FIVE YEAR PLANS OF INDIA

What is the History of Five Year Plans?

• The Idea of Planning as a process of rebuilding the economy
gained prominence in the 1940s-50s.
• Various Industrialists came together in 1944 and drafted a joint
proposal for setting up a planned economy in India. It is famously
known as the Bombay Plan.
• Planning for development was seen as a crucial choice for the
country, following Independence.
• Joseph Stalin was the first person to implement the Five-Year Plan
in the Soviet Union, in the year 1928.
• India launched a series of Five-Year Plans after independence to
build its economy and attain development.
What is the Concept of FYPs?
• The idea of five-year plans is simple- The Government of India
prepares a document with all its income and expenditure for five
years.
• The budget of the central government and all the state
governments is divided into two parts: non-plan budget and plan
budget.The non-plan budget is spent on routine items yearly. The
planned budget is spent on a five-year basis as per the priorities
fixed by the plan.The model of the Indian Economy was premised
on the concept of planning based on five-year plans from 1951-
2017.The Five Year Plans were formulated, implemented and
regulated by a body known as the Planning Commission.
• The Planning Commission was replaced by a think tank called NITI
AAYOG in 2015.The Niti Aayog has come out with three
 documents — 3-year action agenda, 7-year medium-term strategy
paper and 15-year vision document.
Economic Planning In India - Five Year Plans
The term economic planning is used to describe the long term plans of
the government of India to develop and coordinate the economy with
efficient utilization of resources. Economic planning in India started
after independence in the year 1950, it was deemed necessary for
economic growth and development of the nation.
Long term objectives of Five Year Plans in India are:
• High Growth rate to improve the living standard of the residents
of India.
• Economic stability for prosperity.
• Self-reliant economy.
• Social justice and reduced inequalities.
• Modernization of the economy.
The idea of economic planning for five year was taken from the Soviet
Union under socialist influence of first Prime Minister Pt. Jawahar lal
Nehru.
The first eight five year plans in India emphasised on growing the public
sector with huge investments in heavy and basic industries, but since
the launch of Ninth five year plan in 1997, attention has shifted towards
making government a growth facilitator.
SOME ABSTRACTS
INDIA’S FIRST FIVE YEAR PLAN covered the period from April 1951
through March 1956; the Second Five Year Plan covers the period from
April 1956 through March 1961. The main objectives of planning in
India are, broadly, to double real national income in less than 20 years
and to double the per capita income in 25 years.

During the First Plan period, national income was expected to rise by
11–12 per cent; the actual increase was over 18 per cent, despite a
shortfall in Plan outlays. The success of the First Plan, under conditions
of economic and financial stability, prompted more ambitious goals and
a bolder approach in formulating the Second Plan. The main objectives
of the Second Plan are an increase of 25 per cent in real national
income over the five-year period 1956–57 to 1960–61; a large
expansion of employment opportunities; rapid industrialization; and
reduction of economic inequalities. The emphasis on the development
of industry and transport is greater than in the First Plan. The main
problem is to step up the rate of investment in the economy. The total
cost of the Plan has increased considerably since the estimates were
presented, mainly because of two factors: the original costs were
underestimated and prices have generally risen, especially prices of
imported capital goods. But while difficulties have arisen currently in
financing the Plan, particularly in regard to foreign exchange, it is
important to stress the progress achieved so far. The technical and
administrative tasks have been faced competently, by and large; major
projects in steel, irrigation, and power are developing; and there is an
unmistakable determination on the part of the Indian authorities to
maximize tax resources, limit deficit financing, and take all possible
measures to maintain the core of the Plan.
LIST OF FIVE YEAR PLANS IN SHORT
We shall discuss the objectives and achievement of all the 12 five-year
plans in India one by one.
First Five Year Plan [1951-1956]
Growth Rate: Actual Growth of 3.6% was achieved against the targeted
growth of 2.1%
Salient Features:
• The first plan was made based on the Harrod-Domar model which
was developed independently by Roy F. Harrod and Evsey Domar.
• The main objective of this plan was to increase agricultural
production and thereby increase growth of the sector. It also focused
on full employment, removal of economic inequalities and power and
transport.
• Objectives such as food self sufficiency, rehabilitation of refugees and
price stability were achieved to some extent.
• During the first five-year plan, five Indian Institutes of Technology
(IITs) were established.
Second Five Year Plan [1956-1961]
Growth Rate: Second Five year plan underachieved its actual Growth at
4.3% against the targeted growth
of 4.5%
Salient Features:
• Similar to the first plan, this plan was developed on the basis of the
Harrod-Domar model.
• This plan was authored by P C Mahalanobis and hence it is also known
as the Mahalanobis plan.
• The plan focused mainly on rapid industrialisation with particular
emphasis on development of basic and
heavy industries. It also aimed to increase employment opportunities
and national income.
• However, due to the shortage of foreign exchange, the plan was not
implemented completely and the targets were pruned.
• The Industrial policy 1956 considered the establishment of a
socialistic pattern of society as the goal of economic policy.
Third Five Year Plan [1961-1966]
Growth Rate: India completely failed to achieve its targeterowth of
5.6%. Actual growth stood at meagre 2.8% only.
Salient Features:
• This plan aimed to make India a self-reliant and self-generating
economy. However, towards the end of
the plan, the aim was shifted to the development of defence.
• This plan created a base for the growth of medium and small scale
industries and cottage industries.
• It was during this plan period, India resorted to borrowing from the
International Monetary Fund (IMF) for the first time.
• Due to events such as Chinese aggression of 1962, Indo-Pak war of
1965 and severe drought during 1965 to 1966, this plan failed to
achieve its targets.Plan Holidays – Annual Plans [1966-1969]
• As a result of the Third Plan's terrible failure, the government was
compelled to declare "Plan Holidays" from 1966 to 1969.
• The government established three yearly plans known as Plan
Holidays from 1966 to 1967, 1967-68, and 1968-69.
• The principal causes of the plan's termination were the Indo-Pakistan
and Sino-Indian wars, culminating in the collapse of the third Five-Year
Plan.
Fourth Five Year Plan [1969-1974]
Growth Rate: The targeted growth of 5.6% was not achieved as Actual
growth stood at just 3.3%.
Salient Features:
• The fourth plan aimed for growth with stability and being self-reliant
particularly in the defence sector. The family planning programmes
were introduced during this plan.
• Special emphasis was laid on improving the conditions of poor and
underprivileged sections of the Society by providing education and
employment.
• Post the Indo-Pak war of 1971, there was a huge influx of Bangladeshi
refugees into the country which Created scarcity of resources. This led
to the failure of the plan.
• Indira Gandhi’s administration nationalized 14 major Indian banks,
and the Green Revolution Revolutionized agriculture in India.

Fifth Five Year Plan [1974]

Growth Rate: This was first time after The First Five Year Plan when
India achieved actual growth of 4.8% against the targeted growth of
4.4%.
Salient Features:
• Removal of poverty (Garibi Hatao) and attainment of self-reliance
were the two chief objectives of the 5th five year plan.
• In 1975, the Electricity Supply Act was passed, allowing the Central
Government to overcome the Threshold of electricity generation and
transmission.
• Since the inception of five yearly plans, for the first time removal of
poverty was made the prime Objective of the plan.

Rolling plan [1979-1980]

• The sixth plan for the period 1978 to 1983 was put forward by the
Janata government.
• This lasted only for two years. The Congress government which came
to power in 1980, removed this Plan from official records and
introduced the official 6th plan in 1980.

Sixth Five Year Plan [1980-1985]

Growth Rate: India achieved an actual growth rate of 5.7% against the
targeted 5.2%.
Salient Features:
• The foremost aim of the 6th plan was the removal of poverty. It also
aimed for higher growth rate, Removal of unemployment, improved
productivity, modernization of technology and significant reduction In
the disparities of income and wealth.
• Though there was a famine in the last year of the plan period, most of
the targets fixed in this plan were Achieved and thus it was a successful.
• In order to avoid overpopulation, family planning was also increased.
Seventh Five Year Plan [1985-1990]
Growth Rate: Actual growth was 20% more than the targeted growth.
Actual growth was 6% against the Targeted growth of 5%.

Salient Features:
• This plan focused on increasing the production of food grains at a
larger scale and the employment Opportunities.
• It was a very successful plan and it recorded the highest ever
agricultural as well as overall growth rate in The fiscal year 1988 to
1989.
• Following this plan, there was a plan holiday from 1990 to 1992 due
to political instability and economic Crisis that existed then in India.

Plan Holiday [1990-1992]

• Due to the Seventh Plan’s abject failure, the Indian government was
compelled to proclaim “plan Holidays” from 1990 to 1992.
• Due to the rapidly changing economic circumstances at the center,
the Eighth Plan was unable to launch In 1990, and the years 1990–91
and 1991–92 were considered as Annual Plans.
Eighth Five Year Plan [1992-1997]
Growth Rate: India overachieved her targeted growth of 5.6% to an
actual growth of 6.8%.
Salient Features:
• In 1992, issues such as recession in industry, inflation, budget deficits
and increases in debt burden Existed. The planners of the 8 th plan
introduced various measures and policies to combat all these
Economical issues.
• Under the Prime Minister Shri P.V. Narasimha Rao, fiscal and
economic reforms were introduced.
• Another key objective of the 8th plan was to have universal education
and eradication of illiteracy in the Age group of 15 to 35 years.
• Increase in private sector investment, improvement in current
account deficit and high growth of Agriculture and allied sectors and
the manufacturing sector were achieved through this plan.

Ninth Five Year Plan [1997-2002]

Growth Rate: After overachieving the targeted growth rate for last 3
Five year plans, India failed to Achieve its targeted growth of 6.5%
against the actual growth of 5.4%.
Salient Features:
• This plan was mostly an extension of the eighth plan. It focused on
growth with social justice and Equality.
• Priority was given to agriculture and rural development for generating
adequate productive employment And eradication of poverty.
• Provisions to provide safe drinking water, PHC facilities, UPE, shelter
and connectivity to all in a time Bound manner were made under this
plan.
• It also aimed to ensure food and nutritional security to all, particularly
to the weaker sections of the Society.
Tenth Five Year Plan [2002-2007]
Growth Rate: Actual growth stood at just 7.6% averse the targeted
growth of 8%.
Salient Features:
• In this plan, monitorable targets were fixed for a few key indicators of
development.
• Following were the main objectives of the tenth plan:
o Attainment of GDP growth rate of 8% per annum.
o Providing access to basic services such as education, health, drinking
water and sanitation.
o Substantial allocation of resources to the social sector and major
improvement in governance for effective use of resources.
o Reduction in poverty to 5% by 2007 and 15% by 2012.
o To reduce the gender gap in literacy and wage rate to 50% by 2007
and population growth to 16.2% during 2001-2011.
o To give sustained access to drinking water for all the villages in the
country by 2007.
Eleventh Five Year Plan [2007-2012]
Growth Rate: Targeted growth of 9% fell short as the actual growth
achieved was just 8%.
Salient Features:
• The theme of the 11th plan was “towards faster and more inclusive
growth”.
• Though the Indian economy witnessed growth, it was not perceived
as sufficiently inclusive by various vulnerable sections of the society.
Thus the concept of inclusive growth was introduced in this plan.
• Agriculture, infrastructure and education were the key areas of
concern during this plan period.
• Around 27 detailed national targets, ranging from enhancing
production and incomes to literacy, health, child development, poverty
reduction etc., were set under the 11th plan.
• To boost agricultural, industrial, and service growth rates to 4%, 10%,
and 9%, respectively. By 2009, all people will have access to safe
drinking water.
Twelfth Five Year Plan [2012-2017]
Growth Rate: Targeted growth was 8%, but the actual growth for the
five years were 5.1% (2012-13), 6.9% (2013-14), 7.2% (2014-15), 7.6%
(2015-16), 7.1% (2016-17) respectively.
Salient Features:
Inclusive growth was the central theme and objective of the 12th plan.
In order to achieve this target, planners set 25 core monitorable targets
most of which are to be achieved by the end of 12th five . They are as
follows:
• The overall growth rate of each state should be greater than the
previous one.
• Real GDP growth rate – 8.2%
• Manufacturing growth rate – 10%
• Agricultural growth rate – 4%
• Increase mean years of schooling to seven years by 2017.
• Elimination of gender and social gap in enrollment into
schools.Increasing the access to higher education by increasing the
total number of seats for each age category.
• Reducing the head count ratio of consumption poverty by 10%
• Generation of 50 million job opportunities in the non-farm sector.
• Reducing the Infant Mortality Rate to 25 per 1000 live births and
Maternal Mortality Rate to 1 per 1000 live births by the end of this
plan.
• Reducing the under-nutrition among the children aged 0 to 3 years to
half by the end of the 12th plan.
• Also, reducing the total fertility rate to 2.1% by the end of the plan
period.
• Adding 30,000 MW of renewable energy capacity.
• Increasing the green cover in the country by 1 million hectare every
year.
• Reducing the emission intensity of GDP to 20-25% by 2020.
• Increasing the teledensity in rural areas to 70%.
• Completing the Eastern and Western Freight corridors by the end of
the plan period.
• Providing electricity to all the villages in the country by the end of the
12th plan.
• Increasing the infrastructure investment as a percentage of GDP to
9% by the end of the plan.
• Increasing the gross irrigated area from 90 million hectare to 103
million hectare.
• Connecting all the villages with all weather roads.
• Upgrading all the national and state highways to two-lane standard by
the end of 12th plan.
• Ensuring that at least 50% of the rural population have access to 55
LPCD piped drinking water supply and 50% of gram panchayats to
achieve Nirmal Gram Status by the end of plan period.
• Proving 90% of households in the country an access to banking
services by the end of the plan period.
• Providing the subsidies and welfare related benefits to the
beneficiaries by direct bank account transfer.
Some of the plans are discussed below:

• Bombay Plan:

O In 1944, the then eight leading Indian industrialists published a plan

for the economic Development of the country, which came to be
known as the Bombay plan.
O The plan aimed to double the per capita income and the national
income of that period.
O It proposed to increase the output of the agricultural sector by two
times and the industrial sector By five times within the period of 15
years.
O The total cost of the plan was Rs.10,000 crores which was to be
invested over the 15 years.
O The Bombay plan stressed the fact that in order for the economy of
any country to grow, Government intervention and regulation is a key
factors.
People’s Plan:
O The Indian Federation of Labour came up with an alternative plan to
the Bombay plan which was Known as the People’s plan. This plan was
drafted by M.N. Roy in 1944.
O The plan aimed to provide basic needs to all the people in the
country within a period of 10 years. It was an Rs.15000 crores plan.
O To achieve the aim, the plan laid a special emphasis on the
development of agriculture through The nationalization of land. The
rationale behind this is that agriculture is the major occupation as Well
as the backbone of the country.

• Gandhian Plan:
O In 1944, S.N. Agarwal, then principal of Wardha Commercial college,
authored the Gandhian Plan. It was framed in the light of the Gandhian
principles.
O The fundamental feature of this plan was that it aimed to develop a
decentralised self-sufficient Agricultural society with an emphasis on
the development of the cottage industries.
O The cost estimated to execute this plan was Rs. 3500 crores.
• Colombo Plan for India:
O The Colombo Plan was a 6-year plan which proposed to spend
Rs.1,839 crores on development Projects during the period 1951 to
1956.
O The plan aimed to increase the production of food grains, industrial
raw materials, and finished Goods in order to improve the living
conditions of the people of South and South-East Asia. Check the
Fundamental Duties in India here.

Objectives Of Economic Planning In India

Some of the major objectives of economic planning in India are as

follows:
• Economic growth – It is the first and foremost objective of economic
planning in India. Economic growth country can be achieved by
increasing the real national income and per capita income in the
Country. Economists argue that when both per capita income and
national income grow in real terms, a Higher standard of living for every
individual as well as society as a whole can be achieved.
• Reduction in poverty – At the time of independence more than fifty
percent of India’s population was Poor. Lack of employment is a major
cause of poverty. There are a lot of people in the country who are Not
even getting a square meal a day. Thus the planning commission
decided to prepare an appropriate Plan to remove poverty completely
from the country.
• Modernization of the economy – Since the inception of economic
planning, modernization of the Indian Economy has been the key
objective of the planners. The structural and institutional changes in
economic Activities in three major sectors of the economy i.e.
agriculture, industry, and services will lead to a Progressive and modern
economy. It is also very essential to develop a diversified economy that
produces A wide variety of goods.
• Increase in employment – Employment is one of the key factors
involved in the production process of Goods and services.
Unemployment is the cause of various social problems such as poverty,
crime, etc. So The planners of the Indian economy put the creation of
employment as one of the major objectives of Economic planning.
• Reduction in income inequality – In India, there is a diverse economic
standard of its population and Income disparity is one of the major
concerns in the Indian society. A large section of the society falls Under
the lower-income category while few are under the high-income
category. The main reason for this Disparity is the unequal distribution
of asset holding such as per capita land holding, possession of Movable
and immovable property from inheritance, etc. Thus the planners,
while planning the economy Of the country, aim to reduce this
inequality.

NITI Aayog And Its Action Agenda

• In January 2015, the Government of India replaced the Planning
Commission with an institution called NITI Aayog (National Institution
for Transforming India) by passing a resolution.
• It is the premier think tank of the Government of India. It acts as the
quintessential platform of the Government, as it brings the Indian
states to act together in the national interest.
• The initiatives of NITI Aayog include
O Three-year Action Agenda
O Fifteen-year vision and
O Seven-year strategy.
• Some key functions of NITI Aayog are designing policy and
programme frameworks, fostering Cooperative federalism, providing
advice and encouraging partnerships between key stakeholders and
Various national and international institutions, designing strategic and
long-term policies and programme Frameworks, and monitoring their
progress and efficacy.
REFERENCE ,
1) BOOK: INDIAN ECONOMY BY NITHIN SINGANIA
2) WEB:
https://m.rbi.org.in//scripts/AnnualPublications.aspx?head=Hand
book%20of%20Statistics%20on%20Indian%20Economy
3) News article, ECONOMIC TIMES
4) WEB : WIKIPEDIA
5) BOOK : THE INDIAN ECONOMY BY RAMESH SINGH
6) https://dea.gov.in/
7) 11th and 12th NCERT books