Amity School of Business Module 5 Planning in

Amity School of Business Module- 5 Planning in India 1

Objectives of Economic Planning in India Amity School of Business The Directive Principles of State Policy lay down that: “the State shall direct policy towards securing – (a) that all citizens have the right to adequate means of livelihood; (b) that ownership and control of resources in the community are so distributed as to subserve the common good; (c) that the operation of the economic system does not result in concentration of wealth and means of production to the common detriment. ” The Directive Principles of the Indian Constitution, thus, express the will of the People of India for rapid economic growth. Accordingly, the Government of India adopted planning as a means of fostering economic development. 2

Objectives of Economic Planning in India Amity School of Business Consequently, the Government of India set up Planning Commission in 1950, and entrusted it with the task of formulating economic plans on a continual basis, towards the country’s socio-economic development. Long-term objectives of economic planning in India: 1. Rapid economic growth; 2. Expansion of employment; 3. Reduction of disparities in income and wealth; 4. Prevention of concentration of economic power; and 5. Setting up of a socialistic society based on equality, justice and absence of exploitation. 3

Five Year Plans in India Amity School of Business • • • First five year plan (1951 -1956) Second five year plan (1956 -1961) Third five year plan (1961 -1966) Fourth five year plan (1969 -1974) Fifth five year plan (1974 -78) Sixth five year plan (1980 -1985) Seventh five year plan (1985 -1990) Eighth five year plan (1992 -1997) Ninth five year plan (1997 -2002) Tenth five year plan (2002 -2007) Eleventh five year plan (2007 -2012) 4

First five year plan (1951 -56) Amity School of Business Objectives: 1. To correct the disequilibrium in economy caused by World War –II and partition; 2. Rehabilitation of refugees; 3. Rapid agricultural development (to tackle the problem of severe food shortage and mounting inflation in food items, i. e. to make India self-sufficient in food); 4. To initiate the process of all-round balanced development. 5

Amity School of Business Second five year plan (1956 -61) – Conceived in the atmosphere of economic stability; agricultural targets fixed in 1 st plan been achieved, and stable prices. Thus stage was set for the industrial development of the country on socialistic pattern. Objectives: 1. To lay foundation for industrial progress (thrust towards heavy and basic industries); and 2. to achieve a socialistic pattern of society (Industrial Policy, 1956 – assigning lead role to the public sector). 6

Amity School of Business Third five year plan (1961 -66) – Set as its goal the establishment of self-reliant economy in the areas of agriculture and industry. However, because of India’s conflicts with China in 1962 and with Pakistan in 1965, the approach was shifted from development to defence and development. Fourth five year plan (1969 -74) – Originally planned to commence in 1966. However, got delayed by three years on account of drought, rupee devaluation and inflationary recession in the economy. Instead, three Annual Plans (1966 -69) were implemented. This three year period is also known as “Plan Holiday. ” 7

Amity School of Business Fourth five year plan (1969 -74) – • This plan was aimed at “growth with stability” and “progressive achievement of self-reliance”. • Real GDP growth rate was targeted at 5. 5 per cent per annum. • Care for economically weaker section of the society was also included – “Garibi Hatao”. 8

Amity School of Business Fifth Five Year Plan (1974 -78) The objective of 5 th five year plan was removal of poverty and achievement of economic selfreliance. The plan specifically aimed at: - Increasing income and consumption of the lowest 30 per cent of the population (BPL families); and - Eliminating special forms of external assistance, particularly as regards food and fertilizer imports. However, this plan was terminated in its 4 th year by the Janata Party Govt. in 1978. 9

Amity School of Business Sixth Five Year Plan (1980 -85) The sixth five year plan aimed at providing impetus to the pace of economic development and strengthening the impulse of modernization and technological self reliance. 10

Amity School of Business Seventh Five Year Plan (1985 -90) The seventh five year plan laid emphasis on development, equity and social justice, self-reliance, higher efficiency, and increased food and industrial production. 11

Amity School of Business Eighth Five Year Plan (1992 -97) The eighth five year plan focused on generation of adequate employment opportunities, containing population growth, and strengthening infrastructure. 12

Amity School of Business Ninth Five Year Plan (1997 -2002) The ninth plan focused on accelerating the rate of economic growth giving priority to agriculture and rural development. 13

Amity School of Business Tenth Five Year Plan (2002 -07) Tenth five year plan aimed at an average annual GDP growth rate of 8%, with major focus on human development and family welfare programs. 14

Amity School of Business Eleventh Five Year Plan (2007 -12) • Title of the 11 th plan document “Towards faster and more inclusive growth. ” • This plan began in favorable economic conditions. 15

Targets and objectives of the 11 th Plan Amity School of Business • Average GDP growth rate of 9% p. a. • Average agricultural growth rate of 4 % p. a. • Generation of 58 million employment opportunities; • Increasing literacy rate for persons 7 years or more to 85% by 2011 -12; • Infant mortality rate (IMR) to be reduced to 28 and maternal mortality rate (MMR) to 1 per 1, 000 by 2011 -12; • Clean drinking water to all by 2009. 16

Targets and objectives of the 11 th Plan Amity School of Business • Malnutrition among children of age 0 -3 years to be reduced to half its present level; • Sex ratio for age group 0 -6 years to be raised to 935 by 2011 -12 and to 950 by 2016 -17; • Ensuring that at least 33% of beneficiaries of all government schemes are women and girl children; • Electricity & telephone /broadband connectivity to all villages of the country by 2009; • All-weather road connection to all habitations with population 1000 and above (500 and above for hilly areas) by 2009; 17

Targets and objectives of the 11 th Plan Amity School of Business • To increase forest and tree cover by 5 per cent; • To attain World standards of air quality in all major cities by 2011 -12; • To treat all urban waste water by 2011 -12 for clean river waters; • To increase energy efficiency by 20 per cent; • Investment rate (% of GDP) of 36. 7%; • Domestic saving rate (% of GDP) of 34. 8%; • Exports growth projected at 20% per year (in US dollar terms). As a result share of exports in GDP to rise from 14% in 2006 -07 to 22. 5% by 2011 -12; 18

Targets & Objectives of the 11 th Plan Amity School of Business • Imports projected to grow at 23% per year (in US dollar terms). As a result imports as percentage of GDP to rise from 21% in 2006 -07 to 38. 5% in 2011 -12; • Invisibles surplus is projected to be around 13. 5 -14% of GDP by 2011 -12; As a result, the current account deficit is expected to be around 2– 2. 5 % of GDP by 2011 -12. 19

Five year plans - Achievements and Amity School of Business failures Achievements • Successful in laying a strong infrastructure and broad based industrial development. • Self-reliance in agricultural and industrial production. Thereby achieving price stability. • Balanced regional development. • Poverty alleviation – to an extent. • Structural change in the economy; • Employment generation. • Enhancements in the areas of health and education. 20

Amity School of Business Failures • Unsatisfactory per capita income growth; • Population growth; • Poverty still exists both in urban and rural areas; • Slower agricultural growth (less than 2 % p. a. ); • Continuing inflation; • Increasing fiscal deficits. 21

Amity School of Business Summing up: Over the past sixty years of economic planning in India, though there has been an overall socio-economic progress. However, there still exists regional and sectional disparities in the society. The true success of the planning process would be judged by the extent to which it is able to convert such growth into pro-poor growth and reduce the urbanrural / rich-poor divide. 22

Amity School of Business THANK YOU 23