Economic Planning

Economic Planning ECONOMIC PLANNING

BY: ASHISH BAJAJ

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The two major agencies which are responsible for economic planning in India are the Planning Commission and the

National Development Council

Planning Commission: Set up in March 1950 and has the following functions:  To make an assessment of the material, capital and human resources of the country.  To investigate the possibilities of augmenting these resources  To formulate a plan for the most effective and balanced utilization of the country’s resources  India is a federal state and the Centre gives money to the States. The Planning Commission serves as an intermediary for the allocation of funds to the States.

National Development Council: 

The Prime Minister presides over the NDC. The Secretary of the Planning Commission is also the secretary pf the NDC.

The main functions of the NDC are:  To prescribe guidelines for the formulation of the National Plan as well as for the assessment of resources for the Plan.  To consider the National Plan as formulated by the Planning Commission and endorse its development strategy.  To consider important questions of social and economic policy affecting the country’s development  To periodically review the working of the Plan and to recommend such measures as are necessary for achieving the aims and targets set out in the National Plan.  In addition every State has its own Planning Board.

Objectives of Economic Planning in India: 

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Increase in National Income: The objective is to increase production to the maximum possible extent so as to achieve a higher level of national income and per capita income. The targets are set for the desirable rates of growth and the target period. Full Employment: Each of the plans has given priority to providing a specific number of jobs to reduce unemployment ie provision of jobs to all job seekers and gradual transfer of people from low income jobs to high income jobs. Reduction in Inequalities of Income and Wealth: The objective is to create a more equitable distribution of income and wealth in the country. Social Justice: Economic planning in India also seeks to set up a socialist society based on equality and justice and free from exploitation. Other Objectives: Removal of poverty, modernization of the economy, maximizing the usage of resources by areas, achieving price competitiveness have been some of the other objectives of India’s economic planning.

Review of the Plans: 

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The First Five Year Plan was launched in 1951. The process of implementation of the Five Year Plans was disrupted in 1966 and the Fourth Five Year Plan was put off by three years due to the severe drought in the country and aggressions from China and Pakistan. The intervention period between the Third and Fourth Five Year Plans had annual Plans. This period is referred to as Plan Holiday. On assuming power in 1977, the Janata Government introduced the draft Five Year Plan (1978-83) and introduced the concept of Rolling Plan. Under the rolling plan, when one year lapses another year is added to the planning horizon so that there is always a five year plan. On coming to power in 1980, the Congress Government terminated the Draft Plan and formulated the Sixth Plan 1980-85

Five Year Plans in India The First Five Year Plan (1951-56):  The immediate objective of this plan was rehabilitation of refugees, rapid agricultural growth and control of inflation. These objectives were by and large achieved. The production targets in the agricultural sector were more or less fulfilled largely due to favorable climate. The Second Five Year Plan (1956-61):  The Second Plan aimed at rapid industrialization with emphasis on the development of basic and heavy industries such as iron and steel, heavy engineering. The Industrial Policy was formulated in 1956.  The target of this plan could not be achieved due to shortage of foreign exchange and rising prices.

Five Year Plans in India The Third Five Year Plan (1961-66):  This Plan aimed at the establishment of a self reliant and self generating economy. High priority was assigned to the agricultural sector and development of heavy industries. However, the approach had to be shifted to defence due to conflicts with China (1962) and Pakistan(1965). The Fourth Five Year Plan (1969-74): This Plan had the objectives of growth with stability and progressive achievement of self reliance. It was successful during the first two years. But it was hit by monsoon failure, power shortage and inflation in the remaining years. The Fifth Five Year Plan (1974-79): Removal of poverty and self reliance were the main objectives.

Five Year Plans in India The Sixth Five Year Plan: There were two Sixth Plans. One by the Janata Government and the other by the Congress Government in 1980. The objective was removal of poverty. Broadly speaking this plan was a success. The Seventh Five Year Plan (1985-90): This aimed at accelerating the growth in food grains production, increasing employment and raising productivity. The Eighth Five Year Plan (1992-97): The Eighth Five Year Plan was introduced at a time when there was a severe economic crisis due to balance of payment crisis. The Government introduced economic and fiscal reforms to provide a new dynamism to the country. This Plan laid emphasis on infrastructure development, poverty alleviation, employment generation, population control and health and drinking water for all.

Five Year Plans in India

The Ninth Five Year Plan (97-2002): This plan aimed at quality of life, generation of productive employment, regional balance and self reliance. The focus of this plan was on “Growth with Social Justice and Equality”. The Tenth Five Year Plan (2002-07):  This Plan was introduced in April 2002. The Plan was launched when there were both positive and negative features. Positive being, GDP growth rate was at 6.5% p.a. Population growth had declined to less than 2%. Percentage of people below the poverty line was decreasing. Literacy rate increased to 65% in 2001. Software and IT Services emerged as new sectors of strength.  Negatives were that growth had generated less than expected employment. The infant mortality rate had stagnated and there was acute shortage of drinking water. Objective:  An average annual growth rate of 8%  Increase in per capita income at 6.4% p.a.  Enhancement of human well being through an adequate level of consumption of fixed and other type of consumer goods and access to basic social services  Expansion of economic and social opportunities for individuals and groups and greater participation in decision making.

The Eleventh Five Year Plan (2007-2012):

A major advantage in formulating the 11th. Plan is that India’s economic fundamentals have improved enormously and we now have the capacity to make a decisive impact on the quality of life, especially on the poor and marginalized.    

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The objective of the Plan is “Towards faster and more inclusive growth”. The 11th Plan aims to increase the average economic growth to nine per cent from 7.6 per cent in the Tenth Plan. The 11th Plan also proposes to increase farm sector growth rate to four per cent from 2.13 per cent in the previous Plan. The Plan, which has been formulated with the aim of making economic growth more inclusive, proposes to reduce poverty by ten percentage points This Plan aims to generate seven crore new employment opportunities and reduce unemployment among educated persons to less than five per cent. Extend access to essential public services such as health, education, clean drinking water and sanitation.

The Eleventh Five Year Plan (20072012):contd…. 

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The Plan will also focus on the education sector by increasing the outlay to 19 per cent of the Central budgetary support from less than eight per cent in the previous Plan. Literacy rate to be increased to 85% and the gender gap in literacy to be reduced to 10 percentage points. Create an enabling environment for the socio, political and economic empowerment of women. Protection of the environment. Forest cover to be increased by 5 percentage points and essential requirement to clean up our rivers. Pay special attention to the needs and requirements of the SC / STs and other excluded groups and bring them on par with the rest of the society.

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