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Planning in India

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THE EMERGENCE OF PLANNING

The need for planned, coordinated economic development undergovernment guidance was recognized all along the freedommovement. In the 1930s, as the freedom struggle intensified, socialand economic aims also became more well defined.

The Planning Commission was set up in March 1950. Its task was tomake an assessment of the material, the capital, and the mosteffective utilisation of these resources on a priority basis.

Indias economic history may be broadly divided into the followingphasesthe period from 1947 to the mid-1950s, which was the

preparatory phase in planning for development; the period from mid-1950s to mid-1960s, characterised by rapid industrialisation; the periodof late 1960s and the 1970s, when the plans tried to focus onagriculture; and finally the phase of liberalisation starting tentatively inthe 1980s, and gearing up from 1991 to the present.

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THE PLANNING COMMISSION

The Commission comprises eight members1. Prime Minister (Chairman),

2. Four full-time members (including Deputy Chairman)

3. Minister of Planning,

4. Minister of Finance, and

5. Minister of Defense.

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The main functions of the PlanningCommission include:

1. Making real assessment of various resources and investigating thepossibilities 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; and7. Making additional recommendations as and when necessary.

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THE NATIONAL DEVELOPMENTCOUNCIL

The NDC is composed of the followingmembers:

1. The Prime Minister of India,

2. Chief Ministers of all states, and

3. Members of Planning Commission.

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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, forimproving efficiency in administrative services, for ensuring fullestdevelopment in the backward regions and the backward sections of thecommunity, and also for building up resources for nationaldevelopment.

4. The NDC also takes the final decision regarding the allocation ofCentral assistance for planning among different states. The Gadgil

formula and all other systems followed in transferring Centralassistance for plan to states are finalised by the NDC.

5. The NDC approves the draft plan prepared by the PlanningCommission.

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Rationale for planning

1.Need for social justice

2.Resource mobilization and allocation inthe context of overall developmentprogramme.

3 Limitations of the market mechanism

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Features of Indian Plans

1.Indicative economic planning

2. Physical Planning

Implies allocation of resources in terms ofmen, material and power to accomplishtargets.

3.Social Planning4.Unreliable Data

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OBJECTIVES OF PLANNING IN INDIA

The major objectives of economic planning in Indiacan 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, and6. Redressing imbalances in the economy.

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Phases of planning

The Earlier Phase:1951 to 1980

The era of economic planning ushered in1951

The later phase:1981 onwards

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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)

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First Five-Year Plan(195152 to 195256)

The First Five-Year Plan of India had mainly twoobjectives:

1. To correct the disequilibrium in the economy

caused by Second World War and the partitionand

2. To initiate the process of an all-round balanceddevelopment for ensuring a rising national

income and improvement in the standard of living.Thus, the First Plan aimed at removing food crisisand shortages

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Target of 2.1% p.a increase in nationalincome.

The performance was better and nationalincome recorded a 3.5% p.a increase.

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Second Five-Year Plan(195657 to 196061)

The Second Plan had the following four mainobjectives:

1. A sizeable increase in the national incometo raise the level of living in the country,

2. Rapid industrialisation with particularemphasis on the development of basic andheavy industries,

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Target of 4.5% was set

Was bases on Mahalanobis strategy ofdevelopment which gave the highest priorityto Heavy Industries

The implementation of this policy involvedrapid development of the public sector

The national income rose at a rate of 4.2%p.a

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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 therate of growth during the subsequent plan period,

2. To achieve self-sufficiency in food grains and increase agriculturalproduction to meet the requirements of industry and exports,

3. To expand basic industries like steel, chemicals, fuel, and power andestablish machine building capacity, so that the requirements offurther industrialisation could be met indigeneously within a period of10 years or so,

4. To utilise the manpower resources of the country to the fullest extentpossible and to ensure a substantial expansion in employmentopportunities, and 5. To establish progressively, greater equality ofopportunities and to bring about reduction in disparities in income andwealth and a more even distribution of economic power.

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Third plan was a miserable FLOP and as aconsequence economy found itself strandedin deep waters.

Long term planning was suspended for fullthree years

The fourth plan started in 1969 instead of1966

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Fourth Five-Year Plan(196970 to 197374)

The Fourth Plan aimed at two main objects:1. Growth with stability and2. 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 andunder-privileged, and the common man,

2. Generating more employment opportunities both in the rural and urbanareas,

3. Assigning an increasing role to the public sector in the growth process,and

4. Correcting regional imbalances among different states.

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Fifth Five-Year Plan(197475 to 197879)

The Fifth Plan had two main objectives:

1. Removal of poverty and2. Achievement of economic self-reliance.

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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 bypromoting 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,

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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 inproduction of agro-raw materials like oil seeds, cotton, and sugarcane by raising the rateof growth of production in the agricultural sector;

2. Generation of productive employment for maximum utilisation of human resources andsolving the problem of unemployment through the development of agriculture andindustry in a manner that would create employment potential for a large number ofpeople;

3. To promote efficiency and productivity through elimination of infrastructural bottlenecksand shortages by improving capacity utilisation, and by promoting modernisation of planand equipment and more extensive application and integration of science and

technology;

4. To promote equity and social justice through alleviation of poverty and reduction ininterclass 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 generalwith a specialreference to the economically and socially weaker sections through an MNP;

6. To promote a speedy development of power generation and irrigation potentialalong 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 throughnoninflationary financing;

8. To achieve self-reliance through attaining self-sufficiency in food grains and by

reducing dependence on external finance through export promotion and importsubstitution; and

9. To decentralise planning and to achieve full public participation in developmentworks

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In the first three years of 7th plan GDP hadincreases at a modest rate of 3.8% p.a.however during 1989-90 due to bumper

harvests the growth rate picked up sharplyand the average annual increase in GDPduring the whole of the7TH PLAN turned

out to be 5.6%.

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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 bythe turn of the century,

2. Containing population growth through peoples active cooperation and an effectivescheme of incentives and disincentives,

3. Universalisation of elementary education and eradication of illiteracy among people inthe age group of 1533 years,

4. Provision of safe drinking water and primary health care including immunisation to allvillages 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 supportthe growth process on a sustainable basis.

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Ninth Five-Year Plan(199798 to 200102)

The Ninth Plan outlined the followingimportant objectives for the plan:

1. Accelerating the rate of economic growthwith stable prices,

2. Containing the population growth of thecountry,

3. Strengthening efforts to build self-reliance.

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TENTH FIVE-YEAR PLAN (200207)

Targets

Reduction of poverty ratio by 5 percentage points by 2007 and by 15 percentage points by2012,

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 by2012.

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The approach to the Tenth Five-Year Plan proposes to shift the focus ofplanning from merely resources to the policy, procedural, and institutionalchanges, which are considered essential for every Indian to realise his orher potential.

The minimum agenda on which there must be full political agreement, and for which the approval of the NDC is sought, islisted below:

1. Reduction of Centrally sponsored schemes through transfer to states, convergence, and weeding out.2. Expansion of project-based support to states.3. Support to states made contingent on agreed programme of reforms.4. Adoption of core plan concepts at both Centre and states.5. 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 ajoint 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.

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FIVE-YEAR PLANSACHIEVEMENTSAND FAILURES

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ELEVENTH FIVE-YEAR PLAN(200712)

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