Five Year Plans in India : How they helped Indian Economy?
This article aims to delve into the system of Five-Year planning – its inception, their goals and their outcomes from the perspective of the SSC CGL/CHSL and Banking examinations.
History of Five-Year Plans (FYP)
The 1st ever five-year plan was implemented by Joseph Stalin in the Soviet Union in 1928.
Various communist and capitalist states adopted the idea and subsequently formulated plans of their own.
Ever since India got independence, there was a common consensus of everyone to undertake development through 5 year plans.
Under Prime Minister Jawaharlal Nehru, India setup the planning commission and launched its 1st five-year plan in 1951.
Planning commission: A formal body to formulate and implement Five-Year Plans was established on 15th March 1950 with the Prime Minister as the head. The commission nominated a Deputy Chairman which held the rank of a cabinet minister. In 2014, Prime Minister Narendra Modi dissolved the planning commission to replace it with the NITI Aayog which acts as a think tank for development of the nation.
National Development Council: All the plans made by the Planning Commission need to be approved by the National Development Council first which is an extra-constitutional body. It was set up on 6th August 1952.
Planning at the state level is done through a state planning body where the chief minister is the chairman of the body and finance and planning members along with technical members assist her/him to formulate a plan. A district planning committee also functions similarly.
Five-Year Plans since 1951
1st Five-Year Plan ( 1951- 1596)
Prime Minster Jawaharlal Nehru presented the 1st five-year plan which focused on the development of the primary sector.
It was based on the Harrod-Domar model.
India had a good monsoon and nice crop yields during the 1st Five-Year Plan.
This plan was extremely successful and price of commodities fell during this period.
2nd Five-Year Plan (1956-1961)
This plan was developed by the famous Indian statistician, P C Mahalanobis.
This plan focused on developing the Public Sector and rapid industrialization.
Hydroelectric power projects such as Bhakra-Nangal Dam and 5 steel plants were established.
Research on nuclear power was started during this period.
This plan advocated deficit financing which was highly criticized.
3rd Five-Year Plan (1961-1966)
This plan stressed on developing agriculture and increasing the production of wheat in our country.
This plan failed miserably as India was involved in 2 wars during this period, the Sino-Indian war of 1962 and the war with Pakistan in 1965-1966.
To top it off, India was struck by a severe draught in 1965.
The growth rate of the economy fell down from 4.27% – 2.4%
The Rupee was devalued in 1966.
There was heavy reliance on foreign aid of the IMF.
Plan Holiday from 1966-1969
To cope with the shocks faced in the previous planning period, the government decided to take a holiday from launching five-year plans and focused on repairing the economy. From 1966 -1969, annual plans were formulated and equal importance was given to agriculture and the industrial sector.
4th Five-Year Plan (1969-1974)
The 4th plan was executed under Prime Minister Indira Gandhi who drew focus on growth with stability and progress towards self-reliance.
The government nationalized 14 banks and the green revolution advanced agriculture production in India.
The India- Pakistan war broke out in 1971 which hurt the already slowly repairing economy.
India performed its first underground nuclear test
Prices increased in this plan by around 61%
5th Five Year Plan (1974-1978)
The 5th Five Year Plan laid emphasis on employment, poverty alleviation and justice.
Indian national highway system was introduced and tourism in our country expanded.
Minimum Needs Program (MNP) the objective of the plan is to provide certain minimum needs and improve living standards of people in our nation.
The target growth rate during this period was 4.4% but the actual growth rate is estimated to have been around 4.8%
Rolling Plans (1978-1980)
The newly elected Janata government rejected the 5th Plan and proposed a new 6th Plan.The 6th Plan was rejected by the new Congress government and a new 6th Plan was made.
6th Five Year Plan (1980-1985)
The 6th plan marked the beginning of economic liberalization.
NABARD was established.
Family planning was promoted across the country.
Visakhapatnam Steel Plant (Andhra Pradesh), Salem (TamilNadu) and Bhadravathi Steel Plants were built.
This plan was a success with a growth rate of 5.7%
7th Five Year Plan (1985-1990)
Led by congress party PM Rajiv Gandhi
This plan aimed to increase the productivity of industries by upgrading technology, increasing the production of food grains and generating employment.
‘Jawahar Rozgar Yojana’ was launched in April 1989 to solve the problem of unemployment.
Annual Plans (1990-1992)
Due to economic instability and changes in the political situation, the 8th Plan could not take off and annual short term plans were formulated for 2 years.
8th Five Year Plan (1992-1997)
Around this time, India was facing a crisis in its foreign exchange reserves and was forced to liberalize the economy.
Dr. Manmohan Singh under the guidance of the then Prime Minister Narasimha Rao implemented the reforms of liberalization, privatization and globalization in the country.
India became a member of the world trade organization.
The target growth rate was 5.6% but India achieved a growth rate of 6.8%.
9th Five Year Plan (1997-2002)
Under PM Atal Bihari Vajpayee, the 9th plan aimed to explore the unexplored economic potential of the country.
The target was to eliminate poverty, control the population, generate employment and ensure availability of resources to all through specially designed Special Action Plans (SAP’s) to fulfill targets within a fixed time period with the required resources.
10th Five Year Plan (2002-2007)
The following objectives were set in the 10th Five-Year Plan:
Attain 8% GDP growth rate in a year
Reduce poverty by 5%.
Reduce gender Gap in literacy and wages
The plan achieved a growth rate of 7.7% which was good but still did not meet the target of 8%.
11th Five Year Plan (2007-2012)
This plan under rolled out under Prime Minister Manmohan Singh aimed to increase the access and enrolment of higher education in the country.
It focused on distant education to increase enrolment in higher education.
The target growth rates for agriculture, industries and services were 4%, 10% and 9% respectively.
The fertility rate was reduced to 2.1%
12th Five Year Plan (2012-2017)
The 12th 5 Year Plan aimed to achieve a target growth rate of 8%. The government also aimed to reduce poverty by 10% and create 50 million work opportunities in the non-farm sector. The plan is also aimed to reduce gender inequality and reduce malnutrition amongst children aged 0-3 years.
In 2014, Prime Minister Narendra Modi dissolved the Planning Commission and formed the National Institution for Transforming India (NITI) Aayog.
The NITI Aayog was a political think tank set up to act as an advisor the government. The NITI Aayog will not involve setting up of a plan which is designed from the perspective of the center. Rather, it aims to involve all states to devise systematic policies differently for all states.
The NITI Aayog aims to implement the sustainable development goals (SDG’s) which are formulated on the global forums and make the federal structure of our nation more efficient and co-operative.
The chairperson of the NITI Aayog is the Prime Minister. The CEO of the planning commission is Amitabh Kant at present. The chief Ministers of all states are a part of the governing council of the NITI Aayog.
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