ECONOMIC PLANNING

WHAT IS ECONOMIC PLANNING?

⚫ ECONOMIC PLANNING refers to a process where a
central planning authority, keeping in view of
resources of the country makes an attempt to regulate
economic factors with a view to achieve predetermined
objectives within a specified period of time.
⚫ It mainly involves making decisions with respect to use
of resources.
NEED OF ECONOMIC PLANNING
⚫ High rate of growth of population
⚫ Industrial growth was negligible
⚫ Low level of literacy
⚫ Backward technology
⚫ Traditional attitude
⚫ Social and Economic Problem caused by Partition
⚫ Poverty
⚫ Low per capita income
OBJECTIVES OF ECONOMIC
PLANNING
⚫ Price Stability
⚫ Increase in Employment
⚫ Infrastructural development
⚫ Reduction in inequalities of income
⚫ Increase in National Income
⚫ Self sufficiency
⚫ Full utilisation of resources
PLANNING COMMISSION
FIVE YEAR PLANS
⚫ First five year Plan(1951-1956): The aim of the plan was to improve
the standard of living. The target set for the growth in the gross
domestic product was 2.1percent every year.
⚫ Second five year Plan(1956-1961): It was focused on industry,
especially heavy industry. This plan particularly focused in the
development of the Public Sector. Target Growth:4.5% Growth
achieved:4.0%.
⚫ Third five year Plan(1961-1966): It stressed on agriculture and
improvement in wheat production, but theSino-Indian War of 1962
exposed weaknesses in the economy and shifted the focus towards
Defense industry .Target Growth: 5.6% Actual Growth: 2.4%.
⚫ Fourth Five-Year Plan (1969–1974): The Indira Gandhi government
nationalized 14 major Indian banks and the Green Revolution in India
advanced agriculture. Target Growth: 5.7% Actual Growth: 3.3
⚫ Fifth five-year Plan (1974–1979): The plan focused on employment,
poverty alleviation, justice and self-reliance in agricultural production
and defense. Target Growth: 5.23% Actual Growth: 45.3%
⚫ Sixth five-year Plan (1980–1985): This marked the beginning of
economic liberalization. Price controls were eliminated and ration shops
were closed. Target Growth: 5.2% Actual Growth: 5.4%
⚫ Seventh five-year Plan (1985–1990): The aim of plan was to
establish growth in areas of increasing economic productivity,
production of food grains, and generating employment. Target Growth:
5.0% Actual Growth: 5.7%
⚫ Eighth five-year Plan (1992–1997):1989–91 was a period of economic
instability in India so no five-year plan was implemented. Between1990
and 1992, there were only Annual Plans. India’s free market reforms were
launched. Target Growth: 5.6% Actual Growth: 6.78%
⚫ Ninth five year Plan(1997-2002):Main objective was to prioritize
agricultural sector and emphasize on the rural development, to generate
adequate employment opportunities and promote poverty reduction, to
stabilize the prices. Target Growth: 6.5% Actual Growth: 5.35%
⚫ Tenth Five-Year Plan (2002–2007): Reduction of poverty rate by 5
percentage points by 2007. Providing gainful and high-quality
employment at least to the addition to the labor force. Reduction in
gender gaps in literacy and wage rates by at least 50% by 2007. Target
growth: 8.1% Growth achieved: 7.7%
⚫ Eleventh five year Plan(2007-2012): INCOME AND POVERTY 
Accelerate growth rate of GDP from 8% to 10% and then maintain at
10% in the 12th plan in order to double per capita income by 2016-17.
Increase agricultural GDP growth rate to 4% per year. Reduce educated
unemployment to below 5%.
⚫ Twelfth five year Plan(2012-2017):The aim was “faster, sustainable
and more inclusive growth”. Raising agriculture output to 4 percent.
Manufacturing sector growth to 10 %.The target of adding over 88,000
MW of power generation capacity. Its growth rate target was 8%.
PROGRESS OF ECONOMIC PLANS
⚫ Increase in Per capita Income
⚫ Increase in Rate of Capital Formation
⚫ Infrastructural Development
⚫ Increase in Employment
⚫ Modernisation
⚫ Industrial Development
⚫ Technological Development
⚫ Increase in National Income
FAILURES OF PLANNING
⚫ Rise in Prices
⚫ Inequality in distribution of wealth
⚫ Increase in Unemployment
⚫ Slow capital formation
⚫ Poor Infrastructural Development
⚫ Imbalanced Industrial Growth
⚫ Poor Standard of living
PROCESS OF ECONOMIC PLANNING
⚫ Setting Objectives and Priorities: All objectives and plans
should be made with a target to achieve keeping in mind the
national goals, economic policies and government plans.

⚫ Drafting Approach Paper: The paper includes growth

targets, broad guidelines for detailed plan document. It is
prepared by Planning Commission.

⚫ Approval to Approach Paper: Firstly Union Cabinet id

reached for approval and then NDC which is headed by Prime
Minister. Other members are also considered .

⚫ Drafting detailed Plan Document: After approval a detailed

document is prepared by Planning Commission. Various
committees are setup and strategies are formed.
⚫ Approval to Plan Document: The prepared document is
then presented before the panel and then the Union Cabinet .
After their approval it is sent to NDC. The approval of NDC
makes the plan draft final.

⚫ Implementation of Plan: The plan is implemented through

government policies, projects, programmes etc. Funds are
proposed and intact administration transparency is maintained.

⚫ Evaluation of Plan: The final step is critical assessment of the

performance of the plan. The actual achievements are compared
with the targets.
STRATEGY OF PLANNING
⚫ Mixed Economy
⚫ Wide Scope
⚫ Self-Reliance
⚫ Education
⚫ Social Welfare
⚫ Progress of Backward classes
⚫ Employee Oriented
⚫ Balanced Regional Development
SUGGESTIONS FOR SUCCESS
⚫ Price Stability
⚫ Effective Administration
⚫ Rapid Agricultural Development
⚫ Development of Rural Industries
⚫ Proper development of Public Sector
⚫ Technological Development
⚫ Human Capital Formation Rural Development

⚫ Physical Planning