ECONOMIC PLANNING IN

INDIA
 INTRODUCTION
Economic Planning is to make decision with
respect to the use of resources.

Economic Planning is a term used to describe

the long term plans of government to co-
ordinate and develop the economy.

Economic planning in India that was started in

1950 is necessary for economic development
and economic growth.
 NEED FOR ECONOMIC
PLANNING
Mass Poverty And Low Per Capita Income

High Rate of Growth of Population

Low Level of Literacy

Backward Technology

Social And Economic Problem Created By

Partition
Of Country
 OBJECTIVES OF ECONOMIC
PLANNING
Economic Growth.
Self Reliance
Removal of Unemployment
Reduction Of Economic Inequalities.
Modernization
Sustainable Growth.
 FIVE YEAR PLANS
The economy of India is based in part on planning
through its five year plans which are developed,
executed and monitored by planning commission .
1. First five year plan(1951-1956)
2. Second five year plan (1956-1961)
3. Third five year plan (1961-1966)
4. Fourth five year plan (1969-1974)
5. Fifth five year plan (1974-1979)
6. Sixth five year plan (1980-1985)
7. Seventh five year plan(1985-1990)
8. Eighth five year plan(1992-1997)
9. Ninth five year plan(1997-2002)
10.Tenth five year plan (2002-2007)
11.Eleventh five year plan (2007-2012)
12.Twelfth plan ( 2012-17)
First five year plan(1951-1956)- 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 most important feature of this phase was
active role of state in all economic sectors. after
independence, India was facing basic problems
deficiency of capital and low capacity to save.
At the end of the plan period in 1956, five Indian
Institutes of Technology (IITs) were started as
major technical institutions.
 First Plan (1951-56)
Main focus Primary sector.
Based on Harrod Domar Model -:
1. Warranted growth
rate
2. Actual growth rate
3. Natural growth rate
Problems deficiency of capital & low capacity
to save.
Total planned budget 2069cr.(later 2378cr.)-
key allocation
Irrigation & energy27.2%
Agriculture & community development 17.4%
Transport & communication 24%
 Target GDP growth rate= 2.1%
Actual GDP growth rate= 3.6%
- Reason Good Monsoon
Population grew @ 2% P.A, thus
dampening per capita growth rate to
8% only.
Five IITs were setup, 3 Dams were
setup (including Bhakra Nangal dam)
Infant mortality rate decreased.
Second five year plan(1956-61) - The
second five-year plan focused on industry, especially
heavy industry.
Hydroelectric power projects and five steel mills at
Bhilai, Durgapur, and Rourkela were established. Coal
production was increased. More railway lines were
added in the north east.
Atomic energy was also formed in second five year
plan.
The total amount allocated under the second five year
plan in India was Rs. 4,800 crore. This amount was
allocated among various sectors:
Mining and industry
Community and agriculture development
Power and irrigation
Social services
Communications and transport
 Second Five year Plan
(1956-61)
Objectives :
Attempted to determine optimal allocation of
investment between productive sectors.
Sizeable increase in National income- to raise
standard of living .
Rapid Industrialization & focus on basic and key
industries.
Develop labour intensive projects to increase
employment opportunities.
Target growth rate 4.5%
Budget 4800 cr.
 Strategy & Outcomes
3 new Steel plants at Bhilai,
Durgapur & Rourkela of capacity 10
lac tons each
Increased capacity of TISCO, IISCO
&MISCO by 7 LT, 5 LT & 75KT .
9.5 Million jobs created.
Achieved growth rate of 4.27%
Third five year plan(1961-66)
The third plan stressed on agriculture and on improving production of
wheat, it also shifted the focus towards Defence industry.
Many primary schools were started in rural areas. Panchayat
elections were started.
State electricity boards and state secondary education boards were
formed.

Objectives -
Utilizing countrys manpower
Target growth rate of 5.6%
Increase in agriculture by increasing food production.
Works:
Responsibilities given to states- Secondary education, Electricity
boards, Local road building.
Primary schools started in rural areas, panchayat election started.
Punjab began producing abundance of wheat.
Budget utilization of 8577Cr.

.
 Everything doesnt go as
planned
Sino Indo war -1962
Severe Famines & Droughts in Bengal
region.
Indo Pak war 1965
Led to High inflation, Drop in
agricultural production.
Shift in focus Industrialization &
Growth to Defence.
As a result growth rate plummeted
to 2.4%.
 PLAN HOLIDAYS
1966- 66, 1967-68, 1968-69.
Idea of 5 year Plans temporarily
dropped, annual plans adopted.
Motive was to get back on track with
increasing agriculture production and
industrial development.
Annual Budget- 6625Cr.
 Fourth five year plan(1969-74) - At this
time Indira Gandhi was the Prime Minister. The
Indira Gandhi government nationalized 14 major
Indian banks and the Green Revolution in India
advanced agriculture
Major works
Nationalization of 14 Major pvt. Banks
Mobilization of pvt. Savings
Target growth rate 5.6%
Yet another Indo Pak war
Independence of East Pakistan(Bangladesh).
Oil prices sky rocketed, Fertilizer became costlier
Achieved growth rate 3.3%
Fifth five year plan(1974-79)
Stress was laid on employment, poverty, alleviation, and justice. The
plan also focused on self-reliance in agricultural production &
defence.
The Indian national highway system was introduced for the first
time.
Objectives
Criticism of Mahalanobis model by Word Bank Economists -
suggested working on poverty alleviation.
Other Areas of focus- Employment, Justice.
Target growth rate 4.4%
Works
Electricity Supply act amended- Central govt. entered power
generation.
National Highway system introduced- Roads widened to
accommodate traffic.
Tourism expanded.
Growth rate achieved @ 5%.
Plan was rejected by the Morarji Desai govt. due to change of
govt. at centre in 1978.
 Rolling plan(1978-80)
Junta party govt. rejected 5th year plan &
introduced rolling plans.
Rolling plans 3 plans:
1st plan present year
2nd plan fixed no. of years say 3, 4,
5 yr.
3rd plan -- long term plan 10, 15
years
Advantage- flexibility as per condition.
Disadvantage- frequent revisions make
economy unstable.
Sixth five year plan(1980-85) - The sixth
plan also marked the beginning of economic
liberalization. This led to an increase in food
prices and an increase in the cost of living.
Features :
Family planning was also expanded in order to
prevent overpopulation.
Economic Liberalization.
End of license raj lengthy/corrupt procedures.
Setting up of NABARD.
Family Planning.
Target growth 5.2%
Achieved growth 5.4%
Most successful plan, implemented twice.
Seventh five year plan(1985-90) - The Seventh
Plan marked the comeback of the Congress Party to
power.
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.
The thrust areas of the 7th Five year plan have been
enlisted below:
Social Justice
Using modern technology
Agricultural development
Full supply of food, clothing, and shelter
Increasing productivity of small and large scale farmers
Making India an Independent Economy
Target growth rate -5%, achieved growth rate -5.7%
Eighth five year plan(1992-97) -Between
1990 and 1992, there were only Annual Plans.
It was the beginning of privatization and
liberalization in India.
Modernization of industries was a major highlight of
the Eighth Plan.
India became a member of the World Trade
Organization on 1st January 1995.
The major objectives included controlling population
growth, poverty reduction, employment generation,
strengthening the infrastructure, Institutional
building, tourism management, Human Resource
development, Involvement of Panchayat raj, Nagar
Palikas, N.G.O'S and Decentralization and people's
participation.
Target growth rate -5.6%, Achieved growth rate
-6.7%.
 11th Five Year Plan Target
Income & Poverty
Accelerate growth rate of GDP 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.
Reduce educated unemployment to below 5%.
Raise real wage rate of unskilled workers by 20
percent.
 EDUCATION

Reduce dropout rates of children from

elementary school from 52.2% in 2003-04
to 20% by 2011-12.

Increase literacy rate for persons of age 7

years or more to 85%.

Lower gender gap in literacy to 10

percentage points.
 WOMEN AND CHILDREN

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.
 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.
 CONCLUSION
Economic Planning help in mobilizing and
allocating the resources in desired manner.
Objective of economic planning is to
reduce inequality, economic growth,
balanced regional growth, modernization.
Each five year plan aims at achieving
certain targets. Five year plan constitutes
the steps toward the fulfilment of
objectives of economic planning.