Is Planning relevant in Indian

context today?
What is Plan?
 Define Plan
• Spells out how the resources of a nation
should be put to use.
• Has some general goals as well as specific
objectives, which are to be achieved within a
specified period of time.
• Unrealistic to expect all the goals of a plan to
be given equal importance in all the plans.
 History of Plans
• Borrowed the concept of five-year plans from the
former soviet union, the pioneer in national planning
• Jawaharlal Nehru was impressed with the
remarkable successes in industrialization achieved by
the USSR in their initial five year plans
• India has an extensive network setup to formulate 5-
year plans under the supervision of the planning
commission
 Why to Plan
• After independence, was in dire conditions and needed
to start acting soon
• Some of the problems necessitated need for an
immediate plan:
– Vicious circle of poverty
– Foreign Trade
– Need for Rapid industrialization
– Population pressure
– Development of Natural resources
– Backward Population
– Capital Deficiency
– Market imperfections
 Objectives of Planning
• Central objective - raise the standard of living of
the people
– To increase per capita and NI
– Higher level of employment
– Growth with social justice
– Increasing industrial output
– To remove bottlenecks in agriculture, manufacturing
industry
– Reduction of inequality in income
– Modernization
– Self- reliance
 Stages in Planning
• Formulation- by planning commission. In this stage,
planning commission prepares draft that goes to
National development council. The council then
endorse the draft, and it is forwarded to Parliament.
• Adoption- By Parliament
• Approval- After the approval of Parliament only, the
draft becomes the planned document.
• Execution-By executive
• Supervision- By Officials
 Pre-conditions of Planning
• Collection of Statistical Data- If at collection stage
data is incorrect or irrelevant or collected half
heartedly then economic planning won‘t be effective
at all.
• Economic Organization
• Government Setup
• Public Cooperation- Citizen must provide every
information so that government can formulate
policies for their betterment.
 Characteristics of Planning
• Major economic decisions are determined by
a central authority, through the planning
commission.
• The government will have the powers of
implementation.
• The planners fix the targets for the sectors and
also decide how much investment must be
made in each sector to achieve the targets.
Planning and its Impact
Planning Organization & its Divisions
• Prime minister is the chairman of the planning
commission
• The planning commission functions through several
divisions, each headed by a senior officer.
• Works under the overall guidance of the national
development council.
• Deputy chairman and the full time members of the
commission provide advice and guidance to the
subject divisions
 Planning Commission Divisions

• Planning Areas is divided under the following sectors:

 Agriculture
 Infrastructure
 Social Sector
 Other sectors/ Areas
Five year Plan overview
 First plan (1951-1956)
• Plan primarily addressed the agrarian sector
• Including investments in dams and irrigation
• Total plan budget of 206.8 billion INR was allocated to seven broad areas:
o Irrigation and energy (27.2 percent)
o Agriculture and community development (17.4 percent)
o Transport and communications (24 percent)
o Industry (8.4 percent)
o Social services (16.64 percent)
o Land rehabilitation (4.1 percent), and
o Other (2.5 percent)
• Target 2.1% annual GDP growth, achieved 3.6 % ; per capita income up by 8%
• The Bhakra dam and Hirakud dam projects initiated
• Contracts signed to start 5 major steel plants
• UGC set up; plans to set up IITs initiated
 Second plan (1956-1961)
• Focused on industry, especially heavy industry
• Development of the public sector
• Advocated huge imports, which led to emptying of funds
leading to foreign loans
• 5 steel mills established, coal production increased
• Initiated license raj
• Price level increased by 30%
 Third plan (1961-1966)
• Stressed on agriculture and improving production of rice
• Panchayat elections were started and the states were given more
development responsibilities
• Higher stress on grass-root level education
• Increased focus on cement and fertilizer plants
• Sino-Indian War in 1962 exposed weaknesses in the economy and shifted the
focus towards defence
• War-time policies led to inflation and the priority was shifted to price
stabilisation
• Increased foreign aid needed to maintain development expenditures
eventually provided 28 percent of public development spending
 Fourth plan (1969-1974)
• Nationalised 14 major Indian banks and the Green
Revolution in India advanced agriculture
• Spending on war efforts reduced industrial spending
• Poor monsoon and influx of refugees form Bangladesh
• Projected national income growth at 5.7 percent/ yr;
realized rate - 3.3 percent
• Focus on sorting short-term problems; No long term
focus in plan
 Fifth plan (1974-1979)
• Stress on employment, poverty alleviation, and justice
• Also focused on self-reliance in agricultural production and defence
• Rapidly changing oil prices in 1973 forced series of revision during
formulation of plan
• Turmoil in world economic situation caused high inflation in prices
of energy, fertilizers and food sector
• Terminated in 1978 by the newly elected Morarji Desai govt
• Janta govt’s 5-yr plan was terminated in 1980 by next Congress
govt.
 Sixth plan (1980-1985)
• Aimed for rapid industrial development, especially in the area
of information technology
• Marked the beginning of economic liberalization
• Price controls were eliminated and ration shops were closed -
led to an increase in food prices and an increased cost of living
• Family planning concept introduced – but not forcibly
• Planned GDP growth - 5.1 percent a year, achieved 5.4 percent
• Political constraints limited effectiveness of industrial growth
policies
 Seventh plan (1985-1989)
• Establish growth in the areas of increasing economic productivity,
production of food grains, and generating employment opportunities
• Stress on improving the productivity level of industries by
upgradation of technology
• Long-term steady growth plan: focused on achieving the pre-
requisites of self-sustaining growth by the year 2000
• Economy recorded 6% growth rate against the targeted 5%
– 1989-91 was a period of political instability in India and hence no five
year plan was implemented
– In 1991, India faced a crisis in foreign exchange(Forex) reserves
 Eighth plan (1992-1997)
• Gradual opening of the Indian economy to reduce the
high deficit and foreign debt
• Energy was given priority with 26.6% of the outlay
• Avg annual growth rate of 6.7% against the target 5.6%
• major objectives included containing population growth,
poverty reduction, employment generation, strengthening
the infrastructure, Institutional building, Human Resource
development, Involvement of Panchayat raj
 Ninth Plan (1997 - 2002)
• Developed in the context of four important dimensions:
Quality of life, generation of productive employment,
regional balance and self-reliance
• 1998 Nuclear test and subsequent sanctions imposed
affected Ex-Im but developed domestic capabilities
• Services sector showed higher growth
• Growth rate was 5.35 per cent, against the target GDP
growth of 6.5 per cent
 Tenth plan (2002-2007)
• Reduction of poverty ratio to 20% by 2007 and to 10% by 2012
• Providing gainful high quality employment to the addition to the labour
force over the tenth plan period
• Universal access to primary education by 2007
• Reduction in gender gaps in literacy and wage rates by atleast 50% by
2007
• Reduction in decadal rate of population growth between 2001 and 2011
to 16.2%
• Increase in literacy rate to 72% within the plan period and to 80% by
2012.
• Reduction of Infant Mortality Rate (IMR) to 45 per 1000 live births by
2007 and to 28 by 2012
• All villages to have sustained access to potable drinking water by 2012
• Achieved 7.7% growth rate against visualized 10%
 Eleventh plan (2007-2012)
• 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
• To reduce the poverty by 10% and generate 7cr new
employment opportunities
Analysis
• Planning outlines have been greatly influenced by
leaning of government at centre
• Accountability and target ownership is not present
• Some hold belief that the Industrial development
here has not been because of, rather inspite of
government efforts.
 Deficiencies of Planning - 1
• A minimum standard of living could have been
ensured for all if resources had been thought of, not
in money term, but in terms of people
• In spite of enormous advancement in
industrialization there has been no change in the
occupational pattern of the country‘s work force
• So long the emphasis was on financial rather than
physical targets
• Government policy has aggravated inequality in the
distribution of wealth
 Deficiencies of Planning - 2
• The conceptual or logical content of planning is
concerned there is not much wrong; the wrong lie is
its in implementation, its lack of cohesion with social
factors and the impediments imposed by political,
social, administrative and cultural forces rather then
strictly economic factors.
• We have also failed to create self-reliance.
• The tenancy reforms have not been complete and
insecurity of tenure has been much more
pronounced.
 Deficiencies of Planning - 3
• The economy has faced an-uninterrupted inflationary
process. Eroded purchasing power of the people-
increased project cost, and reduced the
competitiveness of the economy.
• The resources allocation pattern does not show any
consistent trend. Various aspects of social sector has
been neglected.
• The growth rate in the plan period in most cases has
not been satisfactory. They have not helped to remove
poverty and unemployment.
 Deficiencies of Planning - 3
• The economy has faced an-uninterrupted inflationary
process. Eroded purchasing power of the people-
increased project cost, and reduced the
competitiveness of the economy.
• The resources allocation pattern does not show any
consistent trend. Various aspects of social sector has
been neglected.
• The growth rate in the plan period in most cases has
not been satisfactory. They have not helped to remove
poverty and unemployment.
Conclusion
 YES, because... - 1
• Because of excellent economic planning now
we are one of the parts of developing countries.
• Five year duration chosen gives planning
commission ample time to review the effects or
ineffectiveness of the plans
• Planning has also evolved over the years with
plans becoming more and more inclusive and
broadening their scope.
• Because of liberalization the rate Foreign Direct
Investment increased after 1991
 YES, because... - 2
• India has been blessed with good planners
with a very impartial outlook development.
• After introduced 1991 policy the growth of
India became very faster
• We were brought out of out slumber by the
crisis of 1991 and subsequent pressure from
World bank.
• “We need to back our lofty plans with equally
high Implementation plans.”
Thank You!!