ECONOMIC

PLANNING IN INDIA

India at the time of independence was left with crippling

economy by British , which needed attention and well

planned strategies to boom again in the global market.
The planning commission was set up by a resolution of

the Government of India in March 1950 in pursuance of

declared objectives of the Government to promote a rapid
rise in the standard of living of the people by efficient
utilization of the resources of the country, increasing
production and offering opportunities to all for
employment in the service of the community.

The planning commission was charged with the responsibility of

making assessment of all resources of the country, augmenting

deficient resources, formulating plans for the most effective and
balanced utilization of resources and determining priorities.
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.

OBJECTIVES OF ECONOMIC
PLANNING
Economic Growth
To Reduce the Economic Inequalities
Balanced Regional Development
Modernization
Reduction of Unemployment

During the First Five Year Plan (1951-56) India was

facing three major problems i.e., influx of refugees,

severe food crisis and mounting inflation. India had also
to correct the disequilibrium in the economy caused by the
Second World War and partition of the country. Therefore,
the First Plan emphasized, as its immediate objectives and
rehabilitation
of
refugees,
rapid
agricultural
development so as to achieve food self-sufficiency in the
shortest possible time and inflation control.

The Second Plan (1956-61) started in an atmosphere of

economic stability. Agricultural targets fixed in First Plan

had been achieved. It was felt that the Indian economy
had reached a stage where agriculture could be assigned a
lower priority and a forward thrust made in the
development of heavy and basic industries of the
economy for more rapid advance in future.

The Third Plan (1961-66) gave top priority to

agriculture but it also laid adequate emphasis on

development of basic industries, which were vitally
necessary for rapid economic development of the country.
However, because of Indias conflicts with China in 1962
and with Pakistan in 1965, the approach of the Third Plan
was later shifted from development to defence.
Three Annual Plans (1966-69) Plan holiday for
3years : Prevailing crisis in agriculture and serious food
shortage necessitated the emphasis on agriculture during
the Annual Plans. During the Annual Plans, the economy
absorbed the shocks generated during the Third Plan.

The Fourth Plan (1969-74) Main emphasis was on

growth rate of agriculture to enable other sectors to move

forward. Nationalisation of 14 Indian Banks and Green
revolution. Influx of Bangladeshi refugees before and
after 1971 Indo-Pak war were important issues which
influenced this plan period.
The Fifth Five- Year plan (1974-1979) aimed at poverty

alleviation , employment and Justice along with selfreliability on defense and agriculture. objectives of
growth with justice and Garibi Hatao (Removal of
poverty). The plan was terminated in 1978 (instead of
1979) when Janata Party Govt. rose to power.

Rolling Plan (1978 - 80) : There were 2 Sixth

Plans. Janata Govt. put forward a plan for 1978-1983.

However, the government lasted for only 2 years.
Congress Govt. returned to power in 1980 and launched a
different plan.
The sixth plan (1980-85) Focus - Increase in national

income, modernization of technology, ensuring

continuous decrease in poverty and unemployment,
population control through family planning, etc.

.
The Seventh Plan (1985-90) sought to emphasise policies

and programmes which would accelerate the growth in

food grains production, increase employment
opportunity and raise productivity. The plan was very
successful, the economy recorded 6% growth rate against
the targeted 5%.
The Eighth Plan (1992-97) The eighth plan was

postponed by two years because of political uncertainty at

the Centre. It aimed at privatisation and liberalisation as
the nation in this phase suffered from great economic
instability.

The Ninth Five Year Plan (1997-2002) was developed in the

context of four important dimension of state policy i.e., quality

of life, generation of productive employment, regional
balance and self-reliance. This plan focussed on accelerated
growth, recognizing a special role for agriculture for its
stronger poverty reducing and employment generating effects,
which will be carried out over a period of 15 years.

Tenth Five Year plan (2002-2007) aimed at poverty reduction

by 5 percent and attain a growth rate of 8 percent of GDP.

The tenth five year plan officially started on 1st April,

2002 and covered the period 2006-07. This is first plan

in twenty first century. The tenth plan kept the
objective of achieving 8.6 % growth per annum over
the plan period.
1) For the tenth five year plan 62.4% of amount or
funds came from balance from current revenue,
Borrowing in the market and foreign aid. It means that
majority of funds collected from fiscal measures only.
2) Under tenth five year plan 37.6% of resources or
funds collected from revenue of public enterprises.

: The National Development

council approved eleventh plan draft in December 2006. The
vision of new plan i.e. Eleventh plan was Faster and more
inclusive growth. Because the last four years of the tenth
plan recorded a rate of growth of as high as 8.6% per annum
making India one of the fastest growing economies of the
world. However, according to the plan, a major weakness in the
economy is that the growth is not perceived as being
sufficiently inclusive for many groups especially, SCs, STs and
minorities. Gender inequality also remains a pervasive
problem and some of the structural changes taking place have
an adverse effect on women. The lack of inclusiveness is borne
out by date on several dimension of performance.
So it was based on different objectives that includes education, income and
poverty, women and children, infrastructure, health and safeguarding the
environment.
Eleventh Five Year plan (2007-2012)

Twelth Five Year Plan ( 2012-2017)

The Twelfth Plan commenced at a time when the

global economy was going through a second financial

crisis. The crisis affected all countries including India.
Growth slowed down to 6.2 percent in 2011-12 and
the deceleration continued into the first year of the
Twelfth Plan, when the economy is estimated to have
grown by only 5 percent . The Twelfth Plan therefore
emphasizes that our first priority must be to bring
the economy back to rapid growth while ensuring
that the growth is both inclusive and sustainable. The
broad vision and aspirations which the Twelfth Plan
seeks to fulfill are reflected in the subtitle: Faster,
Sustainable, and More Inclusive Growth.

Apart from the global slowdown, the domestic economy

has also run up against several internal constraints.

Macro-economic imbalances have surfaced following the
fiscal expansion undertaken after 2008 to give a fiscal
stimulus to the economy.
Inflationary pressures have built up.
Major investment projects in energy and transport have
slowed down because of a variety of implementation
problems.
changes in tax treatment in the 201213 have caused

uncertainty among investors.

These developments have produced a reduction in the rate
of investment, and a slowing down of economic growth.

During 11th plan the average annual growth

rate was 7.9%. In 12th Five Year Plan, 9% GDP

growth is expected . Higher investment and
fund mobilization will induce market
development and employment.
But later growth rate has been decreased to
8.2% from 9 % which was set earlier in view
of the adverse domestic and global conditions
Main areas of thrust are infrastructure,
health and education.

Other targets
Agricultural growth of 4 percent
Generating 50 million work opportunities
Eliminating gender and social gap in

education
Enhance infrastructure investment to 90% of
GDP
Achieve universal road connectivity and
access to power for all villages
Access to banking services for 90 percent
households
Major welfare benefits and subsidies via

Five Year Plan

Target Growth in
GDP

Achieved growth in
GDP

First(1951-56)

2.1% per year

3.6%

Second(1956-61)

4.5%

4.27%

Third(1961-66)

5.6%

2.84%

Fourth(1969-74)

5.7%

3.3%

Fifth(1974-79)

5.23%

4.53%

Sixth(1980-85)

5.2%

5.66%

Seventh(1985-90)

5%

6.01%

Eighth(1992-97)

5.6%

6.78%

Ninth(1997-2002)

6.5%

5.35%

Tenth(2002-2007)

8.1%

8.6 %

Eleventh (2007-2012)

9%

7.9%

Achievements

There is considerable rise in Net Domestic Product ,

Savings and Investments

India has achieved self-sufficiency in almost all
basic and capital good industries and consumer
good industries
Self-sufficiency in food grain production is achieved
There is a good deal of diversification in industrial
structure
The plans have created significant infrastructure
particularly in the fields of transport, irrigation and
telecommunications.
There has been tremendous development of
educational sector and there has been a significant
growth in trained scientific and technical
manpower.

Failures
In spite of planning, poverty exists
Unemployment has risen
Inequalities of income have not been

reduced
Failure to check black money
Ineffeciency

Financing Economic
Planning
Internal source
a) current revenue balance

b) Public borrowings
c) Small savings.
d) Surplus of public enterprises
ii) Deficit financing
iii) Foreign Aid