Emergence of Planning System

by Devender

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In the 1940s and 50s, public support around the world was won by Planning as a process of rebuilding the economy. At one point there was a general consensus that the government should plan for development and not the private sector.

The consensus was contributed by the great depression in Europe, Post WW2 reconstruction of the world, and spectacular economic growth against heavy odds in the Soviet Union in the 1930s and 1940s.

The emergence of the Planning System in India

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: Narayan Agarwal gave the Gandhian Plan
1945: M N Roy gave People's Plan
1950: J P Narayan gave the Sarvodaya Plan which was based on Vinoda Bhave's philosophy

In 1950, the Planning commission was set up as an advisory body to the government. The scope of the resolution by which the Planning Commission was formed:

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

Just like USSR, the Planning commission of India also opted for a 5-year plan. It was believed that 5-year plan will allow the government to focus on the larger picture and make a long-term intervention in the economy.

Five Year Plans – India

First Five Year Plan:

It was from 1951-56 and was based on the Harrod - Domar Model of development.

It was focused on the rapid development of agriculture in order to move towards food self-sufficiency
It addressed mainly the agrarian sector including investment in dams and irrigation
Due to the partition, the agriculture sector was hit tremendously and needed urgent attention
It also focused on land reform for the country’s development

Second Five Year Plan:

From 1956–61 and known as Mahabolis plan.

It was focused on heavy industries and industrialization such as iron & steel, heavy chemicals like nitrogenous fertilizers, heavy engineering, and the machine-building industry
It was in favor of huge imports which led to the emptying of funds leading to foreign loans
Deficit financing started in this plan
During the first plan, the price level increased by 30%, against a decline of 13%

Third Five Year Plan: Defence & Price stabilization

From 1961-66 and aimed at making India a Self–Reliant and Self–Generating economy.

It was based on the experience of the first two plans and agriculture was given the top priority
Panchayat elections started in this plan
It still failed to reach its goals due to Chinese aggression (1962), the Indo-Pak war (1965), and severe drought 1965-66

Three Annual Plans: Plan holiday for 3 years

From 1966 to 1969 and focused on the crisis prevailing in agriculture and serious food shortage.

It also introduced the Green revolution & HYVs
During these plans, 14 banks were nationalized in 1969

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

From 1969-74 and focused on growth with stability & social justice and progress towards self–reliance.

Its main focus was on agriculture’s growth rate so that a chain reaction can start
It had to tackle the problem of Bangladeshi refugees before and after the 1971 Indo - Pak war
Gadgil formula applied for center’s assistance to states and Pokhran nuclear test

Fifth Five Year Plan: Poverty elimination & self-reliance

From 1947-79 and drafted by DD Dhar with an aim to remove poverty and achieve Self Reliance by promotion of high rate of growth.

Initiated the National Program of Minimum needs like Primary Education, Drinking Water, Medical facilities in rural areas, Food, Land for Landless Laborers, Rural Roads, Rural Electrification etc.
It was terminated in 1978, 1 year before it had to when Janta government came in power

Sixth Five Year Plan:

From 1980-85 and focused on increasing national income and modernization.

It was also focusing on decreasing poverty and unemployment
During this, population control through family planning, National highway, etc. was launched

Seventh Five Year Plan:

From 1985-90 and focused on rapid growth in food-grains production & increased employment opportunities.

It also focused on productivity within the framework of basic tenants of planning
It was a great success as the economy recorded a 6% growth rate against the targeted 5%

Eighth Five Year Plan:

From 1992 to 97 and focused on areas such as Human Development, Industrial modernization, and population control.

It was postponed for 2 years because of political upheavals at the Centre
It was launched after a worsening Balance of Payment position and inflation during 1990 − 91
The main objective of this plan was Liberalization, Privatization & Globalization, together, defined the framework of new policy regime of radical reforms with the market-driven paradigm of development – emphasized high growth and employment generation

Ninth Five Year Plan:

From 1997-2002 and focused on generating employment, providing food security to everyone, and Continued liberalization.

Tenth Five Year Plan:

From 2002-07 and focused on areas such as education, health, and environment.

Its aim was to reduce poverty, create more gainful employment, agricultural development, primary education
High priority was given to reducing infant and maternal mortality rates

Eleventh Five Year Plan:

From 2007-12 and focused on areas such as education, health, infrastructure, and environment.

Its aim was rapid growth that reduces poverty and creates employment opportunities, provides access to essential services in health and education especially for the poor, and empowerment through education and skill development

Twelfth Five Year Plan:

From 2012-17 and focused on Faster, More inclusive & sustainable growth. The target was set at GDP (9%), Agriculture (4%), and Manufacturing (10%). Creation of 50 million jobs and 10% reduction in property than the rate at the end of the 11th plan.

Reduce IMR to 25; MMR to 1 + Increase Child Sex Ratio to 950 + Reduce Total Fertility Rate to 2.1