PLANNING IN INDIA

1. In 1938, the Indian National congress headed by Pandit J.L. Nehru appointed the National planning Committee (NPC) to prepare a plan for economic development.

2. The NPC was given the task of formulating a comprehensive scheme of national planning as a means to solve the problems of poverty and unemployment, of national defiance and of economic regeneration in general.

3. With the declaration of the World War II in September 1939 and putting leaders into prison, the NPC could not march ahead.

THE BOMBAY PLAN : THE PEOPLE’ PLAN AND THE GANDHIAN PLAN

1. One of the most widely discussed plans during the 1940’s was the Bombay plan prepared by the Indian capitalists.

2. It was a plan for economic development under considerable amount of government intervention.

3. It emphasized the industrial sector with an aim of trebling national income and doubling of per capita income within a 15 year period.

4. Some of the agreement made between NPC and the Bombay Plan club were:

· Agrarian restructuring i.e., Zamindari abolition, guarantor of minimum (or) fair prices for agricultural products.

· Rapid industrialization.

· Development of the essential consumer goods industries.

· Importance of promoting the medium-scale, small-scale and cottage industries.

· Both the plans wanted the state to play an active role in the economy through planning, controlling, and overseeing the different areas of the economy.

· Large scale measures for social welfare were favored by both the plans, which suggested to be based on issues like – right to work and full employment, the guarantee of minimum wage, water and sanitation, free education etc.

The People’s Plan :-

· An alternative to the Bombay plan was given by M.N. Roy in 1944. His plan came to be known as People’s Plan.

· His Idea of planning was borrowed from the soviet type planning.

· In this plan, priorities were given to agriculture and small scale industries. This plan favored a socialist organization of society.

The Gandhian Plan :-

· In the light of the basic principles of Gnadhian economic thinking, Sriman Narayan Agarwal formulated “The Gandhian Plan” in 1944.

· In this plan, he put emphasis on the expansion of small unit production and agriculture.

· Its fundamental feature was decentralization of economic structure with self contained villages and cottage industries.

PLANNING COMMISSION :-

1. The planning Commission was set up by the Government of India in March 1950.

2. It an extra constitutional and non statutory body.

3. It is an advisory body to the Government of India on India on an array of issues of economic development.

4. An autonomous body entitled to form its own views on important issues and place them before the governments.

Functions :-

· It was described as the “economic cabinet of the country as a whole:

· Make an assessment of the material, capital human resources, such of those resources as are found to be deficient in relation to the nation’s requirements.

· Formulate a plan for the most effective and balanced utilization of the country’s resources.

· Determine the nature of the machinery which will be necessary for successful implementation of the plan.

· Make such intuim or ancillary recommendations as appear to be appropriate either for facilitating the discharge of the duties assigned to it.

· To monitor the progress of various Central Ministries.

NATIONAL DEVELOPMENT COUNCIL (NDC) :-

1. The National Development Council was set up on August 6, 1952.

2. Reasons, why NDC was set up:

3. The planning Commission was not provided with its own implementation staff for the purpose. Therefore, the consent and co-operation of these federal units was a must.

4. Economic planning as a concept had its origin in the centralized system. The setting up of the NDC can be considered as a step towards decentralized planning.

5. The NDC serves the purpose of diluting the autonomous and rigid federal units of the union of India.

Functions of the NDC are :-

· To consider the proposals formulated for plans at all important stages and accept them

· To review the working of the plans from time to time.

· To consider the important questions of social and economic policy affecting national development.

· To recommend measures to secure the active participation and co- operation of the people, improve the efficiency of the administrative services.

THE FIVE YEAR PLANS :-

1. The strategy for development included a comprehensive planning for all round development a mixed economy approach to keep up the socialistic pattern of development, achieve a balanced development that would develop agriculture and industry, etc.

FIRST FIVE YEAR PLAN (1951-56) :-

1. This plan had a twofold objective.

2. To correct the disequilibrium in the economy caused by the Second World War and the partition of the country.

3. To initially simultaneously a process of all round development which would ensure a rise in national income and a steady improvement in the living standards of the people.

4. The plan also aimed at increasing the role of investment from 5% to 7% of the national incomes.

5. The growth rate achieved in this plan was 3.6%

SECOND FIVE YEAR PLAN (1956-61) :-

1. The basic aim under this was to attain greater equality of income and wealth and not private profit.

2. It promoted a pattern of development that would lead to the establishment of a socialistic society in India.

The main objectives are :-

· An increase of 25% in the national income.

· Rapid industrialization with special emphasis on the development of basic and heavy industries.

· Large expansion of employment opportunities.

· Reduction of the inequalities in income and wealth and a more even distribution of economic power.

· The plan aimed at increasing the role of investment from 7% to 11% of the national by 1960-61.

· This plan increased the scope of industrialization by increasing the production of iron and steel, heavy chemicals etc.

· For the first time long term economic policy was formulated and loans were taken from foreign countries.

· The growth rate achieved was 4%.

THIRD FIVE YEAR PLAN (1961-66) :-

1. This plan aimed at securing a marked advance towards self sustaining growth. The objectives were:

2. Increase in the national income of over 5% per annum and at the same time ensure a pattern of investment that would sustain this rate of growth during subsequent plan periods

3. Achieve self sufficiency in food grains and increase agricultural production to meet the requirements of the industry and exports.

4. Expand the basic industries like steel, chemicals etc. and to establish machine building ability.

5. Utilize fully the manpower resources of the country and ensure a substantial expansion in employment opportunities.

6. Bring down disparities of income and wealth.

7. The growth rate achieved was 2.2%

8. The national income in this plan was to increase by about 30% by 1965-66 and per capital income by about 17% during the period.

Annual Plans (1967,1968,1969) :-

· There were following reasons for the delay in the finalization of the fourth five year plan.

· Situation created by the Indo Pak conflict

· Two successive years of severe drought 1965-66adn 1966-67

· Devaluation of the currency in 1966.

· General rise in prices and erosion of resources available.

· Instead three annual plans were formulated within the frame work of the draft outline of the fourth plan.

· The emphasis of these plans was to adopt irrigation projects along which the use of high yielding variety (HYV) crops in the agriculture sector.

· In the industrial sector the stress was on the utilization of the existing capacity and on consumer goods industry.

FOURTH FIVE YEAR PLAN (1969-74) :-

1. This plan aimed at raising the standard of living of the people through porgrammes that would promote social justice and equality at the same time.

Salient features were :-

· Frequently double digit inflation.

· Unrefined increase in the fiscal deficits.

· Subsidy induced higher non plan expenditures and the first move in the direction of “nationalization”.

· Greater control and regulation of the economy.

· The rate of growth in national income was 3.3% per annum and the per capita income was 1.2% per annum

· The performance in industry as well as agriculture was not satisfactory.

FIFTH FIVE YEAR PLAN (1974-79) :-

1. This plan has its focus on poverty alleviations self – reliance.

2. Twenty point programme (1975) with a marginal importance has been given to the objective of “growth with stability”.

The objectives were :-

· Removal of poverty.

· Achievement of economic self reliance

· To achieve these objectives the procedure through was to get a 5.5% over all rate of growth:

· Expansion of productive employment.

· Extend programme of social welfare

· Export promotion and substitution of imports

· The fifth five year plan that was to be completed in March 1979 was completed earlier; by March 1978 by the Janata Party which came to rate achieved was 5.2%.

· The growth rate achieved was 5.2%

SIXTH FIVE YEAR PLAN (1980-85) :-

1. This plan aimed for the removal of poverty, generation of gainful employment and technology and economic self reliance.

2. The plan targeted a growth rate of 5.2% and achieved it.

3. It undertook the development of under developed areas of the country. It also concentrated on the refinement of technology.

4. It was the first perspective plan of the country stated for a long term of 15 years

5. It also saw a rapid growth in the service sector.

Achievements :-

· About 94% of the cost of investment was met from the domestic resources projecting the self reliance of the country.

· It was successful to achieving the required industrial development & agricultural growth.

· It also achieved aims of Social justice.

SEVENTH FIVE-YEARS PLAN (1985-90) :-

1. The guiding principles of the plan continued to be growth, equity and social justice, self-reliance improved efficiency & productivity.

2. The policies to accelerate growth in food grains production, increase employment opportunities & raise productivity were pursued in this plan.

3. The estimated growth rate was 5.6%

4. The Jawahar Rojgar Yojana (JRY) was launched in 1989 with the motive to create wage – employment for the rural poors.

5. The plan was not laid with a strong financial strategy, which put the economy into a crisis of unsustainable balance of payments & fiscal deficits.

Two Annual Plans (1991, 1992) :-

· The new government which assumed power at the centre in June 1991 dedicated to commence the Eighth Plan for the period 1992-97.

· The fiscals 1990-92 should be treated as two separate Annual plans.

· The basic thrust was on maximization of employment & social transformation.

EIGHTH FIVE-YEAR PLAN (1992-97) :-

1. This was launched in a typically new economic environment.

Objectives :-

· Generating adequate employment to achieve near full employment level by the turn of the century.

· Eradication of illiteracy in the age group of 15 to 35 years.

· Provision for health & availability of safe drinking water especially in villages.

· Self – sufficiency in food & generation of agricultural surplus

· Strengthening the infrastructure in order to support growth process on a sustained basis.

· Planning immediately needs to be ‘decentralized’

· Special emphasis on ‘co-operative federation’.

· ‘Market-based’ development advised to areas which could afford it.

NINTH FIVE - YEAR PLAN (1997-2002) :-

1. This plan was proposed with an aim of achieving 7% growth rate.

2. It introduced “fiscal discipline” & aimed to control rise in princes through controlling money supply.

3. Also aimed at resource mobilization & attract foreign direct investment.

4. The thrust of the plan was to achieve agricultural growth.

5. There was an emphasis on the seven identified Basic Minimum Services (BMS), which included:

· Safe drinking water

· Primary health service

· Universalisation of primary education.

· Public housing assistance to the shelter-less poor families.

· Nutritional support to children.

· Connectivity of all villages & habitations.

· Streaming of the public distribution system.

The issue of fiscal consolidation had its focus on:-

· Sharp reduction in the revenue deficit of the government including centre, status & the PSUs.

· Cutting down subsidies, collection of user charges on economic services, cutting down interest, wages, pension, PF etc.

· Decentralization of planning.

Tenth Five - Year Plan (2002 – 07) :-

This plan commenced with the objectives of greater participation of the NDC in their formulations.

Objectives :-

· Doubling per Capita income in 10 years.

· For the first time, the plan went to set the ‘monitorable targets’ for the centre as well as for the states.

· ‘Governance’ to be considered a factor of development.

· States role in planning to be increased.

· Policy & institutional reforms in each sector.

· Agriculture sector decreased as the prime moving force (PMF) of the economy.

· Increased emphasis on social sector i.e., education, health etc.

· The growth rate achieved was 7.6%

ELEVENTH FIVE- YEAR PLAN (2007-12) :-

1. The plan targets a growth rate of 10%

2. It emphasis the idea of ‘inclusive growth’

Objectives :-

· Accelerate GDP growth from 8% to 10 % & then maintain at 10% in the 12^th plan in order to double per capita income by 2016-17.

· Create 70 million new work opportunities.

· Reduce educated unemployment to below 5% & reduce poverty by 10 percentage points.

· Increase literacy rate for persons of age 7 years or more to 85%.

· Reduce infant mortality rate to 28 and maternal mortality ratio to 1 per 1000 live births.

· Reduce malnutrition among children of age group 0-3 to half its present level.

· Ensure electricity connection to all villages by 2009 & round the clock power.

· The growth rate achieved was 8%

· The issue of Price stability remained resonating for more than half of the Plan period.

TWELFTH FIVE - YEAR PLAN (2012-17) :-

1. This plan focuses on Growth, which is Faster; Inclusive and Sustainable.

2. The plan aims at a growth rate of 9%

Objectives :-

· It emphasis the need to intensify efforts to have 4% average growth in the agriculture sector during the plan period.

· The higher growth in agriculture which would provide broad based income benefits to the rural population & help restrain inflationary pressure.

· It proposes that the major flagship programmes which were instrumental for promoting inclusiveness in the Eleventh plan should continue in the Twelfth plan.

· The plan indicates that the energy needs of rapid growth will pose a major challenge.

· Commercial energy supplies will have to grow at a rate between 6.8 & 7% per year. Since India’s domestic energy supplies are limited, dependence upon imports will increase.

· Import dependence in the case of petroleum is projected to be 80% in the Twelfth Plan. In the case of coal, import dependence is projected to increase as the growth of thermal generation will require coal supplies.

· The need to take steps to reduce energy intensifies of production processes, increase domestic energy supply as quickly as possible & ensure rational energy pricing.

· It draws attention to evolving a holistic water management policy aiming at more efficient conservation of water.

· Need for a new legislation for land acquisition.

· Health, education & skill development will continue to be the focus areas in the plan.

· Requirement of large investments in infrastructure sector development in order to achieve 9% growth rate.

· This plan emphasized the importance of the process of fiscal correction.

· Resource limitations simply the need to prioritize carefully & that some priority areas e.g., health education & infrastructure.

· It also emphasizes the need for focusing more on efficient use of available resources in view of the resource constraints.