Emergence of Planning System

Emergence of Planning System


Emergence of Planning System in India

  • Planning as a process of rebuilding economy earned worldwide public support in 1940’s & 1950’s
  • There was a general consensus on one point that ‘the government’ should plan for the development, not the private sector.
  • Great depression in Europe, Post WW2 reconstruction of the world + spectacular economic growth against heavy odds in the Soviet Union in the 1930s and 1940s contributed to this consensus.


1938 National Planning Committee’ was established under the chairmanship of Nehru by INC. Its recommendations could not be implemented because of the beginning of the Second World War
1944 ‘Bombay Plan’ was presented by 8 leading industrialists of Bombay
1944 ‘Gandhian Plan’ was given by Narayan Agarwal
1945 ‘People’s Plan’ was given by M N Roy
1950 ‘Sarvodaya Plan’ was given by J P Narayan – based on Vinoda bhave’s philosophy

Planning Commission (as an advisory body to the government) was set up in 1950 by a simple resolution of Government. The scope of the resolution by which Planning Commission was formed:

  • Adequate means of livelihood for everyone
  • Material resources of community should serve the common good
  • Economic system should operate in such a way that use of ‘means of production’ and ‘wealth’ should not result in well-being of particular community and to the detriment of the society.

Five Year Plans

Like USSR, Planning Commission of India opted for five-year plan which permitted the government to focus on the larger picture and make long term intervention in the economy.

Five Year Plans – India

First Five Year Plan: 1951 – 56

  • Was based on Harrod – Domar Model of development 
  • Rapid development of agriculture in order to move towards food self-sufficiency.
  • Addressed mainly the agrarian sector including investment in dams and irrigation
  • Due to the bitter Partition, Agricultural sector was hit hardest and needed urgent attention
  • Also focused on land reform for the country’s development 

Second Five Year Plan: 1956 – 61 (Mahabolis plan)

  • Thrust on heavy industries – industrialization.
  • Advocated huge imports which led to emptying of funds leading to foreign loans
  • Deficit financing started in this plan [arr] government funding of spending by borrowing
  • Price level increased by 30%, against a decline of 13% during the First Plan

Focus – Basic & heavy industries such as iron & steel, heavy chemicals like nitrogenous fertilizers, heavy engineering and machine building industry.

Third Five Year Plan: 1961 – 66 – Defence & Price stabilization

  • Aim was to make India a ‘Self – Reliant’ and ‘Self – Generating’ Economy
  • Panchayat elections started.
  • Based on the experience of first two plans, agriculture was given top priority to support the exports and industry.
  • Complete failure in reaching the targets due to unforeseen events – Chinese aggression (1962), Indo-Pak war (1965), severe drought 1965-66

Three Annual Plans (1966 – 69) – Plan holiday for 3 years

  • Prevailing crisis in agriculture and serious food shortage
  • Green revolution & introduction of HYVs
  • Nationalization of 14 banks in 1969

Fourth Five Year Plan: 1969 -74 – Growth, Stability & self-reliance

  • Growth with stability & social justice [arr] progress towards self – reliance
  • Main emphasis on agriculture’s growth rate so that a chain reaction can start
  • Had to tackle the influx of Bangladeshi refugees before and after 1971 Indo – Pak war
  • Gadgil formula applied for center’s assistance to states
  • Pokhran nuclear test

Fifth Five Year Plan: 1974 – 79 (DD Dhar Garibi Hatao) – Poverty elimination & self-reliance

  • Drafted by DD Dhar with an aim to Removal of Poverty’ (Garibi Hatao) and ‘Attainment of Self Reliance’, through promotion of high rate of growth.
  • National Program of Minimum needs was initiated viz. Primary Education, Drinking Water; Medical facilities in rural areas, Food, Land for Landless Laborers, Rural Roads, Rural Electrification etc.
  • The plan was terminated in 1978 (instead of 1979) when Janta Government, came to power.

Sixth Five Year Plan (1980 – 85)

  • Focus was on increase in national income, modernization of technology.
  • Ensuring continuous decrease in poverty and unemployment
  • Population control through family planning, National highway launched etc.

Seventh Five Year Plan (1985 – 90)

  • Aimed at rapid growth in food-grains production & increased employment opportunities
  • Targeted productivity within the framework of basic tenants of planning
  • It was a great success, the economy recorded 6% growth rate against the targeted 5%.

Eighth Five Year Plan (1992 – 97)

  • Focus areas [arr] Human development + Industrial modernisation + Population control.
  • The eighth plan was postponed by two years because of political upheavals at the Centre.
  • it was launched after a worsening Balance of Payment position and inflation during 1990 − 91.

Objectives – Liberalization, Privatization & Globalization, together, defined the framework of new policy regime of radical reforms with market driven paradigm of development – emphasized high growth and employment generation.

Ninth Five Year Plan (1997 – 2002)

  • Focused on generating employment
  • Providing food security to everyone
  • Continued liberalization

Tenth Five Year Plan (2002 – 2007)

  • Focus areas [arr] Education + Health + Environment
  • Reduction of poverty and creation of additional gainful employment
  • Agricultural development universal primary education
  • Reduction in infant and maternal mortality rates accorded high priority

Eleventh Five Year Plan (2007 – 2012)

  • Focus areas [arr] Education + Health + Environment + Infrastructure
  • Emphasized the need for focusing on ‘inclusive growth’ i.e.
  • rapid growth that reduces poverty and creates employment opportunities
  • provides access to essential services in health and education especially for the poor
  • empowerment through education and skill development.

Twelth Five Year Plan (2012 – 17)

  • Objective [arr] Faster, More inclusive & sustainable growth
  • Target – GDP (9%) + Agriculture (4%) + Mfg (10%)
  • 10% reduction in property than the rate at the end of 11th plan+ 50 million new jobs
  • Reduce IMR to 25; MMR to 1 + Increase Child Sex Ratio to 950 + Reduce Total Fertility Rate to 2.1
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