Arjun Varma

UG-III
Roll-39

ANALYSIS OF THE 12 FIVE YEAR PLANS

INTRODUCTION

Economic planning is defined as ' The making of major economic decisions- what and how much is to
be produced, when and where it is to be produced and to whom it is to be allocated by the conscious
decision of the highest authority on the basis of an in-depth analysis of the economic system as a
whole'. The government has to prepare and implement a comprehensive economic plan integrating the
private sector with the public sector.

Economic planning is nothing but the long term plans of government to coordinate and develop the
economy. In India the economic planning was started in the year 1950. After independence, it was
deemed necessary for economic development and growth of nation. The idea of five year planning was
taken from the erstwhile Soviet union under socialist influence of the first Prime minister Jawaharlal
Nehru.

The planning commission was an institution in the government of India, which formulated India's five
year plans among other functions. It was established in accordance with article 39 of the constitution
which is a part of directive principles of state policy.

FIRST FIVE YEAR PLAN (1951-1956)

The first Indian Prime Minister, Jawaharlal Nehru presented the First Five-Year Plan to the Parliament
of India and needed immediate attention. The First Five-year Plan was launched in 1951 which mainly
focused in development of the agricultural sector. The First Five-Year Plan was based on the Harrod–
Domar model.

Objectives of the First Five-Year Plan:

The Plan had a three-fold objective:

 It aimed at correcting the disequilibrium in the economy caused by the war and the partition
of the country.

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  It proposed to initiate simultaneously a process of all round balanced development so as to
ensure a rising national income and a steady improvement in living standards over a period of
time.

 Another aim was not merely to initiate development within the existing socio-economic
framework but “to change it progressively and by democratic methods in keeping with
the larger ends of policy enunciated in the constitution.”

Originally, the plan period for an outlay of Rs. 2069 crores in the public sector which was later raised
to Rs. 2378 crores with a view to meeting the growing unemployment in the country. The expenditure
actually incurred amounted to Rs. 1960 crores of which the investment component was of the order of
Rs. 1560 crores.

The First Plan placed the most importance on agriculture and irrigation, followed by transport and
communications second, social services third, then power and finally industry. Of the total expenditure
of 1960 crores available to the public sector, 601 crores (31%) went to agriculture including
community projects and irrigation, 503 crores (27%) to transport and communications; 459 crores
(23%) to social services; 260 crores (13%) to power and only 117 crores (6%) to industry including
village and small industries.

It is here that the Planning commission was highly criticised. The amount allocated to industry was,
most inadequate. Even this small amount was wholly allocated to consumer industries. The capital
goods or even intermediate products industry received negligible to zero funds.

Achievements of the First Five-Year Plan:

The actual growth rate (GDP) was 3.6%. The per capita income increased by 11% and per capita
consumption by about 8%. As a result of various development programmes undertaken during the
Plan, the rate of investment went up from 5% in the first year to 7.3% of the National Income in the
last year of the plan. A notable achievement of the plan was in the field of agriculture where overall
production went up by 17%. Output of food grains increased by 20%; cotton and oil seeds increased
by 45% and 8% respectively while raw jute production went up by 27%.

Criticism of the First Five-Year Plan:

On the basis of these results, the Planning Commission found the overall achievements of the Plan as
‘satisfactory’. In reality, the progress was neither adequate nor substantial. Much more serious, from
the stand point of long term development, was the shortfall in education. The %age of school going
children in the age-group 6-11 years went up by 9.9% only as against the target of 18.8%. Achievement
in the field of Secondary education, was smaller still. Despite the marked increase in developmental

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expenditure and industrial output, even within the agricultural sector, subsistence-farming of food
crops continued as before. There was no noticeable shift in the crop pattern nor any significant increase
in the direction of mixed farming. The unemployment problem, actually worsened during the course
of the Plan. As against the addition of 10 million people to the labour force, the Plan claimed to have
found employment for only 4.5 million persons. The overall implementation of the plan was far from
satisfactory. There were serious shortfalls in scheduled expenditure, the shortfall being particularly
marked in agriculture and social services.

SECOND FIVE YEAR PLAN (1956-1961):

Conceived in an era of economic stability, the plan focused on the development of the public sector.
It was felt that the Indian Economy was at a stage where agriculture could be assigned a lower priority
and the development of heavy and basic industries was to be main ideal for a more rapid advancement.
It followed the Mahalanobis Model, developed by P. C. Mahalanobis in 1953. It attempted to determine
the optimal allocation of investment between productive sectors in order to maximize long run
economic growth. Despite an 18% increase in the aggregate national income during the First Plan,
there was very little rise in the standard of living of the population as a whole.

OBJECTIVES:

The objectives of the second five year plan as placed before the country from time to time by Pandit
Nehru and other leaders are as follows:
 to increase national income,
 A large expansion of employment opportunities by developing labour-intensive projects and
small scale industries.
 Reduction in inequalities of income and distribution.
 To attain the annual growth rate of 5%.

As can be seen, these objectives were inter-related. A significant increase in national income and a
marked improvement in living standards could not be secured without a substantial increase in
production and investment.

Assessment:
 The actual growth rate recorded was 4.2%. The growth rate of per capita income was low
because of higher rate of population. The population growth rate was more than 2% per annum
during the plan period.

 Food production increased by 15%. Production of cotton increased by 31.5%; tea by 9% and
sugarcane by 22.5%. There was, however, a fall in the production of Jute.

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  The Second Plan was being essentially “an industry and transport plan”, India started producing
large quantities of machinery, machine tools for agriculture, industry and transport, heavy
electrical equipment and scientific instrument.

 One of the major steps towards building a solid capital base was the establishment of three
steel mills in the public sector with an initial capacity of 10 lakh tonnes each at Durgapur (West
Bengal), Rourkela (Orissa), and Bhilai (Madhya Pradesh).

 One of the major achievements of the second plan was job creation. During the span of the
second five year plan close to 8 million jobs were created.

Growth Model of the Second Five-Year Plan:

The Second Five Year Plan envisaged an increase in the total national income from Rs. 10,800 crores
in 1955-56 to Rs. 13,480 crores in 1960-61 (calculated at 1952-53 prices). This represented an increase
of about 25% over the five-year period. The per capita income was expected to increase from Rs. 281
in 1956 to Rs. 331 in 1960-61.
In order to make these achievements possible, the rate of investment was expected to rise from 7% of
the national income in 1955-56 to 11% in 1960-61, assuming that the rate of population growth would
remain stationary at 1.3% per annum and the capital output ratio at 2.3: 1.
Plan Outlay and Priorities of the Second Five-Year Plan:
In order to secure the objective of a 25% increase in the national income, the plan provided for an
outlay of Rs. 4,800 crores in the public sector. The actual outlay, however, amounted to Rs. 4,600
crores of which investment amounted to Rs. 3,650 crores and the balance Rs. 950 crores was current
developmental expenditure. The most notable feature of the Second Plan was its marked emphasis on
public investment and rapid industrialisation. In the First plan, relatively greater stress was placed on
programmes designed to build up the agricultural potential of the country.

Criticism of the Second Five Year Plan:

1. GROWTH:

While there is no doubt that the Second Plan did secure certain far reaching gains in the industrial
field, but the “momentum was so slow and the impact of economic growth on the standard of
living of the majority of the population was insignificant” as to generate a wide spread feeling of
cynicism regarding the achievements of planning in the country. During this plan the actual growth
rate was 4.2% against the targeted 4.5%. There were serious shortfalls in several important spheres.
While the setting up of the three new steel plants was by itself a most impressive achievement, their

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combined output of steel was only 0.6 million tons in 1960-61. As a result, targets set for Iron and
steel, fertilizers, were not achieved.

2. INFLATION:
A greater failure was in the sphere of prices. Unlike the First, the Second plan was characterised by a
persistent rise in prices. Over the five-year period, the rise in the general index of wholesale prices was
about 30%. Food articles as a group went up by 27%; industrial raw-materials by 45% and manufacture
by over 25%. This substantial price rise had its repercussions on the cost of living as well as the
country’s exports. The common man found his rupee losing a quarter of its value while the country’s
exports suffered a serious setback. While the plan failed to achieve its major physical targets, its
working led to constantly widening inequalities in the distribution of national wealth.
3. EMPLOYMENT:
One of the principal objectives of the plan was to provide greater employment opportunities. Although,
the plan did succeed in creating about 8 million new jobs, yet the backlog of unemployment at the end
of the plan was estimated at 9 million. It means that the rate of investment was far short of the
population growth. Distribution of national income had become more unequal. These were some of
the problems that confronted the country on the eve of the Third Five Year Plan.

THIRD FIVE YEAR PLAN (1961-1966):

The circumstances in which the preparation of the Third Five Year Plan began were different from
those which were there at the beginning of the Second. There was a financial crisis, a foreign
exchange crisis, and a food crisis. It was against this gloomy background that the Planning
Commission began to consider, around November, 1958 the general pattern of resources and outlay
for the Third Plan.

Objectives of the Third Five Year Plan:

The Plan had the following aims:
 To secure an increase in national income of over 5% per year, the pattern of investment being
so designed as to sustain this rate of growth during subsequent plan periods;

 To achieve self-sufficiency in food grains and increase agricultural production to meet the
requirements of industry and exports;

 To expand basic industries like steel, chemicals, fuel, and power and establish machine-
building capacity so as to meet the requirements of further industrialisation within a period of
ten years or so mainly from the country’s own resources;
 To establish progressively greater equality of opportunity and bring about reduction in
disparities in income and wealth and a more even distribution of economic power.

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In order to achieve these objectives, the Plan proposed an outlay of Rs. 7,500 crores in the public
sector. Of this, Rs. 6,300 crores represented investment and Rs. 1,200 crores represented expenditure
on staff and subsidies etc. Investment by private sector was estimated at Rs. 4,100 crores thus making
a total of Rs. 10,400 crores during the five year period.
The plan’s priorities were quite like those of the second. Transport and communications came in the
first place with nearly 1/4 of the outlay. Industry, including village and small industries, came second
with 23% of the actual outlay. The third place was occupied by agriculture, including irrigation and
community development.

Analysis of the Third Five Year Plan:

1. GROWTH:
The progress made in the Third Plan was rather disappointing. The target growth rate was 5.6%, but
the actual growth rate was 2.4%. There were serious shortfalls in such vital sectors as agriculture,
irrigation, power and industry. Production of food grains, oil seeds, cotton and jute, provision of ir-
rigation facilities and generation of power were all behind schedule. In the field of industry, production
of steel, cement, fertilizers and coal was also short of the plan targets.

2. INFLATION:

But a major failure of the plan was in the field of prices where the general index in 1965-66 was 32%
higher than in 1960-61. This increase in the price level necessitated increase in several grants to
employees and industrial workers. At the same time, the cost of production in the economy increased
and profitability of enterprises was reduced.
3. EMPLOYMENT:
The Plan also failed to create enough jobs to meet the growing demand for employment. Against an
estimated 25 million un-employed persons in the country, the Third Plan could create only 14 million
additional jobs. Thus, the number of the unemployed at the end of the plan was greater than at the
beginning.
Due to miserable failure of the Third Plan the government was forced to declare "plan holidays" (from
1966–67, 1967–68, and 1968–69). Three annual plans were drawn during this intervening period.

FOURTH FIVE YEAR PLAN (1969-1974):

Fourth Five Year plan was the first plan launched by Indira Gandhi government amidst the pressure
of drought, devaluation and inflationary recession. The Indira Gandhi government nationalised 14
major Indian banks and the Green Revolution in India advanced agriculture. The country was fighting
with population explosion, increased unemployment, poverty and a shackling economy. In addition,

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the situation in East Pakistan (now independent Bangladesh) was becoming dire as the Indo-Pakistani
War of 1971 and Bangladesh Liberation War took place. The result was that this plan period was also
no better than the third five year plan.

OBJECTIVES:
Fourth Five Year Plan have following objectives:
 The targeted rate of growth was 5.5%;
 Measures to maintain stability in the prices and to set up consistent economic policies which
would lead towards the goal of mixed economy;
 Priority would be given to enlarge the income of the rural population and augment the supply
of food. Efforts would be made to maximise the production.
 For the development of human resources, additional facilities would be provided particularly
in rural areas.

Critical Assessment of the Fourth Five Year Plan:

The plan envisaged a growth rate of 5.5% but could only achieve a maximum of 3.5%. During the first
three years of the Fourth Plan, the balance of payment was fairly stable but in the later period, the
drought of 1972-73 compelled the country to go in for large imports of food-grains when the world
prices of food-grains had gone up to unprecedented levels. The production of food grains increased
only by 7.2% against a targeted increase of 31%. The rate of growth in the industrial sector was only
3.9 % annually. In social welfare activities, substantial progress was achieved. The number of primary
health centres and sub-centres rose by the end of 1973-74 as compared with the figures in 1968- 69.

FIFTH FIVE YEAR PLAN (1974-1978):

The Fifth Five Year Plan India was sketched out for the period spanning 1974 to 1979 with
the objectives of increasing the employment level, reducing poverty, and attaining self-reliance.
The twin objectives of poverty eradication and attainment of self-reliance were inculcated in the
fifth plan. A national program for minimum needs including elementary education, safe drinking
water, health care, shelter for the landless was included.

OBJECTIVES:
 5.5 % overall rate of growth of gross domestic product;
 Expansion of productive employment;
 A national programme for minimum needs;

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  Extended programme of social welfare;
 Stress on agriculture, key and basic industries producing goods for mass consumption.

Critical Assessment
The agricultural production showed tremendous favourable trends. The annual rate of growth of
agricultural production grew at the rate of 4.58% against its target rate of 3.3%. The growth rate of
industrial production was around 6.2%. To alleviate the problem of unequal spread of green revolution,
government unsuccessfully tried to take over the wholesale trade in wheat. Indira Gandhi government
also launched twenty point programme and irrigation schemes such as Command Area Development
Programme in this plan.
However, in 1975, Indira Gandhi imposed emergency and planning became subject to much
politicization. In 1977, the government changed and first non-Congress Government took over power
with Morar Ji Desai at its helm. The new objective laid down was “Growth for Social Justice”. The
new approach was “Rolling Plan”. It terminated the fifth five year plan in 1977-78 and launched its
own sixth five year plan for period 1978-83 and called it rolling plan. Later, Janta government self-
destructed itself and Indira Gandhi again became prime minister. She immediately abolished the
Janta’s rolling plan and launched her own plan for year 1980-85. The year 1978-79 was restored back
to fifth plan of 1974-79.

SIXTH FIVE YEAR PLAN (1980-1985):

There were two Sixth Plans. The Janata Party’s Sixth Plan (1978-83) sought to reconcile the objectives
of higher production with those of greater employment so that people living below the poverty line
could benefit from it. The focus of the Janata’s Sixth Five-Year Plan was enlargement of the
employment potential in agriculture and allied activities, encouragement to household and small
industries producing consumer goods for mass consumption and to raise the incomes of the lowest
income classes through a minimum needs programme.
When the Sixth Plan (1980-85) was introduced by the Congress, the planners rejected the Janata
approach and brought back Nehru model of growth by aiming at a direct attack on the problem of
poverty by creating conditions of an expanding economy.

OBJECTIVES:
 Removing obstacles to the expansion of capacity for exports.
 Promotion of efficiency in the use of resources and improved productively;
 Strengthening the distribution bias of public policies and services in favour of weaker sections
of society;
 A progressive reduction in regional inequalities;

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  Maintaining adequate links with technological development abroad so that our export
capability is not hurt by outdated technology.
 To achieve self-reliance.

Critical Assessment
The plan was able to achieve most of its targets. The average annual growth rate was around 5.7%
against the targeted 5.2%. Food production increased. The growth in individual sectors was also
satisfactory. Some of the segments of the economy achieved self-reliance.
The plan paid special attention to the removal of poverty through rural development programmes like
Integrated Rural Development Programme (IRDP), National Rural Employment Programme (NREP)
and Rural Landless Employment Guarantee Programme (RLEGP). The sixth five year plan was a great
success to the Indian Economy and was the only plan to be done twice.

SEVENTH FIVE YEAR PLAN (1985-1990) :

The Seventh Five-Year Plan was led by the Congress Party with Rajiv Gandhi as the prime minister.
The draft of Seventh Five Year Plan approved by National Development Council on Nov. 9, 1985. It
was noted that since independence the inception of planning, Indian economy has made steady
progress towards the basic objectives of building an independent, self-reliance economy. The plan
sought to emphasize polices, which would accelerate the growth in food-grain production, increase in
employment and raise productivity.

OBJECTIVES:

The Seventh Plan has been framed with a view of:

 Accelerate the growth in food-grain production;

 Increase employment opportunities;

 Raise productivity;

 Significant reduction in the poverty;

 Improvement in the quality of living for the poor in the villages and towns.

Analysis of the Seventh five year plan:

1. GROWTH:

The average annual growth rate in the GDP during this plan period remained at 5.6 % which was
0.6 % more than the target. The final year of the seventh plan (1989-90) saw the growth of
National Income by 4% which was largely a contribution of secondary (manufacturing) and

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 service sector. The annual average growth of the seventh plan has been put at 5.3%, almost
equally the growth rate of the sixth plan.

2. AGRICULTURE:

The food production declined over the span of the five year plan, primarily due to poor monsoons
during the first three years of the plan. This set back the agricultural production and the growth rate
fell down to 2.6%, which was lower than the long term growth rate of 3.5%.

3. INDUSTRY:
The Seventh Plan has laid down considerable emphasis on accelerating the pace of growth by
liberalization of industrial licensing policy and other regulations, provision of incentives for certain
key areas like electronics etc. The pace of growth is almost maintained in 1987-88 despite the drought
conditions, resilience to supply shocks from agriculture and thinning interdependence between
agriculture and industry. In 1987-88 industrial production had grown at 7.5 % while the manufacturing
sector recorded a growth of 8.2 %
4. TRADE:
The trade deficit, which averaged 3.4 % of GDP during sixth plan period, increased to 3.7 % of GDP
in 1985-86 but declined in 1986-87 to 3.2 % due to both better export performance and acceleration in
growth rates of imports.
5. INFLATION:
Monsoon failures generate strong inflationary pressures because of the consequent supply squeeze in
agriculture and its effect on the rest of the economy. The annual inflation rate in terms of the wholesale
price index (WPI) had gone up to 10.6 % during 1987-88. Up to January 1989, wholesale price index
had come down to 5.4 %.
6. POVERTY:
In terms of %age, the poverty ratio was 39.9 % in rural areas and 27.7 % in urban areas in 1984- 85.
This plan aimed at bringing down the poverty rate from an average of 36.9 % to 25.8 %.
The Eighth Plan could not take off in 1990 due to the fast changing political situation at the centre and
the years 1990–91 and 1991–92 were treated as Annual Plans. The Eighth Plan was finally formulated
for the period 1992–1997.

EIGHTH FIVE YEAR PLAN (1992-1997):

In 1991, India faced a crisis in foreign exchange (forex) reserves, left with reserves of only about US$1
billion. Thus, under pressure, the country took the risk of reforming the socialist economy. P.V.
Narasimha Rao was the tenth 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

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transformation and several incidents affecting national security. At that time Dr. Manmohan
Singh (later 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 liberalization, privatisation and
globalization (LPG) in India.
Objectives:
Based on the approach, the following objectives were accorded priority in Eighth Plan period:
 Generating adequate employment to achieve near full employment level by the turn of the
century.
 Containing population growth through active people’s cooperation and an effective scheme of
incentives and disincentives.
 Universalization of elementary education and complete eradication of illiteracy among the
people in the age group of 15 to 35 years.
 Growth and diversification of agriculture to achieve self- sufficient in food and generate
surpluses for exports.
 Strengthening the infrastructure (energy, transport, and communication, irrigation) in order to
support the growth processes on a sustainable basis.

Critical Appraisal of the Eighth five year plan:

1. GROWTH:
The Eighth Plan had set a growth target of 5.6% but it revealed from Economic Survey of 1998-99
that the growth rate, which was only 0.5% in 1991-92 gradually increased to 5.2% in 1992-93 and then
increased to 6.2% provisional in 1993-94. In the agricultural sector, has achieved 6.1 % growth rate in
1992-93 and 94 % growth rate in 1996- 97.
2. MANUFACTURING:
As against the targeted growth rate of 7.3% in the manufacturing sector during the Eighth Plan, this
sector could attain only 4.2% and 8.4% growth rate in the 1992-93 and 1993-94 respectively.
3. INDUSTRY:
During the Eighth Plan, the industrial sector of the country has responded well to the economic reforms
process. Accordingly, the growth rates of industrial sector which was only 4.2% in 1992-93 gradually
rose to 6.6% in 1993-94, 9.3% in 1994-95, 12.2% in 1995- 96 and 6.0% in 1996-97.
The average growth rate attained by the industrial sector during the Eighth Plan (1992-97) was
estimated at 8.0%. The Eighth Plan set ambitious targets of attaining growth rate of 2.6% in
employment generation along with the annual average growth rate of 5.6% in GDP. Accordingly, it
was estimated that on an average about 8 to 9 million additional employment opportunities would be
generated every year during the Eighth Plan.

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 4. INFLATION:
During the Eighth Plan the behaviour of prices was not satisfactory. In 1992-93, the wholesale price
index of the country rose by 7%. In 1993-94, although the Government wanted to control the growth
of price level by 5% but ultimately wholesale price index in this year finally rose by 11% and thus
crossed the double digit level.
In a nutshell the 8th five year Plan was more successful in meeting its objectives as compared to the
previous five year plan.

NINTH FIVE YEAR PLAN (1997-2002):

The Ninth Plan has been launched in the 50th year of the independence of our country. The principle
task of the Ninth Plan will be to usher in a new era of people-oriented planning, in which not only the
Governments at the Centre and the States, but the people at large, particularly the poor, can fully
participate. A participatory planning process is an essential pre-condition for ensuring equity as well

as accelerating the rate of growth of the economy. The objective of the plan is to achieve a growth rate
of 7% per annum.

Objectives of Ninth Five Years Plan:

The major objectives of Ninth Five Years Plan stated are as under:
 Priority to agriculture and rural development with a view to generating adequate productivity
employment and eradication of poverty;
 Accelerating the growth rate of the economy with stable prices;
 Ensuring food and nutritional security for all, particularly the vulnerable sections of society;
 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;
 Containing the growth rate of population;
 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;
 Promoting and developing people’s participatory institutions like Panchayat Raj Institutions,
co-operatives and self-help groups.

Analysis of the Ninth five year plan:

1. GROWTH:
Regarding annual growth rate of GDP, although the approach paper of the Ninth Plan initially set the
target of attaining 7.0% annual growth rate of GDP. But according to the Economic Survey 2001-
2002, the growth rate of GDP which has only 4.8% in 1997-98 gradually increased to 6.5% in 1998-

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99 and then decelerated marginally to 6.2% in 1999-2000 and then to 4.0 % in 2000-01 and then to 5.4
% in 2001-02.
Therefore, the annual average growth rate during the Ninth Five Year Plan (1997-2002) is now
estimated at 5.4 % which is lower than the plan target of 7%.
2. AGRICULTURE:
Although the draft Ninth Plan had set a target to attain annual average growth rate of 3.9 % in
Agriculture and allied sector but during the first three years of the Ninth Plan it has attained 2.7%
growth rate. The same sector attained the growth rate of - 2.7 % in 1997-98, 7.6 % in 1998-99, -0.9 %
in 1999-2000, -6.6% in 2000-01 and finally 6.8% in 2001-02
3. MANUFACTURING:
The growth rate of 8.2% was fixed in the manufacturing sector during the Ninth Plan. This sector could
attain on an average 4.9% growth rate during the first three years of the plan

4. SERVICE SECTOR:
The growth rate of 9.9% in the financial services sector was targeted in the Ninth Plan. The sector
could attain on an average 11.4% growth rate during the first three years of the plan. Again, in respect
of other services, as against the targeted growth rate of 6.6 %, the actual realisation of the target during
the first three years of the plan was 8.8%.
5. INFLATION:
During the first four years of the Ninth Plan, the price behaviour of the country reflects a moderate
behaviour in its price level. Accordingly, the average rate of inflation (WPI) which was 4.4% in 1997-
98, gradually rose to 5.9% in 1998-99 and then declined to 3.3% in 1999-2000 and again rose to 7.1
% in 2000-2001 and finally to 4.4 % in 2001-02.
The Ninth Five-Year Plan looks through the past weaknesses in order to frame the new measures for
the overall socio-economic development of the country. However, for a well-planned economy of any
country, there should be a combined participation of the governmental agencies along with the general
population of that nation. A combined effort of public, private, and all levels of government is essential
for ensuring the growth of India's economy.

TENTH FIVE YEAR PLAN (2002-2007):

The National Development Council (NDC), headed by Prime Minister Atal Bihari Vajpayee, approved
unanimously in December 2002 the Tenth Five-year Plan, envisaging an 8 % annual GDP growth. The
NDC decided to constitute four sub-committees to remove trade and investment barriers and improve
governance. One to deal with governance reforms as the “best policies and programmes can flounder
on the rocks of poor governance and implementation”; the second to consider all barriers to internal
trade on merits and to decide what would be the most appropriate steps that could be taken; the third

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to look into the wide range of controls and restriction from the past which hindered the creation of an
investor-friendly climate and work out ways to dismantle such barriers, and the fourth to look into
problems faced in transferring functions and resources to the Panchayat raj institutions.
Historically, five- year plans have not included a consideration of issues relating to the management
and mitigation of natural disasters. This is because in the traditional perception calamity relief is seen
as a non-plan item of expenditure. The plan emphasises the disaster mitigation components to be built
into the developmental projects.

Main Targets:

 Growth rate of GDP: 7.92 % per annum;

 Growth rate of agriculture and allied sectors: 3.97 %
 Manufacturing sector growth rate: 9.82 %. Growth rate of export: (2.3 % per year.)
 Creating of 50 million jobs in five years.
 5 % reduction of poverty target to 21 % by 2007 from the present 26 %.
 Doubling of per-capita income in 10 years from the present.
 Potable drinking water in all villages.
 Infant mortality rate to be reduced from 72 (in 1,000 births) in 1999 2000 to 45 in 2007.
 Increase in forest/tree cover to 25 % of land area by 2007.
 At least five years of schooling to all children by 2007.
 Increasing literacy rate to 75 % from 65 %; gender gap in literacy to be halved.

Critical Assessment:
1. GROWTH:
Though the economy (Gross Domestic Product) of the country was expected to grow at the rate of 8%,
it actually grew at 7.6 % during Tenth Plan (up to 2005-06). Thus the overall growth in the 10th Plan
was the highest achieved in any of the plan periods before but still was lower than the proposed target.
This shortfall is largely due to adverse weather conditions and natural calamities affecting the primary
sector.
2. AGRICULTURE:
In view of the critical importance of the agriculture sector, the Tenth Five Year Plan had targeted a
growth rate of 4 %. The actual performance in the first four years of the Tenth Plan has been far
below this target. Due to a severe drought in 2002-03, the first year of the Tenth Plan, the agriculture
sector witnessed a severe setback and the growth rate dipped to a low of (-) 21.93%. In the next year
2003-04, the growth was (-) 2.69 %. In 2004-05, due to a good monsoon, it bounced back to 15.09%.

3. SERVICE SECTOR:
The Services sector has been booming, causing a structural shift in the economy. The tertiary sector
showed a growth rate of 7.81% in 2002-03 which rose to 9.13% in 2005-06. The Sector is the fastest

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growing one with a growth rate of 8.73 % during the first four years of the Tenth Five Year Plan as
compared to the 7.42 % during the Ninth Plan. The target for the growth of the tertiary sector was
9.77%

4. POVERTY:
During the Tenth Plan, it was targeted to reduce the poverty ratio to 10% by 2007 and to achieve
near elimination by 2012. However, as per the data for the year 2004, the poverty ratio in the rural
areas of the country was 22%. In the urban areas, this ratio was 25%.

5. HEALTH:
The Tenth Plan targeted to reduce the Infant Mortality Rate (IMR) of the country from 52 per 1000
live births in 1999 to 28 per 1000 live births by the year 2007 and to reduce the Maternal Mortality
Rate (MMR) from 1.5 per 1000 births to 1.0 by the year 2007 and further to 0.5 by 2012. The IMR
has been reduced to 37 per 1000 live births in 2005 and MMR is 0.9 per 1000 live births in 2004.

ELEVENTH FIVE YEAR PLAN (2007-2012):

The National Development Council (NDC) had approved the Eleventh Plan on 19th December 2007
to raise the average economic growth rate to 9 % from 7.6 % recorded during the Tenth Plan. In order
to make growth more inclusive, the Eleventh Plan proposed to increase the agriculture sector growth
rate to 4 % from 2.13 % in the Tenth Plan. The basic theme of this plan period was “Inclusive
Growth”.
Main Targets of the Eleventh Five Year Plan:
 Accelerate GDP growth from 8% to 9% and then maintain at 9.5% in the 12th plan in order to
double per capita income by 2016-17
 Create 70 million new work opportunities.
 Reduce dropout rates of children from elementary school from 52.2% in 2003-04 to 20% by
2011-12.
 Reduce infant mortality rate to 28 and maternal mortality ratio to 1 % 1000 live births.
 Reduce Total Fertility rate to 2.1.
 Reduce educated unemployment to below 5%.

Critical Assessment:
1. GROWTH:
The growth rate recorded during the plan period was 7.9%, which was less than the target of 9%.
Population growth reduction target was achieved. There was reduction in unemployment, not through
job creation but due to more people becoming educated.

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 2. AGRICULTURE:
An important aspect of ‘inclusive growth’ in the Eleventh Five Year Plan (2007–12) is its target of 4
per cent per annum growth in GDP from agriculture and allied sectors. This target is not only necessary
to achieve the overall GDP growth target of 9 per cent per annum without undue inflation, but it is an
important element of ‘inclusiveness’. Growth in agriculture in 2007–08, the first year of Eleventh Plan
was 4.7 per cent. This continued with the strong growth recovery after 2004–05, which reversed a
prolonged deceleration since the mid-1990s. However, agricultural growth fell to 1.6 per cent in 2008–
09; and a severe drought in 2009 (the worst in 37 years) produced virtually flat growth because of
major losses in kharif output which also led to high food price inflation
3. EDUCATION:
The Eleventh Plan placed great emphasis on expanding access to education at all the three levels—
elementary education, secondary education, and higher education—and also on improving the quality
of education. The Plan envisaged a substantial increase in the share of the central sector plan resources
devoted to education and contained several initiatives at each of these three levels. A critical element
of the Eleventh Plan strategy in education was to achieve a paradigm shift from access to quality. Over
12 lakh teachers’ posts have been sanctioned and 10.22 lakh recruitments reported. This improved the
Pupil–Teacher Ratio (PTR) in primary schools from 36:1 in 2006–07 to 34:1 in 2008–09 while at
upper primary level it improved from 32:1 to 31:1 during the same period. The Mid-Day Meal Scheme
(MDMS) was launched in 1995 to support the Universalization of Primary Education (UPE) by
enhancing enrolment, retention, attendance, and simultaneously improving the nutritional status of
primary school children.

4. EMPLOYMENT:
The global financial crisis, which erupted in 2008 and led to a slowdown in the economy, was bound
to have an adverse effect on the employment situation compared with what would have prevailed under
normal circumstances. According to the Economic Survey 2009–10, employment in the organized
sector increased from 264.6 lakh persons in 2004–05 to 272.8 lakh persons in 2006–07 (that is, an
increase of only 3.1 per cent). The entire increase emanated from the organized private sector wherein
employment increased from 84.5 lakh persons to 92.7 lakh persons during the same period.
Employment in the organized public sector remained stagnant at 180.1 lakh persons.

5. HEALTH:
To reach the MMR target of 100 by 2012, the required rate of decline from 254 has to be, on an
average, 22 per year. Unfortunately, no data are available on the progress of MMR during the Eleventh
Plan period, that is, the period beginning2007–08. However, earlier data shows that MMR came down
from 301 to 254, that is, an average decline of 16 per year. Achieving the Eleventh Plan target clearly
requires much faster progress. State-wise decline during the pre-Eleventh Plan period varied from an

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average of 26 per year for Uttar Pradesh/Uttarakhand, 20 per year for Bihar/Jharkhand, 19 per year for
Rajasthan, and 18 per year for Orissa/West Bengal to 15 per year for Madhya Pradesh/Chhattisgarh.
The total fertility rate came down from 2.9 in 2005 to 2.6 in 2008, a decline of 0.1 per year. With some
more effort, it should still be possible to reach the target of 2.1 by 2012.

TWELFTH FIVE YEAR PLAN (2012-2017):

On 4th October, the government of India approved 12th five year plan (2012-2017) that aims to achieve
annual average economic growth rate of 8.2%. The aim of the 12th five year plan is to achieve “faster,
sustainable and more inclusive growth”. For this purpose, it seeks to achieve 4% growth in
agriculture sector and 10% in manufacturing sector. The total budget of the 12th five year plan has
been estimated at 47.7 lakh crore which is 135% more than that for the 11th five year plan.
BROAD OBJECTIVES:
 To reduce poverty.
 To improve regional equality across states and within states.
 To improve living conditions for SCs, STs, OBCs, other minority groups.
 To generate attractive employment opportunities for the youth of the country.
 To eliminate gender gaps.
12th Five Year Plan lists various growth indicators as follows:
 It aims at average GDP growth rate of 8%.
 It seeks to achieve 4% growth in agricultural sector.
 It aims at reducing head-count poverty by 10%.
 It aims at generating 50 million work opportunities in non-farm sector and providing skill
certification.
 Reducing Infant Mortality Rate (IMR) to 25, Maternal Mortality Rate (MMR) to 100 and
Total Fertility Rate (TFR) to 2.1
 Increasing infrastructure investment to 9% GDP.
 Provision of banking services for 90% households.
 Increase public spending from 1% (11th plan) to 2.5%of GDP by the end of 12 plan.
 Increasing gross irrigated area from 90 million hectares to 103 million hectares,
 Increasing Green cover by 1 million hectare every year.

CONCLUSION
A minimum standard of living could have been ensured for all if resources had been thought of, not
in money terms, but in terms of people. Economic development should not have been equated with
increasing the supply of goods but with providing opportunity for work to the entire population and
raising their productivity by better knowledge and better equipment.

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In spite of enormous advance in industrialisation there has been no change in the occupational pattern
of the country’s work force. In spite of an impressive development of the large-scale manufacturing
and infrastructure sectors, there was a negligible reduction in the share of agriculture in the work force.
It was 72% in 1911 and still 60% of labour force is in primary sector according to the data in 2001.
Investment and output have grown at a high rate but the production-mix and the technology-mix have
been so capital intensive that employment has not grown. Between 1961 and 1976, in modern factory
sector, investment increased 139% and output 161% but employment increased only 71%. Therefore,
employment per unit of gross output decreased by 34% and employment per unit of capital declined
by 28%. The higher output ratio also indicates that much employment has not been created in the
industrial sector, as capital intensity was higher for different investments. In 1999-2000 the
employment in secondary sector was 15.8% of the working population. In the period of economic
reform employment generation rate was reduced.
After 50 years of planning, the conditions created and sustained by the Government policy have
resulted in aggravating inequality in the distribution of wealth. Millions of people especially in rural
areas continue to languish on the border line of abject poverty if not of actual starvation.
One of the objectives of the planning is economic self-reliance; self-reliance means economy should
be attaining various types of securities such as food security, energy security, environmental security,
socio-political security.
Though in various fields we have made much progress, but we have not been able to bridge the
resource gap and a large part of the resources come from foreign sources. The private sector as well as
public sector has failed to generate adequate resources. We have also failed to create sophisticated
equipment and materials.
The economy has faced an uninterrupted inflationary process. The inflation varied from 5 to 10% per
annum. It has eroded purchasing power of the people, increased project costs, and reduced the
competitiveness of the economy. It has also affected rate of savings and real investment. Common
people have become hard hit by such inflation.
The resources allocation pattern does not show any consistent trend. Sometimes it was on industry or
sometimes it was on agriculture, after the first five year plan, agriculture got prime importance again
relatively in 10th plan (as union budget 2004-05 and common minimum programmes reveals.) whereas
with the exception of 4th plan, industry got relatively a largest chunk of resources (almost 25% of total
allocation).
The growth rate in the plan period in most cases has not been satisfactory. Excepting the years of 8th
and 9th plan growth rates were not consistent. Moreover, growth rates have not helped to remove
poverty and unemployment.
The product mix that has been generated has not helped poor people. Balance of payment situation has
not been satisfactory. We had always a deficit in the BOP.

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Another major area of setback is the inability to generate adequate revenue, which has given rise to
resource gap and deficit financing. There was generation of black money and corruption and failure to
tax black money income.
On the 15th August, 2014, Prime Minister Narendra Modi announced that India’s Soviet-inspired
vehicle for central planning, the Planning Commission would be dismantled and replaced with NITI
Aayog which focuses on ‘solutions’ and ‘innovations’. Ever since this announcement, there has been
a lot of debate on the merits and demerits of the proposal. While most analysts have agreed that the
planning commission has far outlived its utility, they have also added that the end of the Commission
should not imply the death of planning.

REFERENCES:

1. www.planningcommission.gov
2. Times of India (www.blog.timesofindia.indiatimes.com)
3. News India Express (www.newsindiaexpress.com)
4. Live India (www.liveindia.com)
5. One India (www.oneindia.com)
6. Ruddar Dutt, K. P. M. Shundaram, Indian Economy, S. Chand and Company Ltd
7. FIVE YEAR PLANS OF INDIA (wikipedia.org)
8. Review of Various Plans: Evaluation of Indian Planning and Development by Bhimasen
Hantal.

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