Essay on the Plans of Economic Development in India

However, when the planning era started in India, the emphasis was more on socialistic pattern of society. Hence, a good deal of public sector undertakings made massive investments in basic and heavy industries and paved the way for a leap-up in the economy.

Although there is presently enough criticism of our continued emphasis on the public sector, it will be nice to remember that Nehru’s economic policies which have been given successful implementation by Mrs. Indira Gandhi, Rajiv Gandhi and later Dr. Manmohan Singh that India has achieved some status in world economy.

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There is no denying the fact that the private sector has also now grown to maturity and thus we find some of the private sector undertakings as showing adequate responsibility in innovating indigenous technology and have otherwise developed manifold with the cooperation of the Department of Science and Technology.

Majority of them are regarded now as capable of standing international competition. Moreover, with basic and heavy industries already at the disposal of the industry and the economy, the private sector is now organising itself smoothly in consumer industries.

First Plan

Keeping in view the large scale imports of foodgrains in 1951 and inflationary pressures on economy, the First Plan (1951-56) accorded the highest priority to agriculture including irrigation and power projects.

About 44.6% of the total outlay of Rs. 2,069 crore in the public sector (later raised to Rs. 2,378 crore) was allotted for its development. The plan also aimed at increasing the rate of investment from 5 to 7% of the national income.

Second Plan

The Second Five-Year Plan (1956-57 to 1960-61) sought to promote the pattern of development which would lead to the establishment of a socialist pattern of society in India. Its main aims were: (i) an increase of 25% in national income, (ii) rapid industrialisation with particular emphasis on the development of basic and heavy industries, (iii) large expansion of employment opportunities, (iv) reduction of inequalities in income and wealth and a more even distribution of economic power, and (v) increasing the rate of investment from 7% of the National income I to 11 % by 1960-61 the plan laid special stress on industrialisation, increased production of iron and steel, heavy chemicals, including nitrogenous fertilizers and development of heavy engineering and machine-building industry.

Third Plan

The Third Plan (1961-62 to 1965-66) aimed at securing a marked advance towards self-sustaining growth. Its immediate objectives were:

(i) an increase in the national income of over five per annum and at the same time to ensure a pattern of investment which could sustain this rate of growth during subsequent plan periods, (ii) to achieve self-sufficiency in food grains and increase agricultural production to meet the requirements of industry and exports, (iii) expand basic industries like steel, chemicals, fuel and to establish machine- building capacity so that the requirements of further industrialisation could be met within a period of 10 years or so mainly from the country’s own resources, (iv) utilize fully the manpower resources of the country and ensure substantial expansion in employment opportunities, and (v) establish Progressively greater equality of opportunity and bring about reduction in disparities of income and wealth and a more even distribution of economic power.

The third plan aimed at increasing the national income by about 30 per cent from Rs. 14,500 crore in 1961-61 to about Rs. 19,000 crore by 1965-66 (at 1960-61 prices) and per capita income from 330 to 385 during the same period.

Annual Plans

The situation created by the Indo-Pakistan conflict in 1965, two successive years of severe drought, devaluation of the currency, general rise in prices and erosion of resources available for Plan purposes delayed finalisation of the Fourth Five-Year Plan.

Instead, between 1966 and 1969, three annual plans were formulated within the framework of the draft outline of the Fourth Plan.

Fourth Plan

Fourth Plan (1969-74) aimed at accelerating the tempo of development and reducing fluctuations in agricultural production as well as the impact of uncertainties of foreign aid. It sought to raise the standard of living through programmes designed to promote equality and social justice.

The Plan laid particular emphasis on improving conditions of less privileged and weaker sections specially through provision of employment and education.

Efforts were also directed towards reduction of concentration of wealth and wider diffusion of wealth, income and economic power. The plan aimed at increasing net domestic product (at 1968-69 factor cost) from Rs. 29,071 crore in 1969-70 to Rs. 38,306 crore in 1973-74. Average annual compound growth rate envisaged was 5.7 per cent.

Fifth Plan

The Fifth Plan (1974-79) was formulated against the backdrop of severe inflationary pressures. Major objectives of the plan were to achieve self-reliance and adopting measures for raising consumption and standard of people living below the poverty line.

The plan also gave high priority to bring inflation under control and to achieve stability in the economic situation. It targeted an annual growth rate of 5.5% in national income. Four annual plans pertaining to the fifth plan period were completed.

It was subsequently decided to end the fifth plan period with the close of Annual Plan 1978-79 and initiate work for next five years with new priorities and programmes.

Sixth Plan

Removal of poverty was the foremost objective of the Sixth plan (1980-85). The strategy adopted for the plan consisted essentially in moving simultaneously towards strengthening infrastructure for both agriculture and industry.

Stress was laid on dealing with inter-related problems through a system approach rather than in separate compartments, greater management, efficiency and intensive monitoring in all sectors and active involvement of people in formulating specific schemes of development at local level and securing their speedy and effective implementation.

The Sixth Plan’s actual expenditure stood at Rs. 1, 09,291.7 crore (current prices) as against the envisaged total public sector outlay of 97,500 crore (1970-80 prices) accounting for a 12.5% increase in nominal terms. Average annual growth rate targeted for the plan was 5.2%.

Seventh Plan

The seventh plan (1985-90) emphasised on policies and programmes which aimed at rapid growth in foodgrains production, increase in employment opportunities, and productivity within the basic tenets of planning, namely, growth, modernisation, self-reliance and social justice.

Due to overall favourable weather conditions, implementation of various thrust programmes and with concerted efforts of the government and the farmers, food production during the Seventh Plan grew by 3.23% as compared to a long-term growth rate of 2.68% during 1967-68 to 1988-89 and a growth rate of 2.55% in the 1980s.

To reduce unemployment and consequently the incidence of poverty, special programmes like Jawahar Rozgar Yojana were initiated in addition to the already existing Programmes. Due recognition was also extended to the role of small-scale industries; food processing industries can play in this regard.

The total expenditure during the entire seventh plan stood at Rs. 2, 18,729.62 crore (current prices) as against the envisaged total sector outlay of Rs. 1, 80,000 crore, resulting in a 21.52% increase in nominal terms. During this plan period, GDP grew at an average 5.6% exceeding the targeted growth rate of 0.6 per cent.

Annual Plans

The Eighth Five-Year Plan (1990-95) could not take off due to the fast changing political situation at the centre.

The new government which assumed power at the-Centre by June 1991 decided that the Eighth Five-Year Plan would commence on April 1, 1992 and that 1990-91 and 1991-92 should be treated as separate annual plans, formulated within the framework of earlier Approach to the Eighth Five-Year Plan (1990-95), the basic thrust of these annual plans was maximization of employment and social transformation.

Eighth Plan

The Eighth Five-Year Plan (1992-97) was launched immediately after the initiation of structural adjustment policies and macro stabilisation policies which were necessitated by worsening of balance of payment position and inflation position during 1990-91.

Various structural adjustment policies were introduced gradually so that the economy could be pushed to higher growth path and to improve its strength to enable it to prevent the balance of payment and inflation crisis in future. The Eighth Plan took note of some of these policy changes which were to come about due to these reforms.

The Eighth Plan aimed at an annual growth rate of 5.6% and an average industrial growth rate of 7.5%. These growth targets were planned to be achieved with relative price stability and substantial improvement in the country’s balance of payment.

Some of the salient features of economic performance during the Eighth Plan indicated (i) faster growth of manufacturing sector and agricultural and allied sector, (ii) faster economic growth, (iii) significant growth rates in exports and imports and improvement in trade and current account deficit and significant reduction in the Central Government fiscal deficit.

However, shortfall in expenditure in the Central sector due to inadequate mobilization of internal and extra budgetary resources by the Public Sector Undertakings and various departments was witnessed.

In the states sector, the reason for shortfall was lack of mobilization of adequate resources due to deterioration in the balance of current revenues, erosion in the contribution state electricity boards and state road transport operations, negative opening balance, mounting non-plan expenditure and shortfalls in the collection of small savings, etc.

Ninth Plan

The Ninth Plan (1997-2002) was launched in the fiftieth year of India’s Independence. The Plan aimed at achieving a targeted GDP growth rate of seven per cent per annum and there was emphasis on the seven identified Basic Minimum Services (BMS) with additional Central Assistance earmarked for these services with a view to obtaining a complete coverage of the population in a time-bound manner.

These included provision of safe drinking water, availability of primary health service facilities, universalisation of primary education, public housing assistance to shelter less poor families, nutritional support to children, connectivity of all villages and habitations and streamlining of the public distribution system with a focus on the poor.

The Plan also aimed at pursuing a policy of fiscal consolidation, whereby the focus was on sharp reduction in the revenue deficit of the Government, including the Centre, States and PSUs through a combination of improved revenue collections.

The Specific objectives of the Ninth Plan included: (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 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 socio-economic change and development.

The Ninth Plan envisaged an average target growth rate of 6.5 per cent per annum in GDP as against the growth rate of 7 per cent approved earlier in the Approach Paper.

The scaling down of the target was necessitated by the changes in the national as well as global economic situation in the first two years of the Ninth Plan. Against this, the achievement in the growth-rate on an average was to be 5.5 per cent per annum.

Tenth Five-Year Plan

The Tenth Five-Year Plan (2002-07) was approved by the National Development Council on 21st December 2002. The Plan further developed the NDC mandated objectives, of doubling the per capita income in ten years and achieving a growth rate of eight per cent of GDP per annum.

Since economic growth was not the only objective, the Plan aimed at harnessing the benefits of growth to improve the quality of life of the people by setting the following key targets: Reduction in the poverty ratio from 26 per cent to 21 per cent, by 2007; decadal population growth to reduce from 21.3 per cent in 1991-2001 to 16.2 per cent in 2001-11; growth in gainful employment, at least, to keep pace with addition to the labour force; all children to be in school by 2003 and all children to complete five years of schooling by 2007; reducing gender gaps in literacy and wage rates by 50 per cent; literacy rate to increase from 65 per cent in 1999-2000, to 75 per cent in 2007; providing potable drinking water to all villages; infant mortality rate to be reduced from 72 in 1999-2000, to 45 in 20007; maternal mortality ratio to be reduced from four in 1999-2000, to two in 2007; increase in forest/tree cover from 19 per cent in 1999-2000, to 25 per cent in 2007; and cleaning of major polluted river stretches.

The Tenth Plan had a number of new features that include, among others, the following:

Firstly, the Plan recognised the rapid growth in the labour force. At current rates of growth and labour intensity in production, India faces the possibility of rising unemployment, which could lead to social unrest.

The Tenth Plan therefore aims at creating 50 million job opportunities during the period, by placing special emphasis on employment intensive sectors of agriculture, irrigation, agro-forestry, small and medium enterprises, information and communication technology and other services.

Secondly, the Plan addressed the issue of poverty and the unacceptable low levels of social indicators. Although these have been the objectives in earlier Plans, in the current Plan there are specific monitorable targets, which will need to be attained along with the growth target.

Thirdly, since national targets do not necessarily translate into balanced regional development and the potential and constraints of each State differ vastly, the Tenth Plan has adopted a differential development strategy.

For the first time a state wise growth and other monitorable targets have been worked out in consultation with the States to focus better on their own development plans.

Another feature of this Plan was the recognition that Governance is perhaps one of the most important factors for ensuring that the Plan is realised, as envisaged. The Plan has laid down a list of reforms in this connection.

Eleventh Five-Year Plan

The Eleventh Plan which spans 2007-12 envisages a growth target of 8.5 per cent. Besides, growth in agriculture sector has been emphasised because, to achieve the targeted growth of 8.5 per cent, it is necessary to raise the average growth of two per cent of the agriculture sector to four per cent.

However, the targeted growths of agriculture sector in Eleventh Plan are 3.9 per cent. This target has necessitated the need for ‘Second Green Revolution’. It seeks to promote a strategy of balanced development. The main thrusts are equal distribution and development.

The country made great progress in the field of agriculture as a result of planned growth of economy. It has become self- reliant in the production of food grain. Today, India is the highest producer of milk in the world.

Besides, the country also achieved remarkable success in the growth of fruits, vegetables, spices and herbs and medicinal plants. The country has made impressive strides in irrigation development since 1951.

The irrigation potential of the country rose from 22.6 m.ha. in 1957 to nearly 150 m.ha in 2007. The growth in the field of power sector is equally plausible. In this sector, the total installed capacity which was only 2,301 MW in 1950 increased to 1, 31,310 MW by the end of March 2007. Under the rural electrification programme, all villages have been electrified.

Education gained brilliant growth during the plan period. The literacy rate has gone up from 18.3 per cent in 1957 to 68 per cent in 2008. The Gross Enrolment Ratio (GER) at primary level has increased from 42.6 per cent in 1950-51 to 97.3 in 2005-06. Similarly, for the upper primary, it has gone up from 12.7 per cent to 70.6 per cent for the corresponding period.

As a result of more than five decades of planned development, per capita income, literacy rate, life expectancy rate rose immensely, while India achieved self-sufficiency in the field of food grains production, and made great strides in the field of science and technology.

In short, it made great progress in every sphere of life. But much remains to be done. About one-fourth of its population is still illiterate, about 22 per cent of the total population is still below poverty line. Access to drinking water and health facilities remain a distant dream for a major portion of the population.

Efficient governance is a must for ensuring that targets under the Plan are achieved. Moreover, improved people’s participation, involvement of civil society, especially voluntary organisations, civil services reforms for improving transparency, accountability and efficiency, a more equitable system of reward and punishments, awareness campaign, reforms in judicial and revenue system are some of the measures which can help India improve its performance and to make advantages of development accessible to each and all.

It is the need of the hour to bridge the gap of socio-economic inequalities so that the benefits of economic achievements reach all sections of our society.