List of ten five year plans.
1. First 5-Year Plan (1951-56):
1. Providing immediate remedial measures to the problems of:
(i) High and rising prices,
(ii) Shortage of essential consumer goods and raw materials, and
(iii) Relief and rehabilitation of displaced persons.
2. Initiating a long-term process of planned economic development by laying emphasis on transportation, power and irrigation.
3. Creating more rapid economic and industrial future advancement.
4. Initiating policies for bringing above institutional reforms and social changes.
5. For the public sector, an outlay of Rs. 24,000 million was proposed.
6. In private sector, also an estimated investment of Rs. 16,000 million was allowed.
1. Economy responded well to the stimulus of this first plan; introduction of a new dynamic element in a long static situation.
2. Investment in the economy rose from 5% to 7% of national income i.e., from an annual rate of Rs. 45,000 million in 1950-51 to Rs. 67,500 million in 1955-56.
3. National income increased by 18% as against original expectation of 11%.
4. It improved about 11% in per capita income and 9% in consumption expenditure per head.
2. Second 5-Year Plan (1956-61):
1. To have sizable increase in national income for raising country’s living standard.
2. Rapid industrialisation with stress on the development of heavy and basic industries in particular.
3. To expand employment opportunities at large.
4. To reduce inequalities of wealth and income for more even distribution of economic power.
5. In the public sector, an outlay of Rs. 84,000 million was proposed, out of which Rs. 38,000 million was to be invested. Total investment was nearly twice of that in first plan.
6. In the private sector, Rs. 24,000 million was estimated to be the investment.
7. Investment as proportional to national income was expected to come to 10.7% in this plan as against 7.3% of the first plan.
Difficulties Encountered during Second Plan:
(a) Rise in prices,
(b) Rise in production cost,
(c) Foreign exchange crisis,
(d) Fall in food production,
(e) Fall in industrial production,
(f) Fall in loans and small savings,
(g) Lack of financial resources, and
(h) The value of rupee went down by 20%.
1. Rate of investment increased by 8% to 11%.
2. National income increased by 20%.
3. Agricultural production went up by about 20%.
4. Industrial production increased by nearly 41%.
3. Third 5-Year Plan (1961-66):
1. To represent an important phase in the development of economy of the country.
2. To accelerate the tempo of development already attained.
3. Establishing progressively greater equality of opportunity and reducing disparities in wealth and income for more even distribution of economic power.
4. Expansion of basic industries i.e. fuel, power, steel, machines, chemicals etc.
5. Establishing machine building capacity within 10 years from country’s own resources in particular for further industrialisation.
6. Securing a rise in national income of over 5% per annum.
7. Designing the pattern of investment for sustaining the growth rate during subsequent periods of plan.
8. Utilise upto full extent country’s manpower, resources and ensuring substantial expansion in employment opportunities.
9. To increase agricultural production for meeting requirements of industries and exports and to achieve self-sufficiency in food grains.
Outlays and Investments:
In public sector, the plan outlay was Rs. 75,000 million approximately. In addition, in private sector, investment was Rs. 41,000 million.
By the end of plan, the investment rate was expected to go up from 11 to 14%. Additional taxation of Rs. 17,000 million in 5 years was proposed by the plan.
Foreign exchange requirement for the private and public sector plans was placed at Rs 21,000 million. Commodity assistance of over Rs. 6,000 million and refinancing for maturing external obligations worth Rs. 5,000 million were needed.
Reasons for Unsatisfactory and Disappointing Overall Performance of Third Plan:
(i) Agricultural production was adversely affected by unfavourable conditions of weather.
(ii) Due to delay in finalising certain schemes, the progress rate in the various sectors was delayed.
(iii) Scarcity of certain raw materials.
(iv) In negotiating foreign assistance, long time was taken.
(v) Further set-back to the economic development schemes was given by “1962 Chinese Aggression” and 1965 Indo-Pakistan War.
(а) National Income:
It increased at the rate of 2.5% in first year, 1.6% in second year, 3% in third year and 7.6% in fourth year. It declined by 4.2% in fifth year due to unprecedented draught conditions and Indo-Pak war.
National income at Rs. 1,41,400 million in 1960-61 rose to Rs. 204,300 million in 1964-65 and declined to Rs. 203,400 million in 1965-66 at current prices.
(b) Agricultural Growth:
For agriculture, 1964-65 was exceptionally good due to highest production of food-grains (output 89 million tonnes approx.). But the output dropped to 72 million tonnes in 1965-66 against a target of 100 million tonnes.
(c) Industrial Growth:
Industrial growth registered by fertilisers, steel, petroleum products, aluminium, chemicals and engineering was a special feature of the industrial development in the third Plan.
Total installed capacity of 5.6 million kW in 1961-62 rose to 35.2 million kW in 1965-66.
Indian Railways freight of 156.2 million tonnes in 1960-61 rose 205 million tonnes in 1965-66.
Third plan provided for 13 million jobs approximately and left a backlog of 10 million unemployed at its end.
4. 4th Five Year Plan (1969—1974):
Reasons for Postponing 4th 5-Year Plan:
(i) Uncertain Financial Resources:
Due to high prices and cost of living saving potential has declined very much. Tax evasion appeared to be the order of the day.
(ii) Lack of Foreign Aid:
India was almost fully dependent on foreign aid during first three “Five Year Plans”. During 4th Plan this aid could not be received much.
(iii) Low Agricultural Output:
Unprecedented drought conditions in certain parts of the country were witnessed by the last two years of the ‘third plan’. This lowered the agricultural production and resulted unrest due to starvation and semi-starvation conditions.
(iv) Steep Rise in Prices:
All the calculations and base-figures of the plan were disturbed by steeply rising prices. Thus, revision of the entire framework of future plans becomes necessary.
(v) Lower Industrial Growth:
Due to acute shortage of raw materials, equipment and accessories, many industrial establishments were not working out their full capacity. Immediate attention and rethinking was warranted by such a strange position.
(vi) Adverse Balance of Payment:
Inspite of devaluation of the currency and measures adopted for promoting exports and restricting imports, the balance of payment position became from bad to worse. Economic development was thus adversely affected by such a bottleneck.
(i) To promote rapid progress towards greater employment and social justice.
(ii) To achieve self-reliance early. All schemes of industrial and agricultural production were to be given top priority so as to promote exports and replace imports.
(iii) To check all inflationary factors for making the prices stable because gaps between resources and requirements cannot be filled by printing currency notes.
(iv) To get the maximum agricultural production so as to increase the income of the rural people.
(v) Production of fertilisers, insecticides, tractors, diesel engines and agricultural implements was given top priority.
(vi) To step up production of essential consumer goods i.e. sugar, kerosene, textiles, paper, drugs etc.
(vii) To keep up the momentum of growth already built up and to meet the basic needs of the country during 5th Plan, only those schemes were taken up which were essential for national defence and economic self-reliance.
(viii) To limit the growth of population by massive country-wide family planning drive.
(ix) Maximum possible facilities were given to the social services for developing human resources.
Strategy adopted to achieve the Foregoing Aims:
(i) Export promotion and import substitution was given top priority.
(ii) For restricting further price, increase of consumption goods i.e. food grains, textiles, industrial raw materials, a major economic policy was made.
(iii) No new project to be started until all its details was worked out and timely availability of requisite resources was ascertained.
(iv) A selective approach was made to “4th Plan” calling for much greater degree of discipline in choosing programmes and projects in administration and finance.
(v) Managerial functions and administrative procedures at all levels were feared to the basic economic and social task.
(vi) For regulating price and distribution of essential commodities, specific measures were suggested and selective use of physical control and state trading was proposed.
(vii) There was no deficit financing.
(viii) There were Rs. 150,020 million for public sector in the revised outlay. It consisted of Rs. 88,710 million for the centre, Rs. 66,060 million for the states and Rs. 4,250 million for the union territories. The outlay for the private sector was Rs. 89,800 million.
For the “4th Plan”, the net increase in the resources of the centre over the draft plan estimates stood at Rs. 9,640 million i.e., Rs. 5,000 million of additional resources mobilisation, Rs. 1,500 million of increase of direct borrowings and Rs. 3,140 million of net increase in domestic budgetary resources, indirect borrowing and external assistance.
5. 5th Five-Year Plan (1974-79):
A socialistic pattern of development was accepted as the appropriate course for removing poverty and attaining economic self-reliance. 5th Plan must take the country along this chosen course.
(i) Removal of Poverty:
Inequality and under-development are the causes of poverty. Hence, productive employment opportunities should be expanded. Aim of employment policy should be expansion of both wage employment and self-employment and raising their productivity.
It is of two basic types:
1. Wages employment and
Fifth Plan envisages substantial additional opportunities for wage employment in non- agricultural sectors: construction, mining, manufacture, generation, transmission and distribution of electricity, transport and communication, trade, storage, banking, insurance etc.
More productive self-employment was anticipated in the agriculture, cottage industry, road, trade and service sectors.
(iii) National Programme for Minimum Need:
To provide large employment and incomes, upto at least certain minimum standards i.e. by social consumption and investment in the form of health, nutrition, education, housing, electricity, drinking water, communication etc.
During the “5th Plan” Period, the net aid reduced to zero by the end i.e., 1978-79 so as to achieve the goal of self-reliance.
The plan propose:
(a) To consolidate self-sufficiency in food grains,
(b) To increase the production of cotton and oil seeds, and
(c) To step up the output of fertilizers, petroleum products, steel, non-ferrous metals, crude oil, basic chemicals, engineering ancillaries etc.
Greater equality and progressive self-reliance was envisaged in the “5th Plan” because it was found that reduced inequality of income will be beneficial to the balance of payment. A further intensification of export drive was absolutely necessary.
(v) Rate and Pattern of Growth:
For realising the basic objectives, the following were taken as the main elements of 5th Plan:
(a) Rigorous restrain on unessential consumption.
(b) Vigorous export promotion and import substitution.
(c) Expanding productive employment opportunities.
(d) 5.5% overall growth rate of gross domestic product.
(e) Extension of social welfare programmes.
(f) For reducing social, economic and regional inequalities, institutional, fiscal and other measures were taken.
(g) An equitable price-wages income balance.
(h) An adequate procurement and distribution system to assure supplies of essential consumer goods at reasonable stable prices at least to poorer sections.
(i) Emphasis on basic industries, agriculture and industries which produce mass consumption goods.
(j) National programming for minimum needs so as to cover elementary education, rural area medical care, slum improvement, rural electrification, drinking water, cleanliness etc.
Achievements of 5th five year plan:
Average rate of growth of industrial production was at 5.9 percent per annum.
Difficulties encountered during 5th plan:
The sharp increase in the prices of food grains, fertilizers and oil seriously upset the assumptions on which the fifth plan was formed. The successive annual plans had to be formulated on the basis of these considerations.
6. 6th Five Year Plan (1980—1985):
The sixth plan envisaged a total public sector plan outlay of Rs. 97,500 crores. The overall outlay earmarked for the large industries and mineral sector is Rs. 20,407 crores including coal and petroleum. Besides this, private sector investment during 80-85 is estimated at Rs. 30,323 crores.
Industrial Policy during the plan aims at:
(i) Optimum utilisation of existing capacities,
(ii) Quantitative increase in output of consumers, intermediate, capital goods, and
(iii) Improvement in productivity. It aims at an annual growth rate of 8 percent of industrial production.
The average annual growth rate achieved during the first 3 years is, 4% in 1980-81, 8.6% in 1981-82 and 3.7% in 1982-83. The average growth rate during the first 3 years is thus 4.9 percent per annum.
7. 7th Five Year Plan (1985—1990):
The 7th plan envisages a total public sector outlay of Rs. 1,80,000 crore of which Rs. 54821.26 crore have been earmarked for energy sector, Rs. 19708.09 crore for large and medium industries and Rs. 2752.74 crore for village and small scale industries. Major portions of these are for schemes or projects in the Central Sector.
To achieve growth with social justice and improving productivity, the programmes and policies in the industrial sector would be oriented towards:
(i) Ensuring adequate supply of wage goods and consumer articles of mass consumption of acceptable quality and at reasonable prices.
(ii) Maximising production for existing assets through restructuring of the industry, improving productivity and technological upgradation.
(iii) Development of “Sunrise” industries with high growth potential as well as of other industries with large domestic and export markets so as to emerge as world leaders in them, and
(iv) Evolving an integrated policy towards self-reliance in strategic fields and for creating employment opportunities for skilled and trained manpower.
Actual public sector outlay was Rs. 220,216 crores as against plan of 180,000 crores.
Industrial production growth rate was envisaged as 8.3 percent per annum. The overall growth rate over the five year period has been 8.5 percent.
In this plan, special programmes like Jawahar Rozgar Yojana were introduced. Social sectors like welfare, education, health, family planning, employment etc. got a higher outlay of 21.6 % in this plan. Rural electrification increased significantly and covered 81% of the villages by the end of the plan.
8. 8th Five Year Plan (1992-1997):
Its objective is to achieve overall annual growth rate of 5.5 percent, and it aims at industrial policy reforms to emphasise:
(i) Strategic and non-discretionary instruments of regulation, and reducing bureaucratic control,
(ii) Steps to improve, efficiency and competitiveness of Indian Industry for enhancing its contribution to export and import substitution
(iii) Review of policy towards small-scale industry and encourage to labour intensive units
(iv) Greater private sector involvement in more areas and public sector to move out from certain non-essential areas.
In this plan reforms in the financial sector and tax systems were introduced, trade barriers were reduced and licensing requirements also reduced. 7.5% annual growth in industry, while keeping inflation under control was envisaged.
Deficit financing to meet the resource shortfall was curtailed to 4.6% of the total resources as against 15.8% in the previous plan period. Government’s own resources increased considerably to 42.2% of the total resources. The total public outlay in the plan was 434,100 crores.
9. 9th Five Year Plan (1997-98 to 2001-02):
The key task in the ninth plan was to improve the living conditions of the poor and provide them with adequate employment opportunities. Ninth plan target programmes at small, medium and marginal farmers and landless labourers. Allocation to power sector shot up to 25.4% of the total outlay (221,970 crores out of total public sector outlay of 875,000 crores). In this plan current account deficit of 2.4% was targeted.
This plan primarily tried to use the latest and un-exposed economic potential of the country to promote economic and social growth. New implementation measures in the form of Special Action Plans (SAPs) covered the areas of social infrastructure, agriculture, information technology and water policy.
The prime focus of this plan was to increase growth in the country with an emphasis on social justice and equity. The plan achieved a GDP growth rate of 5.4% (against a target of 6.5%).
10. 10th Five Year Plan (2002—2007):
The main objective of this plan was to attain 8% GDP growth per year (achieved 7.7%). 20- point programme was introduced. This plan was aimed to take India to the position of “the fastest growing nation in the world”. The tenth plan saw the advent of the National Rural Employment Guarantee Act (NREGA).
The Special Economic Zones (SEZs) were also introduced to encourage the industrial growth, increase employment opportunities and investment in social infrastructure. The actual plan allocation was Rs. 69,511 crores.