Five-Year Plans Of

Indian Economy
A
Project Report
submitted towards the partial fulfilment
of the requirement for the award of the degree
of
Bachelor of Technology
Electrical Engineering
Submitted by
Sunny Kumar(2K20/EE/275)
Mayank Singh(2K20/EE/162)

DELHI TECHNOLOGICAL UNIVERSITY

Shahbad Daulatpur, Bawana Road, Delhi-110042
INDEX

1. Introduction to Five Year Plan

1.1. Five-Year Plans: Long-term goals
1.2. Setting up of Planning Commission
2. Five year Plans in India
2.1. First Five Year Plan
2.2. Second Five-Year Plan
2.3. Third Five Year Plan
2.4. Plan Holidays
2.5. Fourth Five Year Plan
2.6. Fifth Five Year Plan
2.7. Rolling Plan
2.8. Sixth Five Year Plan
2.9. Seventh Five Year Plan
2.10. Annual Plans
2.11. Eighth Five Year Plan
2.12. Ninth Five-Year Plan
2.13. Tenth five-year plan
2.14. Eleventh Five-Year Plan
2.15. Twelfth Five-Year Plan
3. Post Five Year Planning era
4. Conclusion
Introduction to Five-Year Plan Of India

The five-year plan method was developed in the Soviet Union and later used in other
socialist countries to plan economic growth over a restricted period of time. India's first
five-year plan was implemented in 1951. The twelve-year plan ended in 2017 and the
five-year plans were replaced by NITI Aayog's three-year strategy paper, seven-year
strategy paper, and fifteen-year vision report. The three-year action agenda, seven-year
strategy paper, and fifteen-year vision document of the NITI Aayog now replace the five-
year plan.

The Planning Commission was set up in 1951 to guide India's economic development
after independence, and the NITI Aayog has been in charge of country planning since
2015. The Five-Year Plans implemented by the Planning Commission and the NITI Aayog
were approved, carried out, and monitored for the past five years.

The socialist influence of India's first Prime Minister, Jawahar Lal Nehru, led to the
creation of the five-year economic planning system. Between 1950 and 1990, the Indian
government implemented eight five-year plans, which targeted heavy and basic
industries. After 1997, the focus shifted to making the government a growth facilitator, and
each five-year plan began on April 1 and ended on March 31 of the following year.
According to convention, five financial years are encompassed by a five-year plan.
In 1977, Indira Gandhi's government established a six-year plan instead of a regular
one, then the Janta Alliance government changed it to a rolling plan in 1978. In
1983, when they deposed the Janta government, the incumbent Indira government
established its own sixth five-year plan. After the Janta government was deposed in
1990, the incumbent Indira government established its own sixth five-year plan in 1980.
Since India's economy had fallen into chaos in 1990-92, the Eighth Five-Year Plan was
delayed by two years.

Five-Year Plans: Long-term goals

● A good and increasing growth rate is needed to enhance the living standards of
India’s citizen.
● An economic stability brings prosperity.
● A self-sufficient economy.
● Reducing inequality and promoting social justice
● Modernization of economy.

Planning Commission

In 1977, Indira Gandhi's government established a six-year plan instead of a regular one,
then the Janta Alliance government changed it to a rolling plan in 1978. In 1983, when
they deposed the Janta government, the incumbent Indira government established its
own sixth five-year plan. After the Janta government was deposed in 1990, the incumbent
Indira government established its own sixth five-year plan in 1980. Since India's economy
had fallen into chaos in 1990-92, the Eighth Five-Year Plan was delayed by two years.
The Indian government created the Planning Commission in March 1950 to plan for,
develop, and implement resources for, and prioritize development. Successful resource
exploitation, higher output, and opportunities for everyone to participate in the service of
society were key government objectives. The Planning Commission was charged with
identifying all of India's resources, classifying them, developing plans for the most
productive and balanced use of resources, and establishing priorities. Pandit Nehru was
the first chairman of the Planning Commission. It ceased operations in 2014, and NITI
Aayog took its place.

The planning process was launched in India in April 1951 with the creation of the First
Five-Year Plan. So far, five five-year plans have been completed and the sixth one was
initiated in 1978-79. The First Plan covered the time period 1951-52 to 1955-56, the
Second Plan 1956-57 to 1960-61, the Third Plan 1961-62 to 1965-66, the Fourth Plan
1969-70 to 1973-74, and the Fifth Plan 1974-75 to 1977-78. It was completed in 1955-56.
The three-year period separating the Third and the Fourth Plans (i.e., 1966-67, 1967-68,
and 1968-69) was a period of `plan holiday' during which, even though annual plans were
prepared, there was no five-year framework. The conflict with Pakistan in 1965 (as well
as the suspension of foreign aid) resulted in a `plan holiday' for the economy. devaluation
of the rupee, and two consecutive droughts in 1965-66 and 1966-67.

The Janata government terminated the Fifth Plan one year earlier, thereby inaugurating
the Sixth Plan in 1978-79. However, before the Sixth Plan could really begin, the
government at the Centre changed. As the Congress government plans 1980-85 as the
period for the new Sixth Plan, it is now in office.

To complete the commitment, the Government of India constituted the Planning

Commission in 1950 and entrusted it with the tasks of

(a) Planning the most efficient and balanced use of a country's material, capital, and
human resources.

(b) determining what needs to be done, when it needs to be done, and how much of
a resource should be allocated for it.

(c) states the reasons for economic backwardness and the actions required to
overcome it;
 (d) ensuring that the plan can be successfully executed using the appropriate
machinery and

(e) checking on the progress of the plans and making adjustments to the policies as
necessary.

First Five Year Plan(1951-1956)

Jawaharlal Nehru, India's first prime minister, presented the First Five- time Plan to the
Parliament of India and demanded careful consideration. The First Five- time Plan, which
was launched in 1951, concentrated on the development of the nation's primary sectors.
The Harrod-Domar model, as applied to the First Five- year Plan, had numerous
variations.

Jawaharlal Nehru was the chair of this five-year plan, and Gulzarilal Nanda was the vice
president. The phrase of this plan was 'Developing agriculture', and the goal was to
alleviate the consequences of the partition of nations, the second world war. Rebuilding
the nation after independence was the objective of this plan. Other major objectives
included establishing a base for hard work, and improving husbandry development.
Nationwide health care, at low cost, and education were also goals.

The allocated budget for irrigation and energy, husbandry and community development,
transport and dispatches, assiduity, social services, and recuperation of landless growers
during this phase was ₹378 crore (up from ₹368 crore previously). The most important
thing about this phase was that the state played an active part in all profitable sectors. At
the time, India was experiencing immediate issues— insufficient capital and poor saving
abilities—that justified active participation in all profitable sectors.
The target annual economic growth rate was 3.6%; the achieved growth rate was
3.6 percent. The thunderstorm was excellent and crop yields were high, which increased
exchange reserves and the population's income, which rose by 8. As a result of rising
public income, population growth increased faster than the population's income. Irrigated
areas such as the Bhakra, Hirakud, and Damodar Valley head were constructed during
this time period. Later, the World Health Organization (WHO) and the Indian government
addressed children' health and lowered infant mortality, helping to boost population
growth.

In 1956, five Indian Institutes of Technology( IITs) were established as key specialized
institutes. The University Grants Commission( UGC) was established to supervise and
encourage advanced education in India. The contracts to establish five sword shops were
signed during the midpoint of the Alternate Five- Time Plan. The plan was a success for
the government, as it outstripped expansion projections.

Second Five Year Plan(1956-61)

The leaders' confidence was boosted by the success of the First Five-Year Plan. Because
the first plan's agriculture growth target was met, the government soon turned its attention
to areas other than agriculture. Industry, particularly heavy industry, was the focus of the
second five-year plan. Rapid industrialization was used to set a goal of a 25% rise in
national income. The Mahalanobis model is used in the second five-year
plan. PC Mahalanobis, the founder of the Indian Statistical Institute and a close aide
of Nehru, Indianized the USSR model.

Through an elaborate input-output model, this approach is known to have provided the
statistical foundations for state-directed investments and created the intellectual
underpinnings of the licensing raj. This model recommended that the Indian economy
should place a greater emphasis on heavy industries, which might lead to stronger long-
term growth. This concept was used to establish India's second five-year plan and the
Industrial Policy Resolution of 1956, which cleared the way for the rise of the public sector
and the license raj.

Some of the Second Five-Year Plan's important points are

● In the second five-year plan, steel mills were built in Bhilai, Durgapur, and
Rourkela.
● This plan included increased coal production and the addition of extra railway
lines.
● Homi J. Bhabha was the first head of the Atomic Energy Commission, which was
established in 1957.
● As a research institute, the Tata Institute of Fundamental Research was founded.
● A talent search and scholarship program was started in 1957 to locate
exceptional young students who could be trained for the nuclear power industry.

Second Five-Year Plan Achievements

● The second five-year plan, based on a socialist model, aimed for a 25% rise in
national income through rapid industrialization, but only 20% was realized.
Furthermore, per capita income increased by only 8%.
● Domestic industrial product manufacturing was encouraged, particularly in the
public sector's development.
● This plan fell short of its target growth rate of 4.5%, achieving 4.27% instead.

Third Five Year Plan(1961-66)

● Under Jawaharlal Nehru's leadership , established between 1961 and 1962.
● It was created by 1953’s The P.C. Mahalanobis Model.
● The plan was named as the 'Gadgil Yojna,' after D.R. Gadgil, the Deputy
Chairman of the Planning Commission
● Self-sufficient economy was the prime goal of the plan . Agriculture was
promoted which resulted in increase in wheat production.
 ● India was involved in two wars during the implementation of this plan: (1) the
Sino-India conflict of 1962 and (2) the Indo-Pakistani war of 1965.
● Economy's weaknesses and attention to the defense industry was realized, the
Indian Army, and price stabilization (India witnessed inflation).
● Plan fell short of achieving 2.4% instead its target growth rate of 5.6%.

What were the objectives of the third five year plan and why could it not be achieved?

The primary objective of the Third Five Year Plan of the Indian Economy was to develop
India as a self-reliant and self-economy generating country. Besides, this plan included
agricultural growth as the sector slowed down during the Second Five Year Plan. It
involved agricultural development to ensure balanced regional development of the nation.
However, misfortunes like conflicts of India with nations like China and Pakistan along
with poor monsoon has drained all the funds invested in this plan.

Plan Holidays
● In response to the previous plan's failure, the government implemented three
annual plans known as Plan Holidays from 1966 to 1969.
● The third Five-Year Plan was unsuccessful due to the Indo-Pakistan and Sino-
Indian wars.
● During this period, annual plans were made in conjunction with agriculture and
the industry sector, which involved them.
● The government decided to dilute the rupee in order to boost exports..

Fourth Five Year Plan(1969-74)

● Indira Gandhi led the plan from 1969 to 1974.

● The plan sought to expand economically while maintaining political stability.
 ● During the period, 14 Indian banks were nationalised, and the Green Revolution
began. The 1971 Indo-Pakistani War and the Bangladesh Liberation War took
place.
● Family planning programs was the main goal of the plan.
● Plan fell short of achieving 3.3% instead its target growth rate of 5.7%.
Fifth Five Year Plan(1974-78)
● It lasted from 1974 to 1978.
● These issues were given highest priority in this plan Garibi Hatao, employment,
justice, agricultural production, and defence were all prioritised.
● In 1975, the Electricity Supply Act was altered, a Twenty-Point Programme was
launched, the Minimum Needs Programme (MNP) was established, and the Indian
National Highway System was established.
● This plan was overall successful, with a growth rate of 4.8% vs the aim of 4.4%.
● In 1978, the Moraji Desai government ended this scheme.

Rolling Plan
● The Rolling Plan began operation in 1978 and lasted until 1990, after the end of
the fifth Five-Year Plan.
● Congress rejected the Rolling Plan in 1980 and introduced a new sixth Five-Year
Plan.
● Under the Rolling plan, three plans were introduced:

(1) This plan was for the current fiscal year's budget;

(2) it was for a definite number of years— 3, 4, or 5 years;

(3) it was a long-term perspective plan— 10, 15, or 20 years.

● The plan has the capability to alter targets and adapt projects, allocations, and
other elements of the plan to the economy of the country. This indicates that if the
objectives can be altered each year, it will be difficult to achieve them and the
market will become unstable.

Sixth Five Year Plan(1980-85)

● Indira Gandhi led the plan from 1980 to 1985.
● The plan's main objective was to boost economic development by eliminating
poverty and fostering technological independence.
 ● Yojna invested in infrastructure changes and a growth model, which prompted
the growth model trend.
● It grew at 5.7% instead of the target 5.2% rate.

Seventh Five Year Plan(1985-90)

● It lasted from 1985 to 1990, and Rajiv Gandhi was the prime minister during that
time.
● This plan's aims include the creation of a self-sufficient economy, possibilities for
gainful employment, and technological advancement.
● With a focus on 'food, work, and productivity,' the Plan planned to increase
foodgrain output, increase employment possibilities, and raise productivity.
● The private sector was given precedence over the public sector for the first time.
● Its goal growth rate was 5.0%, but it ended up at 6.01%.

Annual Plans
● The fact that political instability in the country's capital stalled the Eighth Five-Year
Plan from being implemented is why it is impossible to be accomplished.
● In 1990 and 1991, two yearly programs were established.

Eighth Five Year Plan(1992-97)

● It lasted from 1992 to 1997, with P.V. Narasimha Rao as its leader.
● This strategy emphasised the development of human resources, such as
employment, education, and public health.
● During this period, the Narasimha Rao government implemented the New
Economic Policy of India.
 ● During the eighth planning period, rapid economic growth (6.8 percent per
year), high growth in agriculture and associated industries, and
manufacturing, trade, and current account deficits, occurred. Despite the decrease
in public sector investment to around 34 percent, a strong growth was achieved.
● This plan was a success, with an annual growth rate of 6.8% compared to the aim
of 5.6.

Ninth Five-Year Plan(1997-02)

● Under the leadership of Atal Bihari Vajpayee, it lasted from 1997 to 2002.
● The plan's main goal was "Growth with Social Justice and Equality."
● It was launched on the 50th anniversary of India's independence.
● It fell short of its 6.5% growth objective, achieving a 5.6% rate instead.

Failure of the 9th Five Year Plan Target

These were the reasons for the failure of the 9th Five Year Plan target

Weather Shocks : There was an El-Nino weather phenomenon in 1997 which resulted in
floods across the country. This led to a shortfall in agricultural production and inflationary
pressures.

The South-East Asian Financial crisis : This led to a slowdown in exports and investments
and put pressure on the balance of payments.

High Oil Prices : This led to an increase in the import bill and put pressure on the balance
of payments.

Sanctions by the International Community : After the Pokhran nuclear tests, the
international community imposed sanctions on India. This led to a slowdown in economic
growth.

Tenth five-year plan(2002-07)

● It lasted from 2002 to 2007, with Atal Bihari Vajpayee and Manmohan Singh led
the plan.
● India hoped to double its standard of living in the next decade using this strategy.
● It sought to reduce the poverty rate to 15% by 2012.
● It grew 7.6% rather than 8%.
Eleventh Five-Year Plan(2007-12)
❖ It lasted from 2007 to 2012, and Manmohan Singh was the prime minister
during that time.
❖ C. Rangarajan was in charge of preparing it.
❖ The main focus of the conference was "rapid and more inclusive growth."
❖ It grew by 8% compared to the forecast of 9% growth.
❖ Create employment opportunities for 70 million more people by 2012: The
Eleventh Plan proposes to create nearly 58 million jobs, aiming to reduce
unemployment by 5 percent by the end of the eleventh fiscal year.
❖ To improve the quality of life of all citizens with a special focus on women and
children. The plan proposes to raise the rate of economic growth to an average of
eight percent per annum during the Eleventh Plan period.
❖ Reduce the incidence of poverty by at least ten percentage points. The plan sets
a poverty alleviation goal of reducing the number of people living below the poverty
line.
❖ Reduce regional imbalances in income and development. The plan seeks to
redress regional imbalances by ensuring accelerated and fairer development of
underdeveloped states and regions.
❖ To make India a global knowledge economy. The Eleventh Plan proposes to
increase the level of investment in education, research and development (R&D) to
at least six percent of GDP.
❖ To provide infrastructure that is at par with international standards. The plan
proposes an investment of over 24 lakh crore rupees, which is almost double the
investment made during the Tenth Plan.
❖ Build a clean and energy efficient economy. The plan proposes to increase the
share of renewable energy in the overall energy mix.
❖ To ensure environmental sustainability. The plan suggests increasing forests and
trees as well as taking steps to improve air and water quality.
❖ Ensure inclusive growth. The plan proposes to focus on the development of
scheduled tribes, scheduled castes, other backward classes, minority communities
and women.
❖ To make India a global economic powerhouse.
❖ World class infrastructure development. The Eleventh Five Year Plan also
committed to achieving the Millennium Development Goals.
❖ The main objective of the 11th Five-Year Plan is to achieve rapid economic growth.
The plan aims for an annual growth rate in the range of up to one percent over five
years. Other objectives of the 11th Five Year Plan are to create
 employment opportunities, reduce poverty and regional imbalances, improve
the quality of life and make India a global knowledge economy.

Twelfth Five-Year Plan(2012-17)

The government intends to reduce poverty by 10 percent during the 12th five-year plan.
Mr Ahluwalia said: "Our target is to reduce poverty estimates by 2 per cent annually on a
sustainable basis during the plan period."

According to the Tendulkar methodology, the percentage of the population below the
poverty line at the end of 2009–2010 was 29.8%. This figure includes 33.8 percent in
rural areas and 20.9 percent in urban areas.

Earlier, while addressing a conference of State Planning Boards and Planning

Departments, he said that the poverty reduction rate had doubled during the 11th Plan.
The commission said that using the Tendulkar poverty line, the rate of reduction in the
five years between 2004-05 and 2009-10 was about 1.5 percentage points each year,
which was double that of the period between 1993-95. till 2004-05.

● It lasted from 2012 to 2017, with Manmohan Singh as its head.

● The main focus of the conference is "Faster, More Inclusive, and Sustainable
Growth."
● Its target growth rate was set at 8%.

Post Five Year Planning era

● There was a general belief that a centralised approach, which tried to fit everyone
into a single size, could not accomplish as much as India was diversified and big.
● In consequence, the NDA government abolished the Planning Commission and
established the NITI Aayog in its place. Instead of thirteen Five Year Plans, a five-
year defence plan was enacted.
● NITI Aayog documents are not financial documents. They are only government
policy maps.
● The three-year action plan serves only as a road map for the government, rather
than defining any plans or allocations.
 Conclusion

Planning in India began after the country's independence in 1950 and was thought to be
important for the country's economic growth and development. The Planning Commission
(1951-2014) and the NITI Aayog's Five-Year Plans, which were established,
implemented, and monitored (2015-2017), were all part of economic planning.

Four major weaknesses of Indian planning:

(a) First, there is gross inefficiency of production in many of the public sector enterprises.
There are many areas of production where inefficiency is fairly widespread as income
generation of power, transport, steel, fertilisers and high cost consumer durables.

(b) India has not been able to employ its growing labour force.

(c) And its occupational structure has remained more or less unchanged.

(d) Poor implementation of land reform measures has adversely affected industrial
growth and has led to wide rural inequality.
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