Paper: 12, Business Environment

Module: 12, Five Year Plans in India

Prof. S P Bansal
Principal Investigator Vice Chancellor
Maharaja Agrasen University, Baddi

Prof YoginderVerma
Co-Principal Investigator Pro–Vice Chancellor
Central University of Himachal Pradesh. Kangra. H.P.

Prof. Manjit Singh

Paper Coordinator Punjabi University, Patiala

Prof. Mandeep Kaur

Content Writer Department of Commerce
Guru Nanak Dev University, Amritsar.

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 Items Description of Module
Subject Name Business Environment
Paper Name Five Year Plans in India
Module Title Five Year Plans in India
Module Id Module no.-12
Pre- Requisites Basic knowledge of Planning in India
Objectives To study the objectives of various five year plans in India and their outcomes.
Keywords Economic Growth, Five Year Plans, Growth Rate, Planning Commission, Targets.

QUADRANT-I

Module 1: Five Year Plans in India

Learning Outcome
1.Introduction
2.Features of Five Year Plans in India
3.Objectives of Five Year Plans in India
4.Five Year Plans in India
5. Success and Failure of Five Year Plans in India
6. Conclusion

Learning Outcome:
After completing this module the students will be able to:
 Understand the features of five year plans in India
 Understand the objectives of five year plans in India
 Discuss the various five year plans formulated in India
 Discuss the success and failure of five year plans in India

1 Introduction

India is an underdeveloped economy. It is the first economy in the world to have chosen the path
of planning for its growth and development. Since Independence, a program of Five Year Plans
has been launched in India in order to ensure the rapid growth and development of the economy.
The five year plans in India are formulated by the Planning Commission in India which was set
up in 1950.The Prime Minister is the chairman of the Planning Commission in India. Since 2014,
the Planning Commission has been replaced by a new institution named NITI (National
Institution for Transforming India) Aayog.

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The following are the Five year plans that have been formulated in India since independence:

Duration of Five Year Plans in India

S.No. Plan Period
1. First Five Year Plan 1951-56
2. Second Five Year Plan 1956-61
3. Third Five Year Plan 1961-66
4. Fourth Five Year Plan 1969-74
5. Fifth Five Year Plan 1974-78
6. Sixth Five Year Plan 1980-85
7. Seventh Five Year Plan 1985-90
8. Eighth Five Year Plan 1992-97
9. Ninth Five Year Plan 1997-2002
10. Tenth Five Year Plan 2002-07
11. Eleventh Five Year Plan 2007-12
12. Twelfth Five Year Plan 2012-17

2. Features of Five Year Plans in India

The following are the features of five year plans in India:

 Democratic: The five year plans in India are based upon a democratic pattern. The five
year plans in India are approved by the NDC i.e. the National Development Council. The
NDC is headed by the Prime Minister and the chief ministers of the states are its
members. The plans are formulated based upon the opinion of the Government and
various organizations and experts. Therefore, Indian planning is totally democratic in
nature.
 Decentralised Planning: The five year plans in India are based upon the concept of
decentralization involving all the tiers of Government. The planning in India takes place
at the grass root level i.e. district planning, sub-divisional planning, block-level planning
and the village level.
 Central Planning and Regulatory Authority: The five year plans in India are
formulated by a central planning authority, i.e., the Planning Commission of India. The
plans are formulated by the Planning Commission and approved by the NDC (National
Development Council).The Planning Commission of India is also the regulatory
mechanism that ensures the successful implementation of its plans.

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  Co-existence of Central Plan and State Plan: Every five year plan in India sets apart a
separate amount both for the Central government plans and the State government plans.
The Central Plan is under the control of the Planning Commission whereas the State Plan
is under the exclusive control of State Planning Board.
 Co-existence of the Public Sector and Private Sector Plan: Every five year plan in
India sets apart a separate amount both for the public sector and the private sector. It is
due to this feature of planning that makes India a mixed economy.
 Fixed Period Plans: Every plan in the five year plan is a periodic plan of five years. The
periodic plan approach helps in achieving its set objectives.
 Fixed Priority: Growth of industry and agriculture, removal of poverty and employment
generation has been the priorities of all five year plans in India.
 Specific Objectives: Every five year plan is guided by some specific objectives which
are common for all the plans.
3. Objectives of Five Year Plans in India

The following are the objectives of five year plans in India:

 Economic Growth and Development: Five year Plans in India stressed upon achieving
a high rate of economic growth and development. Higher level of economic development
helps to alleviate poverty and improve the standard of living of the people in an economy.
Therefore, attaining high level of economic growth and development was an objective
that was common for all the five year plans.
 Eradication of Poverty: Since a large section of the Indian population lives below the
poverty line, therefore alleviation of poverty was one of the major objectives of the five
year plans.
 Employment Generation: Employment generation is the best tool for getting rid of
poverty. Thus, providing employment to maximum number of people in India has been
the part and parcel of five year plans in India.
 Self Sufficiency and Self Reliance: Too much dependence of a country on other
countries can be harmful for its economic development. The five year plans aim at
attaining self sufficiency and self reliance in terms of agricultural and industrial
production as well as in defense.

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 Balanced Regional Growth: Development of backward regions is one of the most
significant objectives of the five year plans. The aim of the plans is to provide additional
resources to the backward states in order to ensure their development. Special tax relief is
given for setting up industries in the backward regions of India.
 Modernization: Modernization of the economy has been the major goal of five year
plans in India. Modernization in agriculture sector and the adoption of capital intensive
techniques have been the goals of the plans.
 Price Control: Protection of economy from inflation and deflation is an important
objective of planning in India.
4. Five Year Plans in India
Five Year planning began in India in July 1951.Since then; twelve five year plans have been
formulated in India. The various five year plans have been discussed as follows:

 First Plan: The period of the first five year plan was 1951-56.The plan was based on
Harrod-Domar Model and was presented to the Parliament of India by the first
Indian Prime Minister, Pandit Jawaharlal Nehru. The focus of the plan was on food self
sufficiency, price control, power and transport. Community Development Program was
started under the plan in the year 1952.Major dam projects such as Bhakra- Nangal,
Hirakund and Mettur were initiated during the period. Five Indian Institutes of
Technology (IITs) were also established by the end of the plan. The target growth rate
during the period was expected to be 2.1% while the actual growth rate was 3.6%. The
plan was successful as the agricultural production during the plan period increased
manifolds.

 Second Plan: The duration of the second five year plan was from 1956 to 61. The plan is
also called the Mahalanobis Plan. The primary focus of the plan was on speedy
industrialization. The target growth rate during the period was 4.5% and the actual
growth rate was 4.27%. Five major Hydro electric power projects and steel plants
at Bhilai, Durgapur and Rourkela were set up during the period.

 Third Plan: The time period of the third plan was 1961 to 1966. The plan focused on the
growth of industry and agriculture. The aim was to make India a “Self Reliant” and “Self
Generating” economy. The plan was not able to achieve its target due to unexpected

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 situations such as Chinese aggression, Indo-Pak war and a bad monsoon. The target
growth rate was 5.6%, but the actual growth rate was 2.4%.

 Three Yearly Plans (1966 – 1969): The emphasis of the three annual plans was on
agriculture. The shortage of food and agriculture crisis led to the formulation of a new
agriculture strategy. The strategy focused upon the need for the high yielding variety of
seeds, use of fertilizers, better irrigation facilities and conservation of soil in order to
improve agricultural productivity.

 Fourth Plan (1969 − 74): The stress of the fourth five year plan was on bringing about
agriculture growth in India. The plan aimed at “Growth with Stability” and “Progressive
Achievement of Self Reliance”. Green Revolution advanced agricultural production in
India.14 major banks in India were also nationalized during this period. The target
growth rate for the period was 5.6% and the actual growth rate of 3.3% was achieved.

 Fifth Plan: The period of the fifth plan was from 1974 to 79.The focus of the plan was
on “poverty alleviation” and “attainment of self reliance in agriculture and defense”.
Minimum Needs programme was started during this period. The plan was terminated in
its fourth year by Janta Party. The target growth rate was 4.4% and the actual growth rate
was 5%.

 Rolling Plan (1978 − 80): Two sixth plans (rolling plans) were introduced by the Janta
Party from 1978 to 1983 and the Congress government in 1980.The first plan was in
operation for two years only. The benefit of the rolling plans was that they were flexible
and the targets could change according to the changing conditions in the country. The
demerit of the plans was that the targets kept on getting revised and therefore were
difficult to achieve.

 Sixth Plan: The period of the plan was from 1980 to 1985.The emphasis of the plan was
on agriculture and infrastructure. Economic Liberalisation also began during the sixth
five year plan. The target and actual growth rate during the plan was 5.2% and 5.4%
respectively.

 Seventh Plan (1985 − 90): The Seventh five year plan stressed upon growth in
agricultural production, economic productivity and employment generation. India
recorded 6% growth rate during this period as against the targeted growth rate of 5%.

 Eighth Plan: The focus of the five year plan between 1992 to 1997 was to generate
employment, improve agricultural productivity, check population growth, strengthen

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 infrastructure and to alleviate poverty. The annual average growth of during the period was
6.8% as against the targeted 5.6%.

 Ninth Plan (1997 − 2002): The emphasis of the ninth plan was on improving the the
quality of life of the people of the country through economic growth. The plan focused
upon social justice and equity. The aim was to remove the inequalities which were still
widespread in the society.

The following were the objectives of the ninth five year plan:

 Control over Population.

 Generating employment opportunities.

 Poverty Alleviation.

 Proper availability of food and water for the poor.

 Providing basic health care facilities

 Primary education to all children in the country.

 Empowering the socially deprived classes.

 Increasing self- sufficiency in agriculture.

 Attaining stability in prices.

The strategies adopted to achieve the objectives were as follows:

 Structural changes in the Indian economy.

 Optimum Utilization of scarce resources.

 Co-existence of the public and private sector to increase employment.

 Increase in the rate of export to attain self-sufficiency.

 Promoting Infrastructure development such as electricity, telecommunication,

railways etc.

 Equal participation of Panchayati Raj institutions/bodies in the development

process.
As a result of the adoption of the above strategies, the growth rate of 5.4% was
achieved as against the target of 6.5%.Agriculture and industry grew by 2.1% and
4.5% respectively. The service industry also saw a growth rate of 7.8%.

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 Tenth Plan (2002 − 2007):The following were the aims of the tenth five year plan:

 To achieve a growth rate of 8% of GDP

 To reduce poverty by 5% by 2007.

 Generating gainful employment and reducing the gender gaps in literacy and
wage rates by 50%.

 To make primary education accessible to all by the year 2007.

 To bring down the population growth between 2001 and 2011 to 16.2%.

 To reduce the Infant Mortality Rate (IMR) to 45 per 1000 births by 2007 and to
28 by the year 2012.

 To increase the forest cover to 25% by the year 2007 and 33% by the year 2012.

 To make available safe drinking water to all villages by the year 2012.

A 20-point program was also launched during the period of the plan. An actual
growth rate of 7.3% was achieved during this period.

 Eleventh Plan (2007-2012): The eleventh plan focused upon the idea of ‘Inclusive
Growth’. The major targets of the eleventh five year plan were as follows:

 Rapid Growth: To accelerate the rate of GDP growth in the economy from 8% to
10% and to increase the agricultural GDP growth rate to 4% per year.

 Employment: Employment generation was another area of concern of the eleventh

five year plan.The aim was to achieve the following targets with respect to
employment generation in the country:

 To generate around 70 million new employment opportunities. MGNREGA (Mahatma

Gandhi National Rural employment Programme) was promoted during the period of the
eleventh five year plan.

 To bring down the educated unemployment rate to below 5%.

 To increase the real wage rate of unskilled labour by 20%.

 To strengthen the Information technology sector in order to provide greater employment

opportunities.

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  Education: The following were tha targets of the eleventh plan in order to provide
education in India:

 To improve the quality of education and to bring down the student dropout rates in
elementary school from 52.2% in 2003-04 to 20% by 2011-12.The improve the Mid day
meal scheme in schools.

 To improve the enrolment rate for secondary and higher education to 15%.

 To improve the literacy rate for the age group of 7 years or above to 85% and to decrease
the gender gap in literacy to 10%.

 To start eight new IIT’s (Indian Institutes of technology), seven IIM’s (Indian Institutes
of Management) and ten NIT’s (National Institutes of Technology).

 To ensure free and compulsory elementary education for the children between the age
group of 6 to 14 years through Sarva Shiksha Abhiyan.

 Health: The eleventh plan aimed to improve public health in terms of the
following targets:

 To improve mother and child’s health and to reduce the infant mortality rate to 28
and maternal mortality rate to 1 per 1000 live births. The plan also aims to reduce the
total fertility rate to 2.1.

 To provide clean drinking water and access to sanitation facilities for all by 2009.

 To decrease malnutrition among children between 0-3 years by 50%.

 To decrease anaemia among women and girls by 50%.

 To increase the sex ratio for age group 0-6 to 935 by 2011-12 and to 950 by 2016-17.

 To attain zero growth rate of HIV/AIDS

 To strengthen the National Rural Health Mission.

 To ensure proper prevention and treatment of communicable diseases.

 Social Sector: The following steps were taken with regard to the improvement in
the social sector during the eleventh five year plan:

 To make sure that at least 33 % of the direct and indirect beneficiaries of all government
schemes are women and girl children.

 To make the Public Distribution System fully computerized.

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  To develop a 15 point programme for welfare of minorities.

 Rural Infrastructure: Bharat Nirman Programme was undertaken in 2005 in order

to develop rural infrastructure such as irrigation facilities, safe drinking water,
rural electrification etc. The following were the specific targets of Bharat Nirman
Programme:

 To build all-weather roads connecting to all habitation with population 1000 and above
(500 in hilly and tribal areas) by 2009 and to make sure that maximum coverage of
habitation takes place by 2015.

 To provide telephone connection in every village by November 2007 and provide

broadband connectivity to all villages by 2012.

 To raise forest and tree cover by 5%.

 To achieve WHO air quality standards by 2011-12.

 To take care of all city waste water by 2011-12.

 To raise energy efficiency by 20% by 2016-17.

During the 11th Plan (2007-12), India has recorded a growth rate of 7.9 % which is less than the
targeted growth rate of 9%. Besides this, the farm sector grew at an average rate of 3.7% The
industry recorded a growth rate of 7.2% while the service sector recorded an average growth rate
of 9.7%.

 Twelfth Plan: The twelfth Five Year Plan 2012-17 aims to attain a growth rate of 8%.
The period of the Twelfth Five Year Plan is from 2012 to 2017 and focuses upon growth.
The main emphasis of the twelfth five year plan is on faster, inclusive and sustainable
growth.
The twelfth five year plan aims to attain an average growth rate of 8.2% as compared to
9% decided earlier. The targeted growth rate has been brought down in light of the
adverse domestic and global economic scenario. The strategy of the twelfth plan is
“faster, sustainable and more inclusive growth”.
The following are the thrust areas of the twelfth five year Plan:
 Developing the Capacity for Growth: The plan aims at achieving a real GDP growth rate
of 8%.The growth of the agricultural sector is targeted at 4% while the manufacturing

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 sector is expected to grow by 10%.The plan aims that the every state should attain a
higher growth rate than the rate achieved during Eleventh plan.
 Developing Skills and Greater Generation of Employment: The plan would provide 5
crore job opportunities and skill certifications in non-farm sector.
 Poverty Alleviation: The Poverty rate will be reduced by 10% than the rate at the end of
eleventh plan.
 Managing the Environment: The plan aims to increase the green cover by 1 million
hectare every year during the period of the plan. Also, the aim is to produce 30,000 Mega
Watts of renewable energy during Five Year Period. The target is to reduce emission
intensity of GDP in line with the target of 20% to 25% reduction over 2005 levels by
2020.
 Enhanced Development of Infrastructure including Rural Infrastructure: The twelfth five
year plan targets to undertake the following measures for infrastructure development:
 To make an investment in Infrastructure at 9% of GDP.
 To enhance the gross irrigated area to 103 million hectare from 90 million hectare.
 To provide electricity to all villages.
 To connect various villages with all weather roads.
 To upgrade the National and State high ways to a minimum of 2 lane standard.
 To raise the tele density of rural areas to 70%.
 To make sure that 50% of the rural population gets up to 40 lpcd piped drinking water
supply.
 To ensure that 50% of gram panchayats achieve Nirmal Gram Status by the end of
Twelfth Five Year Plan.
 To provide electricity to all villages and reduce AT&C losses to 20%.
 To complete eastern and western dedicated freight corridors by the end of the plan.
 Improved Access to Quality Education: Health and education sectors are main focus
areas of the plans. The plan targets to increase the mean years of schooling to 7 years and
to provide 20 lakh seats for each age bracket in higher education. The plan aims to close
the gender gap and social gap i.e. between girls and boys, and between SCs, STs,
Muslims and the rest of the population in school enrollment.
 Better Preventive and Curative Health Care: The plan aims to bring down the infant
mortality rate to 25 and the mother mortality rate to 1 per 1000 births.The target is to

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 raise the sex ratio for age group 0-6 years to 950 by 2016-17.The plan also aims to reduce
the total fertility rate to 2.1 and to reduce the under nutrition of children of the age group
of 0-3 to half of NFHS-3 levels.
 Improved Service Delivery: The twelfth five year plan aimed to provide subsidies and
welfare related payments related to food, fertilizers and petroleum through Aadhar based
Direct Cash Transfer Scheme. The target is to provide access to banking services to 90%
Indian households by the end of Twelfth five Year Plan.

Success and Failure of Five Year Plans in India

The folowing table shows the duration, outlay, the strategy and the targeted and the actual
growth rate of GDP during the various five year plans in India
Duration, Outlay, Strategy and the Targeted and Actual Growth Rate of GDP during the
Five Year Plans in India
S.No. Plan Period Total Strategy Growth Rate Growth Rate
Outlay (in (Targeted) (Actual)
Rs.
Crores)
1. First Five Year 1951-56 1,960 Development of 2.1% 3.6%
Plan Agriculture
2. Second Five 1956-61 4,672 Establishment of 4.5% 4.27%
Year Plan large scale
Industries
3. Third Five 1961-66 8,577 Balanced Growth 5.6% 2.84%
Year Plan
4. Fourth Five 1969-74 15,779 Growth with 5.7% 3.30%
Year Plan Stability
5. Fifth Five 1974-78 39,426 Removal of 4.4% 3.8%
Year Plan Poverty
6. Sixth Five 1980-85 1,10,467 Employment 5.2% 5.66%
Year Plan generation,
Encouragement
to small scale
industries and
Minimum Needs
Programme.
7. Seventh Five 1985-90 2,21,436 Self-sustaining 5.0% 6.01%
Year Plan growth .
8. Eighth Five 1992-97 4,85,457 Reviving a near 6.78% 5.6%
Year Plan bankrupt nation.
9. Ninth Five 1997- 8,59,200 Growth with 6.5% 5.35%
Year Plan 2002 Equity.

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10. Tenth Five 2002-07 15,92,300 To make India 8.1% 7.7%
Year Plan one of the ten
fastest growing
nations in the
world.
11. Eleventh Five 2007-12 36,44,718 Faster and More 9% 7.9%
Year Plan Inclusive growth.
12. Twelfth Five 2012-17 47,70,000 Faster,Sustainable 8% -
Year Plan and more
Inclusive growth.
5. Success of Five Year Plans in India
The Five-Year Plans formulated for the past 65 years have not been able to achieve their targets
completely but have contributed to the socio-economic development of the country. The national
income and the GDP have grown about seven and eight times respectively during this period.
The success of Five year plans in India can be summarized as follows:

 Massive industrialisation in the capital goods sector.

 Rapid expansion and growth of infrastructure.
 Diversification of export and import substitution.
 Increase in life expectancy of the people in India from 37 years in 1951 to 65 in 2001.
 Growth of educational sector and increase in literacy rate from 34 per cent in 1951 to 65
per cent in 2001.
 Growth of science, technology and nuclear energy for peaceful purposes.
 Attainment of self-sufficiency in food grains.

6. Failure of Five Year Plans in India

The five year plans in India failed to achieve some of its important objectives:

 Failed to raise the standard of living of the people. Even after 65 years of planning, India
has not been able to evolve as a society based on equity and social justice. India could not
eliminate poverty as about 37 per cent of the total population in India still lives below the
poverty line.
 The unemployment rate has risen during the period of five year plans. The use of capital
intensive technology has aggravated the unemployment problem.

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 India’s Five Year Plan have at most of the times failed to realize their targets. Though the
targets are set for every five year plan in respect of rate of growth of national income,
employment, agriculture, industry, etc. but in most of the cases these targets are not
achieved. The shortfall in target realization is mainly due to the scarcity of resources and
the faulty implementation of plans.
 The plans have failed to achieve the objective of balanced regional growth. Despite of all
planning there has been unbalanced regional growth where the resources in regions such
as Punjab, Haryana, Goa, Gujarat and Maharashtra have been exploited whereas the
resources in regions such as Bihar, Odisha, Madhya Pradesh, Uttar Pradesh, etc still
remain under exploited.
 The flaws in the planning system have led to generation of black money in a parallel
economy.
 Inequitable distribution of wealth and income has led to a situation where the rich have
become richer and the poor have become even more poor.
 The plans have not been able to achieve the desired rate of growth in agriculture. The
concept of green revolution has been restricted to wheat and rice only. Improper and
inadequate irrigation facilities have made agriculture a gamble of monsoon and have
increased the distress of the poor farmers. The redeployment of land and rapid change to
progressive agriculture have not yet been achieved. In fact, the growth rate of agriculture
is around 2%, much below the desired level. In 2009, the growth level of agriculture fell
to 1.8%.
 Poor development of Infrastructure facilities in India such as power production,
transportation, airways, etc show another failure of five year plans in India.
 The five year plans in India have failed to check the rising prices. In 2001 the inflation
rate in India was 9.4%.
 The greater focus of the five year plans in India was on PSU’s (Public Sector
Undertakings) due to which the plans failed to regulate the private sector. India lacks in
the production of basic goods whereas the production of luxury goods is on a rise.
 Politicalisation of the plans also led to the failure of five year plans in India.

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7. Summary
The economic plans made in a country are required to include inherent public safety mechanisms
so that they are able to face the crises which affect the weak and the poor the most. The objective
of the plans is to ensure growth for years to come. Despite the fact that the five year plans in
India failed to achieve the objectives of equity and justice but at the same time were able to
weather the crisis better than many other countries due to focused inclusive development and
timely interventions.

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