Objectives of Planning

1. Increase in national income and rise in the growth

rate of the economy.
2. Reducing inequalities in distribution of income and
other assets
3. Reducing/removing poverty
4. Achieving full employment.
5. Attaining economic self–reliance
6. Modernisation of various sectors
7. Greater regional balances
8. Price Stability
 Phases of Planning
• 1947- Mid 1950s: Preparatory Phase
• Mid 1950s – Mid 1960s: Period of rapid
industrialisation
• Late 1960s – 1970s: Focus on Agriculture
• Mid 1980s – 1990: Tentative Liberalisation
• 1990s onwards: Globalisation and full
fledged liberalisation
 Various Plans
• The First Plan (1952-56)
• Correct the problems of the economy arising
from ravages of WW-II,
• Initiate all round balanced development for
increasing standards of living, removing food
crisis, building up infrastructure

• The Second Plan (1956-61)

• Rapid industrialisation with emphasis on heavy
and basic industries
• A large expansion in employment opportunities
 Various Plans
• The Third Plan (1962-66)
• More focus on agriculture

• The Fourth Plan (1969-74)

• Growth with stability
• Progressive achievement of self reliance

• The Fifth Plan (1974-79)

• Removal of Poverty
• Economic Self Reliance
 Various Plans
• The Sixth and Seventh Plan (1980-85, 85-90)
• Main emphasis on infrastructure building and
modernising the economy. Partial liberalisation
begins. Increased focus on exports. Poverty

• The Eighth Plan (1992-1997):

• Beginning of economic reforms; constituting
liberalisation of domestic policies and
globalisation.
• The Ninth Plan (1997-2002)
• Greater reliance on the market mechanism and
cooperative federalism
 Various Plans
• The Tenth Plan (2002-2007)
• Growth, Equity and Sustainability: Recognition of
the fact that growth and equity are inter-linked.
While growth is necessary to raise per capita
income and increase employment opportunities.
It is also true that high growth rates cannot be
sustained unless accompanied by dispersion of
purchasing power which can provide the
demand needed to support increase in output
without relying excessively on export market.
 Various Plans
• Thus focus of plan on Agriculture
• Sectors which have high potential for providing
employment opportunities, e.g. SSI, ITES,
modern retailing, construction, housing and real
estate etc.
 Evolving Focus of Various Plans
• Till about the mid-eighties, government was at
the commanding heights with public sector,
public investment and various rules and
regulations acting as the guiding principle for
strategy of growth.
• It build up strong and diversified industrial base,
however, growth rate continued to lag behind the
projected and in the first 3 decades registered
growth of around 3.5 per cent.
• Till about the fifth plan, policies were inward
looking with focus on building domestic industry,
protecting them from foreign competition and low
emphasis on exports.
 Evolving Focus of Various Plans
• Decade long industrial downturn beginning from
the mid-60s, saw the policies changing and
more focus on market oriented policies and
giving greater freedom for private players. De-
licensing, relaxation of MRTP Act

• The Seventh Plan saw partial liberalisation,

However, deep fiscal crisis landed India at the
door of IMF-World Bank for loans.
• Conditionalities saw the beginning of economic
reforms
 Economic Reforms
• Economic Reforms has 3 Aspects:
• 1. Liberalisation;
• 2. Privatisation; and
• 3. Globalisation
 India’s Economic Reform
• A move away from Inward looking economy
to a more open economy or export oriented
strategy of growth.
• That in turn means doing away with
government intervention as much as possible
and giving greater freedom to private
enterprise operations.
• Policy focus is on –
• Deregulating Indian industry;
• Allowing the industry freedom and flexibility
in responding to market forces and
profitability
 India’s Economic Reform
• Providing a policy regime that facilitates
and fosters growth of Indian industry to let
the entrepreneurs make investment
decisions on the basis of their own
commercial judgment.
• Since the attainment of technological
dynamism and international
competitiveness requires that enterprises
must be enabled to swiftly respond to fast
changing external conditions that have
become characteristic of today's industrial
world, policy changes is aimed at enabling
that.
 Meaning of Liberalisation
1. Dismantling of industrial licensing system and
dilution of MRTP Act;
2. Reduction in quantitative restrictions in imports
as well as rate of import duties;
3. Reductions in control on foreign exchange;
4. Financial and banking sector reforms;
5. Reductions in the level of corporate and
personal income taxes;
6. Reductions in restrictions on Foreign
Investments (Direct as well as Portfolio)
 Meaning of Liberalisation
7. De-reservation of basic industries, power,
transport, banking etc.
8. Privatisation of PSUs (Public Sector Units)
Measures towards Globalisation
1. INVESTMENT REFORMS
Allowing entry of MNCs by scrapping restrictive
laws like FERA and changing into FEMA
Permitting Indian companies to collaborate with
foreign companies in the form of joint ventures
Liberalising inflow of foreign direct investment,
Incentives for MNCs and NRIs for investing in
India
 Measures towards Liberalisation,
Globalisation and Privatisation
Expanding list of items for automatic approval of
foreign equity

2. TRADE REFORMS
Import liberalisation – reduction of import tariffs,
replacing import licenses with import tariffs,
removing quantitative restrictions on imports
Removing export subsidies, replacing licenses of
exports with export duties, low flat tax on export
income
Decanalising oil and agricultural trade
 Liberalisation, Globalisation and
Privatisation
3. FINANCIAL AND BANKING REFORMS
Allowing FIIs to invest in Indian Capital Market;
Allowing Indian companies to procure capital from
foreign countries through “Euro Issues” and
“Global Deposit Receipts” Is to invest in Indian
Capital Market;
Allowing Mutual Funds to invest in foreign
companies
Interest Rate to be market Determined
Lowering SLR and CRR in banks
Allowing private sector into banking
 Liberalisation, Globalisation and
Privatisation
4. EXCHANGE RATE REFORMS
Move towards flexible exchange rate; LERMS
Liberalised Exchange Rate Management
System
Flexible Exchange Regime or Managed float
5. FISCAL CONSOLIDATION
Reduce Fiscal Deficit
Reduction in Public Expenditure
Tax reforms: VAT and Income tax and Corporate
taxes
Privatisation
 Liberalisation, Globalisation and
Privatisation
6. INDUSTRIAL REFORMS
• De-Licensing;
• De-reservation;
• Broad banding;
• Dilution of MRTP Act