Five-Year Plans (FYPs) is a well-structured and centralized economic program meant for the sustained economic development of a country. The first such plan was put through in the Soviet Union in 1928 by Joseph Stalin. Since then, many countries have implemented Five-Year Plans including India. A Planning Commission used to make FYPs. According to some reports, it was freedom fighter Subhash Chandra Bose who first set up a National Planning Committee in 1938. The key responsibility of this agency was to put the available resources in the country to the best possible use. The first five-year plan in India was launched in 1951 and since then, India has seen twelve Five Year Plans. Currently, however, the FYP system has been discontinued and a new mechanism has been put into place. Let’s have a look at all the Five Year Plans the country has seen so far.
It was in the period of Manmohan Singh as the prime minister. It aimed to increase the enrolment in higher education of 18–23 years of age group by 2011–12. It focused on distant education, convergence of formal, non-formal, distant and IT education institutions. Rapid and inclusive growth (poverty reduction). Emphasis on social sector and delivery of service therein. Empowerment through education and skill development. Reduction of gender inequality. Environmental sustainability. To increase the growth rate in agriculture, industry and services to 4%, 10% and 9% respectively. Reduce total fertility rate to 2.1. Provide clean drinking water for all by 2009. Increase agriculture growth to 4%.
The Second Plan focused on the development of the public sector and “rapid Industrialisation”. The plan followed the Mahalanobis model, an economic development model developed by the Indian statistician Prasanta Chandra Mahalanobis in 1953. The plan attempted to determine the optimal allocation of investment between productive sectors in order to maximise long-run economic growth. It used the prevalent state-of-the-art techniques of operations research and optimization as well as the novel applications of statistical models developed at the Indian Statistical Institute. The plan assumed a closed economy in which the main trading activity would be centred on importing capital goods.
The first Indian prime minister, Jawaharlal Nehru, presented the First Five-Year Plan to the Parliament of India and needed urgent attention. The First Five-year Plan was launched in 1951 which mainly focused in the development of the primary sector. The First Five-Year Plan was based on the Harrod–Domar model with few modifications.
The Third Five-year Plan stressed agriculture and improvement in the production of wheat, but the brief Sino-Indian War of 1962 exposed weaknesses in the economy and shifted the focus towards the defence industry and the Indian Army. In 1965–1966, India fought a War with Pakistan. There was also a severe drought in 1965. The war led to inflation and the priority was shifted to price stabilisation. The construction of dams continued. Many cement and fertilizer plants were also built. Punjab began producing an abundance of wheat.
At this time Indira Gandhi was the prime minister. The Indira Gandhi government nationalised 14 major Indian banks and the Green Revolution in India advanced agriculture. In addition, the situation in East Pakistan (now Bangladesh) was becoming dire as the Indo-Pakistan War of 1971 and Bangladesh Liberation War took funds earmarked for industrial development. India also performed the Smiling Buddha underground nuclear test (Pokhran-1) in Rajasthan on 18 May 1974, partially in response to the United States deployment of the Seventh Fleet in the Bay of Bengal. The fleet had been deployed to warn India against attacking West Pakistan and extending the war.
The Fifth Five-Year Plan laid stress on employment, poverty alleviation (Garibi Hatao), and justice. The plan also focused on self-reliance in agricultural production and defence. In 1978 the newly elected Morarji Desai government rejected the plan. The Electricity Supply Act was amended in 1975, which enabled the central government to enter into power generation and transmission.
The Sixth Five-Year Plan marked the beginning of economic liberalisation. Price controls were eliminated and ration shops were closed. This led to an increase in food prices and an increase in the cost of living. This was the end of Nehruvian socialism. The National Bank for Agriculture and Rural Development was established for development of rural areas on 12 July 1982 by recommendation of the Shivaraman Committee. Family planning was also expanded in order to prevent overpopulation. In contrast to China’s strict and binding one-child policy, Indian policy did not rely on the threat of force. More prosperous areas of India adopted family planning more rapidly than less prosperous areas, which continued to have a high birth rate. Military Five-Year Plans became coterminous with Planning Commission’s plans from this plan onwards.
The Seventh Five-Year Plan was led by the Congress Party with Rajiv Gandhi as the prime minister. The plan laid stress on improving the productivity level of industries by upgrading of technology. The main objectives of the Seventh Five-Year Plan were to establish growth in areas of increasing economic productivity, production of food grains, and generating employment through “Social Justice”.
1989–91 was a period of economic instability in India and hence no Five-Year Plan was implemented. Between 1990 and 1992, there were only Annual Plans. In 1991, India faced a crisis in foreign exchange (forex) reserves, left with reserves of only about US$1 billion. Thus, under pressure, the country took the risk of reforming the socialist economy. P.V. Narasimha Rao was the ninth prime minister of the Republic of India and head of Congress Party, and led one of the most important administrations in India’s modern history, overseeing a major economic transformation and several incidents affecting national security. At that time Dr. Manmohan Singh (later prime minister of India) launched India’s free market reforms that brought the nearly bankrupt nation back from the edge. It was the beginning of liberalization, privatisation and globalization (LPG) in India.
The Ninth Five-Year Plan came after 50 years of Indian Independence. Atal Bihari Vajpayee was the prime minister of India during the Ninth Plan. The Ninth Plan tried primarily to use the latent and unexplored economic potential of the country to promote economic and social growth. It offered strong support to the social spheres of the country in an effort to achieve the complete elimination of poverty. The satisfactory implementation of the Eighth Five-Year Plan also ensured the states’ ability to proceed on the path of faster development. The Ninth Five-Year Plan also saw joint efforts from the public and the private sectors in ensuring economic development of the country. In addition, the Ninth Five-Year Plan saw contributions towards development from the general public as well as governmental agencies in both the rural and urban areas of the country. New implementation measures in the form of Special Action Plans (SAPs) were evolved during the Ninth Plan to fulfill targets within the stipulated time with adequate resources. The SAPs covered the areas of social infrastructure, agriculture, information technology and Water policy.
The main objectives of the Tenth Five-Year Plan: Attain 8% GDP growth per year. Reduction of poverty rate by 5% by 2007. Providing gainful and high-quality employment at least to the addition to the labour force. Reduction in gender gaps in literacy and wage rates by at least 50% by 2007. 20-point program was introduced. Target growth: 8.1% – growth achieved: 7.7%. The Tenth Plan was expected to follow a regional approach rather than sectoral approach to bring down regional inequalities. Expenditure of ₹43,825 crore (US$6.1 billion) for tenth five years. Out of total plan outlay, ₹921,291 crore (US$130 billion) (57.9%) was for central government and ₹691,009 crore (US$97 billion) (42.1%) was for states and union territories.
The Twelfth Five-Year Plan of the Government of India has been decided to achieve a growth rate of 8.2% but the National Development Council (NDC) on 27 December 2012 approved a growth rate of 8% for the Twelfth Plan. With the deteriorating global situation, the Deputy Chairman of the Planning Commission Montek Singh Ahluwalia has said that achieving an average growth rate of 9 percent in the next five years is not possible. The Final growth target has been set at 8% by the endorsement of the plan at the National Development Council meeting held in New Delhi.