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Amity Law School, Lucknow

ECONOMICS ASSIGNMENT

FIVE YEARS PLANS IN INDIA

Submitted to:

Submitted by:

Dr. A. K. Sharma

Animesh Kumar
B.A.LL.B.(H) 2009-14 Enrol.No.A8108309035

Five Year Plans in India BRIEF STUDIES

PREFACE
This assignment take cares of the topic FIVE YEAR PLANS IN INDIA of Economics- III from social development perspective. Brief introduction, objectives and outcomes & achievements of plans, all have acquired very important place as a subject of Economic planning. I am sure my effort would these inclusions and will keep on guiding me as faculty have done earlier. I am extremely thankful to my faculty Dr. Anuj Kumar Sharma sir for the special care and extra time given to me for preparation of this assignment I took too much time to complete the given task.

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ACKNOWLEDGMENT
This assignment is intended to cover the Five Years Plans in India. Basic and pre-requisite information have been included. I acknowledge the inspiration and blessing of my respected faculty Dr. Anuj Kumar Sharma. He made my all doubt crystal clear. I am full of gratitude to my seniors Pratik Mishra, Mayank Dubey, Swastik Viswakarma and Abhas Sharma for the patience shown and encouragement given to complete this assignment. My heartful thanks are due to my friends Priyanshu, Gaurav and Purusharth for providing relevant resources. In the last but not the least, my sense of gratitude is due to AMITY LAW SCHOOL, LUCKNOW. Every effort has been made to avoid errors and mistakes; however their presence cannot be ruled out.

Animesh Kumar

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INDEX
1. INTRODUCTION..........................................................................................................1 2. FIRST FIVE YEAR PLAN (1951-56)...........................................................................2 3. SECOND FIVE YEAR PLAN (1956-61)......................................................................6 4. THIRD FIVE YEAR PLAN (1961-66).........................................................................8 5. FOURTH FIVE YEAR PLAN (1969-74)....................................................................10 6. FIFTH FIVE YEAR PLAN (1974-79).........................................................................14 7. SIXTH FIVE YEAR PLAN (1980-85)........................................................................17 8. SEVENTH FIVE YEAR PLAN (1985-90).................................................................19 9. EIGHTH FIVE YEAR PLAN (1992-97).....................................................................24 10. NINTH FIVE YEAR PLAN (1997-2002)...................................................................26 11. TENTH FIVE YEAR PLAN (2002-07).......................................................................27 12. ELEVENTH FIVE YEAR PLAN (2007-2012)...........................................................28 13. INDIAS 12TH FIVE YEAR PLAN TO FOCUS ON INCLUSIVE GROWTH.....30 14. CONCLUSION............................................................................................................31

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INTRODUCTION
When India gained independence, its economy was grovelling in dust. The British had left the Indian economy crippled and the fathers of development formulated 5 years plan to develop the Indian economy. The five years plan in India is framed, executed and monitored by the Planning Commission of India. The economy of India is based in part on planning through its Five-Year Plans, which are developed, executed and monitored by the Planning Commission. The Planning Commission was set up in March, 1950 by a Resolution of the Government of India which defined the scope of its work in the following terms: The Constitution of India has guaranteed certain Fundamental Rights to the citizens of India and enunciated certain Directive Principles of State Policy, in particular, that the State shall strive to promote the welfare of the people by securing and protecting as effectively as it may a social order in which justice, social, economic and political, shall inform all the institutions of the national life, and shall direct its policy towards securing, among other things, that the citizens, men and women equally, have the right to an adequate means of livelihood; that the ownership and control of the material resources of the community are so distributed as best to sub serve the common good ; and that the operation of the economic system does not result in the concentration of wealth and means of production to the common detriment.

The Planning Commission will 1. make an assessment of the material, capital and human resources of the country, including technical personnel, and investigate the possibilities of augmenting such of these resources as are found to be deficient in relation to the nation's requirements ; 2. formulate a Plan for the most effective and balanced utilisation of the country's resources ; 3. on a determination of priorities, define the stages in which the Plan should be carried out and propose the allocation of resources for the due completion of each stage ; 4. indicate the factors which are tending to retard economic development, and determine the conditions which, in view of the current social and political situation, should be established for the successful execution of the Plan ; 5. determine the nature of the machinery which will be necessary for securing the successful implementation of each stage of the Plan in all its aspects ; 6. appraise from time to time the progress achieved in the execution of each stage of the Plan and recommend the adjustments of policy and measures that such appraisal may show to be necessary ; and 7. make such interim or ancillary recommendations as appear to it to be appropriate either for facilitating the discharge of the duties assigned to it ; or, on a consideration of the prevailing economic conditions, current policies, measures and development programmes ; or on an examination of such specific problems as may be referred to it for advice by Central or State Governments."

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Major Bodies Behind the Making of Five Year Plans The organisation was set up to formulate basic economic policies, draft plans and watch its progress and implementation. It consists of: (i) Planning Commission of India (ii) National Planning Council (iii) National Development Council and State Planning Commissions

FIRST FIVE YEAR PLAN (1951-56)


In July, 1951 the Planning Commission presented a draft outline of a plan of development for the period of five years from April, 1951 to March, 1956. The Plan included a number of development projects which had been already taken in hand as well as others which had not yet been begun. The Draft Plan was divided into two parts, the first involving an expenditure of Rs. 1,493 crores and consisting largely of projects in execution which were to be implemented in any case, and the second proposing an outlay of Rs. 300 crores which was to be undertaken if external assistance were available. While the execution of development schemes which had been included in the plan after consultation with the Central Ministries and the State Governments was not to be affected, the Draft Outline was addressed to the country for general discussion and comment in the following words : Planning in a democratic State is a social process in which, in some part, every citizen should have the opportunity to participate. To set the patterns of future development is a task of such magnitude and significance that it should embody the impact of public opinion and the needs of the community. We have, therefore, felt it necessary, before presenting our proposals in complete detail, to offer a Draft Outline of the Plan. The Draft is intended to be a document for the widest possible public discussion. We hope to have further consultations with the Central Ministries, State Governments and our own Advisory Board and Panels, and also to obtain the views of Members of Parliament before we finalise the Plan." Objectives: i) To increase food production. ii) To fully utilise available raw materials. iii) To check inflationary pressure. Since its publication, the Draft Outline has been examined in detail by the Central Government and the State Governments. ) It was based on Harrod-Domar Model. It has been discussed in Parliament and most of the Legislatures in the States. A large number of organisations representing industry, commerce, labour, farmers and other interests have expressed their views. At the request of the Planning Commission, many educational institutions set up seminars of teachers and students to study the plan and send their comments to the Commission. Many district boards and municipal committees also commented on the Plan. In every district groups of officials and non-officials met together to study the Plan in relation to their local problems. Ever since its publication the Draft Outline has been a subject of extensive comment in the daily press and in periodicals. A considerable volume of literature in the form of books and pamphlets prepared by independent writers has also become available. Thus, as a result of the discussion which has taken place, every aspect of the proposals in the Draft Outline has been subjected to the fullest possible examination. The Planning Commission has endeavoured to make a careful study of the material which has been received during the past eighteen months. It has had the opportunity also of working out Animesh Kumars Economics Assignment | Amity Law School, Lucknow 2

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details of many projects and pursuing its own studies in different fields. In each sphere of national development the Commission has conferred with the Central and State Governments and their experts as well as with men and women of knowledge and experience outside the Government. The Commission also consulted its Advisory Board and some of its Panels. Recently, the Commission has held consultations with representatives of the principal political parties, leading women workers and some members of Parliament. The first Indian Prime Minister, Jawaharlal Nehru presented the first five-year plan to the Parliament of India on 8 December 1951. 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.[3] The total planned budget of 206.8 billion (US$23.6 billion in the 1950 exchange rate) was allocated to seven broad areas: irrigation and energy (27.2 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).[4] The most important feature of this phase was active role of state in all economic sectors. Such a role was justified at that time because immediately after independence, India was facing basic problemsdeficiency of capital and low capacity to save. The target growth rate was 2.1% annual gross domestic product (GDP) growth; the achieved growth rate was 3.6%. The net domestic product went up by 15%. The monsoon was good and there were relatively high crop yields, boosting exchange reserves and the per capita income, which increased by 8%. 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. The University Grant Commission was set up to take care of funding and take measures to strengthen the higher education in the country. Contracts were signed to start five steel plants, which came into existence in the middle of the second fiveyear plan. All the development projects included in the Draft Outline are of course included in the Plan as it has been now prepared and, as mentioned earlier, many of them are in progress. A number of additions and changes in presentation have been made. The principal changes made in the Plan as compared to the Draft Outline are explained, however, by the attempt to strengthen the Plan, with due regard to the resources which could be foreseen, at those points at which it was felt that the earlier proposals fell short of the needs of the country. In the field of agriculture and community development, for instance, additional programmes have been introduced with a view to ensuring that the targets of agricultural production will be reached. These include a provision of Rs. 90 crores for community development projects, Rs. 30 crores for additional minor irrigation programmes and provision for the establishment of a national extension organisation. Among other urgent problems for which provision has been made may be mentioned soil conservation, resettlement schemes for landless agricultural workers, and training and experiments in co-operative organisation. In the field of irrigation and power development, in addition to providing for projects already in hand, funds have been allocated for undertaking certain new river valley schemes which are considered vital Animesh Kumars Economics Assignment | Amity Law School, Lucknow 3

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for the development of large regions served by them. To keep pace with progress in other sectors of the economy, especially in industry and irrigation and power, increased provision has been made for railways, roads, civil aviation, posts and telegraphs and ports. Programmes for major ports which did not find a place in the Draft Outline have now been included in the Plan. In the Draft Outline, owing to the greater urgency of the programmes for agriculture and irrigation, the provision made for the development of industry in the public sector was insufficient. In the Plan as now presented, in addition to providing for an integrated steel plant, Rs. 50 crores have been allocated for further expansion of basic industries,including manufacture of heavy electrical equipment and fertilisers, and for increased transport facilities required for industry and mineral development. Village industries, small-scale industries and handicraft, whose importance for the economy as a whole can scarcely be exaggerated, have been given greater emphasis in the Plan. In addition to the setting up of new boards for khadi and village industries and for handicrafts, the imposition of a cess on mill made cloth to assist the development of khadi and handloom, and measures taken for the reservation of certain lines of production in favour of the handloom industry, the Central Government's plan provides Rs. 15 crores for cottage and small-scale industries. In the field of social services also, the Plan has several important programmes. These include a national malaria control scheme estimated to cost Rs. 10 crores, increased provision for scheduled tribes and scheduled areas and for scheduled castes and other backward classes, including criminal tribes, a programme for industrial housing costing about Rs. 49 crores, increased allocation for technical education and provision for youth camps and labour service for students. Provision is also made for carrying forward the rehabilitation of displaced persons from West Pakistan and it has been made clear that if circumstances so warrant it will be necessary to provide larger funds for the rehabilitation of displaced persons from East Pakistan. In three other directions important additions have been made. In order to avoid adverse effects on the implementation of the Plan in the States on account of monsoon failures which occur from time to time in different parts of the country, a provision of Rs. 15 crores for assistance to scarcity-affected areas has been made in the Central Government's plan. Secondly, each State plan is being broken up into plans for districts and sub-divisions of districts so that these may be further supplemented through the effort and co-operation of the local people. In the nature of things, State plans cannot provide for all the possible needs of the people and it is necessary both to integrate them with the programmes of district boards and municipalities and to add to them other local programmes designed to meet the felt needs of the people. In addition, to assist local works to which the people themselves contribute in labour and otherwise, the Plan allocates a sum of Rs. 15 crores over the next three years. Finally, a national plan which embraces both the public and the private sectors may yet be incomplete unless the enthusiasm and support of large numbers of voluntary organisations and voluntary workers engaged in constructive work can be harnessed for national development. To provide an increasing field of work for the ' people's sector ', as it were, the Plan provides a sum of Rs. 4 crores to be utilised for assistance to voluntary social welfare organisations at the instance of a social welfare board to which a great deal of administrative authority may be devolved. A word may also be added about the provision of Rs. 50 lakhs made in the Plan for research and investigation into social, economic and administrative problems relating to national development. In many fields sufficient data are wanting to enable policies to be formulated. It is proposed, therefore, to organise, in co-operation with Animesh Kumars Economics Assignment | Amity Law School, Lucknow 4

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universities and other institutions, special investigations into selected problems of development. Besides the plan for the public sector, the Planning Commission has formulated development programmes for forty-two industries in the private sector. These programmes have been prepared in co-operation with the Ministry of Commerce and Industry and after full discussion with representatives of individual industries. The programmes for industrial development have been indicated briefly in this report and are to be presented in a separate volume. The Five Year Plan sets out the programmes of development and also outlines general proposals and policies in each field of development. The report is divided into three parts. The first part contains an analysis of the process of development in an under-developed economy and indicates the long-term goals towards which national effort is to be directed. The objectives, priorities and techniques of planning are set out at some length and an assessment is made about the resources which have to be mobilised in order to carry out the Plan. The first part of the report concludes with a summary statement of the Five Year Plan and of what is sought to be achieved through it. The second part of the report is concerned with administration and public co-operation. Several suggestions are offered for the reform of public administration. On the question of administration of development programmes at the district level, where vital nation-building work is undertaken and the participation of the people is all-important, a number of proposals are offered for consideration and action on the part of State Governments and other authorities. This portion of the report closes with the consideration of the problems of public co-operation in national development, a theme which, because of its high importance and urgency, recurs throughout the report. In the third part of the report, we outline the various programmes of development. These are grouped under three broad heads, namely, agriculture, irrigation and community development; industry and communications; and social services and employment. Each aspect of development is taken up in turn, needs and resources assessed and the Commission's own proposals for policy and action presented. In a separate volume, details are given concerning the principal development schemes included in the Five Year Plan. Important questions of policy relating, for instance, to the land problem, the food problem, provision of finance for agriculture, common production programmes for small-scale and large-scale industries, selection of irrigation and power schemes and conservation of mineral resources have been under close examination in the Planning Commission. In making its recommendations, the Commission is conscious that the framing of social and economic policies in different fields is a continuous process and that, within the framework of priorities and objectives now formulated, such changes as may be necessary in the interest of national development will be made as further experience is gained and ideas are tested in practice. In the field of policy the Central and State Governments have to act in close co-operation with one another. Such co-operation will be greatly facilitated as a result of the setting up in August, 1952 of the National Development- Council which includes the Prime Minister of India and the Chief Ministers of all States. The fulfilment of the Five Year Plan calls for nation-wide co-operation in the tasks of development between the Central Government and the States, the States and the local authorities, with voluntary social service agencies engaged in constructive work, between the administration and the people as well as among the people themselves. Although several programmes included in the Plan are already under way, it is important that, through sacrifice Animesh Kumars Economics Assignment | Amity Law School, Lucknow 5

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borne equally by all citizens, the effort and resources of the entire nation should be mobilised in support of the Plan so that, during the coming years, the tempo of development can be greatly increased and the Plan becomes a focus of intense activity and a field of common endeavour throughout the country.

SECOND FIVE YEAR PLAN (1956-61)


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 maximise longrun 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 Statiatical Institute. The plan assumed a closed economy in which the main trading activity would be centered on importing capital goods. The main objective was to launch upon industrialisation and strengthen the industrial base of the economy. It was in this light that the 1948 Industrial Policy Resolution was revised and a new resolution of 1956 was adopted. The Second Plan started with an emphasis on the expansion of the public sector and aimed at the establishment of a socialistic pattern of society. Objectives: i) A sizeable increase in national income so as to raise the level of living. ii) Rapid industrialisation of the country with particular emphasis on the development of basic and key industries. The Plan was considered in draft by the National Development Council which passed the following Resolution on the 2nd May, 1956: "HAVING considered the Draft Second Five Year Plan, "THE National Development Council places on record its general approval and acceptance of the objectives, priorities and programmes embodied in the Plan; and "RELYING on the enthusiasm and support of the people; "AFFIRMS the common determination of the Central Government and the Governments of all the States of the Union of India to carry out the Plan, and to improve upon the targets set out in it; and "CALLS upon all the citizens of India to work wholeheartedly for the full and timely realisation of the tasks, targets and aims of the Second Five Year Plan." The beginning and the end of a Five Year Plan are vital dates in the nation's history. Each Five Year Plan is both an assessment of the past and a call for the future. It seeks to translate into practical action the aspirations and ideals of the millions in the country and gives to each Animesh Kumars Economics Assignment | Amity Law School, Lucknow 6

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of us the opportunity of service in the common cause of eliminating poverty and raising standards of living. The First Five Year Plan ended in March 1956. Its approach and outlook are part of our common thinking. It has laid the foundations for achieving the socialist pattern of societya social and economic order based upon the values of freedom and democracy, without caste, class and privilege, in which there will be a substantial rise in employment and production and the largest measure of social justice attainable. Work on the Second Five Year Plan has been in progress for about two years. In April 1954, the Planning Commission requested State Governments to arrange for the preparation of district and village plans, especially in relation to agricultural production, rural industries and co-operation. The preparation of such plans was undertaken as it was felt that in sectors which bear closely on the welfare of large numbers of people, local planning is an essential .means for securing the maximum public participation and voluntary effort. While plans for districts and villages and for national extension and community project areas have to be fitted within the framework of State plans which, in turn, take cognizance of plans prepared from the point of view of the economy of the country as a whole, the district is still the pivot of the whole structure of planning. At this point plans from different sectors come intimately into the life of the people. The study of wider aspects of national planning also commenced during 1954. Towards the end of the year the assistance of the Indian Statistical Institute was obtained for the study of technical and statistical problems relating to national planning, and a number of working papers were prepared at the Institute. In March 1955, the results of these and other studies were brought together in Professor P. C. Mahalanobis's 'Draft Recommendations for the Formulation of the Second Five Year Plan' (referred to as the 'plan-frame') and in a 'Tentative Framework for the Second Five Year Plan' which was prepared by the Economic Divisions of the Ministry of Finance and the Planning Commission. These documents were considered in April 1955 by the Planning Commission's Panel of Economists, which drew up a 'Memorandum on Basic Considerations Relating to the Plan-Frame'. Members of the Panel also prepared a number of studies on individual aspects. The 'plan-frame' and the other documents mentioned above were considered by the National Development Council early in May 1955. The National Development Council generally agreed with the basic approach of the draft 'plan-frame' and 'tentative framework' and with the policy considerations relating to it which were put forward in the Memorandum of the Panel of Economists. The Council also agreed that the Second Five Year Plan should be drawn up so as to be capable of leading to an increase in national income of about 25 per cent over a period of five years and of providing employment opportunities to 10 to 12 million persons. Further, the Council directed that the Second Five Year Plan should be drawn up so as to give concrete expression to policy dficisions relating to the socialist pattern of society. Between July and December 1955, the Planning Commission held discussions with Central Ministries and with State Governments. Discussions with each State afforded an opportunity to review the broader aspect of individual State plans in consultation with Chief Ministers Detailed examination of the proposals of States took place in working groups in which senior officials from the Central Ministries, State Governments and the Planning Commission collaborated. Animesh Kumars Economics Assignment | Amity Law School, Lucknow 7

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During January 1956, a Draft Memorandum embodying the proposals which emerged from these discussions was considered by the National Development Council and the Consultative Committee of the Members of Parliament. In the light of these discussions and other comments, a Draft Outline was published in February 1956 for general information and for eliciting comments and suggestions. Suggestions received on the Draft Outline were taken into consideration in the preparation of the Draft Second Five Year Plan. In the course of the past year certain considerations have impressed themselves upon the minds of those concerned with the formulation of the Second Five Year Plan. A Plan for a period of five years has to be viewed in the social and economic perspective of a longer period. It has to be worked in a flexible manner so that, through annual plans, adjustments are effected in the light of economic and financial trends, increase in production in agriculture and industry, and progress in different sectors of the Plan. Close coordination has to be arranged in the related fields of industry, transport, minerals and power, so that the expenditure incurred on each group of connected projects yields the maximum return. As the National Development Council recognised, to offset inflationary pressures associated with a period of rapid development, it is imperative that the targets of agricultural production proposed in the Plan should be further improved upon. At each stage adequate supplies of food and cloth and of essential consumer goods will have to be provided at reasonable prices and a careful watch on the working of the national economy maintained. Our Second Five Year Plan seeks to rebuild rural India, to lay the foundations of industrial progress, and to secure to the greatest extent feasible opportunities for weaker and underprivileged sections of our people and the balanced development of all parts of the country. For a country whose economic development was long retarded these are difficult tasks but, given the effort and the sacrifice, they are well within our capacity to achieve. The Plan which is now presented to Government for submission to Parliament is a result of the labours of large numbers of persons in the Central Government, in the States at various levels and leaders of thought and opinion in every part of the country. In its preparation men and women in all walks of life have given generously of their time and experience. The enthusiasm and the widespread participation which have gone into the making of the Second Five Year Plan are the best augury for its fulfilment.

THIRD FIVE YEAR PLAN (1961-66)


In the third Plan, the emphasis was on long-term development. The Third Plan report stated that during the five-year period concerned, the Indian economy must not only expand rapidly but, at the same time, become self-reliant and self-generating. Objectives: i) An increase in national income of more than 5 per cent annually. The investment pattern laid down must be capable of sustaining this growth rate in the subsequent years. ii) An increase in the agricultural produce and to achieve self sufficiency by increasing food grain production. iii) Greater equality of opportunities, more even distribution of economic power and reducing wealth and income disparities. The third plan stressed on agriculture and improving production of wheat, but the brief SinoIndian 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 Animesh Kumars Economics Assignment | Amity Law School, Lucknow 8

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inflation and the priority was shifted to price stabilisation. 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 grassroots level, Panchayats 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 5.6 percent. The achieved growth rate was 2.84 percent. Two Five Year Plans have helped strengthen the foundations of economic and social life and stimulated industrial and economic growth and scientific and technological advance. The Third Five Year Plan seeks to give a more precise content to the social objectives of the Constitution and represents a large advance towards their realisation. It takes account of the successes and the failures in the first two Plans and sets the tasks to be fulfilled in the perspective of development over the next fifteen years and more. Work on the preparation of the Third Plan commenced towards the end of 1958 and was carried out in three main stages. The first, leading to the publication of the Draft Outline early in July, 1960, comprised detailed studies by working groups set up at the Centre and in the States. Parliament gave its general approval to the Draft Outline in August, 1960. The Draft Outline was discussed throughout the country and served as the basis for the preparation of the plans of States. These were considered with the Chief Ministers of States between September and November, 1960. In January, 1961, the National Development Council made its recommendations concerning the overall size and the structure of the Third Plan; the Council also set up a Committee on Savings to suggest ways of securing the maximum mobilisation of resources for the Third Plan. Finally, on May 31 and June 1, 1961, the National Development Council considered the Draft Report on the Third Plan and generally approved it. The objectives and priorities of the Third Plan were considered carefully by five Parliamentary Committees in November, 1960, and every effort has been made in this Report to avail of the suggestions and comments offered by these Committees. Several aspects of the Plan were placed from time to time before the Committee of Members of Parliament from different political parties presided over by the Prime Minister. The Consultative Committee of Members of Parliament associated with the Planning Commission also reviewed the Plan at various stages. Throughout the preparation of the Plan, leading public men and scholars, professional associations, organisations representing industry and labour, and independent experts generously gave of their time and experience. The Planning Commission had the benefit of advice and suggestions from its Panel of Economists, Panel of Scientists, and Panels on Land Reform, Agriculture, Education, Health and Housing. It was also helped by studies initiated by the Programme Evaluation Organisation, the Research Programmes Committee, the Committee on Plan Projects, the Central Statistical Organisation, the Indian Statistical Institute and other leading organisations engaged in research. Efforts to prepare plans at the Animesh Kumars Economics Assignment | Amity Law School, Lucknow 9

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district, block and village level, specially for the development of agriculture, cooperation, education and rural industries, were an integral part of the process of drawing up the plans of States as well as the National Plan. These local plans are a vital element in the success of Panchayati Raj, which places in the hands of the people of each area the initiative and responsibility for their own development and the means and resources for rapid advance. The preparation of the Third Plan has been, thus, a vast national undertaking in which valuable contributions have come from many sources, and at every stage there has been the closest collaboration with the State Governments and the Central Ministries. The Third Plan represents the first phase in a scheme of long-term development extending over the next fifteen years or so, the preparation of which will now be taken in hand. In the course of this period, India's economy must not only expand rapidly but must, at the same time, become self-reliant and self-generating. This' long-term approach is intended to provide a general design of development for the country's natural resources, agricultural and industrial advance, changes in the social structure and an integrated scheme of regional and national development. The Plan sets large objectives and targets for the five-year period. They are large only in comparison with the past, not in relation to needs or to the nation's capacity to achieve. They constitute a minimum which must be assured, but their true purpose is to open the way to a still more intensive endeavour and a deeper sense of urgency. The size of the task and the many-sided challenge should not be underestimated. The greatest stress in the Plan has to be on implementation, on speed and thoroughness in seeking practical results, and on creating conditions for the maximum production and employment and the development of human resources. Discipline and national unity are the very basis of social and economic progress and the achievement of socialism. At each step, the Third Plan will demand dedicated leadership at all levels, the highest standards of devotion and efficiency from the public services, widespread understanding and participation by the people, and willingness on their part to take their full share of responsibility and to bear larger burdens for the future.

FOURTH FIVE YEAR PLAN (1969-74)


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. After the Plan Holiday, the Fourth Plan was begun in 1969. Objectives: i) To achieve stability and progress towards self-reliance. ii) To achieve an overall rate of growth of 5.7 per cent annually. iii) To raise exports at the rate of 7 per cent annually. Animesh Kumars Economics Assignment | Amity Law School, Lucknow 10

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Planning is the vital instrument we have adopted to realise the social objective enshrined in our Constitution. Though the Five Year Plans we have already achieve a significant increase in the national income in the past eighteen years and laid the foundations of technological advance. The Plan is fast modernising our agriculture and strengthening and diversifying our industry. Above all, it has reinforced national unity and purpose. The attack on our territory in 1962 and again in 1965 forced us to modify the pattern of national expenditure. Before we could reconcile the competing claims of development and defence, drought struck us. Foreign credits became uncertain, Recession followed. All these seriously restricted our freedom of choice. We had to divert our energies to fight drought and nean famine and their aftermath. For some time, long-term planning had to be virtually suspended. But we succeeded in turning adversity to good use. We concentrated on import substitution which further enlarged our industrial base. This along with the need for more foreign exchange put us on the path of a more fruitful export drive. We maintained our investment in development work, especially in intensive agricultural programmes. A new period has how opened. There is a welcome upsurge in the economy, and the increases in agricultural production have brought us nearer to self-sufficiency in food grains. But, inevitably, there are other problems, and a fresh challenge to face. Rural disparities have increased, partly owing to the very efforts we have made to move rapidly towards selfsufficiency in food, and partly owing to certain tardiness in the matter of implementing the land reforms. Although the industrial recession has waned, new industries are not coming up fast enough and unemployment, especially of technically trained persons, continues to be acute. We have a larger and, understandably enough, a more articulate population. Planning is the method to which we are committed for meeting such challenges. We have carried out three Five Year Plans. Each Five Year Plan has addressed itself especially to problems which have emerged either because of new political and economic developments in the country and in the world, or as a consequence of progress already achieved. The priorities and the emphasis have necessarily changed and have had to be adjusted from Plan to Plan, but we have always kept in view our long-term objectives. The Fourth Plan represents a conscious, internally consistent and careful!} thought out programme for the most efficient exploitation of our resources possible in existing conditions. The basic aim is to raise the standard of living of the people, especially of the less privileged sections of society. Our planning should result not only in an integrated process of increased production, but rational distribution of the added wealth. The overriding inspiration must be a burning sense of social justice. While increased production is of the utmost importance it is equally important to remove or reduce, and prevent the concentration of wealth and economic power. The benefits of development should accrue in increasing measure to the common man and the weaker sections of society, so that the forces of production can be fully unleashed. A sense of involvement, of participation by the people as a whole, is vital for the success of any plan of rapid economic growth. This can only be evoked by securing social justice, by reducing disparities of income and wealth, and by redressing regional imbalances. A reorientation of our socio-economic institutions in this spirit is accordingly, a first necessity. One year of this Plan has already gone by. Between the Draft Plan and the present document, certain important changes have been made. The projected investment in the public sector has been stepped up so as to enable us to undertake a larger and bolder agenda of work. New Animesh Kumars Economics Assignment | Amity Law School, Lucknow 11

Five Year Plans in India BRIEF STUDIES


schemes have been added to help the small farmer throughout the country, especially in the un-irrigated areas. The emphasis is squarely on areas that have hitherto suffered from neglect. Transport and housing problems in urban regions will receive more attention. A small but significant beginning is also being made with special programmes for children. The Fourth Plan thus provides a necessary corrective to the earlier trend which helped particularly the stronger sections in agriculture as well as in industry to enable them rapidly to enlarge and diversify the production base. In the long run, the full potential of growth cannot be realised unless the energies of all our people are put to profitable use. The emphasis on spreading the impetus and benefits of economic growth to the weaker sections is thus necessary in the interest of equality as well as growth. The Plan will now assist the less prosperous sections of our farming population to improve their position and make a yet bigger contribution to the national economy. Greater industrial activity and the modernisation of agriculture such as is proposed through the wider use of electric power and the adoption of intensive methods of cultivation in both irrigated and dry areas, would mean that a larger proportion of young people seeking jobs could find employment nearer home. At the same time, there are some new schemes, e.g.,for a network of service centres in the rural areas, which will open out opportunities for young entrepreneurs. The nationalisation of the fourteen big banks is evidence of our determination to bring a greater volume of resources within the area of social decision. It has effected a major change in our economic structure. It enables us to pay more attention to the "small man's" needs, and it restricts the scope for the monopolistic operations of the privileged few. Among other areas where social considerations have still to make a comparable impact are the enforcement of land laws, the management of public sector enterprises, and the toning up of the administration as a whole. There can be no doubt that the responsibilities devolving upon the public sector without diminishing those of the private sector, in our mixed economywill grew in range and volume. Socialism involves a reordering of society on a rational and equitable basis and this can only be achieved by assigning an expanding role to the public sector. Following the reorganisation of credit policies resulting from the nationalisation of major banks, the public sector can be expected more and more to occupy the commanding heights of the economy. It alone would be in a position to undertake investments of the requisite magnitude in such industries of vital importance to us as steel, machinery, machine tools, power generation, ship-building, petrochemicals, fuels and drugs. Naturally, the administration of public enterprises poses some problems of its own (here as in other countries) but they are not insuperable and will be overcome as we gain experience. In addition to the fight against poverty and economic inequalities, the Plan seeks to enlarge the area of self-reliance in terms of financial resources and technological inputs. Here, too, the public sector has an important part to play. Besides striving^ to set an example in better management methods and ushering in a new pattern of worker management relations, the public sector should increasingly base itself on domestic know-how. The public and private sectors have both been too ready to look to foreign collaboration not only for financial but for technological resources. Such collaboration may be unavoidable when new processes have to be introduced but excessive reliance on it has induced a state of mind which inhibits the development of our own technological skills and managerial talents. We should rely more and more on our own machinery and technical know-how, even though it may entail some initial risks and difficulties. This does not mean that we should be indifferent to the latest Animesh Kumars Economics Assignment | Amity Law School, Lucknow 12

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developments in technology, especially in the fast growing sectors. But it would be folly to forget that a nation's strength ultimately consists in what it can do on its own and not in what it can borrow from others. There has been a noticeable change in recent years in the climate of international economic cooperation. It is now increasingly reaffirmed by responsible sections of public opinion in the lending as well as in the borrowing countries that development assistance should not be regarded as an instrument of foreign or commercial policy but as a means of correcting dangerous imbalances in the world economy. However, "aid" is in reality credits which have to be repaid; and even if such credits are available on terms which are concessional in some respects, they often have features which are not consistent strictly with the objective of development. For some time to come we can benefit by more external credits, especially untied credits on concessional terms. But we have to take note of international realities as they are and reduce our reliance on foreign credits. The policy of self-reliance does not mean that we should be actually reducing imports from the rest of the world. In fact, as the pace of development quickens, imports of industrial raw materials, intermediates and special components will go up. But we propose to pay for them increasingly through our own earnings from exports. Economic independence, therefore, hinges to a considerable extent on how we fare in export markets; and our export performance in turn would depend on the state of our economy at home and our success in developing a purposive, planned approach to the problem. The complaint that planning has led to a rise in prices and that planning is, therefore, harmful, is misconceived and unfounded. Consumers with fixed incomes, particularly in urban areas face hardship when prices rise; but at the other extreme, when prices are reduced or depressed to uneconomic level, producers suffer and employment sags. If development means larger real incomes to ever larger numbers of people, some price increases can hardly be avoided. What we must ensure, however, is stability in respect of the core items of family consumption. An adequate supply of food grains and articles of everyday use must be maintained at fairly stable prices. Agricultural scientists who have brought about such notable increases in yields of wheat, and to some extent of millets and rice, have now turned to the task of bringing about similar gains in pulses and cash crops like oilseeds, cotton and sugarcane. In general, the possible impact of development plans on the price situation has been carefully studied, and every effort will be made to keep production and prices in balance. Planning certainly has its critics, but the fact remains that in modern conditions, and in a developing country like ours, economic planning has become indispensable. Compared to the tasks to be accomplished, the resources of money, trained manpower and administrative and managerial skills are in short supply, and they have to be allocated primarily with a view to the national interest rather than the interest of any private individual or group. This is, after all, what the Plan seeks to do. At the same time, and through such rational allocation, it can lead to an augmentation of the now scarce resources, and this gradually extend the limits of our economic freedom. For us in India, planning is a charter of orderly progress. It provides a framework of time and space that binds sectors and regions together and relates each year's effort to the succeeding years, impelling us all constantly to greater cooperative endeavour. By strengthening the Animesh Kumars Economics Assignment | Amity Law School, Lucknow 13

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economic fabric of the country as a whole and of the different regions, it makes a powerful contribution to our goal of national integration.

FIFTH FIVE YEAR PLAN (1974-79)


The Plan was formulated against the background of sever inflationary pressure. Objectives: In addition to removal of poverty and attainment of self-reliance, the Fifth Plan had the following major objectives. i) 5.5 per cent overall rate of growth in Gross Domestic objectives. ii) Expansion of productive employment and fuller utilisation of existing skills and equipment. iii) A national programme for minimum needs and extended programmes of social welfare. 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 leaders. The Indian national highway system was introduced for the first time and many roads were widened to accommodate the increasing traffic. Tourism also expanded. The Draft Fifth Five Year Plan was formulated in terms of 1972-73 prices and in the context of the economic situation obtaining in the first half of the fiscal year 1973-74. Thereafter, two major developments took place. The inflationary pressures gathered momentum till September, 1974; and the balance of payment position worsened due to the steep rise in the prices of imported oil and other materials. The first intimations of the inflationary pressures came in 1972-73, thereafter these pressures gathered strength in 1973-74 and continued unabated right upto September, 1974. During this period, the index rose by 31.8%. Food articles and industrial raw materials accounted for about two-third of the price increase. The prices of machinery, transport equipment and manufactured goods contributed to a little over one-fourth to the overall increase in prices. These pressures were first felt as a result of severe drought conditions in 1 972-73, followed by shortages of various essential consumer goods and critical raw-materials and inputs. Shortage of power together with higher international prices of imported inputs and their inadequate availability led to the stagnation of industrial production during 1973-74. The price situation was aggravated by continued expansion in money supply partly due to large deficit financing and partly due to excessive expansion of bank credit to the commercial sector. Thus in 1973-74 the money supply increased by 15.4% over and above the increase of 15.9% registered in 1972-73. Acting together with the unaccounted money unregulated expansion of money supply in a situation of shortages provided an added impetus to the activities of speculative and unsocial elements. Owing to the escalation of costs and prices, even the administered prices of important intermediate goods such as steel, coal, cement and aluminium had to be raised as a defensive action. The procurement and issue prices of important cereals such as rice and wheat were also increased significantly. This not only had a direct impact on the cost of living index but also strengthened the inflationary tendencies. The balance of payment position also came under severe strain. Large quantities of food grains and essential wage goods had to be imported. The four-fold increase in oil prices and increase in prices of cereals, fertilisers, machinery and equipment, non-ferrous metals and other imported goods severely eroded the resources. The value of the three principal items of Animesh Kumars Economics Assignment | Amity Law School, Lucknow 14

Five Year Plans in India BRIEF STUDIES


imports, namely food, fertilisers and POL accounted for as much as 53.2% of the total import bill in 1974-75, as against 42.6% in 1973-74 and 23% in 1972-73. In absolute terms the import bill for these items increased from Rs. 431 crores in 1972-73 to Rs. 1260 crores in 1973-74 and to about Rs. 2500 crores in 1974-75. No doubt value of exports also increased but the balance of trade showed a deteriorating trend. The trade gap turned from a surplus of Rs. 103.4 crores in 1972-73 to a deficit of Rs. 432 crores in 1973-74 and Rs. 1190 crores in 1 974-75. This trend was both on account of sharp deterioration in the terms of trade since 1 973 and larger imports of certain commodities mentioned above. Borrowings from IMF including special oil facility to the extent of about Rs. 485 crores was resorted to in 1974-75 to meet the deficit in balance of payment. These developments together with uneasy economic conditions in some countries abroad and unstable international monetary conditions could not but have an adverse impact on the Plan. Inevitably, the financial and physical magnitudes of the Plan as well as the balance of payment position got distorted. Escalation in costs, higher outlays on public consumption and non-development expenditure led to erosion of resources for the Plan resulting in staggering of programmes owing to diminution in the size of investment in real terms. Investments in the private sector also felt the impact. With such fluidity both at home and abroad, the finalisation of the Plan had to await the emergence of a more stable situation. Deferment of the finalisation of the Plan did not imply a Plan holiday but a rephrasing of the Plan outlays, in the light of emerging circumstances. It implied that while planning, one had inevitably to pay considerable attention to the short-term management of the economy. Measures had to be devised urgently for containing inflation at home and for keeping the economy in proper alignment with the fast changing international developments. Necessarily priorities had to be defined even amongst the stated priorities, consistent with the objectives of the draft Plan. Naturally, food and energy became the most important sectors for investment planning. The successive Annual Plans had to be formulated on these considerations. The Annual Plan 1 974-75 was formulated at a time when the inflation rate was quite high. It was, therefore, designed mainly to control inflation and increase production particularly in the key sectors. The Plan outlays had to be kept at a modest level. Yet care was taken to ensure adequate provisions for agriculture including irrigation and fertilisers, energy (power, coal and oil), ongoing projects in steel, non-ferrous metals and certain basic consumer goods industries. Emphasis was on fuller utilisation of the unutilised capacities. The piovision for social services was restrained but kept at a reasonable level. During the year, a comprehensive strategy was evolved and a package of measuresfiscal, monetary and administrativewas introduced. It included mobilisation of additional resources (both by the Centre and the States), allocation of funds to high priority projects, restraint on growth of money supply and a crack down on anti-social elements. Disposable incomes were regulated through impounding of certain additional incomes, imposition of restrictions on dividends and compulsory savings by tax payers in the higher brackets. The procurement prices of major agricultural crops were not allowed to rise. These measures effected deceleration in the rate of growth of money supply, significant improvement in price situation and easy availability of essential goods. The money supply increased by only 6.9% in 1 974-75 as against an increase of 1 5.4% in the previous year. The index of wholesale prices declined by 7.1% between September, 1974 and March, 1975. Animesh Kumars Economics Assignment | Amity Law School, Lucknow 15

Five Year Plans in India BRIEF STUDIES


Though inflation was contained, yet the economy was still operating under various constraints. Agricultural production in 1 974-75 declined by 3.1 %. Industrial production grew at 2.5%. While the rate of aggregate investment (net) increased from 13.6%, in 1973-74 to 14.8% in 1974-75, the rate of domestic savings (net) recorded a marginal increase from 12.8% in 1973-74 to 13.1% in 1 974-75. As already mentioned the balance of payment deteriorated. Having achieved a certain measure of price stability by the end of 1974-75, the Annual Plan for 1975-76 could aim at growth under conditions of price stability. Agriculture, Irrigation, Power, Coal, Oil and Fertilisers, therefore, continued to receive priority. Projects capable of yielding quick results received special attention. Labour discipline and sustained antihoarding/smuggling operations created an appropriate climate. An excellent harvest gave timely vigour and push. The national income is estimated to have increased by 6 to 6.5% during 1 975-76agricultural production by about 10% and industrial output by 5.7%. Procurement of nearly 1 3 million tonnes of food grains in 1 975-76, along with imports enabled the build-up of a high level of stocks of food grains (17 million tonnes). The wholesale price index fell from 307.1 at end of March, 1975 to 283.0 at the end of March, 1976by about 8%,. The year 1975-76 closed with an overall budgetary surplus of over Rs. 200 crores against a deficit of Rs. 490 crores estimated earlier. The balance of trade continued to be a matter for concern during 1975-76 and the trade gap was as high as Rs. 1216 crores. This was in spite of the fact that the value of exports had increased by 18.4% and imports by only 14%. However, as a result of larger inflow of private remittances because of effective action against smuggling and illegal dealings in foreign exchange and increase in net foreign aid the balance of payments was not strained. The foreign exchange reserves reached a high level of Rs. 1885 crores at the end of the year as against Rs. 969 crores at the end of the previous year. With stability of prices and growth in economy achieved during 1 975-76, a bolder programme of investment was drawn up for 1976-77. The Annual Plan 1976-77 envisages an outlay of Rs. 7852 crores which represents an increase of 31.4% over the original Plan allocation for 1975-76. The New Economic Programme and consideration of social justice could receive greater attention. The high priority accorded to critical sectors of the economyagriculture including irrigation, energy and intermediate goods was continued. Not only did on-going schemes receive full attention, but new starts in critical sectors could also be envisaged on a selected basis. This strategy together with mobilization of additional resources was expected to maximise the growth potential of the economy. Thus, the efforts made so far have succeeded in checking inflationary tendencies and giving the economic situation a promising turn. Some of the constraints which seriously hampered the process of growth in the earlier period have been removed to a considerable extent. There is easy availability of essential raw materials and inputs. There is greater economic discipline and a renewed dynamism in the country at present. A considerable measure of price stability has been achieved and it is hoped that the recent increase in price level will be contained by effective measures which have been initiated. There is a large buffer stock of foodgrains with the public agencies and the position of foreign exchange is satisfactory. The international monetary system has also stabilised to a certain degree. The Planning Commission, therefore, consider this an appropriate time to finalise the Fifth Plan. With this end in view a meticulous and detailed examination of the development programme for the remaining two years of the Fifth Five Year Plan has been undertaken. What emerges is a clearer delineation of the targets and policies especially in relation to the priority sectors. Animesh Kumars Economics Assignment | Amity Law School, Lucknow 16

Five Year Plans in India BRIEF STUDIES

SIXTH FIVE YEAR PLAN (1980-85)


The draft of the Sixth Five Year Plan (1978-1983) was presented in 1978. However, the plan was terminated with the change of Government in January 1980. The new Sixth Five Year Plan was implemented in April 1980. Objectives: i) To eliminate unemployment and underemployment. ii) To raise the standard of living of the poorest of masses. iii) To reduce disparities in income and wealth. Soon after its reconstitution in April, 1980, the Planning Commission started work 'on the Sixth Five Year Plan 198085. A number of working groups were set up to do the necessary preparatory work and consultations were held with the Central Ministries and the Consultative Committee of Members of Parliament on Planning. A basic paper entitled "Sixth Five Year Plan 198085A Framework" was presented to the National Development Council on its 34th meeting held on August 30 and 31, 1980. The Council considered this paper and directed the Planning Commission to proceed with preparation of the final draft of the Sixth Plan. Thereafter, the Planning Commission held a series of wide ranging consultations with groups of economists and other social scientists, experts on rural development, eminent economic journalists, representatives of industry and trade, of trade unions, credit institutions, and others. The Framework was also discussed in two meetings of the Parliamentary Consultative Committee of the Ministry of Planning and was circulated to all Members of Parliament and to editors of news papers for comments and suggestions. Finally, extensive discussions were held with the States and the Union Territories on the State Plans for 198085. The Commission also benefited by the useful data collection and analytical work done by the Planning Commission in the past three years. In the introduction to the Third Five Year Plan, Jawaharlal Nehru said "Planning is a continuous movement towards desired goals". While the precise formulation of Plan objectives adopted in successive plans has varied, the essential goals of Indian Planning have been growth, removal of poverty and achievement of self-reliance. The Commission has kept in view the pledges given to the people in formulating its proposals. Further it has used the consultative mechanism to elicit the views of as wide a cross section of national opinion as possible so as to evolve a broad national consensus on the objectives, strategies and programmes of the Sixth Plan. Its overriding concern has been to give practical shape to the nation's collective will for using all the latent resources and energies of the nation for an effective attack on poverty, unemployment and inequalities. The final size of the public sector outlay has been fixed at Rs. 97,500 crores at 1979-80 prices. This outlay is in real term 80 per cent higher than the outlay in the Fifth Five Year Plan. The Commission would have liked wry much to be in a position to recommend larger outlays in several sectors. However, given the constraint on the size of the Plan, and keeping in view Plan objectives, an initially consistent and feasible inter-sectoral allocation has been adopted to achieve a growth rate of 5.2 per cent. It should become possible to review these allocations in the mid-Plan period as the combined efforts of the people and Government succeed in raising resources and productivity. While the outlays on all major sectors of the economy will at least be double in nominal terms compared to the Fifth Plan, the growth rate of outlays in rural development and irrigation are even higher. This reflects the very high Animesh Kumars Economics Assignment | Amity Law School, Lucknow 17

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priority given in the Sixth Plan to the objectives of employment generation and removal of poverty. Similarly, the very high emphasis on investment in the energy sector represents our resolve not to let energy availability become an undue constraint on the growth process. Substantial provisions have Ken made for the special component plans for Scheduled Castes and for tribal sub-plans. In addition, benefits will accrue to the Scheduled Castes and Scheduled Tribes from the various sectoral programmes. A substantial increase has been provided in Plan outlays for the special areas programmes in keeping with the Plan objective of reducing regional disparities. In view of the particular problems of the North Eastern Region, a substantial step up in the plans of the constituent units of the Region and of the North Eastern Council is envisaged. These outlays will be in addition to greatly enhanced levels of Central sector investments in the Region. It has been possible to increase the size of the Sixth Plan over that envisaged in the Framework, partly on account of the determination expressed by some States during the course of final Plan discussions to exceed the estimates of additional resource mobilisation that had originally been envisaged, for them. On this basis, the share of States and Union Territories in the Plan is Rs. 50,250 crores, which works out to 51.54 per cent of the total outlay. Determined efforts will have to be made by the Centre and States to realise the target of additional resource mobilisation. This is an essential precondition for successful implementation of the Sixth Plan. This point needs particular emphasis, as a major task of economic policy in the Sixth Plan would be to create the necessary conditions for the mobilisation of resources in a non-inflationary manner. Inflation is the most regressive form of taxation. As the Framework points out, the Sixth Plan is being launched in difficult conditions. Fortunately, .the acute inflationary pressures which prevailed in 1979-80 have shown some signs of abatement in 1980-81. However, the situation cannot be said to be completely under control yet and a great deal of ingenuity and irnaginatio.i, not to speak of resolve, will be needed to device effective economic policies to reconcile the requirements of .growth and stability. As regards the external environment, it must be recognised that the economy continues to be extremely vulnerable to increases in oil prices and to deterioration in our terms of trade generally. A major task facing the country is to reduce our dependence on energy imports and to promote exports and invisible earnings.. This is essential in order to achieve self-reliance. Self-reliance, as should be obvious, but often is not, does not necessarily mean selfsufficiency in all sectors of the economy. So long as the country is able to pay its way, it cannot be said to be dependent on others. This calls for an all out effort to accelerate the rate of growth of our exports to 9 to 10 per cent as envisaged. We must also rigorously promote import substitution in all those sectors of the economy where we have a comparative advantage. Meaningful solutions to the problems of poverty, under-employment and unemployment can only be found within the framework of a rapidly expanding economy. To that end, every effort will have to be made to achieve the planned growth rate of 5.2 per cent in the Sixth Plan. We recognise however that even this rate of growth will have to be supplemented by more direct means of reducing the incidence of poverty, especially in the rural areas. Programmes of direct productive benefit to the poor involving the transfer of assets, the provision of inputs, credit, training and services, the generation of wage employment through the National Rural Employment Programme and the provision of social services through the Minimum Needs and other programmes, will be drawn together so that they focus upon the Animesh Kumars Economics Assignment | Amity Law School, Lucknow 18

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level of the individual household, and raise at least 3000 of the poorest households above the poverty line in each block during the Plan. Necessary changes in the extension and delivery services will be given the highest priority. Simultaneously, every effort will be made to secure voluntary adoption of the small family norm. In the ultimate analysis the success of our efforts in eliminating poverty and unemployment will depend on the extent to which we succeed in reducing the rate of population growth. It need hardly be emphasised that the success of the Plan depends crucially on the efficiency, quality and texture of implementation. The challenge ahead is to achieve an all round improvement in production and efficiency, not merely in the functioning of the infrastructure or the public sector, but in all segments of national life. We must get the most out of the capital stock and human resources we have developed during the last thirty years. In this context, a special responsibility devolves on that segment of the population which has benefited disproportionately from planned development sc far and also on those who have been fortunate enough to enjoy superior access to education and professional skills. Ultimately, the requisite effort and the required sacrifices will only be made if faith in the basic equity of our economic and social system is maintained, and the task which we set ourselves is bold enough to capture the imagination of our citizens. These considerations have implications both for the distributional objectives we build into our Plans, and for the total size of the resources we mobilise for them. It is to be hoped that the Sixth Plan 1980-85, despite all the constraints it faces, will not be found wanting on either of these criteria. The translation of the promise 'it holds out into actual performance, however, is something that can only be ensured by all of us collectively. It is only through sustained hard work, discipline and self-restraint, particularly on the part of the more privileged sections of our society, a willingness to subordinate narrow sectional loyalties to wider national interests; in short; by recapturing some of the idealism and sense of adventure which inspired our freedom struggle, that we can hope to meet effectively the formidable challenges that lie ahead.

SEVENTH FIVE YEAR PLAN (1985-90)


The draft of the Seventh Plan was approved on November 9, 1985 by the National Development Council. The plan was part of the long-term plan for the period of 15 years. Objectives: i) Decentralisation of planning and full public participation in development. ii) The maximum possible generation of productive employment. iii) Removal of poverty and reduction in income disparities. The Seventh Plan marked the comeback of the Congress Party to power. The plan laid stress on improving the productivity level of industries by upgrading of technology. The main objectives of the 7th five year plans were to establish growth in 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 favourable 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 planning process is the precious gift of Pandit Jawaharlal Nehru to the people of India. Indiraji nursed this tender plant with great and loving care. As she once put it, planning in our country is a charter of orderly progress. It provides a framework of time and space that binds Animesh Kumars Economics Assignment | Amity Law School, Lucknow 19

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sectors, regions and States together and relates each year's effort to the succeeding years. By strengthening the social and economic fabric of the country as a whole and of the different regions and States, it makes a powerful contribution to the goal of national integration. The planning process has contributed a great deal to evolving a broad national consensus regarding the basic objectives, strategies and design of our development policies. This has helped to generate broad mass support for national economic policies which has added greatly to the cohesion and stability enjoyed by our polity. Removal of poverty, the building of a modern society making maximum possible use of science and technology, and attainment of self-reliance are the basic objectives of planning in India. The previous Plans have made valuable contribution to the achievement of these national goals. I venture to think that the Seventh Plan consitutes yet another important milestone in the nation's quest to rid this country of the ancient scourges of poverty, ignorance and disease. Effective planning must be based on a vision of the future. We need a long-term perspective to translate the vision into reality and to make it operational. The Seventh Plan is, therefore, set within a 15-year perspective. The aim is to create by the year 2000 the conditions necessary for self-sustaining growth and to provide the basic material requisites of well-being for all our people. This means that we have to sustain and accelerate the momentum of economic growth. Agriculture, industry, the infrastructure and social services have to function at progressively higher levels of efficiency and productivity. Full advantage must be taken of advances in science and technology to bring about the needed structural transformation of our economy. Simultaneously, measures designed to raise the productivity and incomes of the poorer sections of society and poorer regions must be pursued with greater vigour. The objectives and thrusts of the Seventh Plan have, therefore, been formulated as part of the longer term strategy which seeks, by the year 2000, to virtually eliminate poverty and illiteracy, achieve near full employment, secure satisfaction of the basic needs of food, clothing and shelter and provide health for all. The Plan thus seeks to assist in the establishment of an economy and polity which is modern, efficient, progressive, humane and is informed by equity and social justice. India's growth performance has improved considerably in the last decade. The Seventh Plan seeks to take advantage of this favourable trend by aiming to stabilise the growth rate of the economy at an average annual rate of 5 per cent. The targetted growth rates for the economy as a whole, as well as for outputs of both agriculture (4 per cent) and industry (8 per cent), imply a significant improvement over past trends. As such, major efforts will be needed to achieve the growth targets of the Seventh Plan. In formulating the Plan, the Planning Commission has kept in view the mandate given to it by the National Development Council when it approved the Approach Paper last year. Food, work and productivity have been the three basic priorities which guided the preparation of the Plan. Furthermore, because of their critical importance in sustaining the growth process, particular attention has been paid to raising the capability of the infrastructure and human resource development with substantial increases in the proportions of outlays for these two sectors as compared to the Sixth Plan. The proposed pattern of resource allocation is designed to ensure that the country will remain self-sufficient in food and that significant progress will be made in increasing the production of vegetable oils, pulses, vegetables and horticulture. The objective is to build an expanded Animesh Kumars Economics Assignment | Amity Law School, Lucknow 20

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system of food security, at rising levels of per capita consumption. As part of the strategy of a more regionally balanced agricultural development and production, special emphasis has been laid on increasing the productivity of rice in the Eastern States and on the development of dryland agriculture. The Plan also lays considerable stress on enhancing the productivity and incomes of small and marginal farmers. The agricultural programmes of the plan would greatly benefit from the creation of an additional irrigation potential of about f3 million hectares. Since variations in the rate of growth of agriculture are a major factor accounting for regional differences in the pace of development, the agricultural strategy of the plan, with its emphasis on more even and balanced distribution of agricultural growth, will also help to reduce regional disparities. In the field of employment, the major objective of the Plan is to ensure that the growth of employment opportunities is faster than the growth of the labour force. Rapid agricultural development (especially in areas agriculturally backward) expansion of irrigation facilities, more intensive cropping and continuation of the employment-oriented programmes such as the National Rural Employment Programme and the Rural Landless Employment Guarantee Programme, wouli contribute significantly to the generation of additional employment opportunities in rural areas. The faster rate of growtl of industry and a considerably expanded housing programme in the private sectorfor which attempts would be madi to provide finance through institutional sourceswould together generate a larger volume of employment in thi non-agricultural sector than in the past. The Seventh Plan is thus an employment-oriented Plan. Over the Plan perioc employment potential is expected to increase by 40 million standard person years against an addition to the labour fore of 39 million persons. The employment potential will go up by 4 per cent per year, well above the expected growth rat of labour force of about 2.5 to 2.6 per cent over the Seventh Plan. Removal of poverty remains a central concern of planning in India. Consistent with this objective, the Sevent Plan's development strategy and the pattern of growth emerging from it are expected to lead to reduction in poverty at faster rate than in the past. The Plan envisages an expanded coverage under the various anti-poverty programme. Taking into account the highly comfortable position of food stocks with the public sector, it may be possible to expan the employment-oriented anti-poverty programmes at a still faster rate than envisaged in the Plan document. Evei effort will be made to plug various loopholes in the operation of antipoverty programmes and to integrate these an various sectoral and area development programmes into a comprehensive design of integrated development of eac area. The Plan pays special attention to the problems faced by the more vulnerable sections of our society such t scheduled castes, scheduled tribes, women and children. The Plan recognises that in a situation where poverty pervasive, the perception of needs and priorities must not be a merely male perception but must take into acconi explicitly the special needs and problems of women. As a result of these measures, the poverty ratio will decline fro 37 per cent in 198485 to less than 26 per cent in 1989-90. In absolute terms, the number of poor persons expected to fall from 273 million in 1984-85 to 211 million in 1989-90. Promotion of efficiency and higher productivity have been another major concern in the preparation of this Pla Increased and more efficient utilisation of existing assets both in agriculture and industry will contribute to increasing ti efficiency of resource use and also help in containing the rise in the capital output ratio. A coordinated approach irrigation, drainage and land use management will be adopted to realise the multiple cropping potential of the ne agricultural technology. In industry, emphasis is being placed on modernisation, investment in balancing equipment ai technology up gradation to a much greater degree than Animesh Kumars Economics Assignment | Amity Law School, Lucknow 21

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ever before. The policy framework for industrial growth in the Seventh Five Year Plan lays special emphasis on setting up of plants of economic size and on the creation of an environment where business firms have an adequate incentive to modernise, reduce cost, improve the quality of th< products and upgrade their technology. New developments in micro-electronics, informatics, telematics, biotechnol gies, material sciences, oceanography, instrumentation and space technology offer exciting opportunities. A w conceived and coordinated approach to the introduction of these emerging technologies in our production process v further accelerate the pace of technical progress, structural change and growth of productivity, efficiency and qual consciousness. In order that agriculture and industry may grow faster, increased emphasis has been placed on investments infrastructure so that shortages in power, transport and coal would not arise for the scale of activities envisaged in t Plan. The Plan envisages a significant increase in the share of energy in the public sector outlay. Nearly 31 per cent the total public sector outlay is meant for energy. The generation of power is expected to grow at an average annual rate of 12.2 per cent over the Plan period. The Plan pays considerable attention to meeting the energy needs of rural are, It seeks to extend the benefit of electricity to 1.18 lakh villages and to energise 23.9 lakh pumpsets for irrigation. T supply of fuelwood has been included as an additional component of the Minimum Needs Programme. The programi for the development and utilisation of biogas and for the installation of new smokeless 'chulas' will be expanded very substantially. Another major thrust area in the Seventh Plan is human resource development. Public sector outlays for social services show a significant increase as compared to the Sixth Plan. The Plan seeks to facilitate development of 1 human potential in terms of self-respect, selfreliance and a life of dignity. Apart from expansion of the exist programmes in education, health, provision of clean drinking water and sanitation, new initiatives and innovat measures are contemplated in these areas. The Plan seeks to provide adequate drinking water facilities for the entire population both in urban and rural areas. By the end of the Plan period, the infrastructure for primary health care will be fully operational with regard to village health guides, sub-centres, primary health centres and multipurpose health workers. Thus, we would have a country-wide system of health care, with a balanced mix of preventive, primitive and curative services. Increased emphasis on protection and preservation of the ecological balance and environment is another distinctive feature of the Seventh Plan. As regards the financing of the Plan, in broad macro terms, the Plan is eminently bankable and credible, as it projects only a modest increase in the rate of investment and domestic savings during the Plan period. The rate of investment is projected to go up from 24.5 per cent of GDP in 1984-85 to 25.9 per cent by 1989-90 and the rate of domestic savings is projected to go up from 23.3 per cent to 24.5 per cent over the same period. The financing pattern of the Plan seeks to limit recourse to deficit financing within limits of safety and prudence. In the same manner, the external financing of the Plan is expected to involve a deficit of not more than 1.6 per cent of GDP in the balance of payments on current account. The debt service ratio will not exceed 20 per cent of current receipts during the Plan period. Thus care has been taken to ensure that internal and external financing of the Plan does not involve assumption of unacceptable risks. It is, however, to be recognised that financing of the Seventh Plan would require determined and more intense efforts for resource mobilisation. The ratio of taxation to GDP will have to increase by two percentage points over the Plan period. The success of the Plan is crucially Animesh Kumars Economics Assignment | Amity Law School, Lucknow 22

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dependent on the achievement of this target. Subsidies and other non-Plan expenditure will have to be firmly contained if excessive recourse to deficit financing is to be avoided. In the same manner, the public sector enterprises will have to generate larger resources if the requirements of additional investments are to be financed in a non-inflationary manner. To maintain the viability of external payments, it will be necessary to pay greater attention to export promotion and to containing the growth of imports. Our export performance still displays major structural weaknesses and in the interest of an orderly management of our balance of payment, there will have to be a substantial improvement in the competitiveness and quality of our exports. Simultaneously, we must adopt effective measures to curb the growth of imports of petroleum, vegetable oils and sugar. In a truly moving foreword to the Sixth Five Year Plan, Indiraji reminded us that the measure of a Plan is not intention but achievement, not allocation but benefit. It is a statement of universal validity and it applies as much to the Seventh Plan as to the earlier Plans. Thus the impact of the Seventh Plan will depend on the earnestness and determination with which it is implemented. The Seventh Plan document lists several areas where we must improve upon past performance if we are to realise the objectives and goals of the Plan. This is not the place to discuss these problem areas at length. However, since devising effective solutions for some of these problems is crucial to the success of the Plan, a brief reference to some major problem areas is justified. First of all, the rehabilitation and revitalisation of the agricultural credit system is essential for achieving the agricultural targets of the Plan. The mounting phenomenon of overdues must be firmly controlled if the agricultural credit system is to finance adequately the input requirements of agriculture. Secondly, there must be a substantial improvement in the quality of agricultural and rural development administration. The technical knowledge and skills of the official grass-roots level administration need to be greatly improved if we are to impart a scientific temper to our agriculture. District and block level planning has yet to take firm roots. Without the introduction of effective block level/district level planning, the impact of large flows of money through the various anti-poverty programmes will remain limited. Thirdly, we must take a fresh look at not only the basic strategy but also the programme content of the family welfare programme, so as to bring about a faster reduction in the rate of population growth. Fourthly, there must be a major improvement in productivity, efficiency and internal resource generation of the public sector enterprises both of the Centre and of the States. Internal resource generation is particularly weak in capital-intensive enterprises in sectors such as power, coal, steel, transport and fertilisers. We need new administrative structures and new concepts of management so as to enable the public sector to perform its dynamic role in the process of capital accumulation. Finally, we must adopt effective measures to bring about meaningful participation of the people in all phases of national development. We need to tap fully the latent potential of the Panchayati Raj institutions for harnessing the people's energies for nation building activities. Simultaneously, we must also fully exploit the creative potential offered by voluntary organisations engaged in development work. Animesh Kumars Economics Assignment | Amity Law School, Lucknow 23

Five Year Plans in India BRIEF STUDIES


Planning in our country is an instrument for achieving the nation's basic goals and objectives. It was the dream of Mahatma Gandhi to wipe the tears from the eyes of each and every individual in our country. 'We can be legitimately proud of the phenomenal progress made by the country since we embarked on the path ot planned development. However, there are still too many people with tears in their eyes. Our task is thus clear. We have to wage a still more intensive campaign against poverty. Recent experience suggests that by harnessing the forces of modern science and technology, it is possible, as never before, to ensure that chronic poverty need not be the inevitable lot of the majority of humankind. Poverty eradication is an attainable goal. However, it must not be assumed that development is like going to a free dinner party. The standard of living is a matter of high productivity, and there are no short cuts to it. Hard decisions will be necessary to mobilise the needed resources and to sustain the tempo of modernisation and social development. Simultaneously, we must evolve new structures, new attitudes, a new moral code, a new work ethic, a sort of cultural revolution, if you wish, which lays emphasis on dedication, commitment to national goals and pursuit of excellence so that we can make the best possible use of scarce national resources. The task ahead is not easy. We face many challenges and uncertainties. But our country has a tremendous built-in resilience and strength. It has weathered many a storm in the past. The nation is firm in its resolve to work out an autonomous path of development suited to the genius and needs of our people. The Seventh Plan represents a massive national endeavour to build a new India free from the fear of want and exploitation. Its objectives, strategies and programmes are designed to assist in the realisation of the nation's cherished goals. The Plan is an expression of the collective will of the Indian people to move forward at a still faster pace on the road to progress, prosperity, social justice and self-reliance.

EIGHTH FIVE YEAR PLAN (1992-97)


The Eighth Plan proposed a growth rate of 5.6 per cent per annum on an average during the plan period. The Eighth Plan focused on (i) clear prioritisation of sectors/projects for investment in order to facilitate implementation of the policy initiatives taken in the areas of fiscal, trade and industrial sectors and human development. Objectives: i) Generation of adequate employment of achieve near full employment level by the turn of the century. ii) Containment of population growth through peoples active co-operation and an effective scheme of incentives and disincentives. iii) Universalisation of elementary education and complete eradication of illiteracy among the people in the age group of 15 to 35 years. The launching of the First Five Year Plan in April 1951 initiated a process of development aimed not only at raising the standard of living of the people but also opening out to them new opportunities for a richer and more varied life. This was sought to be achieved by planning for growth, modernisation, self-reliance and social justice. We have come a long way over the past forty years. A largely agrarian feudal economy at the time of independence has been transformed into one based on a well developed and a highly diversified infrastructure with immense potential for industrialisation. Income and consumption levels have significantly risen. Consumption basket has diversified. Incidence of poverty has visibly declined. The average life expectancy has gone up. The death and the birth rates have declined. Literacy has improved and the educational base has widened. Animesh Kumars Economics Assignment | Amity Law School, Lucknow 24

Five Year Plans in India BRIEF STUDIES


We now have a robust and resilient agricultural economy with near self-sufficiency in food production. We have built a diversified industrial and service structure. We have a large pool of skilled manpower and ample entrepreneurial capabilities. The growth performance of at least a decade preceding the Eighth Plan has been impressive. We have the wherewithal for further progress. Hence, the task before the Eighth Plan is to use these advantages for further growth and lay strong foundations for even higher growth in the future. The economy has passed through difficult circumstances during the last couple of years. The growing fiscal gap and the sudden depletion of foreign exchange resources created a situation which put severe strains on the economic system leading to drastic import curbs, high rate of inflation and recession in industry. This in turn has led to the projection of very low growth in 1991-92, which happens to be the base year of the Eighth Plan. Corrective measures have already been initiated by way of planned fiscal reforms and policy changes. The Eighth Plan will thus have to reorient some of the development paradigms, since its objective is to lay a sound foundation for higher growth and to achieve the most significant goals, namely, improvement in the levels of living, health and education of the people, full employment, elimination of poverty and a planned growth in population. The public sector was assigned a place of commanding height in the Indian economic scene. It was expected to create the basic infra-structure for development, be a pace setter in taking risk and nurturing entrepreneurship, take care of the social needs, help the poor and the weak and create an environment of equal opportunities and social justice. The public sector has expanded considerably. Its expanse and its influence may not be measured just by the size of its contribution to GDP or its share in investment, but by the fact that it touches every aspect of life. In the process, it has made the people take the public sector for granted, oblivious of certain crucial factors like efficiency, productivity and competitive ability. This has eroded the public sector's own sense of responsibility and initiative. Many of the public sector enterprises have turned into slow moving, inefficient giants. A certain amount of complacency has set in which is not conducive to growth. While there are several social and infrastructural sectors where only the public sector can deliver the goods, it has to be made efficient and surplus generating. It must also give up activities which are not essential to its role. The Eighth Plan has to undertake this task of reorientation. The Eighth Plan will have to undertake re- examination and reorientation of the role of the Government as well as the process of planning. It will have to work out the ways and means of involving people in the developmental task and social evolution. It will have to strengthen the people's participatory institutions. In keeping with these objectives, the process of planning will have to be re- oriented so as to make planning largely indicative. This, in turn, will imply a somewhat changed fole for the Planning Commission. The Planning Commission will have to concentrate on anticipating future trends and evolve integrated strategies for achieving the highest possible level of development of the country in keeping with the internationally competitive standards. In place of the resource allocation role which very largely characterised the working of the Planning Commission in the past, it will have to concentrate on optimal utilization of the limited available resources. This will call for the creation of a culture of high productivity and cost efficiency in the Government both at the Centre and the States and the Planning Commission will have to play the role of a change agent. At the same time, it must provide the broad blue-print for achieving the essential social and economic objectives and indicate the directions in which the economy and the various sub-sectors should be moving. It should pin-point areas in which advance action should be taken to avoid serious bottlenecks. Planning must thus proceed from a vision of the society to Animesh Kumars Economics Assignment | Amity Law School, Lucknow 25

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be created, and through an appropriate mix of policy instruments influence the decisions of the various economic agencies to achieve the desired goals. In this sense, indicative planning is a more difficult exercise. The Eighth Plan is being launched at a time which marks a turning point in both international and domestic economic environment. All over the world centralised economies are disintegrating. On the other hand, economies of several regions are getting integrated under a common philosophy of growth, guided by the market forces and liberal policies. The emphasis is on autonomy and efficiency induced by competition. We cannot remain untouched by these trends. We have to draw lessons from the development experience of other nations during the last four decades. Development economics was largely theoretical when India started her planning in 1951. It has now acquired considerable empirical knowledge based on the rich applied experience of many nations, among whom there are success stories as also failures. Indian planning needs to draw on some of these lessons. It also needs to be guided by its own experience, gained during the last four decades. If planning has to retain its relevance, it must be willing to make appropriate mid-course corrections and adjustments. In that process, it may be necessary to shed off some of the practices and precepts of the past which have outlived their utility and to adopt new practices and precepts, in the light of the experience gained by us and by other nations.

NINTH FIVE-YEAR PLAN (1997-2002)


It began on April 1, 1997. The Ninth Plan was the first concrete attempt to translate the programme of economic reforms and the New Economic Policy within the framework of an indicative Plan. The Approach Paper to the Ninth Plan (1997-2002) was approved by the N.D.C. on 16th January, 1997. Objectives: i.) Priority to agriculture and rural development ii.) Accelerating growth rate of economy iii.) Food and nutritional security for all iv.) Containing growth rate of population v.) Empowerment of women and socially disadvantaged groups such as SC/ST, backward classes and minorities. vi.) Promoting and developing participatory institutions like Panchayati Raj institutions, co-operatives and self-help groups. The Ninth Five Year Plan, launched in the 50th year of Indias Independence, will take the country into the new millennium. Much has happened in the fifty years since independence. The people of India have conclusively demonstrated their ability to forge a nation united despite its diversity, and their commitment to pursue development within the framework of a functioning, vibrant and highly pluralistic democracy. In this process democratic institutions have put down firm roots and flourished and development has also taken place on a wide front. As the millennium draws to a close, the time has come to redouble our efforts at development, especially in the social and economic spheres, so that the country will realise its full economic potential and the poorest and the weakest will be able to shape their destiny in an unfettered manner. This will require not only higher rates of growth of output and employment, but also a special emphasis on all-round human development, with stress on social sectors and a thrust on eradication of poverty.

Animesh Kumars Economics Assignment | Amity Law School, Lucknow 26

Five Year Plans in India BRIEF STUDIES


The Approach Paper to the Ninth Five Year Plan, adopted by the National Development Council, had accorded priority to agriculture and rural development with a view to generating adequate productive 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; ensuring environmental sustainability of the development process through social mobilization and participation of people at all levels; empowerment of women and socially disadvantaged groups such as Scheduled Caste, Scheduled Tribes and Other Backward Classes and Minorities as agents of socio-economic change and development; promoting and developing peoples participatory bodies like Panchayati Raj institutions, co-operatives and self-help groups; and strengthening efforts to build self-reliance. These very priorities constitute the objectives of the Ninth Plan. Some specific areas from within the broad objectives of the Plan as laid down by the NDC have been selected for special focus. For these areas, Special Action Plans (SAPs) have been evolved in order to provide actionable, time-bound targets with adequate resources. Broadly, the SAPs cover specific aspects of social and physical infrastructure, agriculture, information technology and water policy. The Ninth Plan is based on a careful stock taking of the strength of our past development strategy as well as its weakness, and seeks to provide appropriate direction and balance to the socio-economic development of the country. The principal task of the Ninth Plan will be to usher in a new era of growth with social justice and participation in which not only the Governments at the Centre and the States, but the people at large, particularly the poor, can become effective instruments of a participatory planning process. In such a process, the participation of public and private sectors and all tiers of government will be vital for ensuring growth with justice and equity.

TENTH FIVE YEAR PLAN (2002-07)


On December 21, 2002, the Tenth Five Year Plan was approved by the National Development Council (NDC). The Plan has further developed the NDC mandated objectives, of doubling per capita income in 10 years, and achieving a growth rate of 8% of GDP per annum. An 8% growth rate is considered necessary for achieving the social and economic targets of Tenth Plan Keeping in mind decadal growth performance and the steady acceleration that the country has recorded in growth over the past two decades, it is a realisable target. The plan has a number of new features, such as, for the first time (a) It recognises the rapid growth of labour force over the next decade (b) Addresses the issue of poverty and the unacceptably low levels of social indicators (c) Adopted a differential development strategy to equate national targets into balanced regional development as there is vast difference in the potentials and constraints of each state (d) Recognises that the governance is perhaps one of the most important factors for ensuring realisation of the Plan (e) Identifies measures to improve efficiency, unleash entrepreneurial energy, and promote rapid and sustainable growth (f) Proposes major reforms for agricultural sector making agriculture the core element of the Plan. Since economic growth is not the only objective, the Plan aims at harnessing the benefits of growth to improve the quality of life of the people by setting the following key targets: Animesh Kumars Economics Assignment | Amity Law School, Lucknow 27

Five Year Plans in India BRIEF STUDIES


1. All children to be in school by 2003 and all children to complete five years of schooling by 2007 2. Reduction in poverty ratio from 26% to 21% 3. Growth in gainful employment to, at least, keep pace with addition to the labour force 4. Decadal population growth to reduce from 21.3% in 1991-2001 to 16.2% by 2001-11 5. Reducing gender gaps in literacy and wage rates by 50% 6. Literacy rate to increase from 65% in 1999-2000 to 75% in 2001 7. Infant Mortality Rate (IMR) to be reduced from 72 in 1999-2000, to 45 in 2007 8. .Maternal Mortality Rate (MMR) to be reduced from 4 per 1000 in 1999-2000 to 2 per 1000 in 2007 9. Providing portable drinking water in all villages 10. Cleaning of major polluted river stretches 11. Increase in forest/tree cover from 19% in 1999-2000 to 25% in 2007 The Plan also set out to increase the growth rates of disposable income of urban residents and the net income of rural residents to five percent each. In addition, objectives were set to increase housing floor space per urban resident to 22 sq m by 2005, and to install 40 percent of all households in China with cable TV. Another key objective was to improve medical and health services in both urban and rural areas, as was enriching people's cultural lives, and enhancing social morality and security.

ELEVENTH FIVE YEAR PLAN (2007-2012)


The United Progressive Alliance government issued a paper in the eleventh plan titled Towards faster and more inclusive growth. The eleventh plan has the following objectives: 1. Income & Poverty Accelerate GDP growth from 8% to 10% and then maintain at 10% in the 12th 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 52.2% in 200304 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 Animesh Kumars Economics Assignment | Amity Law School, Lucknow 28

Five Year Plans in India BRIEF STUDIES


Provide clean drinking water for all by 2009 and ensure that there are no slipbacks Reduce malnutrition among children of age group 0-3 to half its present level Reduce anaemia 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. Since the constitution of our democratic country has been formed, the frame-workers have been drafting out five-year plans to chalk out the development and progress to be brought in the country as according to the conditions prevailing then. With the 60 years of independence completing its way, the National Development Council (NDC) is presenting the 11 th Five Year Plan, 2007-2012. Recently on 9thNovember 2007, Planning Commission cleared the draft of the plan. Expected to look after every sector of the nation and improve the conditions, lets see how far they succeed. What actually do they hold for us?? With the observed trend in production and consumption, the problem of subsidies in food, fertilizers and petroleum is expected to hit hard the economy and the prosaic life of people. A sum of Rs1, 00,000 crores is likely to be spent on the three commodities in the current financial year itself. But the thing is, will it be really effective in bringing out relief for all, despite the tremendous increase in population and demand patterns along with price-hike that will prevent it from providing any benefit. They also aim at raising the average Gross Domestic Product (GDP) rate from 7.6% to 9%. The planning commission has planned to reduce the poverty by 10% and generate 7crore new employment opportunities and also to illuminate the lives of village people. All these promises look nice on paper work and estimation. No doubt, the government has been working with great fervour to improve the conditions, but the billion-plus nation with 64.8% literacy provides recession to the idea. Will it serve the population that is just above poverty line or bring up those below poverty line? Due to lack of educational amenities ant technological know-how, agriculture has become the livelihood for 58.2% of the total working force and contributes 24% to GDP. So the 7crore employment opportunities are for those who are already employed or in reserve for those who dont have the cult to deal with Animesh Kumars Economics Assignment | Amity Law School, Lucknow 29

Five Year Plans in India BRIEF STUDIES


it? With all the statistics documented and ignoring the basic conditions of the population, will the 11th Five Year Plan serve the purpose of working for marginalized sections of society? They have set the target of industrial and services sector growth to 9-11% and investment rate to 36.7%. But at the elementary level, there is so much the need for advancement, that these figures seem to be meant just for the people who happen to read all this. Education sector is expected to be the BIG beneficiary of the plan by allocating 19.36% of Gross Budgetary Support (GBS) as compared to 7.68% in the previous plan along with the investment of Rs2, 75,000crores and improving the education at primary, secondary and higher level. All of the above sounds very fascinating, but who is going to mention about 27% of the OBC reservation that out-numbers the unreserved majority. India being a developing nation, the situations need to be delicately handled. Reduction in unequal distribution of income and wealth, providing additional employment, adopting measures to boost agriculture and increase in national income will definitely do a lot. All Five Year Plans are designed, drafted and publicly released. But if they happen to is so much promising, after the term why dont they come out with a report of the accomplishments and shortcomings? Or is it so that they have the aims but scant means to accomplish them??

INDIAS 12TH FIVE YEAR PLAN TO FOCUS ON INCLUSIVE GROWTH


As Indias government prepares to submit its approach paper for its 12th five-year plan (a plan which covers years 2012 to 2017), the Planning Commissions focus on instilling inclusive growth is making headway. The plan is expected to be one that encourages the development of Indias agriculture, education, health and social welfare through government spending. It is also expected to create employment through developing Indias manufacturing sector and move the nation higher up the value chain. Prime Minister Manmohan Singh, however, warned that maintaining fiscal discipline is important as well. The commission will likely strive to enact policies that will achieve somewhere around a 10 percent growth rate in factories and a 4 percent growth rate in farm produce, though Prime Minister Singh has asked the plan to set the nations growth rate firmly at 9 percent to 9.5 percent. Come May, a view into the implementation of these goals should be apparent. A question that Indias government will have to grapple with, much like that of any emerging market, is whether to continue to focus on GDP growth in the face of soaring food prices and economywide inflation. An important aspect of generating inclusive growth is shifting the target of government aid to rural areas. Typically, large projects such as power generation, roads whereby freight can travel, and airports receive the lions share of government subsidies, while rural infrastructure receives comparatively little. A recent op-ed piece in the Wall Street Journal by Saurabh Tripathi, a partner with Boston Consulting Group, echoed these sentiments. Rural infrastructure, which serves 70 percent of the population, doesnt get the attention it deserves. As the Planning Commission sets out to draft the countrys planned investments for Animesh Kumars Economics Assignment | Amity Law School, Lucknow 30

Five Year Plans in India BRIEF STUDIES


the next five years, it is important to take note of this gap, and the innovative solutions needed to fill it, Tripathi wrote. As indicated from the planning commissions presentation to the prime minister on April 21, the quantitative metrics known thus far in the early stage of the five-year plan are:

A target of GDP growth in the 9 percent to 9.5 percent range An increase in literacy rates to 100 percent between the plans period from 2012 to 2017 An increased expenditure on health from 1.3 percent to 2.0 percent of GDP

In a boon for industry, the planning commission indicated that it aims to have industry and manufacturing-related activities grow by 11 percent over the next five years, contrasted to 8 percent over the previous 11th five-year plan. It also aims to undertake somewhat vaguely defined, but certainly well-intentioned, structural and regulatory reforms to facilitate investment. The presentation highlighted the planning commissions views that commercial energy demand is expected to increase by 7 percent per year over the next five years. To address that increase in demand, the planning commission recommended that all methods of current energy production and distribution be developed, from coal to nuclear energy to solar and wind, and proposed that existing taxes on electricity should not be raised. Interestingly, the Planning Commission envisioned an expansive role for Indian SOE Coal India: Coal India must become a coal supplier and not just a mining company. Should plan to import coal to meet coal demands? This requires blending of imported and domestic coal as supplied by Coal India. All told, in its early stages, the 12th five-year plan promises a lot for rural development and growth. In that sense, it is similar to Chinas latest iteration of its five-year plan, which seeks to improve the lot of rural Chinese peoples by increasing urbanization and industrial efforts in central and western China. But, by contrast, while the Chinese government seems to be continuing with nation-wide industrialization efforts, the Indian government may be attempting to promote a policy of reverse migration by making rural living more attractive with some access to modern amenities, but hopefully without the accompanying chaos that goes with it.

CONCLUSION
With an overview of the Indian Five Year Plan we can say that they have undoubtedly been tools in the boosting and the shaping of our economy. We have been able to meet many of the objectives laid down by the plans. These plans have succeeded in building the industrial and economic infrastructure of the country. The growth of the Private Sector can also be attributed to these plans. Animesh Kumars Economics Assignment | Amity Law School, Lucknow 31

Five Year Plans in India BRIEF STUDIES


These plans have helped us in building ourselves, but, they are not without their limitations and bottlenecks. The major setbacks are red tapism, bureaucratic delays, unstable Governments, misallocation of resources to non priority areas. With these on going hazards, our economy faces a slowdown and thus, the growth rate is now less than 5%. The core sectors are being ignored by planners in the interest of their short term gains. While making such plans we must remember to project a well balanced plan so that development of infrastructure and improvement of standard of living of the messes go hand in hand. So, in brief, we can say that such plans form a very good and efficient system but such planning should be balanced and must be worked in a systematic way. Goals must be set for all sections of our society and we must ensure that the implementation of these set goals are followed to the last word and it must be seen that the goals must see that all sections of the society grow along simultaneously. However, down the line, there has been something wrong, somewhere and that is why as we see the economic scenario in India there is a considerable gaping gap between the haves and the Have Notes. This in itself indicates that there has been something intrinsically wrong in our economic policies which have made the rich become richer and the poor become poorer. This not the purpose of any develops in economy. The year's financial programming must see that the benefits accrue to the poorest of the poor. We have had slogans of Garibi Hatao but, in practice they were just eye catching slogans, not apparently meant to be followed by successive Governments of the last fifty decades. If this slogan had been earnestly worked upon, be sure we would not find this poverty in India, and India trailing behind in the list of third world powers.

Animesh Kumars Economics Assignment | Amity Law School, Lucknow 32