INDIAN INSTITUTE OF PLANNING & MANAGEMENT BHUBANESWAR WELFARE ECONOMICS Assignment on Five Year Plans in INDIA Submitted to: Prof. Bhabani mohapatra Prepared By ANAND JOGLEKAR ANIL KUMAR SAHOO BIRAJA KALYAN DAS ABHISHEK DARJEE INTRODUCTION: The economy of India is based in part on planning through its five-year plans, developed, executed and monitored by the Planning Commission. With the Prime Minister as the ex officio Chairman, the commission has a nominated Deputy Chairman, who has rank of a Cabinet minister.
Montek Singh Ahluwalia is currently the Deputy Chairman of the Commission. The tenth plan completed its term in March 2007 and the eleventh plan is currently underway. The Planning Commission in India was set up on March 1950 to promote a rapid rise in the standard of living of the people by utilizing the resources of the country, increasing production and offering employment opportunities to all. The Planning Commission has to make periodic assessment of all resources in the country, boost up insufficient resources and formulate plans for the most efficient and judicious utilization of resources.
Following are the functions of the Planning Commission of India: * To make an assessment of the resources of the country and to see which resources are deficient. * To formulate plans for the most effective and balanced utilization of country’s resources. * To indicate the factors which are hampering economic development. * To determine the machinery, that would be necessary for the successful implementation of each stage of plan. * Periodical assessment of the progress of the plan. * With the changing times, the Planning commission is preparing itself for long term vision for the future.
The commission is seeing to maximize the output with minimum resources. * From being a centralized planning system, the Indian economy is slowly progressing towards indicative planning wherein the Planning Commission has set the goal of constructing a long term strategic vision for the future. * It sets sectoral targets and provides the catalyst to the economy to grow in the right direction. * The Planning Commission plays an integrative role in the development of a holistic approach to the formulation of policies in critical areas of human and economic development.
First five year plan (1951-1956) The first Indian Prime Minister, Jawaharlal Nehru presented the first five-year plan to the Parliament of India on 8 December 1951. The first plan sought to get the country’s economy out of the cycle of poverty. The plan addressed, mainly, the agrarian sector, including investments in dams and irrigation. The agricultural sector was hit hardest by the partition of India and needed urgent attention. [2] The total planned budget of 206. 8 billion INR (23. 6 billion USD in the 1950 exchange rate) was allocated to seven broad areas: irrigation and energy (27. percent), agriculture and community development (17. 4 percent), transport and communications (24 percent), industry (8. 4 percent), social services (16. 64 percent), land rehabilitation (4. 1 percent), and for other sectors and services (2. 5 percent). [3] The target growth rate was 2. 1 percent annual gross domestic product (GDP) growth; the achieved growth rate was 3. 6 percent. During the first five-year plan the net domestic product went up by 15 percent. The monsoon was good and there were relatively high crop yields, boosting exchange reserves and the per capita income, which increased by 8 percent.
National income increased more than the per capita income due to rapid population growth. Many irrigation projects were initiated during this period, including the Bhakra Dam and Hirakud Dam. The World Health Organization, with the Indian government, addressed children’s health and reduced infant mortality, indirectly contributing to population growth. At the end of the plan period in 1956, five Indian Institutes of Technology (IITs) were started as major technical institutions. University Grant Commission was set up to take care of funding and take measures to strengthen the higher education in the country. 4] Contracts were signed to start five steel plants; however these plants did not come into existence until the middle of the second five-year plan. Second five year plan (1956-1961) This plan functioned on the basis of Mahalanobis model. The Mahalanobis model was propounded by Prasanta Chandra Mahalanobis in the year 1953. The second five-year plan focused on industry, especially heavy industry. Unlike the First plan, which focused mainly on agriculture, domestic production of industrial products was encouraged in the Second plan, particularly in the development of the public sector.
The plan followed the Mahalanobis model, an economic development model developed by the Indian statistician Prasanta Chandra Mahalanobis in 1953. The plan attempted to determine the optimal allocation of investment between productive sectors in order to maximize long-run economic growth. It used the prevalent state of art techniques of operations research and optimization as well as the novel applications of statistical models developed at the Indian Statistical Institute. The plan assumed a closed economy in which the main trading activity would be centered on importing capital goods.
Hydroelectric power projects and five steel mills at Bhilai, Durgapur, and Rourkela were established. Coal production was increased. More railway lines were added in the north east. The Atomic Energy Commission was formed in 1958 with Homi J. Bhabha as the first chairman. The Tata Institute of Fundamental Research was established as a research institute. In 1957 a talent search and scholarship program was begun to find talented young students to train for work in nuclear power. Third five year plan (1961-1966)
The third plan stressed on agriculture and improving production of rice, but the brief Sino-Indian War of 1962 exposed weaknesses in the economy and shifted the focus towards the Defence industry. In 1965-1966, India fought a war with Pakistan . The war led to inflation and the priority was shifted to price stabilization. The construction of dams continued. Many cement and fertilizer plants were also built. Punjab began producing an abundance of wheat. Many primary schools were started in rural areas.
In an effort to bring democracy to the grassroot level, Panchayat elections were started and the states were given more development responsibilities. State electricity boards and state secondary education boards were formed. States were made responsible for secondary and higher education. State road transportation corporations were formed and local road building became a state responsibility. The target growth rate of GDP(gross domestic product)was 4. 5 percent. The achieved growth rate was 4. 3 percent. Fourth five year plan (1969-1974) At this time Indira Gandhi was the Prime Minister.
The Indira Gandhi government nationalised 14 major Indian banks and the Green Revolution in India advanced agriculture.. In addition, the situation in East Pakistan (now Bangladesh) was becoming dire as the Indo-Pakistani War of 1971 and Bangladesh Liberation War took place. Funds earmarked for the industrial development had to be diverted for the war effort. India also performed the Smiling Buddha underground nuclear test in 1974, partially in response to the United States deployment of the Seventh Fleet in the Bay of Bengal. The fleet had been deployed to warn India against attacking West Pakistan and extending the war.
Fifth five year plan (1974-1979) Stress was laid on employment, poverty alleviation, and justice. The plan also focused on self-reliance in agricultural production and defence. In 1978 the newly elected Morarji Desai government rejected the plan. Electricity Supply Act was enacted in 1975, which enabled the Central Government to enter into power generation and transmission. The Indian national highway system was introduced for the first time and many roads were widened to accommodate the increasing traffic. Tourism also expanded. Sixth five year plan (1980-1985)
The sixth plan also marked the beginning of economic liberalization. Price controls were eliminated and ration shops were closed. This led to an increase in food prices and an increas in the cost of living. Family planning was also expanded in order to prevent overpopulation. In contrast to China’s strict and binding one-child policy, Indian policy did not rely on the threat of force. More prosperous areas of India adopted family planning more rapidly than less prosperous areas, which continued to have a high birth rate. Seventh five year plan (1985-1989)
The Seventh Plan marked the comeback of the Congress Party to power. The plan lay stress on improving the productivity level of industries by upgradation of technology. The main objectives of the 7th five year plans were to establish growth in the areas of increasing economic productivity, production of food grains, and generating employment opportunities. As an outcome of the sixth five year plan, there had been steady growth in agriculture, control on rate of Inflation, and favorable balance of payments which had provided a strong base for the seventh five Year plan to build on the need for further economic growth.
The 7th Plan had strived towards socialism and energy production at large. The thrust areas of the 7th Five year plan have been listed on the next page: * Social Justice * Removal of oppression of the weak * Using modern technology * Agricultural development * Anti-poverty programs * Full supply of food, clothing, and shelter * Increasing productivity of small and large scale farmers * Making India an Independent Economy Based on a 15-year period of striving towards steady growth, the 7th Plan was focused on achieving the pre-requisites of self-sustaining growth by the year 2000.
The Plan expected a growth in labor force of 39 million people and employment was expected to grow at the rate of 4 percent per year. Some of the expected outcomes of the Seventh Five Year Plan India are given below: * Balance of Payments (estimates): Export – Rs. 33 thousand crore, Imports – (-)Rs. 54 thousand crore, Trade Balance – (-)Rs. 21 thousand crore * Merchandise exports (estimates): Rs. 60,653 crore * Merchandise imports (estimates): Rs. 95,437 crore * Projections for Balance of Payments: Export – Rs. 60. 7 thousand crore, Imports – (-) 95. 4 thousand crore, Trade Balance- (-) Rs. 4. 7 thousand crore Seventh Five Year Plan India strove to bring about a self-sustained economy in the country with valuable contributions from voluntary agencies and the general populace. Period between 1989-91 1989-91 was a period of political instability in India and hence no five year plan was implemented. Between 1990 and 1992, there were only Annual Plans. In 1991, India faced a crisis in Foreign Exchange (Forex) reserves, left with reserves of only about $1 billion (US). Thus, under pressure, the country took the risk of reforming the socialist economy. P. V.
Narasimha Rao) was the twelfth Prime Minister of the Republic of India and head of Congress Party, and led one of the most important administrations in India’s modern history overseeing a major economic transformation and several incidents affecting national security. At that time Dr. Manmohan Singh (currently, Prime Minister of India) launched India’s free market reforms that brought the nearly bankrupt nation back from the edge. It was the beginning of privatization and liberalization in India. Eighth five year plan (1992-1997) Modernization of industries was a major highlight of the Eighth Plan.
Under this plan, the gradual opening of the Indian economy was undertaken to correct the burgeoning deficit and foreign debt. Meanwhile India became a member of the World Trade Organization on 1 January 1995. This plan can be termed as Rao and Manmohan model of Economic development. The major objectives included, containing population growth, poverty reduction, employment generation, strengthening the infrastructure, Institutional building, tourism management, Human Resource development, Involvement of Panchayat raj, Nagarapalikas, N. G. O’S and Decentralization and people’s participation.
Energy was given priority with 26. 6% of the outlay. An average annual growth rate of 6. 7% against the target 5. 6% was achieved. Ninth five year Plan (1997 – 2002) Ninth Five Year Plan India runs through the period from 1997 to 2002 with the main aim of attaining objectives like speedy industrialization, human development, full-scale employment, poverty reduction, and self-reliance on domestic resources. Background of Ninth Five Year Plan India: Ninth Five Year Plan was formulated amidst the backdrop of India’s Golden jubilee of Independence.
The main objectives of the Ninth Five Year Plan India are: * to prioritize agricultural sector and emphasize on the rural development * to generate adequate employment opportunities and promote poverty reduction * to stabilize the prices in order to accelerate the growth rate of the economy * to ensure food and nutritional security * to provide for the basic infrastructural facilities like education for all, safe drinking water, primary health care, transport, energy * to check the growing population increase to encourage social issues like women empowerment, conservation of certain benefits for the Special Groups of the society * to create a liberal market for increase in private investments During the Ninth Plan period, the growth rate was 5. 35 per cent, a percentage point lower than the target GDP growth of 6. 5 per cent. Tenth five year plan (2002-2007) * Reduction of poverty ratio by 5 percentage points by 2007; * Providing gainful and high-quality employment at least to the addition to the labour force.
All children in India in school by 2003; all children to complete 5 years of schooling by 2007; * Reduction in gender gaps in literacy and wage rates by at least 50% by 2007;*Reduction in the decadal rate of population growth between 2001 and 2011 to 16. 2%;*Increase in Literacy Rates to 75 per cent within the Tenth Plan period (2002 to 2007); Eleventh five year plan (2007-2012) The eleventh plan has the following objectives: 1. Income ; Poverty * Accelerate GDP growth from 8% to 10% and then maintain at 10% in the 2th Plan in order to double per capita income by 2016-17 * Increase agricultural GDP growth rate to 4% per year to ensure a broader spread of benefits * Create 70 million new work opportunities. * Reduce educated unemployment to below 5%. * Raise real wage rate of unskilled workers by 20 percent. * Reduce the headcount ratio of consumption poverty by 10 percentage points. 2. Education * Reduce dropout rates of children from elementary school from 52. % in 2003-04 to 20% by 2011-12 * Develop minimum standards of educational attainment in elementary school, and by regular testing monitor effectiveness of education to ensure quality * Increase literacy rate for persons of age 7 years or above to 85% * Lower gender gap in literacy to 10 percentage point * Increase the percentage of each cohort going to higher education from the present 10% to 15% by the end of the plan 3. Health * Reduce infant mortality rate to 28 and maternal mortality ratio to 1 per 1000 live births * Reduce Total Fertility Rate to 2. 1 Provide clean drinking water for all by 2009 and ensure that there are no slip-backs * Reduce malnutrition among children of age group 0-3 to half its present level * Reduce anemia among women and girls by 50% by the end of the plan 4. Women and Children * Raise the sex ratio for age group 0-6 to 935 by 2011-12 and to 950 by 2016-17 * Ensure that at least 33 percent of the direct and indirect beneficiaries of all government schemes are women and girl children * Ensure that all children enjoy a safe childhood, without any compulsion to work 5. Infrastructure Ensure electricity connection to all villages and BPL households by 2009 and round-the-clock power. * Ensure all-weather road connection to all habitation with population 1000 and above (500 in hilly and tribal areas) by 2009, and ensure coverage of all significant habitation by 2015 * Connect every village by telephone by November 2007 and provide broadband connectivity to all villages by 2012 * Provide homestead sites to all by 2012 and step up the pace of house construction for rural poor to cover all the poor by 2016-17 6. Environment * Increase forest and tree cover by 5 percentage points. Attain WHO standards of air quality in all major cities by 2011-12. * Treat all urban waste water by 2011-12 to clean river waters. * Increase energy efficiency by 20 percentage points by 2016-17. Conclusion: The Planning commission should bring about a major reform in the banking sector so that India can experience a real “Inclusive growth”. Another thing is that India should execute the plan effectively in every FYP’s, then after we can achieve the real growth. THANK YOU . . . ————————————————- Prepared by Feroz khosla Abhisek darjee
