Overview
This lecture focuses on India's Five Year Plans, their historical background, objectives, key features, and structure—essential for NDA and UPSC Economics preparation.
Introduction to Economic Planning
- Economic planning is organizing resources to achieve set targets.
- Economic planning in India is a concurrent subject (both Center and State can make plans).
- The concept of the Five Year Plan was adopted from the USSR.
Historical Background of Five Year Plans
- M. Visvesvaraya: Father of Economic Planning in India; proposed doubling national income in 10 years.
- P.C. Mahalanobis: Architect of India’s planning structure; contributed to the Second Five Year Plan.
- Bombay Plan (1944): Proposed by industrialists like Tata & Birla to double national income in 15 years.
- Gandhian Plan (1944): S.A. Agarwal; focused on rural and agricultural development.
- People’s Plan (1945): M.N. Roy; emphasized agriculture, industry, and worker welfare.
- National Planning Committee (1938): Formed by Subhash Chandra Bose; chaired by Jawaharlal Nehru.
Structure of Planning in India
- Planning Commission established in 1950 by cabinet resolution (neither constitutional nor statutory).
- The Prime Minister is ex-officio Chairman.
- National Development Council (NDC) set up in 1952 for administrative coordination; includes all CMs and UT Governors.
Key Five Year Plans (Highlights)
First Five Year Plan (1951-56)
- Focus: Agriculture, irrigation, and infrastructure.
- Model: Harrod-Domar Model.
- Success: Growth rate target 2.1%, achieved 3.6%.
Second Five Year Plan (1956-61)
- Focus: Heavy & basic industries, mixed economy.
- Model: Mahalanobis Model.
- Success: Target 4.5%, achieved 4.3%.
Third Five Year Plan (1961-66)
- Focus: Self-generating economy, agriculture & industry.
- Model: Sukhamoy Chakravarty Model.
- Result: Most failed plan, target 5.6%, achieved 2.8%.
Plan Holidays and Rolling Plan
- Plan holidays in 1966-1969 (due to financial crisis) and 1990-92 (political/economic instability).
- Rolling Plan introduced (1978-1980) by Morarji Desai.
Later Plans
- Fourth Plan: Self-reliance, nationalization of banks.
- Fifth Plan: Poverty eradication (Garibi Hatao).
- Sixth Plan: Import substitution, rural development, bank nationalization, establishment of NABARD (1982).
- Eighth Plan (1992-97): Human development, LPG reforms (liberalization, privatization, globalization), highest achieved growth rate 6.8%.
Post-1991 Reforms
- Indicative planning adopted (government acts as facilitator).
- Ninth to Twelfth Plans: Focus on inclusive, rapid, and sustainable growth; introduction of measurable, monitorable targets.
Planning Commission vs. NITI Aayog
- NITI Aayog (est. 2015) replaced Planning Commission.
- NITI Aayog: Think tank, inclusive structure, bottom-up approach, no fund allocation power.
- Promotes cooperative and competitive federalism; releases major indices.
Key Terms & Definitions
- Economic Planning — Organizing resources to achieve set economic targets.
- Planning Commission — Apex body for five-year planning (1950-2014).
- NITI Aayog — Successor to Planning Commission, functions as a policy think tank.
- NDC — National Development Council; approves Five Year Plans.
- Indicative Planning — Government and private sector jointly set and meet economic goals.
- Plan Holiday — Time gaps between formal Five Year Plans due to crises.
- Rolling Plan — Yearly revised plans adjusting to changing conditions.
Action Items / Next Steps
- Revise all Five Year Plans’ dates, objectives, and key achievements.
- Review major government schemes and institutions (NABARD, SEBI, WTO, IMF).
- Practice previous years’ questions (PYQs) on Five Year Plans.
- Read about Planning Commission & NITI Aayog differences.
- Take mock tests and focus revision on weak topics.