Economic Planning

A PROJECT REPORT ON
ECONOMIC PLANNING
ON 23 MARCH,2009. IN PARTIAL FULFILLMENT OF THE REQUIREMENT IN SEMISTER II MASTER OF BUSINESS ADMINISTRATION
RD
SUBMITTED TO: MR. VIRENDRA CHAVDA N.S.V.K.M.S. MBA COLLEGE, VISNAGAR
SUBMITTED BY:
PUNIT LIMBACHIYA (34) BHAVIN PANCHAL (45) TEJAS PANDYA (49)
NSVKMS/MBA/SEM-II/BE
PREFACE
Life is full of efforts and struggles and, success and failures. But the sincere efforts done in right direction and at right time will give us fruits of success as a student of management faculty we are expected with something more organized specific and effective efforts with desire results towards the work entrusted to us. Now a day s cut throat competition prevails in each and every area of management. So with the intension to teach the students how to merge the theoretical knowledge with the actual practice give to the students of M.B.A. Hemchandracharya north Gujarat university has compulsory for each group of student to prepare a report on some topic covered under circulation of Hemchandracharya north Gujarat university. So as per the requirements we the student of Nootan Sarva Vidhyalaya Kelvani Mandal Sanchalit MBA department have tried our level best to prepare the project report and submitting to the college. Our Report is on ECONOMIC PLANNING. First we have collected the information from books and internet and from that information we made the Project report. We are lucky because Nootan Sarva Vidhyalaya Kelvani Mandal Sanchalit MBA College has given us this type of project report.
ACKNOWLEDGEMENT
Gratitude is the noble response of one s soul to kindness or help generously rendered by another and its acknowledgment is a duty and joyance. So it is that We express briefly our debt to those who have made the creation of this project possible. We thank the almighty, Lord on whom we believe and depend on. Our each and every achievement is nothing but a look of the God on us. We thankful to Dr. Jayashish Shetty, Head of Department of N.S.V.K.M.S. MBA College, for giving the guidelines about how to make the project report. We thankful to Mr. Virendra Chavda, Lecturer of N.S.V.K.M.S. MBA College, for helping nicely in preparing a Project Report as a project guide. I extend my thankfulness to all my friends and all my well wishers who had helped in the completion of this project. Last but never the least I extend my wholehearted thankfulness to the librarians and to the office bearers for their backup.
Thank you,
BY: PUNIT LIMBACHIYA (34) BHAVIN PANCHAL (45) TEJAS PANDYA (49)
EXECUTIVE SUMMARY
Economic 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. 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 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: y General Planning Divisions y Programme Administration Divisions The majority of experts in the Commission are economists, making the Commission the biggest employer of the Indian Economic Services. Functions: 1. Assessment of resources of the country 2. Formulation of Five-Year Plans for effective use of these resources 3. Determination of priorities, and allocation of resources for the Plans 4. Determination of requisite machinery for successful implementation of the Plans 5. Periodical appraisal of the progress of the Plan 6. To formulate plans for the most effective and balanced utilization of country's resources. 7. To indicate the factors which are hampering economic development.
TABLE OF CONTENTS
CHAPTER PAGE NO. 1. Introduction 06 1.1 What is Economic Planning?.....................................................................08 1.2 Problems in backward countries ..09 1.3 Characteristics 10 1.4 Organization . ..11 1.5 Members of Planning Commission .. 13 1.6 Types of Planning ..15 1.7 Evolution . 16 1.8 Planning in Developing Countries .. . .17 1.9 Objectives ..21 1.10 Growth ..25 1.11 Functions . .26 2. Divisions . ..28 2.1 Financial resource division .. ...28 2.2 Perspective Planning Division .. .29 2.3 Project Appraisal Management Division .. .30 2.4 Women & Child Development Division ..31 3. Five Year Plans . 34 3.1 Macro Economic Indicators 44 3.2 Socio Economic Indicator .45 y Conclusion .. 46 y Bibliography .. 47
1.INTRODUCTION
According to Lionel Robbins, strictly speaking, all economic life involves planning . To plan is to act with a purpose, to choose and choice is the essence of economic activity . In the words of Barbara Wootten, Planning may be defined as the conscious and deliberate choice of economic priorities by some public authorities . Laissez faire policy is a luxury for modern governments. So they have economic plans. In the developed nations of the world, they plan for economic stability. But in the underdeveloped nations, they plan for economic growth and development. The 20th century was an era of planning. Almost every country had some sort of planning. In socialist countries, planning is almost a religion. Even in countries like the U.S.A. and the U.K. with a capitalistic system, they have partial planning. The 19th century State was a Laissez faire state. It followed a policy of non intervention in economic affairs. But the modern State is a Welfare State. The two World Wars, the Great Depression of 1930s and the success of planning in former Soviet Russia have underlined the need for planning. Planning is a gift of former Soviet Russia to the world. For, it was the first country to practice economic planning on a national scale. Many economists today agree that planning is an organized, conscious and continuous attempt to select the basic available alternatives to achieve specific goals. Planning involves the economizing of scarce resources. Most of the underdeveloped countries of the world became independent only fifty or sixty years back and most of them were poor at that time. So it became the main business of the Governments of the newly emergent nations to provide food, clothing and shelter to their people. For that, first of all, they had to increase their national income. Since most of them were agricultural countries, they had to evolve some programmes for agricultural development. Not only that, they had to industrialize their economies. And they had to provide more jobs to their people. That means, they had to do something for expanding employment opportunities. Further, as most of them were wedded to some kind of socialism, they had to reduce inequalities of income and wealth. All these things, the poor countries attempted to do by means of economic planning. Another main reason for the emergence of planning in underdeveloped countries is the failure of the market mechanism. The capitalist economy is basically a market economy and price mechanism works through the market system. The price system is a basic institution of capitalism. The allocation of resources and distribution of rewards are done through the price system. All decisions of the businessmen, farmers, industrialists and so on are guided by the
NSVKMS/MBA/SEM-II/BE 6
profit motive. If the market is perfect, price system is good. But if there is monopoly and other types of imperfect competition, the market system fails. And it calls for government intervention by way of planning. The dispute between planning and Laissez faire is essentially about efficiency. The case against Laissez faire rests on the following grounds: 1. Under Laissez faire, income is not fairly distributed. As a consequence, less important and less urgent goods are produced for the wealthy people while the poor lack basic goods like education, health, housing, good food and ordinary comforts. Under such a situation, the State can control economic activity by means of planning and reduce inequalities of income and wealth. 2. The market economy is a victim of trade cycles. And there will be alternating periods of prosperity and depression. And during depression, there will be bad trade, falling prices and mass unemployment. So there is need for state intervention. By means of proper planning, the State can control trade cycles as they did in the case of former Soviet Russia. During the latter half of the 20th century, planning was popular in many underdeveloped countries, in addition to former Soviet Russia and Eastern European countries. It does not mean that they believed in complete central planning. The central issue in planning is not whether there shall be planning but what form it shall take. The debate, in fact, centered on whether the State shall operate through the price system or by getting rid of it.
1.1 WHAT IS ECONOMIC PLANNING?

Economic development of India over the last five decades in unique in several ways. In an innovative effort the founding fathers adopted the middle course of a mixed economy. Assigning a pivotal role to public sector & economy planning. The new approach to socioeconomic growth was set within a framework of Parliamentary Democracy Guarantying Universal Franchise. The board of Planning Commission s formulation: Formulation of Planning commission Assessment of material Capital & Human Resources. Most effective & balanced utilization Determination of machinery for securing successful implementation of the plan. Progress & recommending adjustment in policies and measure during the execution of the plan. The planning commissions prepare the blue print of the economic plans in consultation with the state and in accordance with the guide line provided by the National Development Council (NDC) which insists of the Prime Minister, Central Cabinet Ministers, Chief Ministers of the States and Member of planning commission. Successful execution of a plan presupposes co-operation between the central and states governments. The NDC was set up in August, 1952 with the following objectives. To review the working of the National plan from time to time. To consider important question of social and economic policies affecting national development and to recommend measure for the achievement of the aims & target of the national plan.
1.2 PROBLEM OF PLANNING IN BACKWARD COUNTRIES

Planning is much more necessary and much more difficult to execute in backward than in advanced countries. First of all, planning requires a strong, competent and incorrupt administration (Arthur Lewis). But most of the economically backward nations have weak, incompetent and corrupt administration. Further, they have democratic planning. So they cannot do things in a quick manner as was done in former Soviet Russia. They have to go slow. And agriculture is the main stay of their economies. Since agriculture depends upon natural factors which are uncertain, there is a lot of uncertainty about their agricultural programmer. Over population and low capital formation are some other important problems of planning in underdeveloped nations.
1.3 CHARACTERISTICS OF ECONOMIC PLANNING

In a planned economy, major economic decisions such as what and how much is to be produced, when and where it is to be produced and to whom it is to be allocated will be determined by a central authority such as the State, through the Planning Commission. The Government will have the powers of implementation. Before the Plan is drawn up, a detailed survey of all available resources physical resources, financial resources and human resources has to be made. For example, in the former Soviet Russia, after the Revolution in 1917, there was War Communism between 1918 1921. And there was New Economic Policy (NEP) from 1921 to 1924. And from 1924, the Government made a detailed survey of all available resources and only in 1928, it implemented its First Five Year Plan. After the survey of resources, the objectives of planning will be determined. For example, one of the long term objectives of Soviet Planning was that Soviet Russia should catch up with the production levels of the leading capitalist nation of the world, namely U.S.A., in steel, coal and electricity. Keeping in mind, the objectives of the Five Year Plan, the physical targets will be fixed. And ways and means of mobilizing financial resources will be explored. The Plan will also spell out the details in which the fruits of planning will be distributed in a fair and just manner. The nature of planning is determined by the type of economic system capitalism, socialism, mixed economy - in which it is practiced. There will be partial planning in a capitalist economy, (e.g., U.K.) but a socialist economy is a totally planned economy (e.g., Former Soviet Russia). In a mixed economy like India, both public sector and private sector play important roles in economic planning. Usually, the period of a Plan is five years. The Plan has to be drawn in advance. It is done by the Planning Commission in India. A plan will be of a definite size and it will fix the targets for the Plan period and it will also indicate the ways by which the financial resources are to be mobilized for the Plan. The first step in drawing up a Plan is to determine a growth target for an economy over the Plan period. The planners then divide the economy into a number of sectors such as agriculture, industry and service sector. The planners will fix the physical targets for the sectors and also decide how much investment must be made in each sector to achieve the targets. Then they will decide the right type of investment projects and production techniques. As the UDCs are poor, labour-intensive techniques will expand employment opportunities. But some heavy industries like steel have to be capital intensive. The success or failure of a Plan depends upon the choices that are made.
1.4 ORGANIZATION
The Prime Minister is the Chairman of the Planning Commission, which works under the overall guidance of the National Development Council. The Deputy Chairman and the full time Members of the Commission, as a composite body, provide advice and guidance to the subject Divisions for the formulation of Five Year Plans, Annual Plans, State Plans, Monitoring Plan Programmes, Projects and Schemes. The Planning Commission functions through several Divisions, each headed by a Senior Officer. The Set up is: y Chairman y Sh. Montek Singh Ahluwalia, Dy. Chairman y Shri V. Narayanasamy, Minister of State y Members o Dr. Kirit Parikh o Prof. Abhijit Sen o Dr. V.L. Chopra o Dr. Bhalchandra Mungekar o Dr.(Ms.) Syeda Hameed o Shri B.N. Yugandhar o Shri Anwar-ul-Hoda o Shri B. K. Chaturvedi y Dr. Subas Pani, Secretary y Senior Officials y Grievance Officers y Induction Material - PDF | ZIP(MS Word) y Organisational Chart (PDF)
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Divisions 1. Agriculture Division 2. Backward Classes Division 3. Communication & Information Division 4. Development Policy Division 5. Education Division 6. Environment & Forest Division 7. Financial Resources Division 8. Health, Nutrition & Family Welfare Division 9. Housing, Urban Development & Water Supply Division 10. Industry & Minerals Division 11. International Economic Division 12. Infrastructure Division 13. Labour, Employment and Manpower Division 14. Multi-level Planning Division o Border Area Development Programmes o Western Ghat Development Programme 18. Monitoring Division 19. Perspective Planning Division 20. Programme Outcome & Response Monitoring Division 21. Plan Coordination Division 22. Power & Energy Division 23. Programme Evaluation Organisation 24. Project Appraisal & Management Division 25. Rural Development Division 26. Science & Technology Division 27. Social Development & Women s Programme Division 28. Social Welfare Division 29. State Plans Division 30. Transport Division 31. Village & Small Enterprises Division 32. Water Resources Division 33. Administration & Services Division 34. Socio-Economic Research Division
Office Memorandum: Changing the name of 'Village & Small Industries Division' to "Village & Small Enterprises Division" dated 8/3/04
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1.5 MEMBERS OF PLANNING COMMISION
Dr. Manmohan Singh
Chairman
Mr. Montex singh Aahuwaliya
Deputy Chairman
Shri. MV Rajshekharan
Member
Dr. Kirit Parikh
Member
Prof. Abhijit Sen
Member
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Dr. VL Chopara
Member
Dr. Bhalchandra Mungekar
Member
Syeda Saiyidain Hameed
Member
Shri. B.K. Chaturvedi
Member
Shri. B.N. Yugandhar
Member
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1.6 TYPES OF PLANNING

1. Centralized Planning : In a socialist economy (eg. Former Soviet Russia), there was centralized planning; it was planning by direction. In a socialist state, most of the means of production are owned by the State. All basic economic decisions such as whether priority is to be given for industrialization or for development of agriculture ; if it is decided to give importance to industrialization, whether to give importance to basic and heavy industries or for consumer goods industries will be made by the central authority. 2. Planning by Inducement : In a democracy, Planning is done by inducement. For example, ours is a mixed economy where there is a public sector and a private sector. The government has to persuade the industries in the private sector to fulfil the goals of the Plan through inducements such as tax concessions and by providing incentives. 3. Indicative planning In this type of planning, the government invites representatives of industry, and business and discuss with them in advance what it proposes to do in the Plan under question and indicates to them its priorities and goals. Then the Plan is formulated after detailed discussions with varied interests. Planning in France is a good example of indicative planning. After we embraced liberalization and privatization policies in 1991, even Indian planning, in a way, has become indicative planning. Economic plans can also be divided into midterm plans, shorter plans and perspective plans. Our Five Year Plans are in fact, midterm plans. Short term plans are Annual Plans. During the period of implementation, Five Year Plans operated by dividing them into Annual Plans. Perspective Plans are long term plans and the period ranges from 20 to 25 years. The Five Year Plans are formulated by taking into account the long term objectives of the Perspective Plan. Rolling Plan : Unlike the Five Year Plan with fixed targets, in the case of the rolling plan, at the end of each year, targets will be fixed by adding one more year to the Plan. That is, without fixed targets for all the five years, depending upon the performance of the Plan in the current year, targets will be fixed for one more year. Like this, it will go on a continuous basis. That is the idea behind the rolling plan. A great advantage of centralized planning is that plans can be implemented with great speed and targets and goals can be achieved. For example, by means of planning, former Soviet Russia transformed its economy, which was predominantly agricultural into a predominantly industrial nation, within a short span of 12 years. But a demerit of centralized planning is that as the State enjoys a considerable degree of monopoly, in the absence of competition, it is rather difficult to test the productive efficiency of state owned units. Under planning by inducement (democratic
planning), though there is a good deal of freedom for people, because of the procedures and delays associated with the democratic process and because of Parliamentary democracy, there will be a lot of delay in the implementation of programmes and economic growth will be slow.
1.7 EVOLUTION
The National Planning Commission was set up in India in 1950. A major function of the Planning Commission was to formulate a plan for the most effective and balanced utilization of the country s resources . The Planning Commission formulated the First Five Year Plan for the period (1951 56). Since then, we completed nine Five Year Plans and we are now in the midst of Eleventh Five Year Plan (2007-12).
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1.8 PLANNING IN DEVELOPING COUNTRIES

Since the end of World War II, it has become an accepted practice among the governments of the developing countries to publish their development plans. These are medium-term plans, usually for a five-year period. The aim is to select a period long enough to include projects spanning a number of budget years but not so long as to delay periodic assessment of the development effort stretching over a series of plans. The development plan attempts to promote economic development in four main ways: (1) by assessing the current state of the economy and providing information about it; (2) by increasing the overall rate of investment; (3) by carrying out special types of investment designed to break bottlenecks in production in important sectors of the economy; and (4) by trying to improve the coordination between different parts of the economy. Of these, the first and fourth are perhaps the most important and the least understood function of economic planning. The other two functions of planning cannot be efficiently carried out without ample and reliable information, nor without effective economic coordination between the different government departments and agencies within the public sector and the private sector. In most developing countries, information about the economy is scarce, and planning has provided the impetus to acquire and analyze the necessary data in order to provide a better understanding of the functioning of the economy. In order to improve coordination it is necessary to spread reliable economic information to indicate the future course of the government s economic intentions and activities so that the people concerned, both in the public and the private sectors, may make appropriate plans of their own to bring them in line with the government s plan. In fact, this may be regarded as the main reason for publishing development plans, although this point is not always clearly appreciated by the governments that issue them. he newly independent countries, just starting to plan their economies, usually begin with a simple type of development plan. In most cases this is merely an ad hoc list of individually conceived social and economic projects that the various government departments have submitted for the plan. So long as the projects are well selected (say, to break some obvious bottlenecks in production) and are well designed in a technical sense, such a simple plan may be quite serviceable. But it tends to suffer from a number of weaknesses arising from insufficient coordination. (1) Since the projects are drawn up on a piecemeal basis in separate government departments, there is usually no systematic attempt to compare the relative costs and benefits of the plans proposed by the different departments on a uniform basis. As a consequence, the collection of projects included in the plan may or may not represent the most productive pattern of investing. the available resources of the government.
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(2) A lack of coordination frequently leads to wasteful duplication and a failure to take advantage of complementary relationships between individual projects. (3) A simple listing of the projects does not provide a clear-cut system of priorities in their implementation. Typically, the projects that are relatively easy to implement are pushed far ahead of others that, although requiring a longer time to prepare and implement, may have the potential to contribute more directly to the expansion of national output and government revenue. This can have serious budgetary consequences when the projects that are easier to implement generally happen to be in the field of social welfare, education, and health and although they may indirectly contribute to economic development in the longer run entail a significant and ever-increasing stream of recurring government expenditure after their completion. An obvious way of remedying these defects is to formulate a more systematic plan of the public investment program as an integrated whole. In order to do this, it is necessary to begin by making a careful estimate of the total amount and time pattern of the financial resources that the government expects to receive during the plan period from domestic sources and from external loans and aid. Next, it is necessary to make realistic estimates of the costs and benefits of the alternative investment projects within the public sector as a whole so as to select the most productive combination of projects, taking into account significant complementary relationships between the different projects. In selecting the best combination of projects to be included in the plan, it is necessary to pay special attention to the time pattern of costs and benefits. A poor country, with limited sources of government revenue, would have to discount future benefits heavily relative to the more immediate benefits and would have to give priority to the type of project with quicker returns in the form of expansion in output and tax yields over the type of project that may promise higher rates of return, but only in the more distant future. The problems of carrying out an integrated public investment program serve to emphasize the crucial role of the annual budget in development planning. At the aggregate level, with a given amount of external aid, the stream of the total investable funds available to the government during the plan period depends on its ability to raise revenue (and borrow from domestic sources) and, equally important, to control it s no development, or consumption, expenditure year by year during the plan period. At the individual project level, the fact that a project requires a number of budget years to complete does not dispense with the need for annual budgetary controls to ensure that it is being implemented in stages, according to the timetable as originally planned. Indeed, it is only through the discipline of annual budgetary controls that a medium-term development plan is likely to be kept nearer the course as originally planned.
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Few developing countries have submitted themselves to the budgetary discipline necessary for implementing an integrated public investment program. This has not deterred them, however, from jumping from a simple type of development plan to comprehensive economic planning, embracing both the public and the private sectors and regulating both the aggregate level of economic activity and its detailed composition. The drive toward comprehensive planning arises from various causes: from a distrust of the automatic working of the market mechanism and its ability to promote economic development; from a desire to assert national economic independence by government control of foreign trade and investment; and from the theories of economic development, fashionable during the 1950s, that emphasize the need for a big push to overcome technical indivisibilities and the need for a simultaneous setting up of a number of mutually supporting projects to enjoy the benefits of technical complementary. The economic development plans published by the developing countries in the 1960s were fairly elaborate. The trend to quantitative planning encouraged the use of elaborate statistical estimates and projections even when the primary statistical sources on which these computations were based were often unreliable or conjectural. Advanced mathematical techniques were also increasingly employed. Basically, there are three parts to such a development plan: (1) the target figures for increase in per capita income and consumption to be attained at the end of the plan (with estimated figures for the intermediate years during the plan); (2) estimates of the quantities of various resources, such as capital, manpower, and foreign exchange needed to implement the target figures (including the time profile of the rate at which these resources will be required during the plan); and (3) parallel but independent estimates and projections of the quantities and the time pattern of these resources expected to be available both to the government and to the economy as a whole during the plan period. The elaborate planning documents issued by some developing countries may be described as attempts to quantify as far as possible the information required under the three heads and to test the formal consistency of the plan. This essentially consists in asking (a) whether the total amount of available resources is sufficient to meet the total requirements of resources as set by the target figures, and (b) whether the allocation of resources planned for different sectors is consistent with the detailed target figures for the increased output of different goods and services required for consumption and investment. When the resources required by some industries are intermediate goods (the output of other industries), input output tables are frequently used to check whether the outputs of different industries are sufficient to supply not only the target figures for final use in the form of consumption and investment but also the indirect use required by other industries. The more advanced planning models using programming techniques in an attempt to solve the further question (c) whether the planned
pattern of allocating resources is the most efficient; i.e., whether it minimizes the resources needed to meet the target figures as compared with other patterns.
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1.9 OBJECTIVES
The central objective of planning in India is to raise the standard of living of the people. Five Year Plans aim at increasing output. At the same time, they aim at reducing inequalities of income and wealth and providing equal opportunities for all. Growth with social justice is basic goal. Estimation of poverty line and incidence of poverty for which the Planning Commission is the nodal agency in the Government of India. To increase per capita and NI: To increase in per capita and NI of a country is regarded as an indicator of eco, development. The increase in income represents higher standard of living as well as increase in income of india. Higher level of employment: if population is growing it will necessities an increase in real income for marinating per capita income. If labor is expanding, output must also expand to ensure full employment. If net investment takes place, income should also grow to avoid idle capacity of the economy. Unemployment problem requires an immediate solution for the elimination of poverty. It is observed that the rising number of unemployed, poverty expands. Removal of unemployment has thus been mentioned as one of the objectives of economic planning in all the five year plans, but it never got a high priority. Ashok Rudra asserts the government never had an employment policy. It also did not set a target date by when any able bodies person who wants to work and make an honest living can be assured of a job that would offer him at least a minimum subsistence. This explains why unemployment has not decreased over the years. However, the planning commission stated in the eighth plan document that employment is to be treated as a direct focal point of policy. The government at the center, it seems, does not share this perception of the planning commission. The approach of the planning commission till recently has been of not seeing the question of employment generation separately from investment programs. It was believed that as investment increased employment would also grow. In the third plan document, while discussing the objectives of economic planning the Planning Commission had argued that as national grows in response to increased investment and development outlay. The demand for labour rises and employment expands.
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Growth with social justice: By social justice, we mean equal opportunities for all. That means, improving the standard of living of the poorest groups and reduction in inequalities in income and wealth. The Social Welfare Division handles two sectors; (i) Social Welfare; and (ii) Women and Child Development. The Social Welfare Sector deals the welfare, rehabilitation and development of persons with disabilities, social deviants and other disadvantaged in close co-ordination with the nodal Ministry of Social Justice and Empowerment and the Women and Child Development sector handles Empowerment of women and Development of Children in close co-ordination with the nodal Department of Women and Child Development. Increasing industrial output: The Indian industry saw its output shrink for the first time in 15 years with a 0.4 per cent yearon-year decline in October, as the impact of the global economic downturn deepened in the country. To remove bottlenecks in agriculture, manufacturing industry (especially capital goods) and the balance of payments. In the agricultural sector, the main objective was increasing agricultural productivity and attaining self sufficiency in foodgrains. In the industrial sector, the emphasis was on basic and heavy industries. In the foreign trade sector, the emphasis was on having a viable balance of payments position . The strategy adopted in Indian Planning is often referred to as Mahalanobis strategy . In this strategy, emphasis was laid on rapid industrialization with priority for basic and heavy industries. Reduction of inequality in income Reduction in income inequality has been mentioned as one of the objectives of economic planning in India. However, in terms of priority it always got a very low place. It is probably on accounts of this reason that neither the plan documents, nor any other publications of the Planning Commission ever provided estimates of the inequalities in income and wealth distribution. Pramit chaudhari is perhaps right in his assertion that Indian plans have never made any serious attempt to redistribute income and wealth. The Planning Commission had spelt out its approach in respect if income inequalities in the Fourth Plan. In its opinion, fiscal measures at best can reduce disposable income at the top and thus their importance for eliminating income inequalities is limited. It stressed the need for raising the living standards of the poor by accelerating the pace of growth on the assumption that the gains of development will percolate downward. The plan document simply hoped that fiscal policy, industrial licensing, monopoly control measured and additional employment
opportunities to be created during the plan period should be able to reduce disparities in income distribution. The seventh plan did not make even a passing reference to these objectives. Modernisation Indian planners have always recognized the role of science and technology in the country s development. However, until the sixth five year plan modernization was never on the agenda of any plan. In the sixth plan for the first time the objective of modernization was explicitly mentioned. The plan document stated, the term modernization connotes a variety of structural and institutional changes in the framework of economic activity. It thus implied a shift in the sectoral composition of production diversification of activities, an advancement of technology and institutional innovations so as to transform a feudal and colonial economy into a modern and independent economy . If one accepts this concept of modernization, then this is also to be admitted during the whole of the planning period, India did make advances on the modernization path though the progress might not have been spectacular. Over the five decades of planning, the composition of national income has change steadily. The share of manufacturing, mining, construction and productive infrastructure has increase from above 20% in early fifties to about 30% in the late 1980 s. In the industrial sector considerable success has been achieved from the point of view of diversification. Today India s capabilities in technical know-how are far greater than those in the early 1950s. Even in the institutional framework this country s achievements are not small. For example, setting up of development banks for industry and agriculture, innovation of Regional Rural Banks and extension of cooperative credit to the remotest interiors of the country have radically changed the institutional framework of credit. Self- reliance About five decades ago on the eve of the first plan, India was dependent on foreign countries at least in three respects. First, despite the fact that Indian economy was essentially agrarian, the output of food grains was not adequate and the country imported big quantities of food grains from the USA. And some other countries. Second on account of virtual non existence of basic industries, transport equipment machine tools, heavy engineering goods, electrical plant and machines and many other capital goods had to be acquired from developed countries. Third, saving rate being very low, foreign aid had to be obtained in order to step up the investment rate in the country. It has been observed in many cases that developed countries while supplying essential commodities like food grains, machinery and other capital equipment to underdeveloped
countries attempt to take full advantage of their strong bargaining position and extort exorbitant prices for their products. Often exports of these and other essential goods are used as political weapons to blackmail the Third World countries. Therefore, if some underdeveloped country seriously desire to keep it s growth activity free from political pressure of other countries, it has no choice but become a completely self-reliant in food and capital equipment. Further, it has also to minimize it s dependence in respect of aid from other countries and the institutions like the IMF and The World Bank. It is now generally agreed that in the field of self-reliance, India has two achievements to it s credit. First, the country is now almost self sufficient in food. Second, with the growth of iron and steel, machine tools and heavy engineering industries, this country has made considerable advancement towards self-reliance in capital equipment. In totality, however, the goal of selfreliance has proved to be elusive.
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1.10 GROWTH
In the first 30 years of planning, the trend rate of growth of national income was 3.5 percent. Eminent economist Raj Krishna called it the Hindu rate of growth. Agricultural production increased at an average rate of 2.7 percent and industrial production at 6.1 percent. And per capita income increased at the trend rate of 1.3 percent. Though these rates appear rather small, we must remember that throughout the British period, for almost a century, there was stagnation in the Indian economy. For example, in the undivided India from 1901 46, the trend growth rate of the national income was only 1.2 percent. So one of the achievements of planning in Indian economy is that it has overcome stagnation and we have had a slow but steady economic growth. GROWTH RATE OF NATIONAL INCOME(IN PERCENTAGE).
The growth performance of the economy during different plan periods is given in Table 5.1. From the Table, it can be seen that there are shortfalls in the growth targets during early plan periods except the First Five Year Plan. During the Ninth Plan period, the GDP growth rate was 5.4 percent as against the target of 6.5 percent.
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1.11 FUNCTIONS
The 1950 resolution setting up the Planning Commission outlined its functions as to: a. Make an assessment of the material, capital and human resources of the country, including technical personnel, and investigate the possibilities of augmenting such of these resources as are found to be deficient in relation to the nation s requirement; b. Formulate a Plan for the most effective and balanced utilisation of country's resources; c. On a determination of priorities, define the stages in which the Plan should be carried out and propose the allocation of resources for the due completion of each stage; d. Indicate the factors which are tending to retard economic development, and determine the conditions which, in view of the current social and political situation, should be established for the successful execution of the Plan; e. Determine the nature of the machinery which will be necessary for securing the successful implementation of each stage of the Plan in all its aspects; f. Appraise from time to time the progress achieved in the execution of each stage of the Plan and recommend the adjustments of policy and measures that such appraisal may show to be necessary; and g. Make such interim or ancillary recommendations as appear to it to be appropriate either for facilitating the discharge of the duties assigned to it, or on a consideration of prevailing economic conditions, current policies, measures and development programmes or on an examination of such specific problems as may be referred to it for advice by Central or State Governments. h. Evolving Functions From a highly centralised planning system, the Indian economy is gradually moving towards indicative planning where Planning Commission concerns itself with the building of a long term strategic vision of the future and decide on priorities of nation. It works out sectoral targets and provides promotional stimulus to the economy to grow in the desired direction. Planning Commission plays an integrative role in the development of a holistic approach to the policy formulation in critical areas of human and economic development. In the social sector, schemes which require coordination and synthesis like rural health, drinking water, rural energy needs, literacy and environment protection have yet to be subjected to coordinated policy formulation. It has led to multiplicity of agencies. An integrated approach can lead to better results at much lower costs.
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The emphasis of the Commission is on maximising the output by using our limited resources optimally. Instead of looking for mere increase in the plan outlays, the effort is to look for increases in the efficiency of utilisation of the allocations being made. With the emergence of severe constraints on available budgetary resources, the resource allocation system between the States and Ministries of the Central Government is under strain. This requires the Planning Commission to play a mediatory and facilitating role, keeping in view the best interest of all concerned. It has to ensure smooth management of the change and help in creating a culture of high productivity and efficiency in the Government. The key to efficient utilisation of resources lies in the creation of appropriate self-managed organisations at all levels. In this area, Planning Commission attempts to play a systems change role and provide consultancy within the Government for developing better systems. In order to spread the gains of experience more widely, Planning Commission also plays an information dissemination role.
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2.DIVISIONS
2.1 FINANCIAL RESOURCE DIVISION
1. The principal task of the Financial Resources (FR) division is to estimate the financial resources available with the Public Sector for building the economy s productive capacity in a given span of time. Such resources are referred to as Aggregate Plan resources, which the FR division estimates for the Governments at the Center, States and Union territories with legislatures. The information on Aggregate Plan resources indicates the ability of the Public sector in directly developing the productive capacities. Without this, the necessary support required from the private sector in building the potential size of productive capacity cannot be delineated. 2. While the size of Aggregate Plan resources reflects the ability of the Public sector in building productive capacities, its sources of funding have a significant bearing on sustaining this ability. Accordingly, the FR division provides the information on both the size and composition of Aggregate Plan resources in a format referred to as the Scheme of Financing the annual or five year Plan as the case may be. The inputs necessary for making the Scheme of Financing emerge out of periodic discussions the FR division has with the representatives of concerned Governments. 3. Some of these inputs include policy prescriptions on raising potential levels of tax and nontax revenues, limiting borrowings and therefore interest burden to debt sustainability levels, restricting establishment and administrative expenses in favour of maintenance of capital assets and social security schemes and reducing budgetary support to commercial Public sector undertakings. The objective is to obtain that level and composition of Aggregate Plan resources, which reflects the stability of Public finances for Governments at all levels. 4. For the State Governments the Scheme of Financing includes Central Assistance of which the Normal Central Assistance is derived on the basis of Gadgil-Mukherjee formula operated exclusively by the FR division. The formula gives due cognizance to economically disadvantaged States as also their performance in meeting specified targets of fiscal and social objectives. The FR division regularly proposes well-researched modifications of the formula for consideration of the National Development Council. 5. In obtaining fiscally sound level of Aggregate Plan resources of state Governments, the efforts of FR division is complemented by Plan-Finance-I, Department of Expenditure,. Ministry of Finance. The efforts of FR division are also supplemented by expert views which the division obtains from outside the Planning Commission. While the regular reports of Finance Commission serve as crucial inputs, the contributions of Steering Committees and Working Groups on financial resources constituted by Planning Commission in the context of five-year plans are no less significant. The officers of FR division actively participate in the deliberations of such Committees and Working-Groups drawing upon their experience of State and sectoral specific issues. In addition FR division also commissions specialized studies.
2.2 PERSPECTIVE PLANNING DIVISION

The primary role of the Perspective Planning Division is to analyse, assess, estimate and make projections relating to quantitative dimension of medium term and long term development plans. The projection exercises ensure that the quantitative dimensions of the plans are consistent between sectors and between various macro economic aggregates. The Division is responsible for making the projection of economic growth and its sector-wise distribution, projection of levels of living, estimation of poverty ratios, projection of Governments' fiscal balance, assessment and estimation of external sector balance. The Division has a formal economic modeling unit for providing sectoral growth profiles of the economy under alternative assumptions. The activities of the Division cover: (a) Macro-Economic Modeling Macro-balance in National Accounting Frame under alternative assumptions of growth profiles and (a) formulating appropriate macro-economic model (b) analyzing sectoral growth and investment profiles/requirements and the emerging structures of the economy, (c) intersectoral flow of funds including alternative savings instruments. Analysis of input-output structure; sectoral projections based on consistency-cum-investment planning model for estimating mutually consistent growth targets of various sectors. Analysis of State level income aggregates and its sectoral distribution; measurement of inter-state economic disparity and their inter-temporal variations. (b) Fiscal Issues Preparation of the fiscal sub-model of the macro-economic model for medium term plans. Assessment of the fiscal position of the Government in the medium term. Analysis of various components of government finances and measures of the deficits and policy implication for macro economic stability and growth. (c) External Sector Short and medium-term projections for imports, exports at sectoral level; policy issues associated with the WTO agreements. Projection of imports, exports, invisibles, current account balance and balance of payments, using a model for the external sector. Status papers on trade and customs tariff policy. Technical appraisal of WTO agreements and issues of concern for India based on developments in the global economy. (d) Consumption and Levels of Living Assessment of class distribution of consumption and indicators of levels of living. Estimation of poverty line and incidence of poverty for which the Planning Commission is the nodal agency in the Government of India. The incidence of poverty and inequality estimated at national and state level at regular intervals. Analysis of issues relating to human development and their measurement; preparation of the National Human Development Report.
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2.3 PROJECT APPRAISAL MANAGEMENT DIVISION

Project Appraisal & Management Division (PAMD) was set up in 1972 to institutionalize the system of project appraisal in Government of India. The Division is mainly responsible to undertake techno-economic appraisal of all plan project /schemes of Ministries/Departments of Government of India to facilitate investment decision by the Expenditure Finance Committee/Public Investment Board. The Investment proposals of Ministry of Defence, Department of Atomic Energy and Space are out of purview of appraisal by EFC/PIB. 2. Besides, PAMD also develop formats and guidelines for the submission of proposals for projects / programmes and for their techno- economic evaluation, undertake support research studies with a view to improving methodology and procedure for appraisal of projects and programmes, associate with Subject Divisions in Planning Commission in examining the proposals received from Departments/Ministries for grant of "in principle" approval for new schemes etc. 3. As a part of techno-economic appraisal, PAMD presently appraises Central Sector/Centrally Sponsored schemes/projects costing Rs.50 crore & above, and prepares Appraisal Notes in consultation with the Subject Division of the Planning Commission, before these are considered by the Public Investment Board (PIB), Expenditure Finance Committee (EFC), Committee of Public Investment Board (CPIB) and Expanded Board of Railways (EBR), depending upon the nature and size of the proposal. The outer limit for issue of appraisal note by the PAMD has been fixed at six weeks from the date of receipt of PIB/EFC proposal. 4. In pursuance of the recommendations of Cabinet Committee on Economic Affairs, Standing Committees were constituted in Ministries / Departments to examine the Revised Cost Estimates proposals, wherein time overrun and cost overrun have occurred, to assign responsibility for the time and cost overruns. PAMD's officer is nominated as a member on the Standing Committee, to represent Planning Commission. 5. The Division is headed by an Adviser & supported by Joint Advisers, Deputy Advisers, Senior Research Officers, Research Officers, Section Officer and other supporting staff. The work amongst various officers is allocated as far as possible on sectoral basis taking into account the workload at a given point of time. 6. The Division has a well-documented collection of appraisal notes (Chronologically arranged), sectoral volumes of appraisal notes, records of the minutes of the meetings of the Public Investment Board. The Division also published in 1992, "Guidelines for the Preparation of Feasibility Reports", for Industry (including Mines), Coal and Power sectors. Division maintains all the Appraisal Notes issued since inception of PAMD in bound form for reference and record. 7. EFC/PIB proposals pending for appraisal in PAMD and list of Appraisal Notes issued are placed at the Website "EFC/PIB Proposals" of Planning Commission. This is updated weekly.
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2.4 WOMEN AND CHILD DEVELOPMENT DIVISION

Material Pertaining to Women & Child Development Sector The Women & Child Development Division of the Planning Commission look after all works relating (i) Empowerment of Women; and (ii) Development of Children in close collaboration with the nodal Ministry of Women and Child Development. The Division bears the responsibilities for fulfillment of the commitments made in the Approach Paper and Five Year Plan Document through formulation of suitable programmes and policies and their implementation towards inclusive growth, women s agency and child rights. The major function of the Division includes the following: 1. Over all guidance and Advise to both Central and States Governments in the area of Women s Agency & Child Rights. 2. Work relating to Five Year Plans and Annual Plans A . Central Sector (I) Preparation of material for inclusion in the Approach Paper. (II) Setting up of Steering Committee in the Planning Commission and its related Works viz. organizing meetings, preparation of background material /agenda, minutes of the meeting, preparation of the of steering committee reports (III) Setting up of Working Groups on Women and Children at the Ministry level and coordination with the Ministry for their meetings/Reports. (IV) Preparation of chapter for inclusion in the Five Year and Annual Plan Documents. (V) Examination of Plan Proposals for Five Year Plans and Annual Plans of Ministry of Women and Child Development and discussion with the Ministry and recommendation of the outlays. B. State Sector (I) Examination of Plan Proposal (Five Year Plan and Annual Plan) of various states relating to Women and Child Development sector and organizing Working Group Discussion to review the implementation of policies and programme with physical and financial targets and achievements and recommendation of sectoral outlay. (II) Examination of proposal for Additional Central Assistance (ACA) for Women and Child Development sector by States. (III) Preparation of Notes and participation in ther performance review meetings for different states taken by Memebers/Pr.Advisers/Advisers 3. Mid-Term Appraisal (i).Review of the progress of implementation of policies and programmes (ii) Assessment of achievements in terms of Physical & Financial targets. (iii) Suggestions for Mid Term Corrections 4. Other Works
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(I) Setting up of Committees/Groups and Task Forces on issues relating to Women & Children, organizing their meetings and preparation of Reports; (II) Preparation of background notes and organizing Performance Review Meetings of the Ministry of Women and Child Development (III) Work relating to Women Component Plan(WCP) and Gender Budgeting (GB); (IV) Examination and preparation of briefs and comments on Cabinet Notes, EFC Memos, SFC Memos with regard to schemes of Ministry of Women & Child Development besides participating in EFC and SFC meetings; (V) Advisory role with regard to Subodinate Organizations of Ministry of Woomen & Child development i.e. National Commission for Women (NCW), National Commission for Protection of Child rights (NCPCR), national Institute of Public co-operation and Child Development (NIPCCD), Rashtriya Mahila Kosh (RMK) and Central Social Welfare Board (CSWB) besides participation in General Body and Governing Body meetings of NIPCCD, RMK and CSWB (VI) Representing Planning Commission in the meeting of Parliamentary Committees, InterMinisterial Committees, Expert Groups/Committees, Task Forces on the subject relating to Women & Child Development; (VII) All parliamentary matters viz. answering Questions, supply of material withn and ouside the Planning Commission; (VIII) Coordination with other Ministries/Departments, UN and other International Agencies and subject Divisions within Planning Commission on women and child issues; (IX) Examination of the proposals on Research Studies, Seminars, Workshops and Conferences on Women and Child issues received through Socio-Economic Research Division of the Planning Commission; (X) Representing Planning Commission in the meetings of various Sanctioning Committees constituted under respective schemes and other committees on women and child issues constituted by the Minstry of Women & Child Development; (XI) Preparation of material relating to women and child sector for inclusion in Economic Survey, President s Address to the Joint Session of the Parliamnet, Prime Minister s Independence Day Speech, Finance Minister s Budget Speech etc.; (XII) Any other works assigned by the higher authorities of Planning Commission. Setting up of Committees/Groups and Task Forces on issues relating Examination and preparation of briefs and comments on Cabinet Notes, EFC Memos, SFC Memos with regard to schemes of Ministry of Women & Child Development besides participating in EFC and SFC Meetings. 5. Advisory role for Subordinate Organizations of Ministry of Women & Children i.e. National Commission for Women. National Child Protection Commission, National Institute for public Cooperation and Child development, Rashtriya Mahila Kosh and Central Social Welfare Board besides participation in General Body and Governing Bodies meetings of National Institute for
public Cooperation and Child development, Rashtriya Mahila Kosh and Central Social Welfare Board. 6.Repersenting Planning Commission in the meeting of Parliamentary Committees, InterMinisterial Committees, Expert Group/Committees, Task Forces on the subject relating to Women & Child Development. 7. All parliamentary matters viz. answering Questions, supply of material within and outside the Planning commission. 8. Coordination with women and child related Ministries/Departments ,UN and other International Agencies and subject Divisions within Planning Commission. 9. The Division examine the proposals of Research Studies, Seminars, Workshops and Conferences on Women and Child issues received through Socio-Economic Research Division of the Planning Commission. 10. The Division also represents Planning Commission in the various Sanctioning Committees for various schemes Constituted by Ministry of Women & Child Development besides various committees constituted on the various issues relating to women and children 11.The Division also prepares and furnish relevant material relating to women and child sector for inclusion in Economic Survey, President s Address to the Joint Session of the Parliament, Prim Minister s Independence Day Speech ,Finance Minister s Budget Speech. 12.Any other works assigned by the higher authorizes of Planning Commission.
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3. FIVE YEAR PLANS

First plan (1951-1956) The first Indian Prime Minister, Jawaharlal Nehru presented the first five-year plan to the Parliament of India on December 8, 1951. The total plan budget of 206.8 billion INR (23.6 billion USD in the 1950 exchange rate) was allocated to seven broad areas: irrigation and energy (27.2 percent), agriculture and community development (17.4 percent), transport and communications (24 percent), industry (8.4 percent), social services (16.64 percent), land rehabilitation (4.1 percent), and other (2.5 percent). The plan promoting the idea of a self reliant closed economy was developed by Prof. P. C. Mahalanobis of Indian Statistical Institute and borrowed the ideas from USSR's five year plans developed by Domer. The plan is often referred to as the Domer-Mahalanobis Model. The target growth rate was 2.1 percent annual gross domestic product (GDP) growth; the achieved growth rate was 3.6 percent. During the first five-year plan the net domestic product went up by 15 percent. The monsoons were good and there were relatively high crop yields, boosting exchange reserves and per capita income, which went up 8 percent. Lower increase of per capita income as compared to national income was due to rapid population growth. Many irrigation projects were initiated during this period, including the Bhakra Dam and Hirakud Dam. The World Health Organization, with the Indian government, addressed children's health and reduced infant mortality, contributing to population growth. At the end of the plan period in 1956, five Indian Institutes of Technology (IITs) were started as major technical institutions. University Grant Commission was set up to take care of funding and take measures to strengthen the higher education in the country. Contracts were signed to start five steel plants; however these plants did not come into existence until the middle of the next five-year plan.
Second plan (1956-1961)

The second five-year plan focused on industry, especially heavy industry. Domestic production of industrial products was encouraged, 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 1953. 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 techniques of operations research and optimization as well as the novel applications of statistical models developed at the Indian Statiatical Institute. Hydroelectric power projects and five steel mills at Bhilai, Durgapur, and Rourkela were established. Coal production was increased. More railway lines were added in the north east. The Atomic Energy Commission was formed in 1957 with Homi J. Bhabha as the first chairman. The Tata Institute of Fundamental Research was established as a research institute. In 1957 a talent search and scholarship program was begun to find talented young students to train for work in nuclear power. Third plan (1961-1966) The third plan stressed on agriculture and improving production of rice, but the brief SinoIndian War in 1962 exposed weaknesses in the economy and shifted the focus towards defense. In 1965-1966, the Green Revolution in India advanced agriculture. The war led to inflation and the priority was shifted to price stabilization. The construction of dams continued. Many cement and fertilizer plants were also built. Punjab begun 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. State electricity boards and state secondary education boards were formed. States were made responsible for secondary and higher education. State road transportation corporations were formed and local road building became a state responsibility.Gross Domestic Product rate during this duration was lower at 2.7% due to 1962 Sino-Indian War and Indo-Pakistani War of 1965.
Gap between (1966-69)

After 1965, when there was a break because of the Indo-Pakistan Conflict. Two successive years of drought, devaluation of the currency, a general rise in prices and erosion of resources disrupted the planning process and after three Annual Plans between 1966 and 1969, the fourth Five-year plan was started in 1969. Fourth plan (1969-1974) At this time Indira Gandhi was the Prime Minister. The Indira Gandhi government nationalized 14 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 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 plan (1974-1979) Stress was laid on employment, poverty alleviation, and justice. The plan also focused on selfreliance in agricultural production and defense. In 1978 the newly elected Morarji Desai government rejected the plan. Electricity Supply Act was enacted in 1975, which enabled the Central Government to enter into power generation and transmission. Sixth plan (1980-1985) Called the Janata government plan, the sixth plan marked a reversal of the Nehruvian model. When Rajiv Gandhi was elected as the prime minister, the young prime minister aimed for rapid industrial development, especially in the area of information technology. Progress was slow, however, partly because of caution on the part of labor and communist 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. The sixth plan also marked the beginning of economic liberalization. Price controls were eliminated and ration shops were closed. This led to an increase in food prices and an increased cost of living. Family planning also was expanded in order to prevent overpopulation. In contrast to China's harshly-enforced 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. Seventh plan (1985-1989)
The Seventh Plan marked the comeback of the Congress Party to power. The plan lay stress on improving the productivity level of industries by upgradation of technology. Gap between (1989-91) 1989-91 was a period of political instability in India and hence no five year plan was implemented. Between 1990 and 1992, there were only Annual Plans. In 1991, India faced a crisis in Foreign Exchange (Forex) reserves, left with reserves of only about $1 billion (US). Thus, under pressure, the country took the risk of reforming the socialist economy. P.V. Narasimha Rao)(28 June 1921 23 December 2004) also called Father of Indian Economic Reforms was the twelfth Prime Minister of the Republic of India and head of Congress Party, and led one of the most important administrations in India's modern history overseeing a major economic transformation and several incidents affecting national security. At that time Dr. Manmohan Singh (currently, Prime Minister of India) launched India's free market reforms that brought the nearly bankrupt nation back from the edge. It was the beginning of privatization and liberalization in India. Eighth plan (1992-1997) Modernization of industries was a major highlight of the Eighth Plan. Under this plan, the gradual opening of the Indian economy was undertaken to correct the burgeoning deficit and foreign debt. Meanwhile India became a member of the World Trade Organization on 1 January 1995.This plan can be termed as Rao and Manmohan model of Economic development. The major objectives included, containing population growth, poverty reduction, employment generation, strengthening the infrastructure, Institutional building, Human Resource development, Involvement of Panchayat raj, Nagarapalikas, N.G.O Sand Decentralization and peoples participation. Energy was given priority with 26.6% of the outlay. An average annual growth rate of 6.7%against the target 5.6% was achieved. Ninth Plan (1997-2002) The Ninth Five Year Plan, launched in the 50th year of India s Independence, will take the country into the new millennium. Much has happened in the fifty years since independence. The people of India have conclusively demonstrated their ability to forge a nation united despite its diversity, and their commitment to pursue development within the framework of a functioning, vibrant and highly pluralistic democracy. In this process democratic institutions have put down firm roots and flourished and development has also taken place on a wide front. As the millennium draws to a close, the time has come to redouble our efforts at development, especially in the social and economic spheres, so that the country will realise its full economic potential and the poorest and the weakest will be able to shape their destiny in an unfettered manner. This will require not only higher rates of growth of output and employment, but also a
special emphasis on all-round human development, with stress on social sectors and a thrust on eradication of poverty. The Approach Paper to the Ninth Five Year Plan, adopted by the National Development Council, had accorded priority to agriculture and rural development with a view to generating adequate productive employment and eradication of poverty; accelerating the growth rate of the economy with stable prices; ensuring food and nutritional security for all, particularly the vulnerable sections of society; providing the basic minimum services of safe drinking water, primary health care facilities, universal primary education, shelter, and connectivity to all in a time bound manner; containing the growth rate of population; ensuring environmental sustainability of the development process through social mobilization and participation of people at all levels; empowerment of women and socially disadvantaged groups such as Scheduled Caste, Scheduled Tribes and Other Backward Classes and Minorities as agents of socio-economic change and development; promoting and developing people s participatory bodies like Panchayati Raj institutions, co-operatives and self-help groups; and strengthening efforts to build self-reliance. These very priorities constitute the objectives of the Ninth Plan. Some specific areas from within the broad objectives of the Plan as laid down by the NDC have been selected for special focus. For these areas, Special Action Plans (SAPs) have been evolved in order to provide actionable, time-bound targets with adequate resources. Broadly, the SAPs cover specific aspects of social and physical infrastructure, agriculture, information technology and water policy. The Ninth Plan is based on a careful stock taking of the strength of our past development strategy as well as its weakness, and seeks to provide appropriate direction and balance to the socio-economic development of the country. The principal task of the Ninth Plan will be to usher in a new era of growth with social justice and participation in which not only the Governments at the Centre and the States, but the people at large, particularly the poor, can become effective instruments of a participatory planning process. In such a process, the participation of public and private sectors and all tiers of government will be vital for ensuring growth with justice and equity. Objectives of 9th five year plan: The Ninth Plan recognises the integral link between rapid economic growth and the quality of life of the mass of the people. It also recognises the need to combine high growth policies with the pursuit of our ultimate objective of improving policies which are pro-poor and are aimed at the correction of historical inequalities. Thus the focus of the Ninth Plan can be described as : "Growth with Social Justice and Equity".
The specific objectives of the Ninth Plan as approved by the National Development Council are as follows: i. Priority to agriculture and rural development with a view to generating adequate productive employment and eradication of poverty; ii. Accelerating the growth rate of the economy with stable prices; iii. Ensuring food and nutritional security for all, particularly the vulnerable sections of society; iv. Providing the basic minimum services of safe drinking water, primary health care facilities, universal primary education, shelter, and connectivity to all in a time bound manner; v. Containing the growth rate of population; vi. Ensuring environmental sustainability of the development process through social mobilisation and participation of people at all levels; vii. Empowerment of women and socially disadvantaged groups such as Scheduled Castes, Scheduled Tribes and Other Backward Classes and Minorities as agents of socioeconomic change and development; viii. Promoting and developing people s participatory institutions like Panchayati Raj institutions, cooperatives and self-help groups; ix. Strengthening efforts to build self-reliance.
Tenth Plan (2002-2007) The Tenth Five Year Plan, covering the period 2002-03 to 2006-07, represents but another step in the evolution of development planning in India. In the 55 years that have passed since our Independence, the challenges, the imperatives and the capabilities of the nation have undergone profound changes. The planning methodologies have attempted to keep pace with the emerging requirements and to guide the economy through the vicissitudes of national and global events, with greater or lesser success. The Tenth Plan carries on this tradition in the context of the objective realities of Indian economic life as they are manifested today. The single-most important feature of our post-colonial experience is that the people of India have conclusively demonstrated their ability to forge a nation united despite its diversity, and to pursue development within the framework of a functioning, vibrant and pluralistic democracy. In this process, democratic institutions have put down firm roots, which continue to gain strength and spread. The degree of democratisation that has been achieved in the political sphere is, however, not matched by its progress on the economic front. There are still too many controls and restrictions on individual initiatives, and many of our developmental institutions continue to exhibit paternalistic behaviour, which today has become anachronistic. For the country to attain its full economic potential, and for the poorest and weakest to shape their destiny according to their own desires, it requires a comprehensive reappraisal not only of our
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development strategy, but also of the institutional structures that guide the development process. This is the task that the Tenth Plan has set for itself. PERSPECTIVES: The last decade of the 20th century has seen a visible shift in the focus of development planning from the mere expansion of production of goods and services, and the consequent growth of per capita income, to planning for enhancement of human well being. The notion of human well being itself is more broadly conceived to include not only consumption of goods and services in general but more specifically to ensure that the basic material requirements of all sections of the population, especially those below the poverty line, are met and that they have access to basic social services such as health and education. Specific focus on these dimensions of social development is necessary because experience shows that economic prosperity, measured in terms of per capita income, alone does not always ensure enrichment in quality of life, as reflected, for instance, in the social indicators on health, longevity, literacy and environmental sustainability. The latter must be valued as outcomes that are socially desirable in themselves, and hence made direct objectives of any development process. They are also valuable inputs in sustaining the development process in the longer run. In addition to social development measures, in terms of access to social services, an equitable development process must provide expanding opportunities for advancement to all sections of the population. Equality of outcomes may not be a feasible goal of social justice but equality of opportunity is a goal for which we must all strive.
OBJECTIVES:
Traditionally, the level of per capita income has been regarded as a summary indicator of the economic well being of the country, and growth targets have therefore focused on growth in per capita income or per capita GDP. The Prime Minister s vision has been the basis for setting the target in this regard, not only for the Tenth Plan period, but for all of the next ten years. The Approach Paper had proposed that the Tenth Plan should aim at an indicative target of 8 per cent average GDP growth for the period 2002-07. It is certainly an ambitious target, specially in view of the fact that GDP growth has decelerated to below 6 per cent at present. Even if the deceleration is viewed as a short-term phenomenon, the medium-term performance of the economy over the past several years suggests that the demonstrated growth potential is only about 6.5 percent. The proposed 8 per cent growth target therefore involves an increase of at least 1.5 percentage points over the recent medium term performance, which is substantial. Nevertheless, the National Development Council (NDC) affirmed its faith in the latent potentialities of the Indian economy by approving the 8 per cent growth target for the Tenth Plan period.
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The Approach Paper also recognized that economic growth cannot be the only objective of national planning and indeed, over the years, development objectives are being defined not just in terms of increases in GDP or per capita income but more broadly in terms of enhancement of human well being. To reflect the importance of these dimensions in development planning, the Tenth Plan identifies specific and monitor able targets for a few key indicators of human development. The NDC has approved that, in addition to the 8 per cent growth target. The targets mandated by the NDC at the time of approval of the Approach Paper to the Tenth Five Year Plan are, by and large, consistent with the 8 percent growth target either through direct linkages that exist or through the resources that are generated by the growth process for more intensive public interventions. At the time of formulation of the Approach Paper, these linkages had been assessed on the basis of economy-wide aggregative trends observed in the past, and it was felt that achievement of even these targets would require concerted efforts. Subsequently, more detailed study and analysis by the Planning Commission have revealed that it may be possible to record even better achievement as far as employment generation and poverty reduction are concerned. The Report of the Special Group on Targeting 10 Million Employment Opportunities Per Year, which was constituted to deliberate upon the Prime Minister s vision, indicated that with appropriate sectoral focus and directed interventions, it would be possible to generate substantially more employment opportunities than arising merely out of the growth process, not only to take care of the additions to the labour force, but also to reduce the backlog of unemployment. Similarly, internal exercises carried out in the Planning Commission revealed that the state-wise break down of the aggregate growth target, which seeks to redress regional imbalances, could lead to even faster reduction in the poverty rate than the assessment made on the basis of the aggregative trends. The Tenth Plan, therefore, seeks to achieve targets in these two areas which go beyond those set by the NDC in the Approach Paper.
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MONITORABLE TARGETS FOR THE TENTH PLAN AND BEYOND Reduction of poverty ratio by 5 percentage points by 2007 and by 15 percentage points by 2012; Providing gainful and high-quality employment at least to addition to the labour force over the Tenth Plan period; All children in school by 2003; all children to complete 5 years of schooling by 2007; Reduction in gender gaps in literacy and wage rates by at least 50 per cent by 2007; Reduction in the decadal rate of population growth between 2001 and 2011 to 16.2 per cent; Increase in Literacy rates to 75 per cent within the Plan period; Reduction of Infant mortality rate (IMR) to 45 per 1000 live births by 2007 and to 28 by 2012; Reduction of Maternal mortality ratio (MMR) to 2 per 1000 live births by 2007 and to 1 by 2012; Increase in forest and tree cover to 25 per cent by 2007 and 33 per cent by 2012; All villages to have sustained access to potable drinking water within the Plan period; Cleaning of all major polluted rivers by 2007 and other notified stretches by 2012. Eleventh Plan (2007-2012) On the eve of the 11th Plan, our economy is in a much stronger position than it was a few years ago. After slowing down to an average growth rate of about 5.5% in the 9th Plan period (199798 to 2001-02), it has accelerated significantly in recent years. The average growth rate in the last four years of 10th Plan period (2003-04 to 2006-07) is likely to be a little over 8%, making the growth rate 7.2% for the entire 10th Plan period. Though, this is below the 10th Plan target of 8%, it is the highest growth rate achieved in any plan period. The 11th Plan provides an opportunity to restructure policies to achieve a new vision based on faster, more broad-based and inclusive growth. It is designed to reduce poverty and focus on bridging the various divides that continue to fragment our society. The 11th Plan must aim at putting the economy on a sustainable growth trajectory with a growth rate of approximately 10 per cent by the end of the Plan period. It will create productive employment at a faster pace than before, and target robust agriculture growth at 4% per year. It must seek to reduce disparities across regions and communities by ensuring access to basic physical infrastructure as well as health and education services to all. It must recognize gender as a cross-cutting theme across all sectors and commit to respect and promote the rights of the common person. The first steps in this direction were initiated in the middle of the 10th Plan based on the National Common Minimum Programme adopted by the government. These steps must be further strengthened and consolidated into a strategy for the 11th Plan.
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Rapid growth is an essential part of strategy for two reasons. Firstly, it is only in a rapidly growing economy that we can expect to sufficiently raise the incomes of the mass of our population to bring about a general improvement in living conditions. Secondly, rapid growth is necessary to generate the resources needed to provide basic services to all. Work done within the Planning Commission and elsewhere suggests that the economy can accelerate from 8 per cent per year to an average of around 9% over the 11th Plan period, provided appropriate policies are put in place. With population growing at 1.5% per year, 9% growth in GDP would double the real per capita income in 10 years. This must be combined with policies that will ensure that this per capita income growth is broad based, benefiting all sections of the population, especially those who have thus far remained deprived. While encouraging private sector growth the 11th Plan must also ensure a substantial increase in the allocation of public resources for Plan programmes in critical areas. This will support the growth strategy and ensure inclusiveness. These resources will be easier to mobilize if the economy grows rapidly. A new stimulus to public sector investment is particularly important in agriculture and infrastructure and both the Centre and the States have to take steps to mobilize resources to make this possible. The growth component of this strategy is, therefore, important for two reasons: a) it will contribute directly by raising income levels and employment and b) it will help finance programmes that will ensure more broad based and inclusive growth. Alternative Scenarios for 11th Plan:
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3.1 MACROECONOMIC INDICATOR
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3.2 SOCIO-ECONOMIC INDICATORS
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CONCLUSION
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. The government makes both micro- and macroeconomic decisions. Microeconomic decisions include what goods and services to produce, the quantities to produce, the prices to charge, and the wages to pay. Macroeconomic decisions include the rate of investment and the extent of foreign trade. In most industrialized countries, governments influence their economies indirectly through monetary and fiscal policies. A few key economic sectors may be publicly owned, but the trend has been toward the privatization of industries that were socialized in the aftermath of the Great Depression and World War II. Japan is the most notable example of economic planning in a capitalist framework; government and industry cooperate closely in planning patterns of capital investment, research and development, and export.
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BIBLIOGRAPHY
BOOKS: Business Environment by Saroj Upadhyay WEBSITE: Planning Commision: Planningcommission.nic.in WEBLINKS: Economic planning in developing countries: http://www.britannica.com/EBchecked/topic/178458/economic-planning/30579/Planning-indeveloping-countries-approaches Economic Planning: http://www.textbooksonline.tn.nic.in/Books/11/Econ-EM/Chapter_05.pdf Economic Planning: http://www.ccsindia.org/ccsindia/pdf/friedmanindia/03%20Indian%20Economic%20Planning% 20-%20Milton%20Friedman.pdf
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Economic Planning

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Economic Planning

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A PROJECT REPORT ON

SUBMITTED TO: MR. VIRENDRA CHAVDA N.S.V.K.M.S. MBA COLLEGE, VISNAGAR

1.1 WHAT IS ECONOMIC PLANNING?

1.2 PROBLEM OF PLANNING IN BACKWARD COUNTRIES

1.3 CHARACTERISTICS OF ECONOMIC PLANNING

1.5 MEMBERS OF PLANNING COMMISION

Dr. Manmohan Singh

Mr. Montex singh Aahuwaliya

Dr. Kirit Parikh

Prof. Abhijit Sen

Dr. Bhalchandra Mungekar

Syeda Saiyidain Hameed

Shri. B.K. Chaturvedi

Shri. B.N. Yugandhar

1.6 TYPES OF PLANNING

1.8 PLANNING IN DEVELOPING COUNTRIES

2.2 PERSPECTIVE PLANNING DIVISION

2.3 PROJECT APPRAISAL MANAGEMENT DIVISION

2.4 WOMEN AND CHILD DEVELOPMENT DIVISION

3. FIVE YEAR PLANS

Second plan (1956-1961)

Gap between (1966-69)

3.1 MACROECONOMIC INDICATOR

3.2 SOCIO-ECONOMIC INDICATORS

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