsible foreconomic planning in India are the PlanningCommission and the National Development

Council

Planning Commission:

Set up in March 1950 and has the following

functions: To make an assessment of the material, capital

and human resources of the country.

To investigate the possibilities of augmentingthese resources

To formulate a plan for the most effective andbalanced utilization of the countrys resources

India is a federal state and the Centre givesmoney to the States. The Planning Commission

serves as an intermediary for the allocation offunds to the States.


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a ona eve opmen ounc :

The Prime Minister presides over the NDC. The

Secretary of the Planning Commission is also thesecretary of the NDC.

The main functions of the NDC are:

To prescribe guidelines for the formulation of theNational Plan as well as for the assessment ofresources for the Plan.

To consider the National Plan as formulated bythe Planning Commission and endorse its

development strategy. To consider important questions of social and

economic policy affecting the countrysdevelopment

To periodically review the working of the Plan andto recommend such measures as are necessary


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ec ves o conom cPlanning in India:

Increase in National Income: The objective is to increaseproduction to the maximum possible extent so as to achieve ahigher level of national income and per capita income. Thetargets are set for the desirable rates of growth and the targetperiod.

Full Employment: Each of the plans has given priority toproviding a specific number of jobs to reduce unemployment ieprovision of jobs to all job seekers and gradual transfer of

people from low income jobs to high income jobs. Reduction in Inequalities of Income and Wealth: The

objective is to create a more equitable distribution of incomeand wealth in the country.

Social Justice: Economic planning in India also seeks to set up asocialist society based on equality and justice and free fromexploitation.

Other Objectives: Removal of poverty, modernization of theeconomy, maximizing the usage of resources by areas,achieving price competitiveness have been some of the otherobjectives ofIndias economic planning.


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Review of the Plans:

The First Five Year Plan was launched in 1951. Theprocess of implementation of the Five Year Plans wasdisrupted in 1966 and the Fourth Five Year Plan wasput off by three years due to the severe drought inthe country and aggressions from China and Pakistan.The intervention period between the Third and FourthFive Year Plans had annual Plans. This period isreferred to as Plan Holiday.

On assuming power in 1977, the Janata Governmentintroduced the draft Five Year Plan (1978-83) andintroduced the concept of Rolling Plan. Under the

rolling plan, when one year lapses another year isadded to the planning horizon so that there is alwaysa five year plan. On coming to power in 1980, theCongress Government terminated the Draft Plan andformulated the Sixth Plan 1980-85


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Five Year Plans in India

The First Five Year Plan (1951-56): The immediate objective of this plan was

rehabilitation of refugees, rapid agriculturalgrowth and control of inflation. These objectiveswere by and large achieved. The productiontargets in the agricultural sector were more orless fulfilled largely due to favorable climate.

The Second Five Year Plan (1956-61):

The Second Plan aimed at rapid industrializationwith emphasis on the development of basic andheavy industries such as iron and steel, heavyengineering. The Industrial Policy was formulatedin 1956.

The target of this plan could not be achieved due


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Five Year Plans in IndiaThe Third Five Year Plan (1961-66):

This Plan aimed at the establishment of a self reliantand self generating economy. High priority wasassigned to the agricultural sector and development ofheavy industries. However, the approach had to beshifted to defence due to conflicts with China (1962)

and Pakistan(1965).

The Fourth Five Year Plan (1969-74): This Plan had theobjectives of growth with stability and progressiveachievement of self reliance. It was successful duringthe first two years. But it was hit by monsoon failure,power shortage and inflation in the remaining years.

The Fifth Five Year Plan (1974-79): Removal of povertyand self reliance were the main objectives.


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Five Year Plans in India

The Sixth Five Year Plan: There were two SixthPlans. One by the Janata Government and theother by the Congress Government in 1980. Theobjective was removal of poverty. Broadlyspeaking this plan was a success.

The Seventh Five Year Plan (1985-90): This aimedat accelerating the growth in food grainsproduction, increasing employment and raisingproductivity.

The Eighth Five Year Plan (1992-97): The EighthFive Year Plan was introduced at a time whenthere was a severe economic crisis due tobalance of payment crisis. The Governmentintroduced economic and fiscal reforms toprovide a new dynamism to the country. This


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Five Year Plans in IndiaThe Ninth Five Year Plan (1997-2002): This plan aimed at

quality of life, generation of productive employment, regionalbalance and self reliance. The focus of this plan was on

Growth with Social Justice and Equality.

The Tenth Five Year Plan (2002-07): This Plan was introduced in April 2002. The Plan was launched

when there were both positive and negative features. Positive

being, GDP growth rate was at 6.5% p.a. Population growthhad declined to less than 2%. Percentage of people below thepoverty line was decreasing. Literacy rate increased to 65% in2001. Software and IT Services emerged as new sectors ofstrength.

Negatives were that growth had generated less than expectedemployment. The infant mortality rate had stagnated andthere was acute shortage of drinking water.

Objective: An average annual growth rate of 8% Increase in per capita income at 6.4% p.a. Enhancement of human well being through an adequate level

of consumption of fixed and other type of consumer goods andaccess to basic social services

h l h l (200


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The Eleventh Five Year Plan (2007-

2012):A major advantage in formulating the 11th. Plan is that Indias

economic fundamentals have improved enormously and we

now have the capacity to make a decisive impact on thequality of life, especially on the poor and marginalized.

The objective of the Plan is Towards faster and moreinclusive growth.

The 11th Plan aims to increase the average economicgrowth to nine per cent from 7.6 per cent in the Tenth Plan.

The 11th Plan also proposes to increase farm sector growthrate to four per cent from 2.13 per cent in the previousPlan.

The Plan, which has been formulated with the aim ofmaking economic growth more inclusive, proposes to

reduce poverty by ten percentage points This Plan aims to generate seven crore new employment

opportunities and reduce unemployment among educatedpersons to less than five per cent.

Extend access to essential public services such as health,education, clean drinking water and sanitation.


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The Eleventh Five Year Plan (2007-2012):contd.

The Plan will also focus on the education sectorby increasing the outlay to 19 per cent of theCentral budgetary support from less than eightper cent in the previous Plan.

Literacy rate to be increased to 85% and thegender gap in literacy to be reduced to 10percentage points.

Create an enabling environment for the socio,political and economic empowerment of women.

Protection of the environment. Forest cover tobe increased by 5 percentage points andessential requirement to clean up our rivers.

Pay special attention to the needs and

requirements of the SC / STs and otherexcluded rou s and brin them on ar with the


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Achievements of Planning in India: Growth of National and Per Capita Income: There has been an

increase in both but not to the extent the planners expected. NY increasedby nearly 6.4 times.

Growth in Employment: There has been considerable increase inemployment opportunities during the Plans. But these proved inadequate.Slow growth in agriculture and industry, the concentration of investmentin the capital goods industries have been responsible for the failure tomeet the needs of the rising labor force.

Distributive Justice: The role of Zamindars has been considerablyreduced. However there have been no material change in the distributionof income or wealth in rural India. In the industrial sector too theeconomic power of the large business houses has been increasing. Muchstill remains to be done.

Self-reliance: Considerable progress has been made towards theachievement of this goals but a sizeable portion(10%) of our

development expenditure comes from foreign sources. Moreover thecentral objective of self-reliance now is not self sufficiency butinternational competitiveness.

Industrial Progress: A major accomplishment has been thediversification of industries and expansion of industrial capacity. Thecountry is self sufficient in consumer goods. The growth of capital

production has been quite impressive.


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Failures of planning

Poor standard of living

Inflation

Unemployment

Less growth in agriculture sector

Inequality in distribution of incomeand wealth

Low capital formation

Lack of infrastructural development

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