The economy of India is based in part on planning through its five-year plans, which are developed,

executed and monitored by the Planning Commission. The tenth plan completed its term in March
2! and the eleventh plan is currently underway.
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Prior to the fourth plan, the allocation of state
resources was based on schematic patterns rather than a transparent and ob%ective mechanism, which
led to the adoption of the &adgil formula in #'('. )evised versions of the formula have been used
since then to determine the allocation of central assistance for state plans.
First Five-Year Plan, 19511956
The first Indian Prime Minister, *awaharlal +ehru presented the first five,year plan to the Parliament of
India on - .ecember #'/#. The plan addressed, mainly, the agrarian sector, including investments in
dams and irrigation. The agricultural sector was hit hardest by the partition of India and needed
urgent attention.
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The total planned budget of 2(.- billion 123420.( billion in the #'/ exchange
rate5 was allocated to seven broad areas6 irrigation and energy 12!.2 percent5, agriculture and
community development 1#!.7 percent5, transport and communications 127 percent5, industry 1-.7
percent5, social services 1#(.(7 percent5, land rehabilitation 17.# percent5, and for other sectors and
services 12./ percent5.
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The most important feature of this phase was active role of state in all
economic sectors. 3uch a role was %ustified at that time because immediately after independence,
India was facing basic problems8deficiency of capital and low capacity to save.
The target growth rate was 2.#9 annual gross domestic product 1&.P5 growth: the achieved growth
rate was 0.(9. The net domestic product went up by #/9. The monsoon was good and there were
relatively high crop yields, boosting exchange reserves and the per capita income, which increased by
-9. +ational income increased more than the per capita income due to rapid population growth. Many
irrigation pro%ects were initiated during this period, including the ;ha<ra .am and =ira<ud .am. The
>orld =ealth ?rgani@ation, with the Indian government, addressed childrenAs health and reduced
infant mortality, indirectly contributing to population growth.
Bt the end of the plan period in #'/(, five Indian Institutes of Technology 1IITs5 were started as ma%or
technical institutions. The 2niversity &rant Commission was set up to ta<e care of funding and ta<e
measures to strengthen the higher education in the country.
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Contracts were signed to start five steel
plants, which came into existence in the middle of the second five,year plan.
Second Five-Year Plan, 19561961
The second five,year plan focused on industry, especially heavy industry. 2nli<e the Cirst plan, which
focused mainly on agriculture, domestic production of industrial products was encouraged in the
3econd plan, particularly in the development of the public sector. The plan followed the Mahalanobis
model, an economic development model developed by the Indian statistician Prasanta Chandra
Mahalanobis in #'/0. The plan attempted to determine the optimal allocation of investment between
productive sectors in order to maximise long,run economic growth . It used the prevalent state of art
techniDues of operations research and optimi@ation as well as the novel applications of statistical
models developed at the Indian 3tatiatical Institute. The plan assumed a closed economy in which the
main trading activity would be centered on importing capital goods.
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=ydroelectric power pro%ects and five steel mills at ;hilai, .urgapur, and )our<ela were established.
Coal production was increased. More railway lines were added in the north east.
The Btomic Energy Commission was formed in #'7- with =omi *. ;habha as the first chairman. The
Tata Institute of Cundamental )esearch was established as a research institute. In #'/! a talent
search and scholarship program was begun to find talented young students to train for wor< in nuclear
power.
The total amount allocated under the second five year plan in India was )s. 7,- crore. This amount
was allocated among various sectors6
Mining and industry
Community and agriculture development
Power and irrigation
3ocial services
Communications and transport
Miscellaneous
Target &rowth6 7./9 Bctual &rowth6 7.2!9
Third Five-Year Plan, 19611966
The third plan stressed on agriculture and improving production of rice, but the brief 3ino,Indian >ar
of #'(2 exposed wea<nesses in the economy and shifted the focus towards the .efence industry. In
#'(/,#'((, India fought a war with Pa<istan. The war led to inflation and the priority was shifted to
price stabilisation. The construction of dams continued. Many cement and fertili@er plants were also
built. Pun%ab began producing an abundance of wheat.
Many primary schools were started in rural areas. In an effort to bring democracy to the grassroot
level, Panchayat elections were started and the states were given more development responsibilities.
3tate electricity boards and state secondary education boards were formed. 3tates were made
responsible for secondary and higher education. 3tate road transportation corporations were formed
and local road building became a state responsibility. The target growth rate of &.P1gross domestic
product5was /.( percent.The achieved growth rate was 2.-7 percent.
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Fourth Five-Year Plan, 19691974
Bt this time Indira &andhi was the Prime Minister. The Indira &andhi government nationalised #7
ma%or Indian ban<s and the &reen )evolution in India advanced agriculture. In addition, the situation
in East Pa<istan 1now ;angladesh5 was becoming dire as the Indo,Pa<istani >ar of #'!# and
;angladesh Fiberation >ar too< place.
Cunds earmar<ed for the industrial development had to be diverted for the war effort. India also
performed the 3miling ;uddha underground nuclear test in #'!7, partially in response to the 2nited
3tates deployment of the 3eventh Cleet in the ;ay of ;engal. The fleet had been deployed to warn
India against attac<ing >est Pa<istan and extending the war.
Target &rowth6 /.!9 Bctual &rowth6 0.09
Fifth Five-Year Plan, 19741979
3tress was laid on employment, poverty alleviation, and %ustice. The plan also focused on self,reliance
in agricultural production and defence. In #'!- the newly elected Morar%i .esai government re%ected
the plan. Electricity 3upply Bct was enacted in #'!/, which enabled the Central &overnment to enter
into power generation and transmission.
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leaders.
The Indian national highway system was introduced for the first time and many roads were widened to
accommodate the increasing traffic. Tourism also expanded.
Target &rowth6 7.79 Bctual &rowth6 7.-9
Sixth Five-Year Plan, 19!195
The sixth plan also mar<ed the beginning of economic liberali@ation. Price controls were eliminated
and ration shops were closed. This led to an increase in food prices and an increase in the cost of
living. This was the end of +ehruvian Plan and )a%iv &andhi was prime minister during this period.
Camily planning was also expanded in order to prevent overpopulation. In contrast to ChinaAs strict
and binding one,child policy, Indian policy did not rely on the threat of force. More prosperous areas of
India adopted family planning more rapidly than less prosperous areas, which continued to have a
high birth rate.
Target &rowth6 /.29 Bctual &rowth6 /.((9
Seventh Five-Year Plan, 195199!
The 3eventh Plan mar<ed the comebac< of the Congress Party to power. The plan laid stress on
improving the productivity level of industries by upgrading of technology.
The main ob%ectives of the !th five year plans were to establish growth in areas of increasing
economic productivity, production of food grains, and generating employment opportunities.
Bs an outcome of the sixth five year plan, there had been steady growth in agriculture, control on rate
of Inflation, and favourable balance of payments which had provided a strong base for the seventh
five Gear plan to build on the need for further economic growth. The !th Plan had strived towards
socialism and energy production at large. The thrust areas of the !th Cive year plan have been
enlisted below6
3ocial *ustice
)emoval of oppression of the wea<
2sing modern technology
Bgricultural development
Bnti,poverty programs
Cull supply of food, clothing, and shelter
Increasing productivity of small and large scale farmers
Ma<ing India an Independent Economy
;ased on a #/,year period of striving towards steady growth, the !th Plan was focused on achieving
the pre,reDuisites of self,sustaining growth by the year 2. The Plan expected a growth in labour
force of 0' million people and employment was expected to grow at the rate of 7 percent per year.
3ome of the expected outcomes of the 3eventh Cive Gear Plan India are given below6
;alance of Payments 1estimates56 Export , 00, crore 1234!.7 billion5, Imports , 1,5
/7, crore 1234#2 billion5, Trade ;alance , 1,5 2#, crore 12347.! billion5
Merchandise exports 1estimates56 (,(/0 crore 1234#0./ billion5
Merchandise imports 1estimates56 '/,70! crore 12342#.0 billion5
Pro%ections for ;alance of Payments6 Export , (,! crore 1234#0./ billion5, Imports , 1,5
'/,7 crore 12342#.0 billion5, Trade ;alance, 1,5 07,! crore 1234!.! billion5
3eventh Cive Gear Plan India strove to bring about a self,sustained economy in the country with
valuable contributions from voluntary agencies and the general populace.
Target &rowth6 /.9 Bctual &rowth6 (.#9
Period "et#een 1991991
#'-','# was a period of economic instability in India and hence no five year plan was implemented.
;etween #'' and #''2, there were only Bnnual Plans. In #''#, India faced a crisis in Coreign
Exchange 1Corex5 reserves, left with reserves of only about 234# billion. Thus, under pressure, the
country too< the ris< of reforming the socialist economy. P.H. +arasimha )ao5was the twelfth Prime
Minister of the )epublic of India and head of Congress Party, and led one of the most important
administrations in IndiaAs modern history overseeing a ma%or economic transformation and several
incidents affecting national security. Bt that time .r. Manmohan 3ingh 1currently, Prime Minister of
India5 launched IndiaAs free mar<et reforms that brought the nearly ban<rupt nation bac< from the
edge. It was the beginning of privatisation and liberalisation in India.
$i%hth Five-Year Plan, 199&1997
Moderni@ation of industries was a ma%or highlight of the Eighth Plan. 2nder this plan, the gradual
opening of the Indian economy was underta<en to correct the burgeoning deficit and foreign debt.
Meanwhile India became a member of the >orld Trade ?rgani@ation on # *anuary #''/.This plan can
be termed as )ao and Manmohan model of Economic development. The ma%or ob%ectives included,
controlling population growth, poverty reduction, employment generation, strengthening the
infrastructure, Institutional building,tourism management, =uman )esource development,
Involvement of Panchayat ra%, +agarapali<as, +.&.?A3 and .ecentralisation and peopleAs participation.
Energy was given prority with 2(.(9 of the outlay. Bn average annual growth rate of (.!-9 against
the target /.(9 was achieved.
'inth Five-Year Plan, 1997&!!&
+inth Cive Gear Plan India runs through the period from #''! to 22 with the main aim of attaining
ob%ectives li<e speedy industriali@ation, human development, full,scale employment, poverty
reduction, and self,reliance on domestic resources.
;ac<ground of +inth Cive Gear Plan India6 +inth Cive Gear Plan was formulated amidst the bac<drop of
IndiaAs &olden %ubilee of Independence.
The main ob%ectives of the +inth Cive Gear Plan of India are6
to prioriti@e agricultural sector and emphasi@e on the rural development
to generate adeDuate employment opportunities and promote poverty reduction
to stabili@e the prices in order to accelerate the growth rate of the economy
to ensure food and nutritional security
to provide for the basic infrastructural facilities li<e education for all, safe drin<ing water,
primary health care, transport, energy
to chec< the growing population increase
to encourage social issues li<e women empowerment, conservation of certain benefits for the
3pecial &roups of the society
to create a liberal mar<et for increase in private investments
.uring the +inth Plan period, the growth rate was /.0/ per cent, a percentage point lower than the
target &.P growth of (./ per cent.
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Tenth Five-Year Plan, &!!&&!!7
Bttain -9 &.P growth per year.
)eduction of poverty ratio by / percentage points by 2!.
Providing gainful and high,Duality employment at least to the addition to the labour force:IBll
children in India in school by 20: all children to complete / years of schooling by 2!.
)eduction in gender gaps in literacy and wage rates by at least /9 by 2!:I)eduction in
the decadal rate of population growth between 2# and 2## to #(.29:IIncrease in Fiteracy
)ates to !/ per cent within the Tenth Plan period 122 to 2!5
$leventh Five-Year Plan, &!!7&!1&
The eleventh plan has the following ob%ectives6
#. Income J Poverty
o Bccelerate &.P growth from -9 to #9 and then maintain at #9 in the #2th Plan in
order to double per capita income by 2#(,#!
o Increase agricultural &.P growth rate to 79 per year to ensure a broader spread of
benefits
o Create ! million new wor< opportunities.
o )educe educated unemployment to below /9.
o )aise real wage rate of uns<illed wor<ers by 2 percent.
o )educe the headcount ratio of consumption poverty by # percentage points.
2. Education
o )educe dropout rates of children from elementary school from /2.29 in 20,7 to
29 by 2##,#2
o .evelop minimum standards of educational attainment in elementary school, and by
regular testing monitor effectiveness of education to ensure Duality
o Increase literacy rate for persons of age ! years or above to -/9
o Fower gender gap in literacy to # percentage point
o Increase the percentage of each cohort going to higher education from the present
#9 to #/9 by the end of the plan
0. =ealth
o )educe infant mortality rate to 2- and maternal mortality ratio to # per # live
births
o )educe Total Certility )ate to 2.#
o Provide clean drin<ing water for all by 2' and ensure that there are no slip,bac<s
o )educe malnutrition among children of age group ,0 to half its present level
o )educe anaemia among women and girls by /9 by the end of the plan
7. >omen and Children
o )aise the sex ratio for age group ,( to '0/ by 2##,#2 and to '/ by 2#(,#!
o Ensure that at least 00 percent of the direct and indirect beneficiaries of all
government schemes are women and girl children
o Ensure that all children en%oy a safe childhood, without any compulsion to wor<
/. Infrastructure
o Ensure electricity connection to all villages and ;PF households by 2' and round,
the,cloc< power.
o Ensure all,weather road connection to all habitation with population # and above
1/ in hilly and tribal areas5 by 2', and ensure coverage of all significant
habitation by 2#/
o Connect every village by telephone by +ovember 2! and provide broadband
connectivity to all villages by 2#2
o Provide homestead sites to all by 2#2 and step up the pace of house construction for
rural poor to cover all the poor by 2#(,#!
(. Environment
o Increase forest and tree cover by / percentage points.
o Bttain >=? standards of air Duality in all ma%or cities by 2##,#2.
o Treat all urban waste water by 2##,#2 to clean river waters.
o Increase energy efficiency by 2 percentage points by 2#(,#!.