March 11, 2019
Planning Commission of India – Five Year Plans
Contents
Planning Commission of India
- The Soviet Union explored and adopted national planning for the 1st time in the world.
- 1st Soviet Plan started in 1928 for a period of 5 years by Joseph Stalin.
- Independent India was thus destined to be a planned economy.
- The economic history of India is nothing but the history of planning.
Proposed Plans before NPC
Visvesvaraya Plan
- Popular civil engineer and the ex-Dewan of Mysore state M. Visvesvaraya gave the 1st blueprint of Indian planning.
- M. Visvesvaraya’s book “The Planned Economy for India“, was published in 1934.
- His ideas of state planning were an exercise in democratic capitalism, similar to the USA.
- He proposed a 10 years plan with an emphasis on industrialization and individual initiatives.
FICCI Proposal
- In 1934, a serious need for national planning was recommended by the Federation of Indian Chambers of Commerce and Industry (FICCI).
- Its President N.R. Sarkar called for a high-powered ‘National Planning Commission’ to coordinate the whole process of planning.
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Congress Plan
- On the initiative of the INC president Subhash C. Bose, the National Planning Committee (NPC) was set up in 1938.
- Chairman was J. L. Nehru.
- It published its report in 1949.
Bombay Plan
- The Bombay Plan was the popular title of ‘A Plan of Economic Development for India’.
- It was prepared by India’s leading capitalists like Purshotamdas Takurdas, J.R.D. Tata, G.D. Birla and some other.
- The plan was published in 1944-45.
- It proposed a doubling of per capita income within 15 years by priorities industrialization.
- The main focus is on the production of power and capital goods.
Gandhian Plan
- Shriman Narayan Agarwal formulated the Gandhian Plan in 1944.
- This plan laid more emphasis on agriculture, cottage and village-level industries.
People’s Plan
- In 1945, this plan was formulated by M.N. Roy, Chairman of the Post-War Reconstruction Committee of the Indian Trade Union.
- He advocated the need of providing people with the ‘necessities of life’.
- Agricultural and industrial sectors, both were equally highlighted by the plan.
- Common minimum programme of the United Front Govt. of the mid-1990, MGNREGA of UPA 2004 and economic reforms of 1991 also may inspired from this plan.
Sarvodaya Plan
- Jayaprakash Narayan published it in 1950.
- It drew major inspiration from the Gandhian techniques of constructive works by the community and trusteeship.
- It was also inspired by the Sarvodaya concept of Acharya Vinoba Bhave.
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Planning Commission of India
- On 15th March 1950, the Planning Commission of India was set up by the government by a Cabinet Resolution.
- It was an advisory body to the Government of India on an array of issues of economic development.
- A ‘think tank’ on economic development with the Prime Minister as its ex-officio Chairman.
- The Planning Commission of India was dissolved on 17 Aug 2014.
National Development Council
- National Development Council was set up on 6 Aug 1952 by a Resolution issued by the Cabinet Secretariat.
- The main function was to consider the proposals formulated for Plans at all critical stages and accept them and review the working of the Plans from time to time.
Programme Evaluation Organisation (PEO)
- It was established in 1952, as an independent organisation, under the guidance and direction of the NPC.
- Functions of the PEO include undertaking an evaluation of selected schemes under implementation.
- Programme Evaluation Organisation has a three-tier structure.
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Planning Commission of India
Five Year Plans of India in Details
1st Plan 1951-56 | T – 2.1% A – 3.6% | Bhakra-Nangal, and Hirakud were started 5 Indian Institutes of Technology (IIT) were also started Community Development Projects was started, 2 Oct 1952 Irrigation projects started – Mettur Dam Hirakud Dam Bhakra Dam |
2nd 1956-61 | T – 4.5% A – 4.27% | Domestic production of industrial products and rapid industrialization. Steel plants at – Bhilai – USSR Durgapur – UK Rourkela – West Germany |
3rd 1961-66 | T – 5.6% A – 2.4% | Wars with China in 1962 War with Pakistan in 1965 Green Revolution was initiated in 1966 Scientific research, technical education, family planning & rural water supply became central features. |
Plan Holiday 1966-69 | 3 annual plans were made Equal priority to agriculture, its allied activities, and industrial sector | |
4th 1969-74 | T – 5.6% A – 3.3% | |
5th 1974-78 | T – 4.4% A – 4.8% | Self-reliance in agricultural and defense 20-Point programme was launched in 1975 Integrated Urban Development Programme Plan was prepared by D. P. Dhar |
Rolling Plan 1978-80 | Janata Party govt. rejected the 5th five-year plan It consists of 3 kinds of plan 1 annual plan Plan for 3, 4 or 5 years Long term plan 10, 15 or 20 years Rolling plan concept was coined by Gunnar Myrdal Training of Rural Youth for Self-Employment (TRYSEM) – 1979 Integrated Rural Development Programme (IRDP) – 1980 | |
6th 1980-85 | T – 5.2% A – 5.4% | National Rural Employment Programme – Oct 1980 Beginning of Economic Liberalisation Price controls were eliminated NABARD – 12 July 1982 Family planning only Five-Year Plan which was done twice |
7th 1985-90 | T – 5% A – 6.1% | Growth, modernisation, self-reliance and social justice 1st time private sector got priority over the public sector Jawahar Rozgar Yojana – 1989 Delineation of 15 agro-climatic zones Introduction of Decentralized Planning |
Annual Plans 1990-91 1991-92 | Balance of Payment Crisis | |
8th 1992-97 | T – 5.6% A – 6.8% | Lower emphasis on heavy industries and more on infrastructure Objectives were modernization of industries and employment generation |
9th 1997-2002 | T – 7% A – 5.6% | Basic Minimum Services (BMS) Priority to agriculture and rural development Concept of Growth with Justice & Equity Ensuring food and nutritional security for all Focus on reduction in the revenue deficit |
10th 2002-07 | T – 8% A – 7.2% | Doubling per capita income in 10 years Reduction in gender gaps in literacy Mahatma Gandhi National Rural Employment Guarantee Act – 2005 |
11th 2007-12 | T – 8.1% A – 7.9% | Plan targets a growth rate of 10% Emphasizes the idea of ‘inclusive growth’ Increase forest and tree cover higher inflation was main problem |
12th 2012-17 | T – 9% A – 8% | Focuses on Growth – Faster, Inclusive and Sustainable Aadhar based Direct Cash Transfer Scheme |
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Planning Commission of India
Critical Evaluation
Lack of ‘Perspective’ in Planning
- Planning should be evaluation-based, and ‘Long-term’ goals should be followed up, where NPC was not following.
- Succeeding plans have always been commenced without the full evaluation of the preceding Plan.
- The reason was the lack of a nodal body responsible for data collection at the national level and the Federal nature of polity made data collection delays.
Failure in Promoting a Balanced Growth & Development
- NPC is blamed for failing the objective of regionally balanced growth and development.
- NPC was not taken a ‘Differential development strategy’ to decrease regional imbalance in the country until the 10th Plan.
- Because of better infrastructure developed regions attracted most private investment which accelerate the process of imbalanced growth.
Planning Commission of India
Highly Centralised Nature of Planning
- After Nehru, with every Plan, we see a greater tendency of centralisation in the planning process.
- Setting up of the NDC and promoting multi-level planning (MLP) did not serve many purposes in this direction.
- Finally, the 73rd and 74th constitutional amendments promoted the cause of decentralised planning.
Planning Commission of India
Lop-side Employment Strategy
- Planning was heavily in favour of ‘capital intensive’ industries public sector industries.
- PSUs were not labour-intensive and unable to generate enough employment.
- Agri-industries, village industries, and self-employment were not promoted.
Excessive Emphasis on PSUs
- NPC emphasised PSUs for the right reasons but in the wrong way.
- State monopolies in certain areas continued over such a long period that leads to a demand-supply gap in the major goods and services.
Planning Commission of India
Agriculture Overshadowed by the Industry
- Promoting the cause of faster industrialisation, the agriculture sector got badly overshadowed.
- Who depended upon agriculture, could never increase their purchasing power.
- 10th Plan recognises agriculture as the ‘core element’ of development.
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Faulty Industrial Location Policy
- NPC never consider the nearness of raw materials, market, cheaper labour, better transportation and communication.
- Plans always prioritised the setting up of new industrial units in the backward regions.
Wrong Financial Strategy
- Mobilising resources to support the highly capital-intensive Plans has always been a challenge for the government.
- To support the Plans, govt. went for a highly complex and liberal tax structure, nationalising the banks, etc.
- It leads to tax evasion, a parallel economy and lesser and lesser capital for the private sector.
- More subsidies, salaries and the interest burden gave an upward push to the non-plan expenditure.
Planning Commission of India
Politicization of the Planning Process
- Almost every issue of socio-political importance is influenced by the political interests of the Centre.
- From oil subsidies to tax reforms, FDI in retail and free movement of food grains.
- Almost everyone outside the government blamed it for policy paralysis.