Economic Planning in India – Five-Year Plans
🟠 Topic 12: Economic Planning in India – Five-Year Plans
📌 Introduction
Economic planning refers to deliberate governmental efforts to influence, direct, and regulate the economy to achieve specific development objectives. For India, planned economic development was seen as essential to address poverty, inequality, and underdevelopment after independence.
To achieve this, India adopted the Five-Year Plan model, drawing inspiration from the Soviet Union’s central planning system. From 1951 to 2017, twelve Five-Year Plans guided India’s economic development.
🔹 Genesis of Planning in India
- Planning Commission established in 1950.
- First Five-Year Plan (1951-56) launched to lay the economic foundation.
- Objectives included:
- Agricultural development.
- Industrial growth.
- Infrastructure building.
- Social sector investment.
🔹 Evolution of Five-Year Plans
🏛️ First Five-Year Plan (1951-56)
- Focus: Agriculture, irrigation, and rural development.
- Reason: India faced severe food shortages and refugee crises post-Partition.
- Key Achievements:
- Major irrigation projects (Bhakra Nangal, Hirakud dams).
- Foodgrain production increased.
🏭 Second Five-Year Plan (1956-61)
- Focus: Industrialization.
- Mahalanobis Model: Emphasized heavy industries and capital goods production.
- Objective: Build an industrial base for self-sufficiency.
🌾 Third Five-Year Plan (1961-66)
- Focus: Self-reliance and agriculture.
- Context: Indo-China war (1962) and Indo-Pak war (1965) strained the economy.
- Results: Agriculture received a boost via new technologies, later forming the base for the Green Revolution.
🔥 Plan Holiday (1966-69)
- Due to economic crisis, two wars, and drought, regular plans were suspended.
- Annual Plans were adopted instead.
🌱 Fourth Five-Year Plan (1969-74)
- Focus: Growth with stability.
- Green Revolution significantly increased food production.
- Nationalisation of banks occurred during this period.
🏦 Fifth Five-Year Plan (1974-79)
- Focus: Poverty alleviation.
- Introduction of Garibi Hatao slogan by Indira Gandhi.
- Large investments in energy and irrigation sectors.
📉 Rolling Plan (1978-80)
- Implemented by Janata Government.
- Replaced fixed plans with annual plans to allow flexibility.
🏗️ Sixth Five-Year Plan (1980-85)
- Focus: Infrastructure development and technology upgradation.
- Emphasized poverty removal and economic modernization.
📈 Seventh Five-Year Plan (1985-90)
- Focus: Employment generation.
- Liberalization process (limited) initiated to boost productivity.
🚨 Crisis and Reforms (1990-91)
- Severe Balance of Payments (BoP) crisis.
- Structural reforms introduced leading to LPG (Liberalization, Privatization, Globalization).
🌐 Eighth Five-Year Plan (1992-97)
- First Plan post-economic reforms.
- Focus on market liberalization and inclusive growth.
- Emphasis on export promotion and technology development.
🌍 Ninth Five-Year Plan (1997-2002)
- Focus: Growth with social justice and equity.
- Encouraged public-private partnerships (PPP).
🔑 Tenth Five-Year Plan (2002-07)
- Focus: Doubling per capita income and reducing poverty.
- Emphasis on employment generation and human development.
📊 Eleventh Five-Year Plan (2007-12)
- Focus: Inclusive growth.
- Promoted education, health, infrastructure, and environment protection.
🚀 Twelfth Five-Year Plan (2012-17)
- Focus: Faster, sustainable, and more inclusive growth.
- Set ambitious poverty reduction and infrastructure goals.
🔹 End of Five-Year Plans – Shift to NITI Aayog
- In 2015, Planning Commission was replaced by NITI Aayog.
- Five-Year Plans were discontinued after 2017.
- India shifted to a more flexible policy framework driven by annual and medium-term goals.
🔹 Key Achievements of Planned Development
| Area | Achievement |
|---|---|
| Agriculture | Self-sufficiency in food grains |
| Industry | Diversified industrial base |
| Infrastructure | Extensive transport and energy networks |
| Human Development | Expansion in education and healthcare |
🔹 Criticism of Planning Model
1️⃣ Over-centralization: Limited flexibility for states.
2️⃣ License Raj: Bureaucratic hurdles stifled private entrepreneurship.
3️⃣ Inefficiency: Public sector monopolies were inefficient and loss-making.
4️⃣ Neglect of Innovation: Focus on targets over innovation and competitiveness.
🔹 Legacy for Modern Economy
- Foundation for infrastructure and human capital.
- Framework for social welfare programs.
- Shift towards competitive federalism with NITI Aayog’s flexible approach.
📊 Summary Table – Key Themes of Each Plan
| Plan | Theme |
|---|---|
| 1st | Agriculture & rural development |
| 2nd | Industrialization (Mahalanobis Model) |
| 3rd | Self-reliance & agriculture |
| 4th | Growth with stability |
| 5th | Poverty alleviation (Garibi Hatao) |
| 6th | Infrastructure & modernization |
| 7th | Employment generation |
| 8th | Post-reform liberalization |
| 11th | Inclusive growth |
| 12th | Faster, sustainable, inclusive growth |
📚 Practice MCQ
1️⃣ Consider the following statements regarding India’s First Five-Year Plan:
- It focused heavily on heavy industries.
- It prioritized agriculture and irrigation.
- It was influenced by Soviet-style central planning.
- It was implemented after the 1991 reforms.
Which of the above statements are correct?
✅ Options:
(a) 2 and 3 only
(b) 1, 2, and 3 only
(c) 1 and 4 only
(d) 2, 3, and 4 only
2️⃣ Which Five-Year Plan introduced the Garibi Hatao slogan?
✅ Options:
(a) Fourth Plan
(b) Fifth Plan
(c) Sixth Plan
(d) Tenth Plan
3️⃣ Consider the following statements regarding the NITI Aayog:
- It replaced the Planning Commission.
- It prepares Five-Year Plans.
- It focuses on cooperative federalism.
- It emphasizes data-driven policy-making.
Which of the above statements are correct?
✅ Options:
(a) 1, 3, and 4 only
(b) 2, 3, and 4 only
(c) 1 and 2 only
(d) 1, 2, 3, and 4
4️⃣ Which of the following plans emphasized inclusive growth?
✅ Options:
(a) Seventh Plan
(b) Ninth Plan
(c) Eleventh Plan
(d) Fifth Plan
5️⃣ The Planning Commission was established in:
✅ Options:
(a) 1947
(b) 1950
(c) 1952
(d) 1956
