ABM 502 Unit III

LESSON 7
ECONOMIC PLANNING CONCEPT

Context
We are aware that economic development is a dynamic process that
involves the interaction, mobilisation and direction of economic
variables as well as non-economic dimensions. This process of
economic growth calls for organized efforts on the part of various
engines of growth. Almost all productive resources except human
resources are dormant in nature. These resources are organized,
directed and controlled for ensuring necessary pace of development
over a sustained period. This effort is put up by a system that is called
Planning Machinery of the nation. It is the effectiveness and efficiency
of the planning machinery that determine the quality and rate of
development of the country.
This unit deals with various dimensions of economic planning and
reviews the planning process of India.

Objective:

After going through this unit, students will be able to understand

 The nature and importance of economic planning
 Management of economic planning in India
 Various dimensions of India’s Five Year Plans

Introduction

The concept of economic planning is ages old and different

versions of economic planning have been used by different societies
since the advent of social grouping. In its simplest form, economic
planning refers to a process by which a region manages its economy.
Economy pertains various economic variables of a nation that need to
be managed in an orderly manner so that the objective of economic

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growth and social justice could be achieved in the most effective

manner. The significance of planning can be understood by the fact
that the difference between a developed nation and underdeveloped
nation is largely determined by the kind and quality of economic
planning undertaken by respective countries.

Meaning
In a more specific manner, planning is a process, a system, a
technique through which a nation tries to realize some pre-determined
and well-defined economic and social aims and objectives. Planning is
a state intervention in the economic system through which the
productive resources are mobilised and directed towards the
achievement of pre-determined targets. It is an activity that consists of
goals which a society wants to achieve, and the means through which
these goals are sought to be achieved. Keeping in view the needs of
the country, Planning machinery or planning authority sets the goals
and determines the various courses of action to achieve these goals.
Based on a system of planning, an economy can be categorized into
Planned Economy, Unplanned Economy, and Indicative Economies.
In the centralized planned economy, the state or government controls
all major sectors of the economy and formulates all decisions about
their use and about the distribution of income, The planners decide
what should be produced and direct enterprises to produce those
goods. A planned economy may consist of state-owned enterprises,
private enterprises directed by the state, or a combination of both.
Though "planned economy" and "command economy" are often used
as synonyms, some make the distinction that under a command
economy, the means of production are publicly owned. That is, a
planned economy is "an economic system in which the government
controls and regulates production, distribution, prices, etc." Planned
economies are in contrast to unplanned economies, such as a market
economy, where production, distribution, pricing, and investment
decisions are made by the private owners of the factors of production
based upon their own and their customers' interests rather than upon

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furthering some overarching macroeconomic plan. Less extensive

forms of planned economies include those that use indicative planning,
in which the state employs "influence, subsidies, grants, and taxes, but
does not compel.
In nutshell, economic planning is a technique by which economic
resources are mobilised to achieve well-defined economic and social
targets The process by which key economic decisions are made or
influenced by central governments. It contrasts with the laissez-faire
approach that, in its purest form, eschews any attempt to guide the
economy, relying instead on market forces to determine the speed,
direction, and nature of economic evolution.

.Definition of Economic Planning

An acceptable definition of economic planning is rather
confusing, as different economists have so loosely and widely used the
term. Prof. W. Arthur Lewis has referred to six different senses in which
the term economic planning can be used ranging from geographical
factoring of productive resources to determination of economic
objectives and allocation of economic resources to different sections of
society. However, some definitions of economic planning by leading
authors of economics may through some light upon the dimensions of
economic planning.
Prof. Robinson observes, “Economic planning is collective control or
suppression of private activities of production and exchange.”
According to F. Zweig, “Economic planning consists in the extension of
the functions of public authorities for organisation and utilisation of
economic resources…Planning implies and leads to centralisation of
the national economy.”
Lewis Lordwin defines economic planning as “A scheme of economic
organization in which individual and separate plants, enterprises and
industries are treated as coordinate units of one single system for the
purpose of utilising available resources to achieve the maximum
satisfaction of the people’s needs within a given time.

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According to Prof. H.W. Dickinson, Planning denotes, “the making of

major economic decisions, what and how much is to be produced; how,
when and where it is to be produced; to whom it is to be allocated, by
the conscious decision of a determinate authority on the basis of
comprehensive survey of the economic system as a whole.”
On analysis of above mentioned definitions of economic planning a
comprehensive definition may be comprehended as follows
“Economic planning as understood by the majority of leading
economists implies deliberate control and direction of the economy by
the state or central authority for achieving definite targets and
objectives within a scheduled time.”

Features of Economic Planning

The main characteristics of economic planning that is reflected from
above discussions are as follows:
 Definite Aim and objectives
 Central Planning Authority
 Stipulated Time
 Proper regional balance
 Comprehensive
 Optimum utilisation of available resources

Objectives of Economic Planning

Economic planning has a variety of objectives, which are subject to
change at different times in different countries. Given the needs of the
society and availability of productive resource at a particular point of
time, the nature of economic planning changes. In all cases however,
the economic planning aims at achievement of social justice, equitable
distribution of wealth, creation of opportunities for economic
participation and improving the quality of human capital. The primary
motive of all types of economic planning is sustainable development
keeping in view the requirement of future generations. In this way,
economic planning has multiple objectives that can be pointed as
below:

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Rapid Capital Formation

We have already discussed that the major obstacle to economic
growth of a nation is the lack of capital. If capital is inadequate, capital
formation will be abysmally low. This happens because the rate
investment in the economy falls and if the investment level low it will
result into low level of employability of productive resources and the
rate of unemployment will rapidly increase. This way the society
experiences a very low level of income that makes the problem of low
capital formation more complicated. The nation gets into Capital trap
and it remains poor. Prof. Nurkse has rightly said that a country is poor
because it is poor. Hence the foremost objective of economic planning
is increase the rate of capital formation in the country. With the help of
effective mobilisation of resources this problem is overcome.

Poverty Alleviation
The underdeveloped nations have two major chronic economic
problems – poverty and unemployment. Regional backwardness and
inequality in the society are the main reasons of poverty. Poverty is the
symptom of these factors. Therefore, poverty elimination is a major
target of every underdeveloped country.

Self-check question
 Elucidate the relevance of planning in economic development of
a country.

Advantages of Economic planning

Supporters of planned economies cast them as a practical measure to

ensure the production of necessary goods—one that does not rely on
the vagaries of free markets.

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Stability
A planned economy can ensure the continuous utilization of all
available resources. If isolated and unresponsive to consumer demand,
a planned economy does not suffer from a business cycle. Under an
ideally administered planned economy, neither unemployment nor idle
production facilities should exist beyond minimal levels, and the
economy should develop in a stable manner, unimpeded by inflation or
recession.
Long-term infrastructure investment can be made without fear of a
market downturn (or loss of confidence) leading to abandonment of the
project. This is especially where returns are risky (e.g. fusion reactor
technology) or where the return is diffuse (e.g. immunization programs
or public education).

Conformance to a grand design

While a market economy maximises wealth by evolution, a planned
economy favors design. While evolution tends to lead to a local
maximum in aggregate wealth, design is in theory capable of achieving
a global maximum. For example, a planned city can be designed for
efficient transport, while organically grown cities tend to suffer from
traffic congestion. Critics would point out that planned cities will suffer
from the same problems as unplanned cities, unless reproduction and
population growth is subject to strict control, as in a closed city.

Meeting collective objectives by individual sacrifice

A planned economy serves collective rather than individual needs:
under such a system, rewards, whether wages or perquisites, are to be
distributed according to the value that the state ascribes to the service
performed. A planned economy eliminates the individual profit motives
as the driving force of production and places it in the hands of the state
planners to determine what is the appropriate production of different
sets of goods.

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The government can harness land, labor, and capital to serve the
economic objectives of the state. Consumer demand can be restrained
in favor of greater capital investment for economic development in a
desired pattern. The state can begin building a heavy industry at once
in an underdeveloped economy without waiting years for capital to
accumulate through the expansion of light industry, and without
reliance on external financing. This is what happened in the Soviet
Union during the 1930s when the government forced the share of GNP
dedicated to private consumption from 80 percent to 50 percent. [8]
While there was a significant decline in individual living standards, the
state was able to meet some of its "economic objectives."

Self-Check question
 Write a note on the advantages of economic planning

Summary
economic planning is a technique by which economic resources are
mobilised to achieve well-defined economic and social targets The
process by which key economic decisions are made or influenced by
central governments. It contrasts with the laissez-faire approach that, in
its purest form, eschews any attempt to guide the economy, relying
instead on market forces to determine the speed, direction, and nature
of economic evolution. In a more specific manner, planning is a
process, a system, a technique through which a nation tries to realize
some pre-determined and well-defined economic and social aims and
objectives. Planning is a state intervention in the economic system
through which the productive resources are mobilised and directed
towards the achievement of pre-determined targets. It is an activity that
consists of goals which a society wants to achieve, and the means
through which these goals are sought to be achieved. Keeping in view
the needs of the country, Planning machinery or planning authority sets
the goals and determines the various courses of action to achieve
these goals.

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Home Assignment
 Write a detailed note on different types of planning and state as
to which type of planning is more suitable for india.
 Given the state of planning in india, give your opinion about the
flaws of economic planning.

Suggested Readings and References

 Registrar General and Census Commissioner, India, Census of India 2001:
 Provisional Population Totals, Paper 1 of 2001 (New Delhi: Government of
India, 2001).
 http://finmin.nic.in/
 Datt, Ruddar & Sundharam, K.P.M. (2005). "2". Indian
Economy. S.Chand. ISBN 81-219-0298-3.
 Sankaran, S (1994). "3". Indian Economy: Problems, Policies
and Development. Margham Publications.
 Kumar, Dharma (Ed.). "4". The Cambridge Economic History of
India (Volume 2).

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LESSON 8
ECONOMIC PLANNING IN INDIA

Introduction

Before the last decade, the 1990's, India was probably on the short list
of almost every economist outside of India of the countries with the
worst economic systems. India had and probably still has a parasitical
class of politicians and bureaucrats that micromanage the economy in
the interests of their class. They hypocritically aver that they are doing
what they are doing in the interest of the people of India. There has
been some official allegiance to socialism with a goal of achieving it
through Stalinist central planning. The fact that the result has been
some horrible mixture of state capitalism and moribund corporatism is
usually attributed to incompetence and ineptitude on the part of the
bureaucracy. The Indian American economist Jagdish Baghwati of
Columbia University remarked that he agreed with the view that "India's
misfortune was to have brilliant economists: an affliction that the Far
Eastern super-performers were spared." The policies implemented by
the Government of India before the last decade were brilliant only in
maintaining the power and influence of the bureaucrats. Judged with
respect to an promoting the welfare of the Indian people those policies
were ridiculously bad, to the point of stupidity.

The bureaucracy has been rather competent in generating excuses for

the failure of their policies. One of those exceuses has been that there
is a Hindu rate of growth that is significantly lower than the rate of
growth that other countries could achieve. What the bureacrats dare
not say is that in maintaining a pool of economic rents the bureaucrats'
policies were an outstanding success.

Rudimentary economic planning, deriving the sovereign authority of the

state, first began in India in 1930s under the British Raj, and the

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colonial government of India formally established a planning board that

functioned from 1944 to 1946. Private industrialists and economist
formulated at least three development plans in 1944. After India gained
independence, a formal model of planning was adopted, and the
planning commission, reporting directly to the Prime Minister of India
was established. Accordingly, the Planning Commission was set up on
15 March 1950, with Prime Minister Jawahar Lal Nehru as the
chairman.

The planning and adminstration of the Indian economy did not emerge
wholly till indepence. The first five year plan (1951-55) called for the
planned development of only a few industries, the ones that private
industry had not developed for one reason or another. In the first five
year plan the other industries were left to the market.

The second five year plan (1956-1961), the product of P.C.

Mahalanobis' work, was more inteventionist. It tried to implement the
elements of British socialism and combine them with the tenets of
Mahatma Gandhi. It sought to eliminate the importation of consumer
goods, particularly luxuries, by means of high tariffs and low quotas or
banning some items altogether. The large enterprises in seventeen
industries were nationalized. License were required for starting new
companies, for producing new products or expanding production
capacities. This is when India got its License Raj, the bureaucratic
control over the economy. Not only did the Indian Government require
businesses get bureaucratic approval for expanding productive
capacity, busineeses had to have bureaucratic approval for laying off
workers and for shutting down. When a business was losing money the
Government would prevent them from shutting down and to keep the
business going would provide assistance and subsidies. When a
business was hopeless an owner might take away, illegally, all the
equipment that could be moved and disappear themselves. In such
cases the Government would try to keep the business functioning by

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means of subsidies to the employees. One can imagine how chaotic

and unproductive a business would be under such conditions.

Government planning also involved requiring businesses to produce in

particular areas, usually economically backward areas. It also might
require the production of certain goods such as cheap cloth for the
poor.

The Indian Economic Plans had to be financed and this often meant
taking resources away from agriculture and giving them to pet
industries that were not viable on there own. Ultimately this meant
starving agriculture to feed inefficient industries the Government
favored. Such a program was not likely to alleviate poverty and so in
1971, under Nehru's daughter, Indira Gandhi, the Government tried to
eliminate poverty by promoting small, labor intensive enterprises.

The net effect of the Government programs was to take away

resources from agriculture in the countryside to give it to favored
businesses in the cities. When the effects on agriculture and the
countryside became significant the plan added programs to help the
countryside (labor intensive small businesses) and programs to aid
agriculture such as a fertilizer subsidy. These programs to help
agriculture and the countryside generally came from resources which
the Government took away from agriculture and the countryside. The
fertilizer subsidy may have been of greater benefit to the wealthier
farmers than to the poorer farmers.

India's output did grow but not as much as did that of other countries in
the region. The Government of India generally takes credit for growth,
but when India's performance is compared to that of other countries
one sees that the Government's contribution to growth was negative.

State planning and the mixed economy:

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After independence, India opted for a centrally planned economy to try

to achieve an effective and equitable allocation of national resources
and balanced economic development. The process of formulation and
direction of the Five-Year Plans is carried out by the Planning
Commission, headed by the Prime Minister of India as its chairperson.
India's mixed economy combines features of both capitalist market
economy and the socialist command economy, but has shifted more
towards the former over the past decade. The public sector generally
covers areas which are deemed too important or not profitable enough
to leave to the market, including such services as the railways and
postal system. Since independence, there have been phases of
nationalizing such areas as banking and, more recently, of
privatization.

Planning Commission of India

The Planning Commission was set up in March, 1950 by a Resolution
of the Government of India. In July, 1951 the Planning Commission
presented a draft outline of a plan of development for the period of five
years from April, 1951 to March, 1956. The Plan included a number of
development projects which had been already taken in hand as well as
others which had not yet been begun. The Draft Plan was divided into
two parts, the first involving an expenditure of Rs. 1,493 crores and
consisting largely of projects in execution which were to be
implemented in any case, and the second proposing an outlay of Rs.
300 crores which was to be undertaken if external assistance were
available. While the execution of development schemes which had
been included in the plan after consultation with the Central Ministries
and the State Governments was not to be affected, the Draft Outline
was addressed to the country for general discussion

Organisation
The composition of the Commission has undergone a lot of change
since its inception. With the Prime Minister as the ex-officio Chairman,
the committee has a nominated Deputy Chairman, who is given the

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rank of a full Cabinet Minister. Mr. Montek Singh Ahluwalia is presently

the Deputy Chairman of the Commission. Cabinet Ministers with
certain important portfolios act as part-time members of the
Commission, while the full-time members as experts of various fields
like Economics, Industry, Science and General Administration.
The Commission works through its various divisions, of which there are
three kind:
 General Planning Divisions
 Programme Administration Divisions
The majority of experts in the Commission are economists, making the
Commission the biggest employer of the Indian Economic Services.

Functions
 Assessment of resources of the country
 Formulation of Five-Year Plans for effective use of these
resources
 Determination of priorities, and allocation of resources for the
Plans
 Determination of requisite machinery for successful
implementation of the Plans
 Periodical appraisal of the progress of the Plan

Self-check question
 Write a short note on the history and development of planning
machinery in India.

Summary

The bureaucracy has been rather competent in generating excuses for

the failure of their policies. One of those exceuses has been that there
is a Hindu rate of growth that is significantly lower than the rate of
growth that other countries could achieve. What the bureacrats dare
not say is that in maintaining a pool of economic rents the bureaucrats'
policies were an outstanding success. Rudimentary economic

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planning, deriving the sovereign authority of the state, first began in

India in 1930s under the British Raj, and the colonial government of
India formally established a planning board that functioned from 1944
to 1946. Private industrialists and economist formulated at least three
development plans in 1944. After India gained independence, a formal
model of planning was adopted, and the planning commission,
reporting directly to the Prime Minister of India was established.
Accordingly, the Planning Commission was set up on 15 March 1950,
with Prime Minister Jawahar Lal Nehru as the chairman.

Home Assignment

 Give a brief historical account of economic planning in

india.
 Write a note on the organization and process of planning
commission in india.

Suggested Readings and References

 Registrar General and Census Commissioner, India, Census of India 2001:

 Provisional Population Totals, Paper 1 of 2001 (New Delhi:Government of
India, 2001).
 http://finmin.nic.in/
 http://powermin.nic.in/
 Datt, Ruddar & Sundharam, K.P.M. (2005). "2". Indian
Economy. S.Chand. ISBN 81-219-0298-3.
 Sankaran, S (1994). "3". Indian Economy: Problems, Policies
and Development. Margham Publications.
 Kumar, Dharma (Ed.). "4". The Cambridge Economic History of
India (Volume 2).

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LESSON 9
REVIEW OF FIVE YEAR PLANS OF INDIA

For the smooth functioning of any economy, planning plays an

important role. The Planning Commission has been entrusted with the
responsibility of the creation, development and execution of India's
five year plans. India's five year plans are also supervised by the
Planning commission.
Currently, the 11th Five Year Plan, is underway. India's 10th Five Year
Plan, ended its tenure in the month of March, 2007.

An overview of India's Five Year Plans:

 First Five-Year Plan

The first five year plan India (1951-1956) had been presented by the
then Prime Minister Jawaharlal Nehru in the Indian Parliament on 8th
December, 1951.

The first five year plan had been made by the planning commission
whose objective was to improve the standard of living of the people by
effective use of the country's resources. In India, the first five year
plan's total outlay was estimated to been worth Rs. 2,069 crore. In the
first five year plan, this amount was allocated to various areas. They
are:
 Community and agriculture development
 Energy and irrigation
 Communications and transport
 Industry
 Land rehabilitation
 Social services

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The target of GDP growth in the first five year plan of India was 2.1%
per year and the actual growth of GDP that was achieved had been
3.6% per year. This shows the extent to which the first five year plan in
India had been successful. During the period of India first five year
plan, many projects related to irrigation had been started, such as the
Mettur Dam, Bhakra Dam, and Hirakud Dam.

In the first five year plan of India, provisions have been made for the
rehabilitation of agricultural workers who were landless. Apart from that
financial allocation was also made for conservation of soil,
experiments, and training in co-operative organizations. Increased
provisions have also been made for the improvement of roads, civil
aviation, railways, telegraphs, and posts. For the development of the
basic industry which includes the manufacture of fertilizers and
electrical equipment, provisions have been made in the Indian first five
year plan. Emphasis has also been given to small scale and village
industries in the Indian plan of first five years. First five year plan in
India had improved the living condition of the people of the country and
is of historical importance

 Second Five-Year Plan

Second five year plan India (1956-1961) intends to increase and

carry forward the development that had been started by the first five
year plan in India.
These five year plans are formulated by the planning commission
whose objective is to utilize the country's resources effectively, so that
the standard of living of the people improves.
The various tasks of the second five year plan in India are:
 To increase by 25% the national income
 To make the country more industrialized
 To increase employment opportunities so that every citizen gets
a job

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In India, the second five year plan focused on industry - more

specifically on the heavy industry. The domestic production of industrial
goods in the public sector was encouraged by the second five year
plan in India. The total amount for development given allocated under
the second five year plan in India was Rs. 4,800 crore. This money has
been distributed under the second five year plan in India for the
development of various sectors. They are:
 Mining and industry
 Community and agriculture development
 Power and irrigation
 Social services
 Communications and transport
 Miscellaneous

During the second five year plan India, 5 steel plants in Jamshedpur,
Durgapur, and Bhilai had been established, apart from a hydro-electric
power project which was also undertaken and implemented. The
production of coal increased during this period. Also, more railway lines
were added in the north-east part of the country, during the Indian
second five year plan. Land reform measures have been taken during
the period of the second five year plan India, in order to remove the
socio-economic constraints of the rural population.

The second five year plan India has, to a large extent, improved the
living standards of the people.

 Third Five-Year Plan

The third five year plan India (1961-1966) intended to make a more
determined effort to develop the nation, carrying forward the legacy set
by the previous two five year plans.
These five year plans are formulated by the planning commission, the
aim of which is to increase the quality of life of the citizens through
effective use of the country's resources.
The various tasks of the third five year plan India are:

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 To increase the national income by 5% per year

 To increase the production of agriculture so that the nation is
self sufficient in food grains
 To provide employment opportunities for every citizen of the
country
 To establish equality among all the people of the country

In the earlier 2 five year plans, agriculture was not given a great deal of
importance in spite of the fact that India's economy is still primarily
agrarian. But in the third five year plan of India, more stress had
been given to agriculture because increase in agricultural production
would lead to the growth of the Indian economy. Sufficient sops and
subsidies were allowed by the government for the agricultural sector
under the third five year plan of India.

In an effort to invite increased state participation to the India third five

year plan, more responsibility was given to the states. Also, various
organizations such as the Panchayat and Zila Parishads were set up at
the block and district level in order to increase rural development. In
India, the third five year plan have also laid emphasis on soil
conservation, irrigation, afforestation, and dry farming. Many fertilizer
and cement plants were built during the period of the third five year
plan India. Stress had been given to the development of social
services and education in India.

 Fourth five-year plan

At this time, Mrs. Indira Gandhi was the Prime Minister. The Indira
Gandhi government nationalized 19 major Indian banks. In addition,
the situation in East Pakistan (now independent Bangladesh) was
becoming dire as the Indo-Pakistani War of 1971 and Bangladesh
Liberation War took place.

Funds earmarked for the industrial development had to be used for the
war effort. India also performed the Smiling Buddha underground

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nuclear test in 1974, partially in response to the United States

deployment of the Seventh Fleet in the Bay of Bengal to warn India
against attacking West Pakistan and widening the war.

 Fifth Five-Year Plan

The Fifth Five Year Plan India was chalked out for the period
spanning 1974 to1979 with the objectives of increasing the
employment level, reducing poverty, and attaining self-reliance.
At the onset of the Fifth Five Year Plan India in the 1970s, the
international economy was in a turmoil, which had a great impact on
the economy of both, developed and developing countries of the world.
The main changes were perceived in sectors such as food, oil, and
fertilizers where prices sky-rocketed. As a result of this, attaining self-
reliance in food and energy became a top priority. During this period,
the Indian economy was affected by several inflationary pressures.
Food grain production was above 118 million tons due to the
improvement of infrastructural facilities like the functioning of the power
plants and the rise in the supply of coal, steel, and fertilizers.
Regarding the oil, credibility of Bombay High had shot up the
commercial production of oil in India. In 1974-75, Indian exports
crossed 18%, and the large earnings from these exports have further
increased the Indian foreign exchange reserves.

Objectives of the Fifth Five Year Plan India:

The Fifth Five Year Plan India was designed with emphasis on certain
objectives, enlisted as under:
 to reduce social, regional, and economic disparities for
developmental planning
 to enhance agricultural productivity
 to initiate land reforms
 to check rural and urban unemployment
 to emphasize on household industries like carpet-weaving,
handlooms, sericulture, and handicrafts

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 to encourage self-employment through a well integrated local

planning
 to encourage import substitution in areas like industrial
machinery, chemicals, paper, iron and steel and non-ferrous
metals
 to capture the markets with locational advantages
 to initiate appropriate use of fiscal, credit and production support
policies in the cottage industry sector
 to develop labor intensive technological improvements

 Sixth Five Year Plan

The Sixth Five Year Plan India was undertaken for the period
between 1980 to1985, with the main aim of attaining objectives like
speedy industrialization, rise in the employment level, poverty
reduction, and acquisition of technological self-reliance.
At the onset of the Sixth Five Year Plan India, Rajiv Gandhi, the then
prime minister prioritized speedy industrial development, with special
emphasis on the information technology sector. From the Fifth Five
Year Plan, the nation had been able to achieve self-sufficiency in food.
Moreover, the industrial sector was also diversified and science and
technology made a significant advance. One of the major hindrances in
the way of further development in this period was the boom in the
Indian population. However, several successful programs on
improvement of public health and epidemic control were also
undertaken to reduce infant mortality and increase life expectancy.
Significant investments were made by the government in the Indian
healthcare sector.

Objectives of the Sixth Five-Year Plan India:

The objectives of the Sixth Five Year Plan India were mainly focused
on increasing industrialization and reducing long-standing problems
such as poverty and unemployment. Some of the highlights and

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predominant aims of the Sixth Five Year Plan India are enumerated
as under
 to increase the growth rate of the economy
 to concentrate on the promotion of efficient use of resources
 to improve productivity level
 to initiate modernization for achieving economic and
technological self-reliance
 to control poverty and unemployment
 to develop indigenous energy sources and efficient energy
usage
 to promote improved quality of life of the citizens
 to introduce Minimum Needs Program for the poor and needy
with an emphasis to reduce the discrepancies in income and
wealth accumulation
 to initiate Family Planning Programs in order to check the
growing population trends
 to protect and improve ecological and environmental assets
 to promote the education at all levels
 Seventh Five Year Plan

The Seventh Five Year Plan India was for the duration between 1985
and 1989 under the approval of the National Development Council in
India.
The main objectives of the 7th five year plans were to establish growth
in the areas of increasing economic productivity, production of food
grains, and generating employment opportunities.
As an outcome of the sixth five year plan, there had been steady
growth in agriculture, control on rate of Inflation, and favorable balance
of payments which had provided a strong base for the seventh five
Year plan to build on the need for further economic growth. The 7th
Plan had strived towards socialism and energy production at large. The
thrust areas of the 7th Five year plan have been enlisted below:
 Social Justice
 Removal of oppression of the week

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 Using modern technology

 Agricultural development
 Anti-poverty programs
 Full supply of food, clothing, and shelter
 Increasing productivity of small and large scale farmers
 Making India an Independent Economy

Based on a 15-year period of striving towards steady growth, the 7th

Plan was focused on achieving the pre-requisites of self-sustaining
growth by the year 2000. The Plan expected a growth in labor force of
39 million people and employment was expected to grow at the rate of
4 percent per year.

Anti-poverty program:

Special emphasis was given to the most vulnerable classes of people

in the society viz., women, children, schedule tribes, and schedule
castes. The poverty ratio was expected to decline to 26 percent in
1989-90.

Agriculture:

The government undertook to increase productivity of oilseeds, fruits,

vegetables, pulses, cereals, fish, egg, meat, and milk.

Welfare:

Improved facilities for education to girls, family welfare, healthcare,

reduction in infant mortality were undertaken by the government as part
of the 7th five year plan.

Communications:

Emergence of informatics, telematics, and hooking up of

telecommunications with computers were important features of the 7th
five year plan in terms of development in Communications.

Transport:

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More stress was laid on increasing supplementary modes of transport

such as inland waterways, product pipelines, civil aviation, coastal
shipping. The 7th Plan expected an increase in accessibility to about
60 percent of the villages in India.

 Eighth Five Year Plan

Eighth Five Year Plan India runs through the period from 1992 to1997
with the main aim of attaining objectives like modernization of the
industrial sector, rise in the employment level, poverty reduction, and
self-reliance on domestic resources.

Just before the formulation of the Eighth Five Year Plan India, there
was great political instability in India which hindered the implementation
of any five years plan for the following two years after the Seventh Five
Year Plan. This period is characterized by extreme FOREX reserve
crisis and introduction of liberalization and privatization in Indian
economy. To invite FDI in Indian industrial sector and to follow free
market reforms were the only possible ways to revive the country from
foreign debt.

Objectives of the Eighth Five Year Plan India:

The main objectives of the Eighth Five Year Plan India are:
 to prioritize the specific sectors which requires immediate
investment
 to generate full scale employment
 to promote social welfare measures like improved healthcare,
sanitation, communication and provision for extensive education
facilities at all levels
 to check the increasing population growth by creating mass
awareness programs
 to encourage growth and diversification of agriculture
 to achieve self-reliance in food and produce surpluses for
increase in exports

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 to strengthen the infrastructural facilities like energy, power,

irrigation
 to increase the technical capacities for developed science and
technology
 to modernize Indian economy and build up a competitive
efficiency in order to participate in the global developments
 to place greater emphasis on role of private initiative in the
development of the industrial sector
 to involve the public sector to focus on only strategic, high-tech
and essential infrastructural developments
 to create opportunities for the general people to get involved in
various developmental activities by building and strengthening
mass institutions
 Ninth Five year Plan

Ninth Five Year Plan India runs through the period from 1997 to 2002
with the main aim of attaining objectives like speedy industrialization,
human development, full-scale employment, poverty reduction, and
self-reliance on domestic resources.
The main feature of the Ninth Five Year Plan India is that at its onset
our nation crossed the fifty years of independence and this called for a
whole new set of development measures. There was a fresh need felt
for increasing the social and economic developmental measures. The
government felt that the full economic potentiality of the country, yet to
be explored, should be utilized for an overall growth in the next five
years. As a result in the Ninth Five Year Plan India, the emphasis was
on human development, increase in the growth rate and adoption of a
full scale employment scheme for all. For such development one needs
to promote the social sectors of the nation and to give utmost
importance to the eradication of poverty.

The Ninth Five Year Plan India looks through the past weaknesses in
order to frame the new measures for the overall socio-economic
development of the country. However, for a well-planned economy of

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any country, there should be a combined participation of the

governmental agencies along with the general population of that
nation. A combined effort of public, private, and all levels of
government is essential for ensuring the growth of India's economy.

Objectives of Ninth Five Year Plan India:

The main objectives of the Ninth Five Year Plan India are:
 to prioritize agricultural sector and emphasize on the rural
development
 to generate adequate employment opportunities and promote
poverty reduction
 to stabilize 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 like education for
all, safe drinking water, primary health care, transport, energy
 to check the growing population increase
 to encourage social issues like women empowerment,
conservation of certain benefits for the Special Groups of the
society
 to create a liberal market for increase in private investments
 Tenth Five Year Plan

The Tenth Five Year Plan India (2002-2007) aims to transform the
country into the fastest growing economy of the world and targets an
annual economic growth of 10%. This was decided after India
registered a 7% GDP growth consistently over the last decade.

This GDP growth of 7% is much higher than the world's average GDP
growth rate. Thus, the Planning Commission of India sought to stretch
the limit and set targets which would propel India to the super league of
industrially developed countries.

Concisely, the Tenth Five Year Plan India envisages -

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 More investor friendly flexible economic reforms

 Creation of congenial investment environment
 Encourage private sector involvement
 Setting up state-of-the-art infrastructure
 Capacity building in industry
 Corporate transparency
 Mobilizing and optimizing all financial resources
 Implementation of friendly industrial policy instruments
 Eleventh Five Year Plan (2007-2012)

The eleventh plan has the following objectives:

1. Income & Poverty

o Accelerate GDP growth from 8% to 10% and then
maintain at 10% in the 12th Plan in order to double per
capita income by 2016-17
o Increase agricultural GDP growth rate to 4% per year to
ensure a broader spread of benefits
o Create 70 million new work opportunities.
o Reduce educated unemployment to below 5%.
o Raise real wage rate of unskilled workers by 20 percent.
o Reduce the headcount ratio of consumption poverty by
10 percentage points.
2. Education
o Reduce dropout rates of children from elementary school
from 52.2% in 2003-04 to 20% by 2011-12
o Develop minimum standards of educational attainment in
elementary school, and by regular testing monitor
effectiveness of education to ensure quality
o Increase literacy rate for persons of age 7 years or more
to 85%
o Lower gender gap in literacy to 10 percentage points

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o Increase the percentage of each cohort going to higher

education from the present 10% to 15% by the end of the
plan
3. Health
o Reduce infant mortality rate to 28 and maternal mortality
ratio to 1 per 1000 live births
o Reduce Total Fertility Rate to 2.1
o Provide clean drinking water for all by 2009 and ensure
that there are no slip-backs
o Reduce malnutrition among children of age group 0-3 to
half its present level
o Reduce anaemia among women and girls by 50% by the
end of the plan
4. Women and Children
o Raise the sex ratio for age group 0-6 to 935 by 2011-12
and to 950 by 2016-17
o Ensure that at least 33 percent of the direct and indirect
beneficiaries of all government schemes are women and
girl children
o Ensure that all children enjoy a safe childhood, without
any compulsion to work
5. Infrastructure
o Ensure electricity connection to all villages and BPL
households by 2009 and round-the-clock power.
o Ensure all-weather road connection to all habitation with
population 1000 and above (500 in hilly and tribal areas)
by 2009, and ensure coverage of all significant habitation
by 2015
o Connect every village by telephone by November 2007
and provide broadband connectivity to all villages by
2012

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o Provide homestead sites to all by 2012 and step up the

pace of house construction for rural poor to cover all the
poor by 2016-17
6. Environment
o Increase forest and tree cover by 5 percentage points.
o Attain WHO standards of air quality in all major cities by
2011-12.
o Treat all urban waste water by 2011-12 to clean river
waters.
o Increase energy efficiency by 20 percentage points by
2016-17.

Self-Check Question
 Assess the five year plans of India in the perspective of
economic development of India
 Identify shortcomings of Indian planning system and suggest
some concrete resolution for the same

Summary
For the smooth functioning of any economy, planning plays an
important role. The Planning Commission has been entrusted with the
responsibility of the creation, development and execution of India's
five year plans. India's five year plans are also supervised by the
Planning commission.
Currently, the 11th Five Year Plan, is underway. India's 10th Five Year
Plan, ended its tenure in the month of March, 2007.

References and Suggested Readings:

 http://planningcommission.gov.in/
 Datt, Ruddar & Sundharam, K.P.M.. . Indian Economy
 Kelegama, Saman and Parikh, Kirit. "Political Economy of
Growth and Reforms in South Asia
 Kumar, Dharma (Ed.) (1982). The Cambridge Economic History
of India (Volume 2) Penguin Books.

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