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Five Year Plans of India List, Objectives and Achievements

Five-Year Plans of India were a series of economic & social development initiatives launched by the Indian government. Check List of Five Year Plans of India its Objectives & Achievements for UPSC.

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Five Year Plans of India

The Five-Year Plans were a series of national economic development plans implemented by the Indian government to promote industrialization and economic growth. They were first introduced in India in 1951, shortly after India gained independence from British colonial rule, and continued until 2017.

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Objectives of Five Year Plans of India

The Five-Year Plans of India was a series of economic and social development initiatives launched by the Government of India to promote economic growth, social welfare, poverty reduction, regional balance and self-reliance in a planned and systematic manner.

Key Features of Five Year Plans of India

Here are some key features of the Five-Year Plans in India:

Goals: Each Five-Year Plan had specific goals and objectives that were designed to promote economic growth and development in different sectors, such as agriculture, industry, infrastructure, and social welfare.
Planning Commission: The Planning Commission of India was responsible for formulating the Five-Year Plans. The Commission would assess the current state of the economy, identify areas that needed improvement, and set targets for the next five years.
Implementation: The implementation of the Five-Year Plans was carried out through various government departments and agencies at the national, state, and local levels.
Funding: The funds required for implementing the Five-Year Plans were sourced from the government’s budget, loans from international organizations, and private investments.
Results: Over the years, the Five-Year Plans helped India achieve significant progress in various sectors, such as agriculture, education, healthcare, and infrastructure. However, some plans were more successful than others, and there were also instances of corruption and inefficiencies in implementation.

Current Status of Five Year Plans of India

The Government of India stopped the Five-Year Plans after the Twelfth Five-Year Plan (2012-2017) and replaced them with a new think tank body called the Niti Aayog, which focuses on sustainable development goals and long-term planning.

List of Five Year Plans of India

Here is a complete list of Five Year Plans of India along with the Time Period and its Salient Features:

Five-Year Plans of India Brief Analysis

The Five-Year Plans of India, spanning from 1951 to 2017, were instrumental in steering the country’s economic development and growth. The early plans, such as the First and Second, laid the groundwork for industrialization and agriculture.

The Green Revolution was initiated during the Third Plan, leading to increased food production. Subsequent plans addressed social justice, poverty alleviation, and human resource development. The Eighth Plan marked the beginning of economic liberalization, opening up the economy to foreign investment. The Tenth and Eleventh Plans emphasized inclusive growth, rural development, and social sectors. The Twelfth Plan focused on sustainable development, infrastructure, and manufacturing.

Post-2017, India shifted away from the traditional Five-Year Plan model, with the NITI Aayog taking charge of development strategies. Challenges ranged from financial constraints to regional imbalances and global economic uncertainties. Despite challenges, the plans achieved successes in infrastructure development, poverty alleviation, and technological advancements, shaping India’s economic and social landscape.

Five Year Plans of India UPSC

The Five-Year Plans of India is a crucial topic for UPSC aspirants because they form an important part of the Indian economy and polity. This topic is specifically mentioned in the UPSC Syllabus under General Studies paper III, which deals with the Indian economy, planning, and development. Aspirants who are preparing for UPSC exams need to have a clear understanding of the Five-Year Plans and their salient features to answer questions related to economic planning and development in India.

Moreover, online coaching and mock tests for UPSC exams often cover this topic in detail and provide aspirants with a comprehensive understanding of the Five-Year Plans and their importance in the Indian economy. Aspirants can benefit from UPSC Online Coaching by attending lectures, participating in discussions, and accessing study materials related to the Five-Year Plans. Similarly, the UPSC Mock Test can help aspirants assess their knowledge of this topic and identify areas that need further study.

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Five Year Plans of India FAQs

What is the five-year plan.

The five-year plan is a centralized economic plan that sets targets for industrial and agricultural production over a five-year period.

How many 5 year plans are there in India?

There were 12 five-year plans in India, starting from 1951 and ending in 2017.

What are the main goals of five-year plan?

The main goals of the five-year plans in India were to achieve rapid industrialization, increase agricultural production, reduce poverty and unemployment, and promote social welfare.

Who started 5 year plan in India?

The 5 year plan in India was started by the first Prime Minister of India, Jawaharlal Nehru, in 1951.

Who is the father of 2nd five-year plan?

The father of the second five-year plan in India was P.C. Mahalanobis, an Indian scientist and statistician who played a key role in the planning process.

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From 1947 to 2017, the Indian economy was premised on the concept of planning.
This was carried through the Five-Year Plans , developed, executed, and monitored by the Planning Commission (1951-2014) and the NITI Aayog (2015-2017).
With the prime minister as the ex-officio chairman, the commission has a nominated deputy chairman, who holds the rank of a cabinet minister.
Montek Singh Ahluwalia is the last deputy chairman of the commission (resigned on 26 May 2014).
The Twelfth Plan completed its term in March 2017.
The Gadgil formula is named after Dhananjay Ramchandra Gadgil, a social scientist and the first critic of Indian planning. It was evolved in 1969 for determining the allocation of central assistance for state plans in India. Gadgil formula was adopted for distribution of plan assistance during Fourth and Fifth Five Year Plans.
Revised versions of the formula have been used since then to determine the allocation of central assistance for state plans.
The recent government elected in 2014, has announced the dissolution of the Planning Commission, and its replacement by a think tank called the NITI Aayog (an acronym for National Institution for Transforming India).

M. Visvesvaraya Plan

In 1934, Sir M. Visvesvaraya had published a book titled “ Planned Economy in India ”, in which he presented a constructive draft of the development of India in next ten years.
His core idea was to lay out a plan to shift labor from agriculture to industries and double up National income in ten years.
This was the first concrete scholarly work towards planning.
The economic perspective of India’s freedom movement was formulated during the thirties between the 1931 Karachi session of Indian National Congress, 1936 Faizpur session of India National Congress.

National Planning Committee

The first attempt to develop a national plan for India came up in 1938. In that year, Congress President Subhash Chandra Bose had set up a National Planning Committee with Jawaharlal Nehru as its president.
However the reports of the committee could not be prepared and only for the first time in 1948 -49 some papers came out.

Bombay Plan

It was presented in 1944 by Eight Industrialists of Bombay viz. Mr. JRD Tata, GD Birla, Purshottamdas Thakurdas, Lala Shriram, Kasturbhai Lalbhai, AD Shroff , Ardeshir Dalal, & John Mathai working together prepared “ A Brief Memorandum Outlining a Plan of Economic Development for India ”.
This is known as “Bombay Plan”. This plan envisaged doubling the per capita income in 15 years and tripling the national income during this period.
Nehru did not officially accept the plan, yet many of the ideas of the plan were inculcated in other plans which came later.

Gandhian Plan

In the light of the basic principles of Gandhian economics, S. N. Agarwal authored ‘The Gandhian Plan’ in 1944 in which he put emphasis on the expansion of small unit production and agriculture .
Its fundamental feature was decentralisation of economic structure with self-contained villages and cottage industries.

People’s Plan

In 1945, yet another plan was formulated by the radical humanist leader M.N. Roy, chairman of the Post-War Reconstruction Committee of Indian Trade Union.
The plan was based on Marxist socialism and advocated the need of providing the people with the ‘basic necessities of life’. Agricultural and industrial sectors, both were equally highlighted by the plan.

Sarvodaya Plan

Sarvodaya Plan (1950) was drafted by Jaiprakash Narayan.
This plan itself was inspired by Gandhian Plan and Sarvodaya Idea of Vinoba Bhave.
This plan emphasized on agriculture and small & cottage industries.
It also suggested the freedom from foreign technology and stressed upon land reforms and decentralized participatory planning.

The Wage Good Model

Prominent Economist like, C N Vakil and P R Brahmananda advocated Wage Good model for the development of the Indian economy and Industrialisation.
Vakil and Brahamanda differed from the Mahalanobis strategy as they believe “At the low level of consumption (this was the situation in India) the productivity of the workers depends on how much they consumed.
According to them, if people were undernourished, they will lose their productivity and become less efficient, at this juncture it is necessary to feed them to increase their productivity. But this is not true for all consumer good; so they differentiated between Wage Good (whose consumption increase worker productivity) and Non-Wage Good (whose consumption did not).
To sum up, Wage Good model says; worker’s productivity depends on not on whether they use machines to produce goods but also on the consumption of wage goods like, food, cloth and other basics.
Therefore, the first step towards development is to mechanize agriculture and raise food production; once this objective is reached, one should go for Mahalanobis strategy of Heavy Industrialisation.

Twenty Point Programme (TPP)

The second Central Plan which was launched in July 1975.
The programme was conceived for coordinated and intensive monitoring of a number of schemes implemented by the Central and the State Governments.
The basic objective was of improving the quality of life of the people, especially of those living below the poverty line.
Under this, a thrust was given to schemes relating to poverty alleviation, employment generation in rural areas, housing, education, family welfare and health, protection of environment and many other schemes having a bearing on the quality of life in the rural areas.

Planning commission

A formal body to formulate and implement Five-Year Plans was established on 15 th March 1950 with the Prime Minister as the head.
The commission nominated a Deputy Chairman which held the rank of a cabinet minister.
In 2014, Prime Minister Narendra Modi dissolved the planning commission to replace it with the NITI Aayog which acts as a think tank for development of the nation.

National Development Council

All the plans made by the Planning Commission need to be approved by the National Development Council first which is an extra-constitutional body. It was set up on 6 th August 1952.
Planning at the state level is done through a state planning body where the chief minister is the chairman of the body and finance and planning members along with technical members assist her/him to formulate a plan. A district planning committee also functions similarly.
Rather, it aims to involve all states to devise systematic policies differently for all states.
The NITI Aayog aims to implement the sustainable development goals (SDG’s) which are formulated on the global forums and make the federal structure of our nation more efficient and co-operative.
The chairperson of the NITI Aayog is the Prime Minister .
The CEO of the planning commission is Amitabh Kant at present. The chief Ministers of all states are a part of the governing council of the NITI Aayog.
NITI Aayog will be headed by the Prime Minister and will have a Governing Council, comprising Chief Ministers of states and Heads of all Union Territories.
The Governing Council replaces the earlier National Development Council.
In addition, there will also be a regional council comprising of Chief Ministers and Lieutenant Governors of Union Territories, which will be mandated to develop plans that are region specific.
The Aayog will have 7 or 8 full time members and two well- known and accomplished part- time members, drawn from leading research organisations and major universities.
Four Union Ministers, nominated by the Prime Minister, will also be included in ex-officio capacity

First Plan (1951–1956)

The primary sector of the economy includes any industry involved in the extraction and production of raw materials, such as farming, logging, hunting, fishing, and mining
This five years plan’s president was Jawaharlal Nehru and Gulzarilal Nanda was the vice-president.
The motto of first five years plan was ‘ Development of agriculture’ and the aim was to solve different problems that formed due to the partition of the nation, second world war.
Rebuilding the country after independence was the vision of this plan.
Another main target was to lay down the foundation for industry, agriculture development in the country and to provide affordable healthcare, education in low price to the folks.
It was based on the Harrod-Domar model.
The most important feature of this phase was active role of state in all economic sectors.
The target growth rate was 2.1% annual gross domestic product (GDP) growth; the achieved growth rate was 3.6% the net domestic product went up by 15%.
The monsoon was good and there were relatively high crop yields, boosting exchange reserves and the per capita income, which increased by 8%. National income increased more than the per capita income due to rapid population growth.
Many irrigation projects were initiated during this period, including the Bhakra, Hirakud and Damodar Valley dams.
The World Health Organization (WHO), with the Indian government, addressed children’s health and reduced infant mortality, indirectly contributing to population growth.
The University Grants Commission (UGC) was set up to take care of funding and take measures to strengthen the higher education in the country.
Contracts were signed to start five steel plants, which came into existence in the middle of the Second Five-Year Plan. The plan was quasi-successful for the government.

Second Plan (1956–1961)

Focused on the development of the public sector and “rapid Industrialisation”.
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.
From the Second Five-Year Plan, there was a determined thrust towards substitution of basic and capital good industries.
Hydroelectric power projects and five steel plants at Bhilai, Durgapur, and Rourkela were established with the help of the Soviet Union, Britain (the U.K) and West Germany respectively. Coal production was increased.
More railway lines were added in the north east.
The Tata Institute of Fundamental Research and Atomic Energy Commission of India were established as research institutes. In 1957, a talent search and scholarship program was begun to find talented young students to train for work in nuclear power.
The second plan was a period of rising prices. The country also faced foreign exchange crisis. The rapid growth in population slowed down the growth in the per-capita income.
The target growth rate was 4.5% and the actual growth rate was 4.27%.
The plan was criticized by classical liberal economist B.R. Shenoy who noted that the plan’s “dependence on deficit financing to promote heavy industrialization was a recipe for trouble”. Shenoy argued that state control of the economy would undermine a young democracy.
India faced an external payments crisis in 1957, which is viewed as confirmation of Shenoy’s argument.

Third Plan (1961–1966)

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.
The construction of dams continued. Many cement and fertilizer plants were also built. Punjab began producing an abundance of wheat.
Many primary schools were started in rural areas.
In an effort to bring democracy to the grass-root level, Panchayat elections were started and the states were given more development responsibilities.
For the first time India resorted to borrowing from IMF.
Rupee value devalued for the first time in 1966.
State electricity boards and state secondary education boards were formed. States were made responsible for secondary and higher education.
State road transportation corporations were formed and local road building became a state responsibility.
The target growth rate was 5.6%, but the actual growth rate was 2.4%.
It was based on John Sandy and Sukhamoy Chakraborty’s model.

Plan Holidays (1966–1969)

Due to miserable failure of the Third Plan the government was forced to declare “plan holidays” (from 1966 to 1967, 1967–68, and 1968–69).
Three annual plans were drawn during this intervening period. During 1966–67 there was again the problem of drought. Equal priority was given to agriculture, its allied activities, and industrial sector.
The government of India declared “Devaluation of Rupee” to increase the exports of the country. The main reasons for plan holidays were the war, lack of resources and increase in inflation.

Fourth Plan (1969–1974)

adopted the objective of correcting the earlier trend of increased concentration of wealth and economic power.
Nationalisation of 14 major Indian banks and the Green Revolution in India advanced agriculture.
The target growth rate was 5.6%, but the actual growth rate was 3.3%.

Fifth Plan (1974–1978)

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 Indian national highway system was introduced and many roads were widened to accommodate the increasing traffic. Tourism also expanded. The twenty-point programme was launched in 1975. It was followed from 1975 to 1979.
The objective of the programme is to provide certain basic minimum needs and thereby improve the living standards of the people.
It is prepared and launched by D.P.Dhar.
The target growth rate was 4.4% and the actual growth rate was 4.8%.

Rolling Plan (1978–1980)

The Janata Party government rejected the Fifth Five-Year Plan and introduced a new Sixth Five-Year Plan (1978–1980). This plan was again rejected by the Indian National Congress government in 1980 and a new Sixth Plan was made.
The First Plan was for the present year which comprised the annual budget and the Second was a plan for a fixed number of years, which may be 3, 4 or 5 years.
The Second Plan kept changing as per the requirements of the Indian economy.
The Third Plan was a perspective plan for long terms i.e. for 10, 15 or 20 years. Hence there was no fixation of dates for the commencement and termination of the plan in the rolling plans.
The main advantage of the rolling plans was that they were flexible and were able to overcome the rigidity of fixed Five-Year Plans by mending targets, the object of the exercise, projections and allocations as per the changing conditions in the country’s economy.
The main disadvantage of this plan was that if the targets were revised each year, it became difficult to achieve the targets laid down in the five-year period and it turned out to be a complex plan. Also, the frequent revisions resulted in the lack of stability in the economy.

Sixth Plan (1980–1985)

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.
Visakhapatnam Steel Plant (Andhra Pradesh), Salem (TamilNadu) and Bhadravathi Steel Plants were built.
Military Five-Year Plans became coterminous with Planning Commission’s plans from this plan onwards.
The target growth rate was 5.2% and the actual growth rate was 5.7%.

Seventh Plan (1985–1990)

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”.
The Seventh Plan had strived towards socialism and energy production at large.
The thrust areas of the Seventh Five-Year Plan were: social justice, removal of oppression of the weak, using modern technology, agricultural development, anti-poverty programmes, full supply of food, clothing, and shelter, increasing productivity of small- and large-scale farmers, and making India an independent economy.
Under the Seventh Five-Year Plan, India strove to bring about a self-sustained economy in the country with valuable contributions from voluntary agencies and the general populace.
The target growth rate was 5.0% and the actual growth rate was 6.01%. and the growth rate of per capita income was 3.7%.

Annual Plans (1990–1992)

The Eighth Plan could not take off in 1990 due to the fast changing economic situation at the centre and the years 1990–91 and 1991–92 were treated as Annual Plans. The Eighth Plan was finally formulated for the period 1992–1997.

Eighth Plan (1992–1997)

Launched immediately after the initiation of structural adjustment policies and macro stabilisation policies which were necessitated by the worsening balance of payments position’ and inflation during 1990-91.
It was the beginning of liberalization, privatisation and globalization (LPG) in India.
Modernization of industries was a major highlight of the Eighth Plan.
Under this plan, the gradual opening of the Indian economy was undertaken to correct the burgeoning deficit and foreign debt.
Meanwhile, India became a member of the World Trade Organization on 1 January 1995.
The major objectives included, controlling population growth, poverty reduction, employment generation, strengthening the infrastructure, institutional building, tourism management, human resource development, involvement of Panchayati rajs, Nagar Palikas, NGOs, decentralisation and people’s participation.
Universalization of elementary education and complete eradication of illiteracy among the people in the age group of 15 to 35 years.
Energy was given priority with 26.6% of the outlay.
The target growth rate was 5.6% and the actual growth rate was 6.8%.

Ninth Plan (1997–2002)

Focus: Growth with Social Justice and Equality
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.
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.
The SAPs covered the areas of social infrastructure, agriculture, information technology and Water policy.
Population control.
Generating employment by giving priority to agriculture and rural development.
Reduction of poverty.
Ensuring proper availability of food and water for the poor.
Availability of primary health care facilities and other basic necessities.
Primary education to all children in the country.
Empowering the socially disadvantaged classes like Scheduled castes, Scheduled tribes and other backward classes.
Developing self-reliance in terms of agriculture.
Acceleration in the growth rate of the economy with the help of stable prices.
The Ninth Five-Year Plan achieved a GDP growth rate of 5.4% against a target of 6.5%
The agriculture industry grew at a rate of 2.1% against the target of 4.2%
The industrial growth in the country was 4.5% which was higher than that of the target of 3%
The service industry had a growth rate of 7.8%.
An average annual growth rate of 6.7% was reached.
The target growth was 7.1% and the actual growth was 6.8%.

Tenth Plan (2002–2007)

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.

Eleventh Plan (2007–2012)

Theme: T owards faster and more inclusive growth
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%.

Twelfth Plan (2012–2017)

Decided to achieve a growth rate of 9% but the National Development Council (NDC) on 27 December 2012 approved a growth rate of 8% for the Twelfth Plan.
Theme: Faster, More Inclusive and Sustainable Growth
The government intends to reduce poverty by 10% during the 12th Five-Year Plan.
To create 50 million new work opportunities in the non-farm sector.
To remove gender and social gap in school enrolment.
To enhance access to higher education.
To reduce malnutrition among children aged 0–3 years.
To provide electricity to all villages.
To ensure that 50% of the rural population have accesses to proper drinking water.
To increase green cover by 1 million hectare every year.
To provide access to banking services to 90% of households.
The UID (Unique Identification Number) will act as a platform for cash transfer of the subsidies in the plan.

Note: With the Planning Commission dissolved, no more formal plans are made for the economy, but Five-Year Defence Plans continue to be made. The latest would have been 2017–2022. However, there is no Thirteenth Five-Year Plan.

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CURRENT AFFAIRS

India’s five-year plans: a comprehensive overview of economic development strategies.

Posted by Editorial team
Categories CURRENT AFFAIRS
Date April 23, 2023

Introduction to Five Year Plans in India

Five Year Plans were first introduced in India in 1951 by the Planning Commission, which was later replaced by the NITI Aayog . The primary objective of these plans was to ensure a rapid and balanced economic development of the country. The first Five Year Plan focused on agriculture, and subsequent plans shifted their focus to different sectors of the economy.

First Five Year Plan (1951-56)

It was based on Harrod-Domar Model .
Influx of refugees, severe food shortage & mounting inflation confronted the country at the onset of the first five year Plan.
The Plan Focused on agriculture, price stability, power and transport
It was a successful plan primarily because of good harvests in the last two years of the plan. Objectives of rehabilitation of refugees, food self sufficiency & control of prices were more or less achieved

Second Five Year Plan (1956 – 61)

Simple aggregative Harrod Domar Growth Model was again used for overall projections and the strategy of resource allocation to broad sectors as agriculture & Industry was based on two & four sector
Model prepared by Prof. P C Mahalanobis. (Plan is also called Mahalanobis Plan ).
Second plan was conceived in an atmosphere of economic stability .
It was felt agriculture could be accorded lower priority.
The Plan Focussed on rapid industrialization- heavy & basic industries . Advocated huge imports through foreign loans.
The Industrial Policy 1956 was based on establishment of a socialistic pattern of society as the goal of economic policy.
Acute shortage of forex led to pruning of development targets , price rise was also seen ( about 30%) vis a vis decline

Third Five Year Plan (1961 – 66)

At its conception, it was felt that Indian economy has entered a “takeoff stage”. Therefore, its aim was to make India a ‘self-reliant’ and ‘self-generating’ economy.
Based on the experience of first two plans (agricultural production was seen as limiting factor in India’s economic development) , agriculture was given top priority to support the exports and industry.
The Plan was thorough failure in reaching the targets due to unforeseen events – Chinese aggression (1962), Indo-Pak war (1965), severe drought 1965-66. Due to conflicts the approach during the later phase was shifted from development to defence & development.

Fourth Five-Year Plan (1969-74)

During these plans a whole new agricultural strategy was implemented. It involving wide-spread distribution of high-yielding varieties of seeds, extensive use of fertilizers, exploitation of irrigation potential and soil conservation.
Influx of Bangladeshi refugees before and after 1971 Indo-Pak war was an important issue along with price situation deteriorating to crisis proportions and the plan is considered as big failure.
Main emphasis was on growth rate of agriculture to enable other sectors to move forward . First two years of the plan saw record production.
The last three years did not measure up due to poor monsoon.
Implementation of Family Planning Programmes were amongst major targets of the Plan.

Fifth Five-Year Plan (1974-79)

The final Draft of fifth plan was prepared and launched by D.P. Dharin the backdrop of economic crisis arising out of run-away inflation fuelled by hike in oil prices and failure of the Govt. takeover of the wholesale trade in wheat.
It proposed to achieve two main objectives: ‘removal of poverty’ (Garibi Hatao) and ‘attainment of self reliance’
Promotion of high rate of growth, better distribution of income and significant growth in the domestic rate of savings were seen as key instruments
Due to high inflation, cost calculations for the Plan proved to be completely wrong and the original public sector outlay had to be revised upwards. After promulgation of emergency in 1975, the emphasis shifted to the implementation of Prime Ministers 20 Point Programme.
FYP was relegated to the background and when Janta Party came to power in 1978, the Plan was terminated.

Rolling Plan (1978 – 80)

There were 2 Sixth Plans. Janta Govt. put forward a plan for 1978-1983 emphasizing on employment, in contrast to Nehru Model which the Govt criticized for concentration of power, widening inequality & for mounting poverty . However, the government lasted for only 2 years. Congress Govt. returned to power in 1980 and launched a different plan aimed at directly attacking on the problem of poverty by creating conditions of an expanding economy.

Sixth Plan (1980 – 85)

The Plan focussed on Increase in national income, modernization of technology, ensuring continuous decrease in poverty and unemployment through schemes for transferring skills(TRYSEM) and seets(IRDP) and providing slack season employment (NREP) , controlling population explosion etc. Broadly , the sixth Plan could be taken as a success as most of the target were realised even though during the last year (1984-85) many parts of the country faced severe famine conditions and agricultural output was less than the record output of previous year

Seventh Plan (1985 – 90)

The Plan aimed at accelerating food grain production, increasing employment opportunities & raising productivity with focus on ‘food, work & productivity’.
The plan was very successful as the economy recorded 6% growth rate against the targeted 5% with the decade of 80’s struggling out of the’ Hindu Rate of Growth ’.

Eighth Plan (1992 – 97)

The eighth plan was postponed by two years because of political uncertainty at the Centre
Worsening Balance of Payment position, rising debt burden widening budget deficits, recession in industry and inflation were the key issues during the launch of the plan.
The plan undertook drastic policy measures to combat the bad economic situation and to undertake an annual average growth of 5.6% through introduction of fiscal & economic reforms including liberalisation under the Prime Minister ship of Shri P V Narasimha Rao.
Some of the main economic outcomes during eighth plan period were rapid economic growth (highest annual growth rate so far – 6.8 %), high growth of agriculture and allied sector, and manufacturing sector, growth in exports and imports, improvement in trade and current account deficit. High growth rate was achieved even though the share of public sector in total investment had declined considerably to about 34 %.

Ninth Plan (1997- 2002)

The Plan prepared under United Front Government focussed on “ Growth With Social Justice & Equality “ Ninth Plan aimed to depend predominantly on the private sector – Indian as well as foreign (FDI) & State was envisaged to increasingly play the role of facilitator & increasingly involve itself with social sector viz education , health etc and infrastructure where private sector participation was likely to be limited. It assigned priority to agriculture & rural development with a view to generate adequate productive employment and eradicate poverty .

The Plan prepared under United Front Government focussed on “Growth With Social Justice & Equality “ Ninth Plan aimed to depend predominantly on the private sector – Indian as well as foreign (FDI) & State was envisaged to increasingly play the role of facilitator & increasingly involve itself with social sector viz education , health etc and infrastructure where private sector participation was likely to be limited. It assigned priority to agriculture & rural development with a view to generate adequate productive employment and eradicate poverty.

Tenth Plan (2002 – 2007)

Recognising that economic growth cant be the only objective of national plan, Tenth Plan had set ‘monitorable targets’ for few key indicators (11) of development besides 8 % growth target. The targets included reduction in gender gaps in literacy and wage rate, reduction in Infant & maternal mortality rates, improvement in literacy, access to potable drinking water cleaning of major polluted rivers, etc.

Governance was considered as factor of development & agriculture was declared as prime moving force of the economy. States role in planning was to be increased with greater involvement of Panchayati Raj Institutions. State wise break up of targets for growth and social development sought to achieve balanced development of all states

Eleventh Plan (2007 – 2012)

Eleventh Plan was aimed “Towards Faster & More Inclusive Growth “after UPA rode back to power on the plank of helping Aam Aadmi (common man).

The broad vision for 11th Plan included several inter related components like rapid growth reducing poverty & creating employment opportunities , access to essential services in health & education, specially for the poor, extension if employment opportunities using National Rural Employment Guarantee Programme , environmental sustainability , reduction of gender inequality etc.

Twelfth Five Year Plan (2012-17)

The Twelfth Plan commenced at a time when the global economy was going through a second financial crisis, precipitated by the sovereign debt problems of the Eurozone which erupted in the last year of the Eleventh Plan. The crisis affected all countries including India. Our growth slowed down to 6.2 percent in 2011-12 and the deceleration continued into the first year of the Twelfth Plan, when the economy is estimated to have grown by only 5 percent . The Twelfth Plan therefore emphasizes that our first priority must be to bring the economy back to rapid growth while ensuring that the growth is both inclusive and sustainable.

The broad vision and aspirations which the Twelfth Plan seeks to fulfil are reflected in the subtitle: ‘Faster, Sustainable, and More Inclusive Growth’. Inclusiveness is to be achieved through poverty reduction, promoting group equality and regional balance, reducing inequality, empowering people etc whereas sustainability includes ensuring environmental sustainability ,development of human capital through improved health, education, skill development, nutrition, information technology etc and development of institutional capabilities , infrastructure like power telecommunication, roads, transport etc

Creation of NITI (National Institution For Transforming India) Aayog

Planning Commission set up on the 15th of March, 1950 through a Cabinet Resolution was replaced by NITI Ayog through another such resolution on 1st January, 2015. Previously, the Planning Commission played a predominant role indetermination of Annual Plans & transfer of Plan funds to State Govts, a work now being undertaken by Ministry of Finance. However all that is set to change with constitution of NITI Aayog which has been mandated to work towards fostering cooperative federalism through structured support initiatives and mechanisms with the States on a continuous basis, recognizing that strong States make a strong nation.

An important evolutionary change from the past will be replacing a centre-to-state one-way flow of policy by a genuine and continuing partnership with the states. In this sense, the Planning Process in India , is poised for a change. The Chief Minister’s Sub-group on rationalization of Centrally sponsored Schemes (CSS) has recommended that the number of CSS should be reduced, states should be given more flexibility in implementation of the schemes, CSS be divided into core and optional schemes along with many other recommendations related to simplification in release of funds, certainty about availability of funds under these schemes in medium term etc

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Five Year Plan

After India gained independence in 1947 it basically had to rebuild its economy from scratch. The leaders of those times had to pick the type of economy India would be and also outline the economic planning as well. This is where the five year plan was born. Let us study a bit more about them.

The Goals of the Five Year Plans

Every five year plan is developed with a specific goal in mind. But there is never one solitary objective of the plan. The plan is supposed to work towards the perspective plan and must cover a few important objectives. However, it is not possible or practical to give equal importance to all aspects of a plan.

There are basically five generalized goals of a five year plan, wherein a particular plan one or two are given the most importance. In fact, some of the goals are actually conflicting. So let us now look at these five types of goals we cover in the five year plans.

This is the first and the most basic goal of an economic plan. Growth in terms of an economy focuses on the increase of the Gross Domestic Product (GDP) of the country. GDP is a way to measure the growth of an economy. Higher the GDP more the common public can benefit from the economic policies of the country.

This economic growth actually happens due to an increase in the production capacity of a nation for either its goods or its services. This can be due to an influx of capital into the economy as well. The sector in which the growth is happening is also important. There are three basic sectors – agricultural, industrial and service . Their respective contributions make up the structural composition of the GDP.

For very many years India’s primary focus was the agricultural sector. It was the main contributor to our GDP. And it also saw the highest growth rate in the few initial five year plans.

Modernisation

Modernisation refers to the integration of technology in the economy. Innovation, inventions, and advancement in technology play a huge part in upgrading our economy and increasing its output. One example would be the introduction of modern agricultural techniques which increased output. Over the years, the Indian economy also saw a major boom in the IT industry due to modernization.

Another aspect of modernization would be our advancement as a society. Leaving behind discriminatory practices and pushing towards an equal, fair and modern society.

Self Reliance

A new economy like India’s post-independence can become too reliant on imports. So for seven editions of the five year plan, the government promoted self-reliance. This basically meant that anything we were capable of producing domestically we did not import.

Especially food and agricultural products were never imported as long as possible. This was to ensure we not only became self-reliant but also to protect our sovereignty. Because importing basic essentials from other nations would make us dependent on them. Then after 1991, the government finally opened up our economy to the global markets once we had already established a domestic base.

Now the previous three goals mainly relate to the economy. But the development of the economy only is not sufficient. The five year plans must also focus on the development of our society. It is essential to ensure that these benefits from the economy are enjoyed by all members of the society. This is where equity comes in.

Equity focuses on ensuring that all citizens of our country have their basic needs for food, housing, clothing etc fulfilled. It also looks to reduce the wealth gap and the inequality in our society.

Solved Question for You

Q: In which year was the first five year plan passed?

Ans: The correct option is D. India became independent in 1947 but our first economic plan came out in 1951 under the guidance of the PM and chairman of the Planning Commision Jawarhalal Nehru.

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India’s five-year plans impact on economic growth.

Indian History
Indian Polity

In a country as diverse and dynamic as India, the need for comprehensive planning and economic development strategies is paramount. India’s journey towards economic progress has been marked by a series of Five-Year Plans, each designed to address specific challenges and set the nation on a path to prosperity. In this article, we will delve into the history, goals, and impact of India’s Five-Year Plans, from their inception to the present day.

Understanding the Concept of Five-Year Plans

The genesis of five-year plans.

India’s tryst with Five-Year Plans began in 1951 when the Planning Commission, now known as NITI Aayog, formulated the First Five-Year Plan. This pioneering effort was inspired by the Soviet model of planned economic development and aimed to promote balanced growth across sectors.

The Framework of Planning

Each Five-Year Plan in India is a detailed blueprint outlining the allocation of resources, targets, and policies for a five-year period. The plans are instrumental in shaping the nation’s economic and social landscape.

The Chronology of India’s Five-Year Plans

First five-year plan (1951-1956).

The inaugural plan focused on agriculture, irrigation, and power generation. It aimed to reduce poverty and increase economic growth. Key projects included the Bhakra Nangal Dam and the establishment of the Indian Institutes of Technology (IITs).

Second Five-Year Plan (1956-1961)

This plan continued the emphasis on industrialization and infrastructure development. It saw the creation of the Green Revolution and a significant expansion of the public sector.

Third Five-Year Plan (1961-1966)

The third plan aimed to achieve self-sufficiency in food production and foster technological advancements. It also witnessed the Indo-China War, which had implications for the plan’s goals.

Fourth Five-Year Plan (1969-1974)

During this period, the plan concentrated on building a strong industrial base and reducing poverty. India conducted its first successful nuclear test in 1974 during this plan.

Fifth Five-Year Plan (1974-1979)

The focus shifted towards poverty alleviation, employment generation, and rural development. The plan was also affected by the oil crisis of 1973.

Sixth Five-Year Plan (1980-1985)

Strengthening the agricultural sector and improving technology were the primary objectives. The plan also aimed to modernize the Indian automobile industry.

Seventh Five-Year Plan (1985-1990)

This plan emphasized human resource development, environmental sustainability, and social justice. Economic reforms were initiated during this period.

Eighth Five-Year Plan (1992-1997)

The plan aimed at economic stabilization, infrastructure development, and opening up the Indian economy to global markets.

Ninth Five-Year Plan (1997-2002)

This plan focused on social sector development, with an emphasis on education, healthcare, and poverty reduction.

Tenth Five-Year Plan (2002-2007)

The plan aimed at increasing agricultural and industrial growth, with a strong focus on rural development.

Eleventh Five-Year Plan (2007-2012)

Incorporating the United Nations Sustainable Development Goals, this plan prioritized inclusive growth and environmental sustainability.

Twelfth Five-Year Plan (2012-2017)

This plan laid the groundwork for India’s transition to a knowledge-based economy, with a focus on innovation and technology.

Thirteenth Five-Year Plan (2017-2022)

The final Five-Year Plan before India adopted a different approach to planning, it focused on sustainable development, social inclusion, and digitalization.

Impact of India’s Five-Year Plans

Economic growth and diversification.

The Five-Year Plans played a pivotal role in India’s economic growth, diversifying the economy and reducing dependence on agriculture.

Infrastructure Development

Major infrastructure projects such as dams, highways, and power plants were initiated during the plans, transforming India’s physical landscape.

Human Development

Investments in education and healthcare improved the overall quality of life for millions of Indians.

Social Equality

The plans also aimed at reducing income disparities and promoting social justice .

Technological Advancements

India’s strides in science and technology, including the space program and information technology, can be traced back to the planning era.

India’s Five-Year Plans have been instrumental in shaping the nation’s development trajectory. While they have evolved over time and given way to different planning approaches, their legacy endures. These plans laid the foundation for India’s emergence as a global economic powerhouse.

In a rapidly changing world, the power of planning remains as relevant as ever . India’s journey is a testament to the positive impact that well-thought-out strategies and policies can have on a nation’s progress.

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Five Year Plans of India (Summary): Objectives, Achievements, Failures

Five Year Plans in India: Preparing for our future through planning is a crucial landmark whether at a personal level or national level. The social life of a person always depends on various planning schemes. Social and economic planning gives a way to policymakers to improve prevailing conditions in a society. This process is incomplete if there are no positive outcomes. A major part of such planning relies on FIVE YEAR PLANS.

Who is called the father of Indian planning? Mokshagundam Visvesvaraya

Socio-economic scenario after Independence :

After independence, India faced many social, political and economic disrupts. India’s agriculture sector during independence was so backward. The level of productivity was extremely low with high vulnerability. Features like the Zamindari System , low self-consumption from agriculture gains led to the slow down of the economy. On the other side, our industries were also facing vulnerability and discrimination. The demographic profile of population was so unbalanced. There were situations like low birth rate, high death rate low rate of literacy, high infant mortality rate and so on. Other factors like social and economic infrastructure deficiency, corruption in politics, unemployment, and poverty were powerful.

Idea Economic Planning :

Problems of macro-level are never solved with automatic demand and supply forces. The intervention of government with various policies, programs, and schemes is obviously crucial for society. After independence, there was a need for proper economic planning to promote growth and development. Economic Planning was a step taken by the Indian Government to plan the utilization of resources to achieve a well-defined target in a specific period. The concept was adopted from Russia (USSR).

Objectives:

While talking about the goals of economic planning, we can divide these goals on a time period basis.

Certain goals to be accomplished in the Long time period are GDP Growth, the maximum level of employment, equal distribution of resources, promotion of equitable distribution to uplift poor section, make people self-sufficient and of course modernization. While in short period gains we can include things like price stability, education promotion, better health care and so on.

These plans are developed and executed by NITI Aayog (known as planning commission before 2015) and then approved by National Development Council (NDC). In 1951 we started the Five Year Planning system.

First Five Year Plan (1951 – 1956 ):

The priority was set for agricultural development. It took reference from the Harrod – Domar model . After partition and World War II the situation of food production declined drastically. This plan stands to gain high agricultural produce, proper utilization of raw materials and provide irrigation and other necessary amenities. The target is to decrease the income gap between different sections of society and to make our country self-sufficient. Target was also set for controlling inflation. The plan achieved every possible thing beyond targets. The target for national income growth was set as 11% and it got 18 % increase. Agriculture, industries, education, railways, etc. were improving at a great pace.

Second Five Year Plan (1956 – 1961):

The great contribution to this was given by P.C. Mahalanobis model. It was also known as the “Industry and Transport plan”. The main focus was industrial development. Heavy industries were also taken into account with various small and medium-sized industries. People got employment opportunities and ways to income generation. The target for the annual growth rate was 5%. The main significance was that it promoted labor-intensive factories.

Third Five Year Plan (1961- 1966):

The major contribution from this phase was for long term developments. The plan is called Gadgil Yojana . Independence of the economy was a major basis because it will help in self-sufficiency for many sectors. Although, the decided target of 5.6% was not achieved because of the China War. Sectors like industries, communication, and social services were improved with targets. There was a fall in agriculture production and clashes between the centre and state governments. The prices of agricultural products and consumer articles were at a peak.

Period of three annual plans (1966 – 1969)

Now instead of 5-year plans, a three year period was meant to implement 3 annual plans. It is also called plan holidays. This period was generally come due to the ongoing Indo Pakistan War. This led to a decrease in the country’s resource utilization. The major reason was the failed third five-year plan.

Fourth Five Year Plan (1969 – 1974 ):

Country was fighting with several social issues like poverty, increased unemployment, population explosion, economic recession, etc. The Indira government was formed and implemented this plan in 1969. The advancement of agriculture began with the Green Revolution and 14 Indian banks were nationalized. Family Planning Programmes were implemented. However, due to prevailing situations plan remained incomplete and achieved only 3.3% on the place of 5.6%. The big failure of this time is considered price instability

Fifth Five Year Plan ( 1974 – 1979):

In a chronological manner, priority was given to agriculture, industries, and mines. Minimum Needs Programme (MNP) was started to uplift standards of living and to fulfill minimum basic needs of the masses. This plan was suggested by D.P. Dhar . The expansion of roads and tourism activities worked took place simultaneously. Garibi Hatao got promoted with poverty alleviation schemes and India stepped toward Self-reliance and economical growth. The emergency was imposed and emphasis was given to PM 20 Point Programme. A growth of 4.8% was achieved that was more than targeted.

Rolling Plan (1978 – 1980)

In contrast to Nehru Model, Janta Government put forward a plan of more employment emphasis. It criticized many prevailed plans and took inequalities and poverty as real social issues. However, its tenure ended after 2 years and the new government came up with a new five-year plan.

Sixth Plan Year Plan (1980 – 1985):

This period faced social unrest like famine during 1984 – 85 but successful in achieving almost every target. The major focus was an increase in national income, adoption of modern technology, a decrease in poverty-ridden areas, control population expansion and many more. Infrastructural changes also happened and helped in approaching growth strategies.

Seventh Five Year Plan (1985 – 1990 ):

Till now this was the plan that resulted in a maximum growing rate with 6%. Like other plans, previous targets like food, employment and so on were there but now work and productivity also got higher concentration by the government. For the first time, the private sector was suppressing the public sector. Although for the middle and lower class it was not any kind of benefit. This could result in exploitation in the future.

Annual Plans (1990 – 1992)

The situation was so politically unstable and Eighth Five Year Plan was postponed for 2 years.

Eighth Five Year Plan(1992 – 1997):

The reasons for the launch of this plan were fiscal and budgetary impediments. The phase faced recessionary dilemmas with budget deficits. Many economic reforms assisted the Indian economy and reforms like liberalization and changing modes of production for agriculture were implemented. Higher growth was achieved with more private investment. The role of the public sector had declined due to Liberalization, Privatization and Globalization reforms. Priority was given to Human Resource Development in sectors like education, health care facilities, etc.

Ninth Five Year Plan (1997 – 2002):

Social Justice and Equality were featuring development aims in this plan. Foreign Direct Investment flourished with more trade with the rest of the world. At this moment 50 years of independence were completed. The social sector was especially taken care of with provisions like basic social and economic reforms including education, community development programs, and health.

Tenth Five Year Plan (2002 – 2007):

It was an important landmark because it took social deformities into account apart from economic growth. Demographic Profile factors were modified without discrimination. Clean drinking water, low gender gaps, equal wage pay, low death rates, controlled infant mortality rate were certain determinants. The sociological perspective was largely elevated with population policy and family planning State roles were increased and the policy of decentralized planning was promoted.

Eleventh Five Year Plan (2007 – 2012):

Inclusiveness in every growth is a key to decide that its result reaches ground levels. The main motto of the 11 th five-year plan was more inclusive economic growth. C. Rangarajan was its framer. But minorities and tribal communities were not a sufficiently inclusive framework. Malnutrition, poverty, and vulnerability were increasing. However, opportunities like Mahatma Gandhi National Rural Employment Guarantee Act (MNREGA) were also implemented. There were so many fluctuations in economic gains and poverty remained high. Formulas like Tendulkar Formula were criticized due to no effect in poverty reduction.

Twelfth Five Year Plan (2012 – 2017):

During the commencement of 12 th Five Year Plan, the global economy was facing another slowdown. Even our economy slowed down as a result. Therefore, the emphasis was to encourage economic growth rate with faster, sustainable and inclusive growth . Social problems were rightly addressed like malnutrition, environment degradation, education, health, communication, etc. With this phase, prevailing gender gaps, inequalities, regional imbalances, and community gaps were getting attention. The policy held the accountability to remove every lacuna from making India as an emerging world power. It had many long and short term aims.

Some Achievements of Planning:

Our nation achieved a lot from these plans and this took a very long time to cover real issues. The actual increase in national income is seen to date. At the beginning of new India after independence, India had less than 2% of income per annum. Per capita income also went up. GDP growth was a result of capital formation that triggered while planning periods. Employment was increased and many income generation programs became successful. The major contribution was the improvement in social infrastructure and it helped in solving real ground level problems. Facilities like banking, communication, hospitals, irrigation and so on superseded every other achievement.

Failures of Planning :

Alleviation of poverty was the central theme of almost all plans. But when we take a look it is not cured as it should have been. Inflation rates were touching the sky with the unemployment spiral. The ethical goal of planning was the equitable distribution of social and economic benefits. But the gap always gets widen between classes. Desired results to tackle inequalities were received yet. Infrastructural problems were making people vulnerable and excluded.

Conclusion:

Democratic regimes are known to hold values like equality, liberty, and fraternity. It needs various weapons to shape such norms and values. Planning is playing a very crucial role because without planning it is not possible to include everyone’s welfare policies and programs. Broadly we can divide this whole era into two phases that are before liberalization and after liberalization. Many lacunas are still prevailing because population explosion always results in a lack of proper implementation. Some new issues like rape are emerging with modern time and it is a time to tackle and eradicated them.

References:

Class 11 th Book Indian Economic Development by TR Jain AND VK Ohri

https://www.jagranjosh.com/general-knowledge/list-of-all-five-year-plans-of-india-1468309723-1

http://mospi.nic.in

A drop of ink may make millions think. With this spirit, I chose to write for my passion. I am a student studying BA Programme at Miranda House, DU. My core areas are Economics and Political Science. My interests are reading and writing in various fields especially geopolitical issues, International Relations, Social Issues, etc. I will go for UPSC to administer people using my skills and aptitudes. Writing always elevates our creativity and imagination power.

12th Five-Year-Plan and Its Results in India

Introduction, literature review, methodology, recommendations, limitations, reference list.

India uses a system of five-year plans to ensure the economic growth of the country. The 12th five-year plan was implemented from 2013 to 2018. However, within each of the plans, there are both achievements and failures, which can be assessed only after its implementation is completed. This study has attempted to identify the major achievements and failures of India’s 12th five-year plan. For the assessment, data from primary and secondary sources were used, which later became the basis for conclusions. Based on the data obtained, recommendations for improving planning were also formed, which can be implemented in future plans. Additionally, directions for future research are identified, which include the need to consider more different sectors of the economy. At present, the limited number of impacts considered is the main limitation of the study. The study contains such sections as an introduction, literature review, methodology, results, discussion, recommendations, limitations, conclusion, and reference list.

India uses a system of five-year plans to ensure the economic growth of the country. The 12th five-year plan was implemented from 2012 to 2017 (Planning Commission, 2013). Thus, it is necessary to evaluate the main strengths and weaknesses of the 12th plan, which can be taken into account for better planning in the future. The research methodology is to collect qualitative data from primary and secondary sources, including academic articles, books, government reports, and economic indicators. The most important findings are that the 12th plan has led to new approaches to public health, greater self-government, better financing of the tourism sector, and overcoming the food crisis. Although the plan did not achieve fundamental socio-economic benefits, it laid the foundations for future growth and development.

Within the framework of the 12th five-year plan in India, a number of changes have been outlined in the socio-economic sphere, which can become the basis for the growth of the country’s economy. Verma et al. (2014) note that one of the most important achievements of the 12th five-year plan is the development of a public health approach. Additionally, the 12th five-year plan aims to transform the country’s governance paradigm with a focus on expanding self-government (Daugherty et al., 2013). In particular, as part of the transition to a more flexible economy, emphasis was placed on improving private business financing, a direct system of regulators, and stimulating decision-making in institutions (Planning Commission, 2013). Thus, an attempt is made to create a more responsive framework that can make more efficient and faster decisions.

As part of the plan, significant funding was allocated for the development of the country’s tourism infrastructure and support for the tourism business. These actions can become the basis for gradual economic growth. However, Wani and Jan (2018) point out that despite this, efforts should focus on creating tourism clusters around major tourist attraction points in India. Khan et al. (2014) also emphasize that India needs stronger marketing of the country as a tourism brand, which requires government involvement. As with the previous five-year plans, the 12th five-year plan places a special focus on the development of the agricultural sector. Mundhe (2015) notes that in the past thirty years, India has made significant progress in the development of this sector of the economy; the trend continues. In particular, the most important success is overcoming the food crisis through self-sufficient grain production.

The qualitative data for the study are collected from primary and secondary sources. After that, data analysis was carried out to synthesize information and search for important aspects relevant to the topic. In particular, the main aspects of the plan are considered, as well as the results that have been achieved as part of its implementation. On their basis, a conclusion is made about the success of a particular initiative, and recommendations are given.

Most importantly, although the transformation of the health care system has not been started, the foundations for its future development have been laid. Within the framework of governance, changes were also made in favor of the transition to self-government and the expansion of decision-making power. The tourism sector needs to change strategies in terms of marketing and tourism infrastructure. Finally, significant progress has been made in the development of the agricultural sector, as in previous plans.

As part of the study, it was possible to achieve the main goal and evaluate the success of the 12th five-year plan in various aspects. Relevant primary and secondary sources that offer valuable information were reviewed. Additionally, it was possible to draw a number of important findings on the basis of which it was possible to draw primary conclusions about the success of the plan and its shortcomings.

Based on the results obtained, it can be concluded that future plans need more focus on the social sphere and the tourism sector. In particular, it is necessary to pay special attention to the transformation of the healthcare system. With regard to tourism, it is necessary to develop adequate marketing strategies for the country as a brand. It is also important to focus on the transformation of local tourism infrastructure and its improvement.

Limitations of the study include a narrow focus on specific sectors of the economy. This problem can be solved in the future by a more comprehensive consideration of various aspects.

The present study was intended to review the major achievements and failures of India’s 12th Five-Year Economic Development Plan. As part of the study, such important aspects as health care, the management system, the tourism sector, and the agricultural sector were considered. As a result of the study, it was found that the plan did not achieve significant social and economic improvements but laid the foundation for the transformation of healthcare and tourism development.

Daugherty, L., Miller, T., Dossani, R. and Clifford, M. (2013) Building the links between funding and quality in higher education: India’s challenge. RAND Corporation.

Khan, M., Noor, M. and Khan, M. (2014) ‘Tourism development in India under government five-year plans’, International Journal of Research , 1(3), pp. 126-137.

Mundhe, F. (2015) ‘Agricultural productivity in India: trends during five-year plans’, The Business & Management Review , 5(4), pp.175-181.

Planning Commission (2013) Twelfth five-year plan (2012–2017): faster, more inclusive and sustainable growth. SAGE Publications.

Verma, R., Khanna, A. and Dhankar, M. (2014) ‘Twelfth five-year plan (2012- 2017): a hope for better health in India’, Indian Journal of Public Health Research & Development , 5(3), pp. 263-267.

Wani, J. M. and Jan, A. (2018) ‘Tourism development in India under 12th five-year plan’, International Journal of Research in Engineering, Science and Management , 1(8), pp. 78-81.

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Home » Economy » Planning in India » Genesis of Planning Commission and its objectives » Growth of Indian economy under the various-five year plans of the Planning commission

First Five Year Plan:

It was launched for the duration of 1951 to 1956,under the leadership ofJawaharlal Nehru.
It was based on the Harrod-Domar model with a few modifications.
Its main focus was on the agricultural development of the country.
This plan was successful and achieveda growth rate of 3.6% (more than its target of 2.1%).
At the end of this plan, five IITs were set up in the country

Second Five Year plan

It was made for the duration of 1956 to 1961,under the leadership of Jawaharlal Nehru.
It was based on the P.C. Mahalanobis Model made in the year 1953.
Its main focus was on the industrial development of the country.
This plan lags behind its target growth rate of 4.5% and achieved a growth rate of 4.27%.
However, this plan was criticized by many experts and as a result, India faced a payment crisis in the year 1957.

Third Five Year Plan:

It was made for the duration of 1961 to 1966, under the leadership of Jawaharlal Nehru.
This plan is also called ‘Gadgil Yojna’, after the Deputy Chairman of Planning Commission D.R. Gadgil.
The main target of this plan was to make the economy independent. The stress was laid on agriculture and the improvement in the production of wheat.
During the execution of this plan, India was engaged in two wars: (1) the Sino-India war of 1962 and (2) the Indo-Pakistani war of 1965. These wars exposed the weakness in our economy and shifted the focus to the defence industry, the Indian Army, and the stabilization of the price (India witnessed inflation).
The plan was a flop due to wars and drought. The target growth was 5.6% while the achieved growth was 2.4%.

Plan Holidays:

Due to the failure of the previous plan, the government announced three annual plans called Plan Holidays from 1966 to 1969.
The main reason behind the plan holidays was the Indo-Pakistani war and the Sino-India war, leading to the failure of the third Five Year Plan.
During this plan, annual plans were made and equal priority was given to agriculture its allied sectors and the industry sector.
In a bid to increase the exports in the country, the government declared devaluation of the rupee.

Fourth Five Year Plan:

Its duration was from 1969 to 1974, under the leadership of Indira Gandhi.
There were two main objectives of this plan i.e. growth with stability and progressive achievement of self-reliance.
During this time, 14 major Indian banks were nationalized and the Green Revolution was started. Indo-Pakistani War of 1971 and the Bangladesh Liberation War took place.
Implementation of Family Planning Programmes was amongst major targets of the Plan
his plan failed and could achieve a growth rate of 3.3% only against the target of 5.7%.

Fifth Five Year Plan:

Its duration was 1974 to 1978.
This plan focussed on Garibi Hatao, employment, justice, agricultural production and defence.
The Electricity Supply Act was amended in 1975, a Twenty-point program was launched in 1975, the Minimum Needs Programme (MNP) and the Indian National Highway System was introduced.
Overall this plan was successful which achieved a growth of 4.8% against the target of 4.4%.
This plan was terminated in 1978 by the newly elected Moraji Desai government.

Rolling Plan:

After the termination of the fifth Five Year Plan, the Rolling Plan came into effect from 1978 to 1990.
In 1980, Congress rejected the Rolling Plan and a new sixth Five Year Plan was introduced.
Three plans were introduced under the Rolling plan: (1) For the budget of the present year (2) this plan was for a fixed number of years– 3,4 or 5 (3) Perspective plan for long terms– 10, 15 or 20 years.
The plan has several advantages as the targets could be mended and projects, allocations, etc. were variable to the country’s economy. This means that if the targets can be amended each year, it would be difficult to achieve the targets and will result in destabilization in the Indian economy.

Sixth Five Year Plan:

Its duration was from 1980 to 1985, under the leadership of Indira Gandhi .
The basic objective of this plan was economic liberalization by eradicating poverty and achieving technological self-reliance.
It was based on investment Yojna, infrastructural changing, and trend to the growth model.
Its growth target was 5.2% but it achieved a 5.7% growth.

Seventh Five Year Plan:

Its duration was from 1985 to 1990, under the leadership ofRajiv Gandhi.
The objectives of this plan include the establishment of a self-sufficient economy, opportunities for productive employment, and up-gradation of technology.
The Plan aimed at accelerating food grain production, increasing employment opportunities & raising productivity with a focus on ‘food, work & productivity
For the first time, the private sector got priority over the public sector.
Its growth target was 5.0% but it achieved 6.01%.

Annual Plans:

Eighth Five Year Plan could not take place due to the volatile political situation at the centre.
Two annual programmes were formed for the year 1990-91& 1991-92.

Eighth Five Year Plan:

Its duration was from 1992 to 1997, under the leadership ofV. Narasimha Rao.
In this plan, the top priority was given to the development of human resources i.e. employment, education, and public health.
During this plan, Narasimha Rao Govt. launched the New Economic Policy of India.
Some of the main economic outcomes during the eighth plan period were rapid economic growth (highest annual growth rate so far – 6.8 %), high growth of agriculture and allied sector, and manufacturing sector, growth in exports and imports, improvement in trade and current account deficit. A high growth rate was achieved even though the share of the public sector in total investment had declined considerably to about 34 %
This plan was successful and got an annual growth rate of 6.8% against the target of 5.6%.

Ninth Five Year Plan:

Its duration was from 1997 to 2002, under the leadership of Atal Bihari Vajpayee.
The main focus of this plan was “Growth with Social Justice and Equality”.
It was launched in the 50th year of independence of India.
This plan failed to achieve the growth target of 6.5% and achieved a growth rate of 5.6%.

Tenth Five Year Plan:

Its duration was from2002 to 2007, under the leadership of Atal Bihari Vajpayee and Manmohan Singh.
This plan aimed to double the Per Capita Income of India in the next 10 years.
It also aimed to reduce the poverty ratio to 15% by 2012.
Its growth target was 8.0% but it achieved only 7.6%.

Eleventh Five Year Plan:

Its duration was from 2007 to 2012, under the leadership of Manmohan Singh.
It was prepared by the C. Rangarajan.
Its main theme was “rapid and more inclusive growth”.
It achieved a growth rate of 8% against a target of 9% growth.

Twelfth Five Year Plan:

Its duration is from 2012 to 2017, under the leadership of Manmohan Singh .
Its main theme is “Faster, More Inclusive and Sustainable Growth”.
Its growth rate target was 8%.
For a long time, there had been a feeling that for a country as diverse and big as India, centralised planning could not work beyond a point due to its one-size-fits-all approach. Therefore, the NDA government has dissolved the Planning Commission which was replaced by the NITI Aayog. Thus, there was no thirteen Five Year Plan, however, the five-year defense plan was made. It is important to note that the documents of the NITI Aayog have no financial role. They are only policy guide maps for the government.

The three-year action plan only provides a broad roadmap to the government and does not outline any schemes or allocations as it has no financial powers. Since it doesn’t require approval by the Union Cabinet, its recommendations are not binding on the government.

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INDIA’S FIRST FIVE YEAR PLAN covered the period from April 1951 through March 1956; the Second Five Year Plan covers the period from April 1956 through March 1961. The main objectives of planning in India are, broadly, to double real national income in less than 20 years and to double the per capita income in 25 years.

I NDIA’S FIRST FIVE YEAR PLAN covered the period from April 1951 through March 1956; the Second Five Year Plan covers the period from April 1956 through March 1961. The main objectives of planning in India are, broadly, to double real national income in less than 20 years and to double the per capita income in 25 years.

During the First Plan period, national income was expected to rise by 11–12 per cent; the actual increase was over 18 per cent, despite a shortfall in Plan outlays. The success of the First Plan, under conditions of economic and financial stability, prompted more ambitious goals and a bolder approach in formulating the Second Plan. The main objectives of the Second Plan are an increase of 25 per cent in real national income over the five-year period 1956–57 to 1960–61; a large expansion of employment opportunities; rapid industrialization; and reduction of economic inequalities. The emphasis on the development of industry and transport is greater than in the First Plan. The main problem is to step up the rate of investment in the economy. The total cost of the Plan has increased considerably since the estimates were presented, mainly because of two factors: the original costs were underestimated and prices have generally risen, especially prices of imported capital goods. But while difficulties have arisen currently in financing the Plan, particularly in regard to foreign exchange, it is important to stress the progress achieved so far. The technical and administrative tasks have been faced competently, by and large; major projects in steel, irrigation, and power are developing; and there is an unmistakable determination on the part of the Indian authorities to maximize tax resources, limit deficit financing, and take all possible measures to maintain the core of the Plan.

The Background of Economic Development in India

N atural resources.

Of India’s total land area of 811 million acres, 89 million acres were unclassified in 1954–55 mainly because they were inaccessible or desert. Of the 722 million acres for which data on utilization are available, 467 million acres were classified as cultivable, but 95 million acres were not cultivated. Excluding fallow, actual sown area in 1954–55 was 315 million acres. With the provision of transport, health, and other facilities, there is some scope for gradual extension of the area under cultivation. In addition to bringing new areas under cultivation, land reclamation prevents loss of land through erosion and regains for use land already thus lost. Nearly 70 per cent of both the total population and the working force are dependent on agriculture. Holdings are small, 70 per cent of all farms being less than 5 acres each. Though about four fifths of the cultivated area is under food crops, large imports of rice and wheat have been necessary in some years. Since dependence on rainfall renders agricultural production unstable, and since 90 per cent of the rainfall in India is concentrated in certain months, covering one third of the year, the provision of irrigation facilities is of prime importance. Only 20 per cent of the cultivated area was irrigated at the end of the First Plan period; during that period, the net addition to irrigated area was about 14 million acres. Larger areas will be irrigated when the projects that were started during the period are completed. Other projects are being undertaken during the Second Plan period. The further addition to irrigated area is placed at 21 million acres, so that total irrigated area in 1960 would be 88 million acres, or about 25 per cent of the cultivated area, against 51 million acres in 1951, or 17 per cent of the cultivated area. The extension of irrigation facilities, through major as well as minor works, is one of the important factors that makes the agricultural prospect brighter. There are ample water resources available. Of the total river water resources, it has been estimated that one third could be turned to beneficial use but that only 30 per cent of this amount was used in 1956.

The minimum estimate of India’s firm hydroelectric power potential, according to the Central Water and Power Commission, is of the order of 35 million kw. at 60 per cent load factor; in 1956 installed capacity was only 3.4 million kw. Even with a 20 per cent expansion each year, the installed capacity would reach only 15 million kw. by 1965, or a little over 40 per cent of the estimated firm capacity. At present, there is a deficiency of oil resources in India, the current annual output being one tenth of consumption. The available resources are being supplemented through the use of power alcohol, wherever possible. Exploration for new oil resources is being undertaken over wide regions by the Government, directly as well as in cooperation with major foreign companies; and substantial provision has been made under the Second Plan for the development of the resources. The Indo-Stanvac project is engaged in exploration for oil in West Bengal. A new company was formed in January 1958 to prospect for oil and to exploit the large known resources in upper Assam. India also has fairly large uranium, thorium, and beryl supplies and, when a longer view is taken, it is possible to supplement the coal, oil, and water power resources by atomic energy. Modest beginnings have already been made in this direction. Metallurgical coal reserves are adequate, though not abundant. Considerably large reserves of steam and noncoking varieties are available for power generation. Large deposits of lignite that have recently been discovered would usefully supplement coal resources. The Geological Survey of India, the Indian Bureau of Mines, and the newly established National Laboratories are pressing forward with detailed surveys and investigation of mineral resources. A substantial stepping up of coal production, together with the conservation of metallurigcal coal, proper assessment of the more important deposits of various minerals, the beneficial use of low-grade ores, and the exploration and development of the oil resources are among the main lines of investigation. The country is richly endowed with other important minerals, especially iron ore, gypsum, mica, limestone, and manganese; such minerals as sulphur, zinc, lead, and petroleum are conspicuously deficient and have largely to be imported. India’s iron ore deposits are among the world’s largest and best, with a 60–70 per cent iron content, and they are almost inexhaustible; the other minerals necessary for large-scale iron and steel metallurgy are also plentiful.

I ndustrialization and savings

With such resources as these it was natural that various industries would be set up in India. In the interwar period, such important industries as cotton and jute textiles, sugar, soap, iron and steel, cement, and light engineering were established, partly as a result of the stimulus provided by the policy of discriminating protection adopted from 1922. The Swadeshi movement, in which the desire of the people to use domestically produced articles found expression, as well as the circumstances created by World War II, also fostered industrial growth. During the planning phase since 1950, considerable progress has been made by established industries and new industries have been promoted. Among the new industries established in recent years are petroleum refining, fertilizers, locomotives, telephones, newsprint, machine tools, and penicillin. Even so, India remains primarily an agricultural economy: the agricultural sector (including animal husbandry and ancillary activities) accounts for almost one half of aggregate national output and absorbs 70 per cent of the total working force, whereas industry (including mining and small enterprises) contributes but 16–17 per cent of output and absorbs 11 per cent of the working force.

Estimates of India’s national income by industrial origin are available on a systematic and comparable basis since 1948–49; and for certain earlier years, less precise estimates have been made. The aggregate national income ( Table 1 ) in 1956–57 is placed at Rs 114.1 billion, at current prices, giving an average per capita income of Rs 294. At 1948–49 prices ( Table 2 ), the 1956–57 income is estimated at Rs 110.1 billion, or an average per capita income of Rs 284. The rise in national income during the First Five Year Plan period, 1951–52 to 1955–56, is estimated at 18.4 per cent, and that in per capita income at 11.1 per cent. For the large numbers of people who have only subsistence living standards, there is little capacity or inclination to save. Moreover, data on consumer expenditures collected by the National Sample Survey indicate that the nonmonetary sector covers more than one third of the whole economy; as is to be expected, it is much larger (45 per cent) in the rural sector than in the urban sector (10 per cent). In the nonmonetary sector, what little is saved out of current incomes does not take a monetary form and is, therefore, not available as investible funds. Again, particularly in the rural sector, a part of the savings is immobilized in hoards (especially jewelry), and the savings available for productive investment are further attenuated by the preference of certain classes for investment in land and other forms of real estate. For many years, therefore, net investment as a proportion of national income remained low and stationary, at about 5–6 per cent. In these conditions, a stepping up of savings/investment is an essential requisite if development is to proceed apace.

I ndia’s N ational I ncome, at C urrent P rices , C lassified by O rigin

(In billions of rupees)

1 Preliminary; revised total is Rs 100 billion (details not available).

I ndia’s N ational I ncome, at 1948–49 P rices , C lassified by O rigin

1 Preliminary; the revised total is Rs 104.8 billion.

2 Crop farming, animal husbandry, and ancillary activities, and forestry and fisheries.

3 Professions and liberal arts, government services (administration), domestic service, and house property.

D efense requirements

While investible resources are thus very limited, not all the additional resources that are raised become available for development; there is a certain unavoidable increase in nondevelopment expenditures of government, i.e., on administrative and security services. Expenditures on defense (revenue and capital combined) amounted to Rs 1.86 billion in 1952–53 and Rs 1.90 billion in 1955–56; they are estimated at Rs 2.91 billion in 1957–58 and Rs 3.05 billion in 1958–59, the estimate for 1958–59 being less than 20 per cent of central, and 13 per cent of total public, expenditures. India, through its democratically elected government, follows a policy of nonalignment and has to meet its defense bill wholly from its own resources. This diversion of resources, limited and necessary as it is, imposes a certain strain on the resources budget for development.

F oreign trade

Until recently, the imports and exports of India each formed about 5 per cent of national income, and there was little external economic assistance that helped to maintain or improve the standard of living. Until the thirties, imports consisted mostly of finished consumer goods, and exports were chiefly tea, jute goods, and raw materials. The trade pattern has undergone a change in recent years, however, with industrial raw materials and capital goods figuring more prominently in imports and manufactures in exports. In some years, marginal imports of foodgrains have helped to maintain food consumption, especially in urban areas, and imports of capital goods have become essential to the country’s development program; part of these imports has been financed through loan and grant assistance. Thus, at the present stage, not only has foreign trade increased quantitatively in relation to the size of the economy (imports constituted about 10 per cent of national income in 1956–57), but it has also become a significant factor in determining the pace of development.

D evelopment and employment

Attempts are being made to limit, through family planning, the rate of population growth in India, but there is need for comprehensive research into population problems, with a view to evolving an appropriate population policy. However, as the mortality rate gradually declines with improved medical facilities and health services, and as population control is bound to be slow in becoming effective on any substantial scale, it has to be assumed that the population will grow more or less at the observed rate. Correspondingly, with the rise in population there is a continuing addition to the working force. According to the census of 1951, 40 per cent of the total population are workers; and, of the total working force, more than 70 per cent are engaged in agriculture and ancillary occupations, 11 per cent in mining, manufacturing, and hand trades, and the rest in commerce, transport, and other services ( Table 3 ). In 1955, the total working population was estimated at 153 million, of whom 110 million were in the agricultural sector; it is expected that by 1960 the total working force will rise to 164 million, of whom 116 million will be in agriculture; only subsequently will there be a slight decline in the agricultural proportion, so that by 1970 agriculture will account for about 65 per cent of the total working population.

D istribution of W orking F orce in I ndia , A ccording to C ensus D ata

(In hundred thousands)

The structural and seasonal character of unemployment in the Indian economy is as follows: there is substantial unemployment, of about 4 million in the urban sector (according to a preliminary estimate by the National Sample Survey) and of about 3 million in the rural sector (on the basis of the results of the Agricultural Labor Enquiry, and the likely impact of the First Plan on rural employment); the large labor force engaged in agriculture is employed for only part of the year so that there is a serious degree of underemployment; nor does any major shift from agriculture to other gainful occupations seem practicable. Superimposed on this unemployment and underemployment is an addition to the labor force of about 2 million a year, which is likely to involve a worsening of disguised unemployment, that is, an increase in underemployment. Under the circumstances, it is appropriate, in devising techniques to deal with the problem, to view it not only in its aggregate magnitude but also in its distinct rural and urban aspects.

From the standpoint of employment in India, and especially of rural employment, some deliberate decentralization of economic activity is desirable in order to provide increased employment opportunities in supplementary fields for those who are dependent on agriculture. This decentralization will be less costly if it is based on cooperative forms of organization. Decentralization, by and large, in the conditions of the Indian economy, implies the development of small-scale, household industries, requiring little capital. Being labor intensive, such industries provide more employment at the same time that output is increased, but small-scale production is more costly than factory production. On the other hand, aside from the important political and moral considerations involved in preventing the emergence of unemployment, the case for decentralized production to provide greater employment to labor that would otherwise remain unemployed or grossly underemployed appears in better perspective when social costs and returns are considered. When there is a serious shortage of capital, it is necessary not only to increase the supply of capital but also to use capital-conserving techniques; the emphasis should be as much on better as on more tools. This is the rationale of using improved but fairly simple tools, which do not make undue demands on limited capital resources, in certain lines of industry that are well suited to decentralization and can be carried on in close proximity to agriculture. In agriculture and related hand trades, perceptible improvements in productivity are possible with only small additions to capital, if they are made coordinately with more effective organizational and marketing methods and improved techniques.

At the same time, the role of decentralized small-scale industries in India should not be unduly stressed; care should be taken to see that an inferior technology does not become firmly entrenched in the economy. Although the unemployment-underemployment problem is no doubt serious, it is only as urgent as economic development itself. Therefore, while in certain well-defined sectors development programs may properly be elaborated with employment as a main objective, in the sense of maximizing employment opportunities in the short run, the employment problem as a whole has to be viewed as a longer term one which can be resolved only through a development program that raises the productive efficiency of the entire economy. In the circumstances of India, therefore, highly capital-intensive schemes of industrial development (steel mills) and highly labor-intensive units (hand-loom industry) may go together; this combination is made easier by the fairly sharp division between the urban and the rural sectors of the economy. 1 The Plan document stresses decentralization of industry from the employment angle, and provision is made in the Second Plan for promoting small-scale production in certain lines; but, as rapid industrialization is a basic goal of planning in India, the content of the Plan actually places greater emphasis on organized industry. 2 By 1960, the relative share of factory establishments in aggregate output vis-à-vis that of small enterprises is expected to be greater than in either 1951 or 1955.

The decentralization of certain lines of industry, related primarily to the rural sector, might also serve to some extent to mobilize “the saving potential” that exists in disguised unemployment. Part of the labor surplus in the agricultural sector may be employed in constructing irrigation works and communications. It would be unrealistic, however, to assume that this saving potential could become an important source of capital formation. Although in recent years the traditional immobility of labor has diminished somewhat with the development of transport and communications and of large urban centers of industry and trade, it is still an important feature of rural life; decades of common living and family ties make it difficult to change this traditional immobility. Present consumption levels are very low and, when some of the surplus labor is diverted to construction projects, those productive workers who are left on the farm are likely to consume more, so that, consequently, aggregate consumption may rise. This is particularly likely in a peasant economy in which nearly 65 per cent of rural consumer expenditure is represented by food items of which, in turn, the proportion of own produce (imputed value) is as high as 60 per cent.

A vailability of trained personnel: the priority of education

An important factor underlying low productivity in India is the inadequacy of educational facilities—general as well as technical. In the initial stages of development, the inadequate supply of competent and experienced personnel creates a bottleneck, as training facilities and educational standards cannot be stepped up suddenly. The shortfall in attaining targets under the First Plan was due as much, if not more, to this factor as to lack of other resources or inadequacy of finance. Moreover, as voluntary cooperation and a favorable public response constitute the principal sanction and driving force behind planning in India, improved standards of education must have a high priority if cooperation is to be forthcoming in full measure.

The proportion of school-going children in the age group 6–11 years rose from 30 per cent in 1947 to 40 per cent in 1951 and 50 per cent in 1955–56. At the higher, secondary, stage (age group 14–17 years), even in 1955–56 only 10 per cent of the total were at school. The Indian Constitution directs the State to provide by 1961 for free and compulsory education for all children up to 14 years of age. On the basis of progress attained so far, and with the provision made for further facilities under the Second Plan, the actual results by 1961 would fall markedly short of the goal set under the Constitution.

As far as technical and professional education are concerned, the annual new enrollment in engineering institutions is currently 5,000 for degree courses and 8,000 for diploma courses, compared with 4,000 and 5,000, respectively, in 1951, and 2,500 and 3,000, respectively, in 1947. At present, about 8,000 persons obtain degrees or diplomas in engineering each year; this number is expected to rise to 11,000 by 1960. The number of persons graduating from engineering and technological institutions increased during the First Plan period from 2,200 per year to 3,700. The existing higher institutes of technology are being expanded and new regional institutes are being set up. Various other recommendations of the Engineering Personnel Committee constituted by the Planning Commission are being implemented. The Committee had concluded that, even with the expansion provided for under the Second Plan, it would be necessary to provide for additional training facilities for nearly 2,300 graduates in engineering, including mining and metallurgy; yet another 6,000 persons would need to be trained for posts at lower levels. A National Training Council has been set up to direct an extensive program of technical training for various industries; for the steel industry in particular, a considerable number of persons are being trained both at home and abroad. In agriculture and other fields, down to the village worker, and also in social services, especially in health and medical care, there is a similar shortage.

Technical change, so essential for rapid economic development, cannot be accomplished in isolation; the progress of technology depends on the growth of scientific education and, indeed, on general education itself. Therefore, while the provision of facilities for technical education can proceed somewhat ahead of general education, in the longer run the two must go hand in hand; a rounded program of expanding all educational facilities is called for, which is necessarily costly. This raises the important question of the priority to be given to education, general and technical, in a development program; in the Indian context, it is undoubtedly a high priority.

A high priority for education is also necessary because the spread of education is one of the surest means of effecting those changes in social attitudes and in institutions which are essential for quickening the pace of development. There are, no doubt, certain beliefs, ingrained by religion and tradition over the centuries, which inhibit development. While legislative measures help in rectifying these attitudes, education also has an important role to play. Even so, as in relation to the problem of population, these attitudes constitute a complex which can be expected to change only slowly. Social relationships cannot be ordered about; they have to grow. However, legislative and institutional reforms can help forward the process of change.

L and reform

With the Zamindari system of intermediary land tenures prevailing in large parts of the country and with the fragmentation and subdivision of holdings produced by the increasing pressure of population, the condition of the peasantry in general and of tenant farmers in particular had been unsatisfactory for decades; nearly 45 per cent of total cultivated land was in the hands of intermediaries. The ameliorative measures taken in some Provinces before the war had little effect. In the last few years, there has been considerable progress in the abolition, with provision for compensation, of the Zamindari system; and, in 1956, intermediary tenures represented but 8 per cent of the total cultivated area. The total compensation involved has been estimated at over Rs 4.5 billion and is largely paid in marketable bonds or annuity certificates. The program is at various stages of completion in different areas. With the abolition of intermediaries, land tenures are now in the hands of owners who cultivate the land and of tenants who hold land leased from owners. There has also been considerable progress in tenancy reform: the maximum rents payable by tenants have been generally fixed at between one third and one fifth of the produce of the land or its equivalent value, and eviction is permissible only on prescribed grounds. There have been proposals for fixing ceilings on the area cultivated by owners, in terms of a multiple of economic or family holdings, subject to the overriding consideration of maximization of agricultural output.

While the actual implementation of the provisions of the law is not uniformly effective everywhere because of the weak economic position of tenants in certain areas, and the abolition of the Zamindari system and other land reform measures have themselves given rise to certain problems, particularly in relation to agricultural finance, there has, by and large, been a perceptible change in rural relationships. Measures are to be taken during the Second Plan period in relation to production, marketing, and credit which “will lay the foundations for cooperative reorganization of the rural economy.” Rapid growth of education and organized cooperation among peasants are essential if land reform is not itself to result in lower production and smaller marketable surpluses and savings. Bhoodan , a movement for voluntary gifts of land for distribution among landless cultivators, conceived by Acharya Vinoba Bhave early in 1951, is now extended all over India. This movement, as it gathers momentum, supplements agrarian reforms and other measures for reshaping the structure of agriculture and of rural relationships.

C ommunity development

The Community Development Projects, an integral part of India’s Plans, were inaugurated in October 1952, and the National Extension Service, which is less comprehensive in scope, a year later. In each project area the contributions of the people themselves, in cash or in kind, are pooled with the assistance provided by the Government for financing schemes of local development; the people themselves have a large voice in determining the form that local development is to take. By January 1958 the program covered 276,000 villages, with a population of nearly 150 million; over one third of these villages have Community Development Projects and the rest are under the National Extension Service. The objective was to cover the entire rural sector by 1961; it appears that the target date may be put forward two or three years. While, with the help of trained village workers, the dissemination of knowledge of better techniques of production is an important aspect of community development, basically the program aims at releasing the latent energies of the people in a rounded cooperative effort to improve standards of living; the emphasis is on self-help. The tasks of the community development program are thus summed up in the Plan document: “As the program grows in size and the range of activities which it encompasses or influences increases, a great deal of the initiative in implementing it must pass to the people of each local area.… It is necessary to stress that, while the material conditions have to be assured, transformation of the social and economic life of rural areas is essentially a human problem. It is a problem, briefly, of changing the outlook of 70 million families living in the countryside, arousing in them enthusiasm for new knowledge and new ways of life and filling them with the ambition and the will to live and work for a better life. Extension services and community organizations are among the principal sources of vitality in democratic planning, and rural development projects are the means by which, through cooperative self-help and local effort, villages and groups of villages can achieve in increasing measure both social change and economic progress and become partners in the national Plan.”

Such are the ambitious sights set for community development. What has been the record so far? The financial provision made in the First Plan and the increased provision in the Second Plan, as well as the administrative and training arrangements that have been evolved, seem adequate. Generally, the voluntary contributions of the people have amounted to one half of the expenditures involved, and the people are becoming increasingly conscious of the Plan and its objectives. Although success has not been uniform, some of the project areas are bristling with effort. A Program Evaluation Organization was set up in 1952 to assess progress periodically. The Program Evaluation Board, which was set up in 1956 with a nonofficial chairman to plan and guide the work of the Evaluation Organization, has observed in its review of the progress so far: “While there has been considerable increase in rural consciousness of economic, and to a smaller extent of social, needs, the objective of stimulating continuing and positive effort based on self-help for promoting social or economic development has been comparatively unsuccessful.” As for the results in specific directions, the Report points out that aspects of the program involving physical changes—e.g., constructional and irrigational work, attitudes toward improved means in agricultural production and primary education—have been successful. On the other hand, changes involving social attitudes and organization—e.g., readiness to participate in community centers and to use cooperative forms of organization and panchayats for economic and political advancement—have not been so successful. The first series of projects, which were started in 1952–53, have been completed and, after intensive development for three to four years, are now being normalized and placed on a basis which, according to the scheme, should be self-sustaining; in such areas, too, there seems still to be dependence on government initiative and assistance. While such shortcomings need to be carefully examined and corrected, the Board affirms that on the whole community development is perhaps “the most significant development in India.” The Study Team, appointed by the Committee on Plan Projects of the National Development Council, recommended in November 1957 that emphasis in priorities be shifted from welfare activities to economic development aspects and that the target date for covering the whole country be extended by at least three years.

P rice mechanism and controls

At the time of devaluation, during the Korean war period, and again in 1957, the main anti-inflationary policies adopted when there was a threat of inflation were general and indirect. The bank rate was raised and other measures taken to curtail private credit, and additional taxes were levied to limit the deficit financing of government outlays. While physical controls, including rationing and extensive price control, were used, as in many other countries, during the war and the early postwar years, there has been greater reliance in recent years on more general monetary and fiscal measures. No doubt some direct controls, including the licensing of new investment and allocation and price regulation in respect of a few commodities (coal, steel, and cement), are operative. With a view to stabilizing food prices, measures were also taken in June 1957 under the Essential Commodities Act to prevent hoarding of certain foodgrains. The choice of techniques of control in the Second Plan indicates, however, that no breaking away from the competitive price system as it operates at present is envisaged; as stated in the Plan document, “A democratic system of planning eschews direct commandeering of resources and it operates mainly through the price mechanism.” As and when needed, both over-all fiscal and monetary disciplines, for regulating economic activity generally and channeling resources in desired directions, as well as specific controls and allocations to regulate activity in particular sectors or subsectors and to limit consumption of individual commodities, would be used.

R ole of P rivate E nterprise

Agriculture, the larger part of industry (both organized and unorganized), and trade are now in the private sector of the Indian economy. Aggregate public expenditures formed less than 15 per cent of national income even in 1956–57, i.e., after the First Plan was completed and the Second Plan commenced. Although the public sector is to be expanded in the coming years, through a larger share in the new investment activity formulated under the Plan, an important role is assigned to the private sector. The extension of the public sector is dictated mainly by the requirements of rapid economic development and the need to build very large power, transport, and industrial projects. The share of public undertakings in the estimated net output of factories is about 3 per cent, and by 1960–61, the end of the Second Plan period, it is expected to rise to only 7 per cent. The Plan document sums up the attitude toward the private sector as follows: “The public sector has to grow—and rapidly—and the private sector has to conform to the requirements of the Plan. There has necessarily to be a great deal of dovetailing between the two sectors, and it is recognized that the private sector has to be given the opportunity and facilities to function effectively within the field allotted to it.” Data on company finances published by the Taxation Enquiry Commission and by the Reserve Bank show a rate of return in private industry averaging about 8 per cent in postwar years, as measured by net profits (after company taxation) in relation to net worth (paid-up capital plus reserves).

There is no discrimination within the private sector in tax or other matters between domestic enterprise and foreign enterprise. Foreign capital investment has been fairly important in certain lines, such as tea plantations, mineral oils and products, cigarettes, jute manufactures, and utilities. According to the Reserve Bank’s Survey of India’s Foreign Liabilities and Assets, aggregate foreign business investment in India, in terms of book value, was Rs 4.8 billion at the end of December 1955; of this total, more than 80 per cent was direct investment, most of it from the United Kingdom. During 1948–55 there was an increase of Rs 1.9 billion in foreign private capital, including reinvested profits of branches and subsidiaries of foreign companies. The conditions governing foreign investments in India, old and new, were broadly set out in the Prime Minister’s statement in Parliament in April 1949, and recently reaffirmed: “Government would expect all undertakings, Indian or foreign, to conform to the general requirements of their industrial policy. Government do not intend to place any restrictions or impose any conditions which are not applicable to similar Indian enterprise. . . . Foreign interests would be permitted to earn profits, subject only to regulations common to all. . . . Government have no intention to place any restriction on withdrawal of foreign capital investments, but remittance facilities would naturally depend on foreign exchange considerations. . . . If and when foreign enterprises are compulsorily acquired, compensation will be paid on a fair and equitable basis.” In pursuance of this basic policy, even when exchange reserves have been run down, the existing facilities for remittance of profits by foreign interests have been maintained. Again, when life insurance business, most of which was in the hands of Indian insurers, was nationalized, the basis of compensation payable to the affected foreign interests was determined in separate consultations with their spokesmen.

The manner in which controls over industry are being administered and the climate in India for private enterprise, especially for foreign enterprise, were summed up in June 1956, i.e., after the Second Plan had commenced, by a British observer, Mr. Stephen Garvin, in a survey for the Federation of British Industries: “The Industries Act, taken together with the control of capital issues, gives the Government the power to regulate the investment of capital in the private sector and ensure the development of private industry along lines desired. Industrialists are brought into close relationship with the official machine and, as in similar circumstances in the United Kingdom, familiar complaints are heard of delay, frustration, and the rest. It must be said, however, that . . . the officials concerned are extremely able and pleasant to deal with, genuinely anxious to help forward any promising venture, and will work hard to see it succeed. . . . The Government of India’s relationship with private enterprise industry, however, is by no means confined to the negative function of control. It has taken a number of important positive steps to stimulate industry in the private sector and to aid private industrial concerns … it is difficult to accuse the Government of India of any neglect of measures to encourage and promote private enterprise in industry. . . . India is prepared to welcome foreign investment on terms which are not unreasonable, have been conscientiously adhered to, and compare well with those enforced by other underdeveloped countries. . . . India has a good record as far as concerns capital repatriation and remittance of profits. There is no rigid insistence on a majority Indian holding in foreign-initiated enterprises; some one hundred per cent subsidiaries of British firms have been welcomed. The employment of Indian personnel in all possible positions is insisted upon, but not at the expense of managerial experience or technical skill, which it is well understood necessarily accompany foreign capital.” 3

The main lines of industrial policy were set out by the Government of India in a resolution in April 1948, with particular reference to the relative spheres of the public and private sectors. On the eve of the Second Plan, in April 1956, the policy was restated in a second industrial policy resolution, broadly maintaining continuity of approach. Industries are divided into three categories: those of which the further development is to be the exclusive responsibility of the State; industries which are to be progressively state-owned, and in which the State will take the initiative in setting up new units, but from which private enterprise is not excluded; and industries whose development is left largely to private effort. Even in regard to some of the industries included in the first schedule, e.g., iron and steel, under the Plan, considerable expansion of the existing private units is allowed and is in fact financially and otherwise assisted by the State. Again, nondiscriminatory treatment is assured: “When there exist in the same industry both privately owned and publicly owned units, it would continue to be the policy of the State to give fair and nondiscriminatory treatment to both of them.” Estimates of private investment in organized industry since the inception of the Second Plan, imports of machinery and equipment on private account for replacement as well as for new investment, the relatively large new capital market issues, and the number of licenses granted for the establishment of new undertakings and the expansion of existing undertakings, show that, in the actual implementation of policy, more favorable treatment has been accorded to private industry than was originally envisaged.

M onetary and price trends

The monetary and price history of India has been one of stability. Since India is a member of the sterling area, the value of the rupee vis-à-vis sterling has, with but occasional minor variations, remained stable since before the beginning of the present century. India has always honored its internal and external debt obligations, in regard to principal as well as interest. It is estimated that, at the end of March 1958, the total internal interest-bearing obligations of the Government of India amounted to Rs 40.0 billion, or less than two fifths of the national income, and that total external obligations were Rs 2.1 billion; interest-yielding assets are valued at Rs 34.0 billion, or 80 per cent of aggregate obligations, domestic and foreign. Repayments, in conversion loans and cash, have been made promptly on due dates, and no forced loan has been issued. If government-guaranteed obligations, the sizable authorizations that have been made but have not yet been actually received, and the obligations to the International Monetary Fund are included, but loans repayable in rupees are excluded, India’s total external debt as of March 1958 may be placed at about Rs 6 billion (about US$1.26 billion). The annual charge for servicing this debt is moderate and well within the country’s capacity to pay.

Before the war, India raised considerable sums in London; during the war, mainly because of the large recoverable war expenditures incurred by India, it was possible to repatriate the sterling debt and also to accumulate large balances in sterling. Correspondingly, there was a very large expansion of the money supply, inflationary pressures built up, and prices rose. The general index of wholesale prices averaged 308 for 1947–48 (year ended August 1939 = 100). Industrial machinery and railway rolling stock were depleted during the war, as a result of lack of adequate repairs, maintenance, and replacement; and a considerable backlog of replacement had to be made good after the war. On the whole, the economy emerged from the war weaker than before, with shortages of food and other articles and a multiplicity of controls, and there was probably some decline in real per capita income. The partition of the subcontinent between India and Pakistan at the moment of Independence further disrupted the economy and increased India’s food deficiencies. The relief and rehabilitation of large numbers of displaced persons, the defense of Kashmir, the political and financial integration of the former Indian States, many of which were largely feudal in character, imposed a severe strain on the administrative and financial resources of the country in the years immediately following the attainment of Independence, even before the aftermath of war could be fully dealt with.

By about 1950, these transitional problems had, on the whole, been solved, and latent inflation had also been largely worked off. Meanwhile, in September 1949, when sterling was devalued, the Indian rupee, together with the currencies of many other countries, was at the same time devalued by 30.5 per cent in terms of gold and the U.S. dollar. With a view to cushioning the impact of devaluation, various anti-inflationary measures were taken. By about mid-1950 there were indications that the inflationary stimulus of devaluation had spent itself, but before stability could be consolidated, the Korean war had broken out in June 1950, and the inflationary upsurge associated with this outbreak raised the general index of prices from 396 in June 1950 to a peak of 458 in April 1951. These developments again gave rise to speculative activity, and there was a sharp increase in the demand for funds during the busy season of 1950–51; the increase in the money supply in 1950–51 (when Plan outlays had not yet commenced) was Rs 1.04 billion. Among the policy measures taken to subdue inflationary trends was the raising of the bank rate in November 1951 from 3 per cent to 3½ per cent, together with a change in open market policy, according to which the Reserve Bank was to refrain, save in exceptional circumstances, from buying government securities to meet the seasonal requirements of banks. The new monetary policy and the steps taken by the Government in the fiscal and other fields strengthened the disinflationary forces that were in operation internally and abroad and, after the break in February 1952 in the prices of certain commodities that were the object of speculative interest, there was by mid-March 1952 a sudden and marked fall in the price index to 365, 8 per cent below the pre-Korean level. Some measures were taken to arrest the decline in prices, lest recessionary trends should set in.

This was the general economic and political background at the time the First Five Year Plan was undertaken. The adoption of the Constitution and the political and financial integration of the different parts of the country afforded the political stability that was a prerequisite; the administrative framework had stood the strain of partition and its aftermath; the problem of relief and rehabilitation of displaced persons was reduced to manageable proportions, and the distortions caused by war and partition had in the main been corrected; devaluation, on the whole, proved a corrective to the imbalance in foreign trade; the Korean boom turned out to be short-lived. Once the major problems of transition were out of the way, it was necessary to concentrate efforts on speeding up economic development. There have been vicissitudes from time to time, but, on the whole, since the attainment of Independence the monetary and price situation has caused little concern until recently, and India has been able to combine development with economic stability. As pointed out above, national income in real terms is estimated to have risen by 18.4 per cent during the period of the First Plan. While the money supply with the public rose during this period by 10.4 per cent, to Rs 20.4 billion as at the end of March 1956, the general index of prices declined somewhat. In contrast to a large balance of payments deficit in 1951–52, which was due mainly to emergency food imports, there was an addition to reserves in the next four years.

D evelopments in 1956 and 1957

With the accelerated tempo of the Plan after 1953–54, substantial and increasing deficits appeared in government accounts. The over-all budgetary deficit of the Government of India (i.e., decline in cash balances plus borrowing from the Reserve Bank) amounted to Rs 1.6 billion in 1955–56 and to Rs 1.9 billion in 1956–57; for 1957–58, the deficit was estimated at Rs 2.8 billion, after taking into account additional tax receipts of Rs 880 million. The revised estimates for 1957–58 place the over-all deficit higher, at Rs 3.8 billion, mainly because of a short-fall in receipts from market loans and small savings and a larger transfer of revenues to State Governments pursuant to the recommendations of the Second Finance Commission; the holdings of treasury bills by the Reserve Bank increased by Rs 4.0 billion between March 29, 1957 and March 28,1958. These deficits, together with the expansion of bank credit to the private sector, had an expansionist effect on the money supply, which increased by Rs 1.23 billion in 1954, Rs 2.15 billion in 1955, and Rs 1.31 billion in 1956. At the end of December 1957, the money supply with the public aggregated Rs 22.75 billion—Rs 15.26 billion in currency and Rs 7.49 billion in deposit money—which was Rs 970 million, or 4.4 per cent, more than at the end of December 1956. Thus within two years the index of money supply (1953 = 100) rose to 120; it rose further to 127 at the end of December 1956 and to 133 in December 1957. The comparatively moderate rise in 1956 and 1957, at a time when deficits in government finances were growing and bank credit was expanding, is attributable to the contractionist influence of the large balance of payments deficits.

Commercial bank credit to the private sector increased in 1956 by 26 per cent. The total credit extended by the scheduled banks, which account for most of India’s banking business, reached Rs 9.33 billion in May 1957 (an amount equal to 76.1 per cent of their net liabilities), against Rs 6.36 billion at the end of 1955 and Rs 7.86 billion at the end of 1956. Thus, in spite of the considerable expansion of deposits, the position of the banks came to be increasingly overextended, and the pressures on their liquidity and monetary stringency in general were intensified. Therefore, while the higher levels of banking activity largely reflected the growth of economic activity and increased imports under the impetus of the Plan, the credit trends were disquieting and had to be corrected. As the strain upon the liquidity of the banks increased, they were obliged to liquidate some of their investments and to resort to increased borrowing from the Reserve Bank. Various measures were taken to deal with the speculative part of the expansion and also generally to restrain bank credit.

Selective credit controls have been systematically applied through Reserve Bank directives to the banks to limit their advances against foodgrains and other commodities, the latest such directive being issued on March 22, 1958. The interest rate mechanism also has been applied to some extent. Under the so-called Bill Market Scheme, the Reserve Bank’s lending rate against the security of eligible commercial paper was raised from 3 per cent to 3¼ per cent on March 1, 1956 and then to 3½ per cent in November 1956; the effective rate was raised to 4 per cent from February 1, 1957, when the stamp duty on usance bills was increased. At the same time, the Reserve Bank increased its lending rate on advances against government securities from 3½ per cent to 4 per cent. The bank rate itself was raised from 3½ per cent to 4 per cent on May 16, 1957. With the simultaneous lowering of the stamp duty on usance bills to ⅕ of 1 per cent, the effective rate for borrowing under the Bill Market Scheme thus became 4⅕ per cent. At the end of June 1957, the Governor of the Reserve Bank drew the attention of banks to certain features of the credit situation and urged cautious lending policies. In August 1957, the banks were requested to reduce aggregate bank credit from the level at that time of Rs 8.8 billion to Rs 8 billion by mid-October 1957. 4 The policies of the Reserve Bank of India were directed to what has been termed “controlled expansion,” but gradually emphasis shifted to positive restriction. Credit policy seems to have been effective in controlling credit expansion. On March 28, 1958, scheduled bank credit was Rs 9.6 billion (66.4 per cent of net liabilities), against Rs 9.0 billion (76.6 per cent of net liabilities) a year earlier. Bank credit, which had expanded by 26 per cent in 1956, rose by 9 per cent in 1957. The rise in bank credit during the 1957–58 busy season up to the end of March 1958 was Rs 951 million, compared with a rise of Rs 1,394 million in the corresponding period of the previous busy season.

The re-emergence of inflationary pressures was reflected in a continued rise in prices after the middle of 1955, at first moderate, but substantial in 1956. The general index of wholesale prices (1952–53 = 100) was 112.1 in August 1957, the highest since the upsurge of prices at the time of the outbreak of hostilities in Korea, against 93.5 in December 1955 and 107.9 in December 1956. The food group showed the largest rise, partly as a result of the decline in output of foodgrains after 1953–54. The authorities have taken various specific steps to curb the rise in prices, in addition to the more general disinflationary measures. These steps have included arrangements for larger imports of wheat and rice, especially under the agreements concluded with the United States under U.S. Public Law 480 and with Burma, the establishment of a network of fair price shops for the distribution of food-grains released from stocks, the formation of certain wheat and rice zones, and restrictions on interzonal movements of rice and wheat. As stated above, the Reserve Bank also curtailed bank advances against specified commodities, including foodgrains and cloth. After August 1957, prices declined; this movement, which was in part seasonal and related to the movement of new crops to the market, was also in part a result of the measures taken to check price increases. In December 1957, the general price index averaged 107, and in March 1958 it was 105.4.

Since the inception of the Second Five Year Plan, India’s balance of payments has shown a substantial deficit. The sterling balances of the Reserve Bank of India, the principal part of India’s foreign exchange reserves, declined from Rs 7.46 billion ($1.57 billion) at the end of March 1956 to Rs 2.98 billion ($626 million) at the end of December 1957. The problems which thus arose for the implementation of the Plan are examined in detail in a later part of this paper. With a view to correcting the serious imbalance in the payments position, import policy was made more restrictive from January 1957. At the same time, despite a large reduction in foreign exchange reserves, the money supply continued to rise.

Faced with a serious decline in foreign exchange reserves and rising domestic prices, as well as with the prospect of larger Plan outlays and an increased measure of deficit financing in 1957–58, determined and effective steps had to be taken immediately if the recrudescence of serious inflationary pressures was to be curbed. The policies adopted included the credit measures referred to above; a substantial increase in taxation; measures to stabilize food prices and to prevent speculative hoarding of stocks; various steps to conserve foreign exchange; and, above all, readjustment of Plan outlays. On the whole, it appears that by the end of 1957 inflationary pressures in the Indian economy were contained. The current trends in the economy are indicated in Table 4 . However, as stated in the economic survey presented with the 1958–59 budget, despite the recent decline in prices and the relative improvement in monetary and credit trends, “the economic situation is basically one in which there is a continuous pull, on balance, in the direction of inflation. There also remains a sizable gap in the foreign exchange resources required for the Plan. For maintaining price stability as well as for achieving a better balance in external account, an increase in savings, a continuance of fiscal and monetary discipline and of the efforts to secure external assistance, and an adjustment of developmental programs so as to bring them into a more even relationship with available resources are called for.”

S elected E conomic I ndicators in I ndia

1 Dollar balances of the Government of India and banks amount to about $75 million.

2 Budget data are for fiscal years (beginning April 1) 1953–54, 1955–56, 1956–57, 1957–58, and 1958–59.

3 Excludes receipts from sales of treasury bills.

The Five Year Plans: Formulation and Progress

P lanning procedures.

Pioneering work in the discussion of planning was done by the National Planning Committee set up by the Indian National Congress before World War II. Immediately after the war, a Planning Department was set up at the Centre, and postwar reconstruction schemes began to be drawn up by the Centre and the Provinces. What came to be known as the Bombay Plan was advanced by a small group of prominent industrialists in the private sector; this envisaged a development outlay of Rs 100 billion over a period of 15 years, and it evoked wide interest. Even before the First Five Year Plan was inaugurated, blueprints of various major projects, including multipurpose schemes and steel plants, were under study, and some important projects had been commenced. The Planning Commission was set up in March 1950, by a resolution of the Government, to “make an assessment of the material, capital, and human resources of the country, including technical personnel, and investigate the possibilities of augmenting such of these resources as are found to be deficient in relation to the nation’s requirements; formulate a Plan for the most effective and balanced utilization of the country’s resources; on a determination of priorities, define the stages in which the Plan should be carried out and propose the allocation of resources for the due completion of each stage; indicate the factors which are tending to retard economic development, and determine the conditions which, in view of the current social and political situation, should be established for the successful execution of the Plan; determine the nature of the machinery which will be necessary for securing the successful implementation of each stage of the Plan in all its aspects; appraise from time to time the progress achieved in the execution of each stage of the Plan and recommend the adjustments of policy and measures that such appraisal may show to be necessary; and make such interim or ancillary recommendations as appear to it to be appropriate either for facilitating the discharge of the duties assigned to it, or on a consideration of the prevailing economic conditions, current policies, measures, and development programs, or on an examination of such specific problems as may be referred to it for advice by Central or State Governments.”

A draft outline of the First Five Year Plan was presented to the country in July 1951, as a document “for the widest possible public discussion.” The views expressed by various interests—industry, commerce, labor, farmers, municipal committees, and other local authorities—were taken into account, and, after further examination in Parliament, state legislatures, and elsewhere, the First Plan, covering the period April 1951-March 1956, was finalized in December 1952. Preliminary work on the Second Five Year Plan commenced after April 1954, when the Planning Commission had requested state governments to arrange for the preparation of district and village programs, especially in agriculture, rural industries, and cooperation, as “the district is still the pivot of the whole structure of planning [and] . . . local planning is the essential means for securing the maximum possible participation and voluntary effort.” By March 1955 a “plan-frame” was available, which, together with the suggestions by the Planning Commission’s panel of economists, was generally approved by the National Development Council in May 1955. A Draft Outline of the Plan was published in February 1956 for general information, and the Second Plan, covering the period April 1956-March 1961, was finalized in May 1956.

The authorities and the public at the state and local levels have been given a considerable measure of initiative in formulating regional and local schemes of development. The various schemes are coordinated by the Planning Commission and dovetailed into a broad framework which also incorporates the major national schemes, relating to the development of power, transport, and industry, which are formulated largely by central ministries; in the process, the whole program is pruned to a magnitude which can be accommodated broadly within the estimated resources. At various stages, public discussion of the Plan—of resources and outlays, structure, and the order of priorities—is facilitated. Finally, while the central departments and agencies are responsible for the execution of those projects which are in the central sphere, each State has its part in the Plan, and local bodies actively participate in the implementation of local schemes. The whole program of community development is in the local sphere, and its success depends mainly on the enthusiasm and response of the people. Thus, Indian planning is not too centralized and is not imposed from above, but seeks to release the dynamic energies of the people by stressing regional and local development. The National Development Council, which was set up in August 1952, and which includes the Prime Minister of India, the Chief Ministers of all the States, and members of the Central Cabinet and of the Planning Commission, is the apex body that makes major policy changes in regard to the Plan and ensures that the Plan is implemented throughout the country as a single, coordinated whole.

O bjectives of planning

The main long-term objectives of planning in India are to double real national output in less than 20 years (between 1950 and 1968), and to double per capita real income in less than 25 years (between 1950 and 1974). The broad assumptions underlying these projections are that the population will increase at the rate of 12–14 per cent per decade; that the incremental capital-output ratio will be about 2:1 in the initial years and rise to 3.5:1 in the later stages, as a shift toward a more capital-intensive pattern takes place, with a time lag of about 2 years between investment and output; that the investment rate (the proportion of total net investment to national income) will rise steadily from an estimated 5 per cent in 1950 to 7 per cent in 1955, 11 per cent in 1960, 14 per cent in 1965, and 16–17 per cent by 1970, and remain at that level thereafter. When the First Plan was drawn up, the objectives for the five-year period 1951–52 to 1955–56 were set at modest levels, so as to minimize hardships in the initial stage of planning; in addition, although the consequences of war and partition had already been largely dealt with, conditions were still somewhat unsettled. National income was expected to rise by 11–12 per cent during this five-year period. In the event, though actual outlays fell short of estimated Plan outlays, national income is estimated to have risen by 18.4 per cent, per capita income by 11.1 per cent, and per capita consumer expenditure by 9 per cent.

The success of the First Plan, under conditions of economic and financial stability, prompted the adoption of more ambitious goals and a bolder approach for the Second Five Year Plan. The main objectives of the Second Plan are a sizable increase, of the order of 25 per cent, in national income so as to raise living standards; rapid industrialization with emphasis on the development of basic and heavy industries; a large expansion of employment opportunities; and reduction of inequalities in income and wealth and a more even distribution of economic power. In more general terms, the Plan seeks to rebuild rural India, to lay the foundations of industrial progress on a wide front, and to advance toward a socialist pattern of society. The socialist pattern is not conceived in a rigid or dogmatic way; its core lies essentially in rapid development and greater equality proceeding side by side. It is postulated that social gain, rather than private profit, should be the determining criterion, with the emphasis on the attainment of positive goals rather than on negative restrictions. The reduction of inequalities should be attained by raising incomes at the lower levels rather than by cutting down other incomes; this objective can be attained only as the end-result of the totality of measures and institutional changes envisaged in the Plan. This includes the changed pattern of investment, the direction given to economic activity by government action, expansion of social services, institutional changes in land ownership and management, regulation of corporations, growth of the cooperative sector, and fiscal measures; a ceiling on incomes is the end-product of all these measures rather than the beginning of a process to be effected through legislation.

With the assumed increase in population of 12.5 per cent during the decade 1951–60, a rise in national income of 25 per cent over five years gives an annual growth rate of 4.5 per cent, and an increase of 18 per cent in per capita income over the five years. These rates of growth require that the proportion of current income devoted to capital formation should rise from 7 per cent in 1955–56 to 10 per cent at the end of the Plan period (1960–61); this, together with the projected inflow of resources from abroad, would raise net investment as a proportion of national income from 7.3 per cent in 1955–56 to 10.7 per cent in 1960–61; the capital-output ratio itself works out at 2.3:1. As for the employment objectives of the Plan, the increase and diversification of employment opportunities are to be of such an order and character as would at least arrest further deterioration in the unemployment situation. Investment programs under the Second Plan are expected to provide additional employment for about 8 million workers, including 2.1 million in construction, 0.8 million in industry and mining, 0.5 million in cottage and small-scale industry, 5 and 2.7 million in trade, commerce, and professions. In agriculture, with increased irrigation and other facilities, additional employment for about 2 million persons is expected, as well as some relief in the conditions of underemployment. However, in spite of the considerable increase in total investment in the Second Plan period and attempts to promote labor-intensive schemes, the additional employment potential of the Second Plan is not much larger than that of the First. A partial explanation of this fact is to be found in the addition of some employment-oriented programs to the First Plan as it proceeded. Furthermore, while the role of small-scale industries has been much discussed and an attempt has been made to foster labor-intensive schemes, the assumption that industrialization should now be the core of development in India means that, on the whole, the Second Plan is more capital-intensive than the First. The output of factory establishments is expected to rise by 64 per cent during 1956–61, but that of small enterprises by only 30 per cent. While the share of small enterprises in the national product is to be almost the same in 1960–61 (8 per cent) as in 1955–56, that of large-scale industry is to increase from 7.8 per cent to 10 per cent. A main part of the expected increase in employment under the Second Plan is in construction, which is of a temporary character. While such activity continues to expand, its temporary character presents no problem; but after construction work has ceased, some time will elapse before the working force is absorbed in other sectors and employment becomes stabilized—all of which only underlines the difficult nature of the employment problem in the Indian economy. 6

I nvestment and output: restraint on consumption

Table 5 , which shows the trends in national income and investment between 1950–51 and 1955–56, the estimates for the Second Plan period, and projections for a longer perspective, makes possible a closer investigation of the targets of the Second Plan, and especially of the savings rates and capital-output ratios postulated in the Plan. The two objectives, viz., the rate of increase in investment and the growth of national income, cannot both be targets; the latter is but an estimate of the average rise in national product based on the magnitude and pattern of the proposed investment. Investment alone constitutes the target. Moreover, proposed outlays and estimates of resources have to be considered in financial as well as real terms and, therefore, at (assumed) constant prices. If prices should rise, both would have to be revised. In considering the (financial) resources budget, estimates of receipts from taxes and borrowings are made without regard to the impact of deficit financing and price increases. Briefly, the problem is to step up the rate of investment in the economy, i.e., to direct a larger proportion of national income into investment, the static position of which largely explains the prolonged economic stagnation in the past. If the ratio of investment to national income is to rise, the ratio of consumption to income must fall; as long as national income is rising, this can be effected by diverting a significant and increasing proportion of additional income to investment. There would then be no actual reduction in consumption but only restraint on the increase in consumption for the community as a whole; it is contemplated that for particular groups there should be some decline, and superfluous (or conspicuous) consumption has to be eliminated. The problem is somewhat analogous to that of financing the war effort; latent inflation can be the means in both cases. However, while war effort is once-for-all, development effort is a continuous process extending over 15–20 years. On the other hand, in contrast to war conditions, real national income expands as development effort is being made, and there is a definite prospect of a subsequent rise in consumption. But in the initial phase, when the basic investments are being built, the effort involves considerable strain. The restraint of consumption could be orderly and equitable—or haphazard and inequitable; it would be the former if a plan for resources is adopted ex ante , corresponding to the plan of expenditures, and it would be the latter if the easy but slippery road of inflation is followed. Therefore, as the Plan proceeds, rigorous control measures for the restriction of consumption may be necessary. As set forth in the Plan document, however, the degree of restraint on consumption envisaged under the Plan is not very onerous, given the rate of growth in national income and the savings ratio to be attained. The marginal rate of savings is about 22 per cent, which would raise the domestic savings rate from 7 per cent of national income to 9.7 per cent. In a community where current consumption is low relative to consumption needs, the choice between current consumption and future consumption, which capital formation involves, presents great difficulties, but it cannot be evaded.

A ctual and P rojected N ational I ncome , I nvestment, and C onsumption in I ndia, at 1952–53 P rices

In the Indian Plan, simplified aggregate growth models are used in projecting rates of growth; some preliminary work has also been done with input-output tables, and a few commodity balances have been set up in the Plan frame. However, these were not applied extensively in the formulation of the Plan, and the capital-output ratios used—admittedly a rough way of expressing average productivity of new capital, taking the various sectors together—are rather conjectural. The available data pertaining to actual new investment and value added in organized industry in India and in other countries suggest, when account is taken of the emphasis on heavy and basic industries in the Indian Plan, that the capital-output ratio in the sector of organized industry may actually be less favorable than is assumed in the Plan. When the First Plan was presented, a capital-output ratio of 3:1 was assumed for the economy as a whole; it actually turned out to be 1.8:1. The bias of both the economy and the Plan in favor of agriculture—a sector in which better but simple tools, combined with improved methods and attitudes in cultivation, yield substantial returns—and the sizable nonmonetary investment in the rural economy which takes place all the time but is not included in Plan estimates of investment, 7 are two factors that render the capital-output ratio favorable in India and in other, similarly situated countries, compared with the more generally observed ratios of 3:1 or 4:1 in industrialized countries. During the First Plan period, two additional factors also influenced the outcome: a part of the rise in industrial output was attributable to utilization of the idle capacity available in several industries at the commencement of the Plan, and the succession of good monsoons partly accounted for the record agricultural crops of 1953–54. These were special and temporary factors. Especially if the agricultural sector should not again show a ratio something like 1:1, the shift in the pattern of investment in the Second Plan suggests that the assumption of a 2.3:1 ratio for the whole economy may prove to be somewhat optimistic.

S ize and S tructure of the P lans

The total outlay proposed in the public sector under the First Plan was Rs 23.56 billion; actual outlay was about Rs 19.60 billion. Total outlay in the public sector proposed under the Second Plan is estimated at Rs 48 billion. 8 This does not include direct improvements made by farmers in agriculture or other forms of nonmonetary investment, such as contributions in kind (labor and materials) for executing local development schemes. But in addition to net investment (for building up productive assets), it includes what may be termed current developmental expenditure. Of the actual outlays in the public sector under the First Plan, about Rs 16 billion represented net investment; net investment during the Second Plan period is placed at Rs 38 billion. Total monetary investment during 1951–52 to 1955–56 was approximately Rs 31 billion, divided more or less equally between the public and private sectors; during 1956–57 to 1960–61, it is expected to aggregate Rs 62 billion, of which about 60 per cent would be in the public sector. The distribution of the Plan outlay in the public sector, by categories ( Table 6 ), shows the shift in priorities under the Second Plan, with greater emphasis on industry and transport. The public investment program is concentrated largely on the provision of overhead capital, or the economic infrastructure, such as transport, power and irrigation, and basic industry, which is necessary for further sustained growth in production and cannot be adequately undertaken by the private sector. The proposed Plan outlay of Rs 48 billion in the public sector under the Second Plan is divided between investment and current outlay as shown in Table 7 .

D istribution of I ndia’s P lan O utlay in the P ublic S ector, by C ategories

D istribution of I nvestment and C urrent O utlay in the P ublic S ector U nder I ndia’s S econd F ive Y ear P lan

For industry and mining, the outlay proposed under the Second Plan is eight or nine times the actual outlay of the First Plan. The development of coal resources is assigned a high priority. The target for coal output in 1960 is 60 million tons, an increase of 22 million tons over 1955, of which 12 million tons is to be from collieries in the public sector. The industrial priorities laid down in the Second Plan (for both public and private sectors) are increased production of iron and steel and of heavy chemicals; development of heavy engineering and machine-building industries; expansion of capacity in respect of other producer goods; modernization and re-equipment of existing large-scale industries, such as cotton and jute textiles and sugar; fuller utilization of existing capacity; expansion of capacity for consumer goods, with the requirements of common production programs and the production targets for the decentralized sector of industry being kept in view. The expansion of the steel industry has the highest priority, and heavy engineering industries (including structural fabrication and machine tools) have a priority second only to steel. Three new steel plants, each with a finished steel capacity of about 0.7–0.8 million tons and costing in all Rs 3.5 billion (since revised to Rs 5 billion), are to be set up in the public sector; simultaneously, the existing steel mills in the private sector are to be expanded. 9

The figures on proposed investment in large-scale industries ( Table 8 ) indicate that the private sector has an equal share with the public sector, that public sector investment is confined largely to heavy and basic industries, but that even there the private sector has no small part.

P roposed I nvestment in L arge -S cale I ndustries U nder I ndia’s S econd F ive Y ear P lan

1 Including new investments of the National Industrial Development Corporation.

Partly because of the distribution of raw materials and other resources, organized industry in India is unevenly dispersed. On the basis of employment figures, it may be stated broadly that 25–30 per cent of aggregate industrial activity is concentrated in the State of Bombay, over 20 per cent in the State of Bengal, and 10–12 per cent in the State of Madras; the other 40 per cent is distributed over the rest of the country, which accounts for 67 per cent of the population and 78 per cent of the area. The program of industrialization envisages more balanced regional development. This is being assisted through such devices as uniform prices of steel, pig iron, and cement at all railheads, made possible by freight pool arrangements, and the establishment of industrial estates which enable medium-sized and small-scale industrial units to have the advantages of common services and facilities. The increasing availability of hydroelectric power for industrial purposes also makes the dispersion of industry easier. The proposed large-scale development of lignite deposits in South India is another important project for the same purpose.

The allocation of capital for transport and communications has been increased from 24 per cent of the total in the First Plan to 29 per cent in the Second; in both Plans, railways account for the larger part of this allocation, i.e., 11 per cent of the total in the First Plan and 19 per cent in the Second. The Indian railway system is the fourth largest in the world, comprising nearly 36,000 route miles. The railway program under the First Plan was carried out as scheduled, but at the end of the Plan period there were still arrears of replacement; of a total stock on the line in 1956 of 9,260 locomotives, 24,780 coaches, and 266,000 wagons, as many as 2,810 locomotives, 6,300 coaches, and 49,570 wagons were over age. Of the broad gauge stock in 1956, 32 per cent of the locomotives and 16.5 per cent of the wagons were over age, and these percentages were higher than in 1951. After taking into account the physical targets set in agriculture and industry, particularly in regard to coal and steel, additional goods traffic originating during the Second Plan period is estimated at over 60 million tons, raising the total goods traffic to be handled by 1960–61 to 181 million tons; but, in view of the limited resources that are available, provision is made in the Plan for additional carrying capacity of only 42 million tons. The cost of the net investment program of the railways is placed at Rs 9 billion, of which the railways themselves are expected to provide Rs 1.50 billion. Including the rehabilitation costs (Rs 2.25 billion) to be met from railway earnings, the total railway program is placed at Rs 11.25 billion, of which Rs 4.25 billion is the estimated foreign exchange component.

While the outlay on agriculture and irrigation, like that on every other category, is larger under the Second Plan, its share in the total has been reduced from 26.5 per cent in the First Plan to 15.0 per cent in the Second Plan. In the Plan frame, it may be recalled, emphasis was placed almost exclusively on rapid industrialization, particularly on the development of basic industries. The final version of the Plan stresses also the rebuilding of rural India, which is not, however, correspondingly reflected in the allocations. Agricultural targets have been revised since the Plan was formulated; aggregate agricultural output is to show a 27 per cent rise, and foodgrain production a rise of 24 per cent, against 18 per cent and 16 per cent, respectively, envisaged in the Plan estimates. However, these increases are to be effected within the original financial allocation, through greater use of manures and fertilizers, widespread distribution of quality seed, extension of the Japanese method of paddy cultivation—on the whole, through improved techniques and better irrigation facilities. For instance, the Japanese method of rice cultivation is to be extended considerably, to cover over 8 million acres by 1960. 10 If the rising demand resulting from development expenditures, especially from rapid industrialization, is not to lead to inflationary conditions, such an increase in food supplies is essential. But it is doubtful that these enlarged output targets can be attained in the agricultural sector under the present scheme of allocation. To some extent, their attainment may be rendered possible by the fact that industrialization itself gradually changes the technical coefficients in agriculture.

P rogress under F irst P lan and output targets under S econd P lan

Of the actual development outlay of Rs 19.60 billion under the First Plan, 15 per cent was spent on agriculture and community development, 29 per cent on irrigation and power, 5 per cent on industry and mining, 27 per cent on transport and communications, 21 per cent on social services, and 3 per cent for other purposes. The resources pattern for this outlay was as follows: revenue surpluses and internal borrowing Rs 12.6 billion (taxation and surpluses of railways Rs 7.51 billion, market loans Rs 2.05 billion, small savings and other unfunded debt Rs 3.04 billion), external assistance Rs 1.9 billion, other capital receipts Rs 0.9 billion, and deficit finance Rs 4.2 billion. The over-all result of a rise of 18 per cent in national product, or a growth rate of 3.4 per cent per annum, has already been mentioned; the rise in 1953–54 was as high as 6 per cent, mainly because of good agricultural crops; in 1955–56 the increase was less than 2 per cent. The outlays on the development of economic overhead proposed in the First Plan were modest; in physical terms, actual achievement was 85–90 per cent of the targets postulated.

The general index of industrial production (1951 = 100) increased steadily to 104 in 1952, 106 in 1953, 113 in 1954, 122 in 1955, and 133 in 1956; the rise in industrial output during the five years of the Plan was about 30 per cent. On the basis of data available for January-November, the industrial index appears to have risen in 1957 by about 3 per cent. The general index of agricultural production rose by 20 per cent during the First Plan period; the index (1949–50 = 100) fell to 95.6 in 1950–51, rose moderately in the next two years, increased sharply to 114 in 1953–54, and in the next two years showed only a small increase to 116. However, total production of foodgrains, which had reached the record level of 68.7 million tons in 1953–54, declined in the following two years. But in 1956–57, a good crop year, foodgrain production rose again to 68.7 million tons, and the general index of agricultural production was 123. Because of drought conditions in certain parts of the country, a shortfall is expected in 1957–58, particularly in production of rice.

For the public and private sectors taken together, actual gains in output of some of the more important products under the First Plan (compared with original targets), and the targets of output to be attained by 1960–61, under the Second Plan, are shown in Table 9 . Since the Second Plan was formulated, the targets for certain agricultural commodities have been revised upward. For foodgrains, the new target is 80.5 million tons, an increase of 24 per cent over output in 1955–56; for cotton, 6.5 million bales; and for jute, 5.5 million bales. For all commodities, the revised target indicates an increase of 27 per cent, instead of the original 18 per cent, over 1955–56 output. In November 1957, however, the Foodgrains Enquiry Committee stated that the record at that time suggested that actual achievement might be only 67 per cent of the revised targets, and recommended continued imports of food-grains on the substantial scale of 2–3 million tons a year. In these circumstances, the expansion of food production obviously has a high priority and the Indian authorities are giving considerable attention to this problem.

M ain T argets of P roduction and D evelopment in I ndia U nder the F ive Y ear P lans

1 Dots indicate that data are not available.

2 Relates to the year 1949–50.

3 Figures relate to calendar years.

4 Includes handloom cloth.

5 Rated capacity to be reached by 1956–57 when the two new refineries were expected to be in full operation.

6 Approximate; the figure for 1954–55 was 136,000.

I nvestment in the private sector

The industrial investment program in the private sector for the period of the Second Plan is estimated on the basis of the schemes formulated for the main categories of private industry. The estimates for construction, agriculture, and rural industries are only broad approximations. A sizable increase in stocks is to be expected, especially with the growth in industrial activity, and substantial provision is therefore made for investment in working capital. Residential construction is included in investment, but only in the urban sector, as rural housing falls largely in the nonmonetary sector. The probable level of net investment in the private sector during the period 1956–57 to 1960–61 is placed at Rs 24 billion; this includes organized industry and mining, Rs 5.75 billion; construction, Rs 10 billion; plantations, electricity, and transport, Rs 1.25 billion; agriculture and small-scale rural industries, Rs 3 billion; and stocks, Rs 4 billion.

It is difficult to enumerate all the sources of savings for the private sector, since only a part of the total savings utilized in this sector passes through institutional agencies, and savings which may be termed “direct,” i.e., savings of the persons undertaking the investment or the savings of their friends and relatives, play a prominent part. However, if certain assumptions are made, an estimate is possible of the resources for the organized sector of private industry. In view of the fairly high rate of investment already achieved in organized industries and the increasing strength of the capital market, it should not be difficult to raise the resources required for fixed investment. The Government can assist in the fulfillment of the programs in this sector partly by eliminating unplanned investment through control of capital issues and licensing of industries, and partly through tax concessions and adjustments and financial assistance through the corporations set up for the purpose.

A total outlay of Rs 7.20 billion is envisaged for industrial development in the private sector (including the National Industrial Development Corporation program and excluding mining, electricity generation and distribution, plantations, and small-scale industries); this total includes Rs 5.70 billion for new investments and Rs 1.50 billion for replacements and modernization. After the exclusion of Rs 550 million to be provided by the National Industrial Development Corporation, financial requirements amount to Rs 6.65 billion; estimates of resources available for the private sector amount to Rs 6.20 billion ( Table 10 ).

E stimates of R esources A vailable for I ndustrial D evelopment in the P rivate Sector U nder I ndia’s F ive Y ear P lans

(In millions of rupees)

R evised costs of the P lan

While no precise revision of the financial costs of the Plan has been made, and no official estimate of the total outlay involved is available, it became evident during 1957 that the total cost of the Plan in the public sector was likely to exceed Rs 55 billion, if the physical targets postulated under the Plan were to be realized. The main items for which costs will particularly exceed the original estimates are railways, the three steel plants, other industries, power schemes, and other projects in respect of which the import content is large. If current trends in production are maintained and transport is not to become a serious bottleneck, additional freight-carrying capacity of 60 million tons is the minimum that has to be provided for; the actual allocation for railway development would secure a smaller addition than this. The cost of adding further to freight capacity is placed at over Rs 1 billion, while the general increase in costs amounts to another Rs 1 billion. Even at the time the Plan was finalized, the inadequacy of allocations for transport in relation to production targets was underlined. The revised estimate of the total cost of the steel plants (including the cost of townships and training programs) is reported to be Rs 4.95 billion, against an original provision of Rs 3.50 billion, which itself was an underestimate to the extent of Rs 500 million. Of the rise in the total costs of the Plan, a large part reflects the increases in foreign exchange requirements. The main factors responsible for the substantial rise are that the original cost figures, particularly in respect of major schemes like steel plants and power and irrigation projects, have proved to be underestimates; and prices in general, and particularly of imports of capital goods and intermediate goods, have risen. Some physical additions have been made to the Plan by enlarging schemes already accepted, with a view to making them more rounded, or by including new schemes like heavy machine-building; such increases have, however, been few and are only a contributing factor to the increases in costs.

E stimates for financing the P lan

According to the original estimates for financing the Plan, shown in Table 11 , the budgetary resources to be raised through taxation, borrowing, and other receipts amounted to Rs 28.0 billion; this includes the gap of Rs 4 billion which, it was decided, should be met mostly by additional taxation. The estimate of the surplus of ordinary revenues over expenditures outside the Plan is based on the assumption that total revenue maintains a uniform proportion to a rising national income; however, this cannot be expected to happen automatically. As the Taxation Enquiry Commission observed, it has been the experience for years that additional tax effort on the part of the Central and State Governments has been necessary merely to maintain the ratio of public revenue to national income. The ratio of tax revenue to national income in India has remained virtually stationary at about 7.5 per cent until recently. This is because collections from certain taxes (e.g., taxes on land and specific indirect taxes) have remained rather inelastic; there is a lag between the rise in incomes (in real or money terms) and the consequent rise in tax yields, even of direct taxes related to income; and there is leakage of part of the revenue through evasion. The far-reaching tax changes in 1956 and 1957 have resulted in an increase in the ratio of tax revenue to national income from 7.4 per cent in 1955–56 to an estimated 8.3 per cent in 1957–58. The ratio of total public revenue to national income rose from 9.7 per cent to an estimated 10.7 per cent. Moreover, in estimating the current surplus, provision was made for only minimum increases in expenditures under nondevelopment headings, such as defense and administration; revised estimates for 1957–58 and budget estimates for 1958–59 show sizable increases in non-Plan expenditures. Administrative costs, including the costs of reorganizing the States broadly on a linguistic basis, as well as expenditure on relief and rehabilitation of displaced persons coming into West Bengal from East Pakistan, have been higher than expected. Defense costs, as noted earlier, have risen; the rise of Rs 600 million in the defense budget in 1957–58 and of another Rs 120 million in 1958–59 would correspond to a total addition of Rs 2.8 billion to non-Plan expenditure over the Plan period. Thus, at 1955–56 rates of taxation, the current revenue surplus available for Plan expenditures would be considerably less than was estimated.

O riginal E stimates for F inancing I ndia’s S econd F ive Y ear P lan

fresh taxation

In estimating the yield from additional taxation at Rs 4.5 billion ( Table 11 ), the recommendations of the Taxation Enquiry Commission were taken into account, and it was assumed that steps would be taken to implement them as expeditiously as possible; the Central and State Governments were expected to raise this sum between them in equal amounts. Keeping in view the objective that “the maximum practicable rate of investment in the public sector should be attained, consistent with maintaining and strengthening the incentives to the private sector to step up its own rate of investment,” the Taxation Enquiry Commission had made detailed recommendations in the central, state, and local spheres of taxation which involved a deepening and widening of the tax system, as well as certain incentive tax reliefs. Broadly, their conclusion was that a substantial increase in total tax revenue was both necessary and feasible, mainly through higher excise duties, a net increase in income taxation, surcharges on land revenue, betterment levies, and wider coverage of sales taxation. With a view to covering the financial requirements of the Second Plan, which are much larger than was assumed by the Taxation Enquiry Commission, and to avoiding the dangers of excessive deficit financing, the target for additional taxation in the Plan estimates was in fact raised to Rs 8.5 billion, so as to cover the gap of Rs 4 billion also. Taxation has to be supplemented by other devices, such as appropriate pricing policies for certain public enterprises or fiscal monopolies and economies in both Plan and non-Plan expenditures. But it is unlikely that any substantial resources can be obtained from these other sources.

The low ratio of taxation to national product in India is an indicator of both the difficulties and the possibilities of tax increases. Despite the low per capita income in the agricultural sector, a significant contribution to any development program must come from agriculture, which accounts for over 45 per cent of the national product, and indeed generally from the lower income groups. Such imposts become more acceptable when the higher income groups and propertied classes are required at the same time to assume a large share of the increased tax burden. Such additional taxation reduces the scale of deficit financing. It is necessary, therefore, to step up taxation to the limits of tolerance. In adopting such a positive role for taxation, the basis of policy in a country such as India, with a federal government structure, has to be laid by the federal government. It therefore devolves mainly on the Central Government to give effect to taxation policy, although some adaptation by the state and local governments is also necessary. Of the tax measures taken in 1956, the reintroduction of the capital gains tax and an increase in the excise duty on cloth were the most important. In 1957, far-reaching tax changes were made, estimated to yield over Rs 1 billion a year and Rs 880 million in fiscal 1957–58. For the whole Plan period, the aggregate revenue from the tax changes made in 1956 and 1957 may be placed at about Rs 8.0–8.5 billion. Together with the normal increase in revenue as incomes rise, the tax effort expected of the States, and further taxation that may be levied by the Centre, total revenue surpluses available for Plan purposes may be placed at about Rs 13 billion.

The substantial tax changes introduced in 1957 cover both direct and indirect taxes under almost every major heading, and include two new levies—on wealth and on expenditure. In announcing these changes, the Finance Minister said that he was in effect outlining the tax structure for the period of the Second Plan, and that for the rest of the period there would be only relatively small adjustments. Certain structural changes have been made in the direct tax sector which are expected, in the course of time, to make possible a progressive increase in the ratio of public revenue to national income. The Finance Minister stated that the main objectives of tax policy are a sizable addition to public revenue, provision of incentives for higher earnings and savings, restraint of consumption over a fairly wide field so as to keep domestic inflationary pressures in check and release larger resources for investment, and initiation of such changes in the tax structure as would render tax receipts increasingly responsive to rising incomes. The tax changes proposed for 1958–59 are modest and include the levy of a gift tax, reduction in the excise duty on cotton textiles, abolition of the company compulsory deposits scheme, and exemption of foreign nationals residing in India from payment of the wealth tax on their foreign assets. Thus, the major reorientation of the tax structure that was effected in 1956 and 1957 remains. When taxation is thus decisively stepped up, and the tax net is widened to cover sectors which hitherto have not been reached or have been only lightly affected, and when new levies related to the valuation of assets on a current basis and scrutiny of savings in all forms are introduced, administration becomes the crux of the effectiveness of the tax system, especially as the personnel resources of the machinery for assessing and collecting taxes are already under strain. While there are administrative and other problems both in operating the new taxes and in effectively enforcing the old taxes whose incidence has been substantially increased, this major tax effort reflects the determination of the Indian authorities to subdue the emerging inflationary pressures in the economy and to raise resources for the Plan.

L oans and S mall S avings

The estimate of Rs 7 billion for loans from the public implies that average annual receipts from this source will be about 40 per cent higher than they have been recently. Especially in the context of the brisk demand for funds in the private sector, the task of mobilizing a net amount of Rs 7 billion (i.e., allowing for loans of Rs 4.30 billion due for repayment) cannot be regarded as easy. A substantial increase in small savings will also be required if the target of Rs 1 billion a year is to be realized. On the whole, on all the available evidence, it seems prudent not to revise upward the original Plan estimates of borrowing; in fact, there may be a shortfall.

A steady improvement in domestic savings in recent years is shown by the experience of new private issues in the capital market and of government loans. The total of new private issues, in which are included all issues of not less than Rs 10 million, amounted to Rs 200 million in the period July 1955-June 1956, compared with Rs 170 million in July 1954-June 1955 and much less in earlier years; the total in 1956–57 seems to have been still larger, about Rs 400 million. For government borrowings, on the whole, there has been an even greater improvement in net receipts. Planned development has itself established a direct and meaningful link between government borrowings and public investments; fuller coordination has been developed between central and state borrowing programs, in timing as well as in the terms offered; with the subsidence of inflationary conditions and restoration of stability in the money and capital markets, confidence has increasingly revived. For the five years 1946–47 to 1950–51, net repayment of government loans amounted to Rs 210 million. During 1951–52 to 1955–56, net receipts amounted to Rs 1.77 billion. These figures do not accurately measure the improvement, for there was a net repayment of Rs 250 million in 1951–52 and a net receipt of only Rs 130 million in 1952–53. In 1953–54 there was a small net repayment, while in 1954–55 net receipts were Rs 1.11 billion and in 1955–56, Rs 820 million. With adjustments for transactions in the investment accounts of the Reserve Bank of India and of Central and State Governments, the net absorption of securities by the market during this period was even larger, Rs 2.5 billion. The prospect for market loans in the Second Plan period was viewed in the light of this improvement.

Net borrowing by the Central and State Governments of Rs 1.41 billion was apparently equal in 1956–57 to the average expected for the Plan period. However, when allowance is made for the amount taken up by the Reserve Bank of India, there was little rise in 1956–57 over the last two years of the First Plan, despite the entry of as many as 15 State Governments into the market and a reorientation of the Central Government’s borrowing techniques, whereby three loans of differing maturities were bunched together to meet different investor preferences. The budget estimate of net market borrowings by the Central Government in 1957–58 was Rs 680 million. Two loans for a total of Rs 1 billion were first issued: 3¾ per cent National Plan Bonds, Fourth Series, with an issue price of Rs 99.50, and repayable at par on August 1, 1967; and a 4 per cent Loan 1972, issued at Rs 100, and repayable at par on August 1, 1972. Subscriptions were received either in cash or by converting the 3 per cent Victory Loan repayable in 1957, or the 3 per cent Loan repayable in 1958. Total subscriptions amounted to Rs 1.06 billion, including conversions of Rs 0.45 billion. Another loan of Rs 300 million, in 3¼ per cent bonds, 1962, was issued in December 1957. State Governments were dissuaded from entering the market in 1957–58; only two State Governments issued loans, for a total of Rs 90 million. For 1957–58, actual cash subscriptions to central and state loans amounted to Rs 770 million, which was much less than was estimated in the Plan. This was in part the result of stringency in the capital market and the competitive demands from the private sector for investible funds.

The target for small savings under the Second Plan is Rs 5 billion for the five-year period. Net small savings collections in 1956–57, at Rs 594 million, were somewhat less than in 1955–56. The budget estimate for small savings for 1957–58 was Rs 800 million; however, actual collections for the eleven months April 1957-February 1958, at Rs 446 million, were less than the amount collected in the corresponding period of 1956–57. With a view to augmenting receipts, interest rates on the various categories of small savings have been raised by ½—¾ per cent. The State Governments have been allotted a larger share of the receipts from small savings (two thirds, against one half previously), in order to induce them to organize the collection of these savings more efficiently.

O ther B udgetary S ources

The railways were expected to contribute Rs 1.50 billion to the financing of the Rs 9 billion provided for them under the Plan outlay (see Table 6 ); this was to be done partly through selective rate adjustments and partly from the larger earnings expected from the growth in traffic. In addition, the railways have to provide in the Plan period Rs 2.25 billion for depreciation. In the railway budget for 1957–58, freight rates were revised upward, to yield Rs 95 million in 1957–58 and more in later years. The contribution of the railways is now placed at Rs 900 million more than in the original estimates. Together with other nontax items, provident funds, etc., the total from sources other than taxation may be estimated at about Rs 5 billion.

E xternal finance

The foreign exchange requirements of the Second Plan are considerable. The emphasis placed on heavy industry and transport means large imports of capital goods, especially in the initial Plan years, i.e., until steel, machinery, and structural fabrication industries are developed in India. The import component of investments in irrigation, electric power generation, industry, railways, and communications would be of the order of 40 per cent of the total. Increased agricultural production helps to save foreign exchange by limiting, and in due course altogether eliminating, food imports. The growth of industry helps to save foreign exchange by substituting domestic production for some imports, and it also increases foreign exchange earnings through a larger volume of more diversified exports. In particular fields of industry, production targets are formulated specifically with a view to stepping up exports. The main export targets to be reached by 1960–61 are as follows: cotton textiles (cloth), 1,000–1,100 million yards; jute manufactures, 900,000 tons; ferromanganese, 100,000 tons; bicycles, 150,000; vegetable oils, 240,000 tons; salt, 300,000 tons; and iron ore, 2 million tons. A few of these are new export lines; others represent sizable increases over the export levels reached in 1955.

It is extremely difficult to forecast foreign exchange requirements and earnings over a period of five years. Broadly speaking, on certain assumptions (viz., in particular, that average terms of trade in the Plan period will remain as they were in 1955–56 and that inflationary pressures will be held in check), it was estimated that during the Second Plan period there would be an aggregate balance of payments deficit on current account of about Rs 11 billion. It was proposed to cover a part of the deficit by drawing Rs 2 billion from India’s sterling balances. The remaining Rs 9 billion was to be obtained by borrowing from the International Bank for Reconstruction and Development, loans and grants from other international institutions, loans and grants from foreign governments, flotation of loans in foreign markets, or through private foreign investment. An inflow of private foreign capital of the order of Rs 1 billion was assumed for the investment programs in the private sector. For the public sector, therefore, receipts of Rs 8 billion from external resources were assumed.

The balance of payments on current account for the five-year period, as estimated in the Plan document, is shown in Table 12 . Annual average imports of machinery, vehicles, and steel and other metals during 1956–61 are estimated at Rs 4.4 billion, against the actual value of Rs 2.25 billion in 1955–56; in effect, these imports account for all of the estimated deficit in the balance of payments on current account during the Second Plan period.

E stimates of I ndia’s B alance of P ayments on C urrent A ccount D uring P eriod of S econd F ive Y ear P lan

1 Excludes official donations.

Actually, the current account deficit in 1956–57 amounted to Rs 2.93 billion ($625 million), much larger than had been estimated; and available data indicate that the 1957–58 deficit has been considerably above that in 1956–57. In the First Plan period, when a reduction in exchange reserves of Rs 2.9 billion was expected, the actual decline was Rs 1.2 billion, which was only slightly more than the recorded capital outflow of Rs 1.1 billion. The drawings on sterling balances in 1956–57, the first year in the Second Plan period, were greater than the total drawings of over Rs 2 billion provided for in the Plan for the whole period. The drain on reserves continued in 1957–58. Emergency measures (including drawings of $200 million from the International Monetary Fund in February, March, and June 1957, severe import restrictions, and strict limitations on exchange made available for travel) were taken to conserve foreign exchange resources and to rectify the imbalance to an extent that would make it manageable.

Meanwhile, an effort was also made to promote exports in new lines, such as sugar, by restricting domestic demand, and to increase exports of cotton textiles, iron ore, and other items; a Directorate of Export Promotion was set up, and an export risks insurance corporation was established. On the other side, attention was focused on ways and means to obtain foreign assistance to the maximum possible extent in loans and grants and in suppliers’ credits.

The enlarged deficit was due mainly to greatly increased imports; imports in 1956–57 are estimated at Rs 10.77 billion and exports at Rs 6.37 billion, against Rs 7.51 billion and Rs 6.41 billion, respectively, in 1955–56 ( Table 13 ). Although import prices were approximately 4.5 per cent higher in 1956–57 than in 1955–56, the substantial increase in the total value of imports was due mainly to a rise of 18 per cent in volume. According to a report by the Reserve Bank of India, the main increases were in machinery, vehicles, iron and steel, and other metals (Rs 1,430 million); foodgrains, including surplus U.S. foodgrains purchased against rupees (Rs 730 million); 11 oils (Rs 130 million); cutlery, hardware, and electrical goods (Rs 120 million); and chemicals, drugs, and medicines (Rs 90 million). Imports of certain other items, especially government imports, certain raw materials, and some consumer goods, increased by Rs 920 million. On the other hand, imports of raw cotton and raw jute were less in 1956–57 than in 1955–56. In the first half of 1957–58, imports were larger than in the first half of 1956–57; the increase was only on government account.

I ndia’s B alance of P ayments

1 Excludes exports of lend-lease silver to the United States, valued at Rs 744 million.

Exports fell slightly in 1956–57 mainly because of a reduction in volume, since prices were higher than in 1955–56. The fall in export earnings was distributed over a number of commodities. Higher domestic consumption reduced the volume of exports of raw cotton and vegetable oils. There were moderate decreases in exports of cotton textiles, hides and skins, and ores, the former owing mainly to the pressure of home demand and increased Japanese competition in foreign markets. Tea exports, however, increased substantially, and there was a moderate improvement in exports of jute textiles. Tea prices subsequently fell somewhat, while ore exports were affected by transport difficulties. On the other hand, sugar exports have been sizable, and exports of light engineering goods are increasing. The fall in exports in the first half of 1957–58, compared with the first half of 1956–57, was mainly in respect of tea, jute manufactures, and vegetable oils.

The buoyancy of private investment seems to have been as important a factor in stimulating import demand as the rising tempo of development outlays in the public sector. Another factor was the indirect impact of inflationary pressures at home, which increased the demand for imports in general. There were other, somewhat special and temporary, contributory factors, like the impact of the Suez crisis, accelerated use of a larger proportion of import licenses than had been customary, and some stockpiling. Yet another contributory factor seems to have been the general feeling of confidence on the eve of the Second Plan, generated by the “comfortable” balance of payments position and the rise in reserves since 1952–53, which led to relaxation of import restrictions. On the other hand, there may have been some leakage of exports; there have been reports of increased gold smuggling. The sharp rise in gold prices since 1955, while it reflects internal conditions, encourages such smuggling.

The Indian authorities were concerned with the magnitude of the external payments deficit and the consequent sharp decline in foreign exchange reserves, and they took a number of steps to cope with the situation. A ban was imposed on new foreign exchange commitments in either the private or the public sector in respect of uncommitted projects; import quotas were reduced; the basic allowance of foreign exchange for travel abroad for pleasure was withdrawn; and restrictions were placed on foreign travel for business, education, and health. Import restrictions were tightened progressively, commencing in January 1957, and a virtual ban was placed on imports of nonessentials. The total value of import licenses issued (excluding jute which is licensed on a quantity basis) was only Rs 358 million in the second half of 1957 and Rs 424 million in the first half, compared with Rs 631 million in the second half of 1956. However, because of heavy import commitments that had already been entered into and the large value of licenses outstanding, the full impact of these measures could not be felt during the first nine or ten months of 1957. Expectations of exchange rate adjustments for some European currencies may also have postponed the full impact of these measures until later in the year. Toward the end of 1957, the impact of the stringent import restrictions began to be felt; during November 1957-March 1958, foreign exchange reserves fell at a monthly rate of about Rs 120 million, against a monthly reduction of Rs 270 million during January-October 1957.

The sterling balances of the Reserve Bank of India, which form the principal part of India’s foreign exchange holdings, fell from Rs 7.46 billion ($1.57 billion) at the end of March 1956 to Rs 2.98 billion ($630 million) at the end of December 1957; this decrease was twice the amount of the total reduction that had been estimated for the entire Second Plan period. Further withdrawal from sterling balances is inescapable, but the extent of these drawings will depend partly on the scale of foreign assistance forthcoming.

The fall in India’s foreign exchange reserves ( Table 14 ) suggested a reconsideration of the question of monetary cover in India. Legal minimum reserve requirements were altered in October 1956—when the Reserve Bank of India Act was amended—from a proportional to a fixed basis; a minimum reserve of Rs 4 billion in foreign securities and of Rs 1.15 billion in gold was required to be maintained. However, the minimum of foreign securities could be lowered temporarily to Rs 3 billion with government approval and without legislative amendment; such approval was given in early August 1957. With the continued decline in sterling balances, the foreign securities held in the Issue Department of the Reserve Bank fell to a level which by October 1957 was barely above the Rs 3 billion minimum. On October 31, 1957, the minimum currency cover requirement was reduced to Rs 2 billion ($420 million), of which not less than Rs 1.15 billion should be in gold coin and bullion. Thus, a working balance of not less than Rs 850 million ($178 million) is now required in respect of foreign securities, but this requirement can be suspended for temporary periods with the prior approval of the Central Government.

I ndia’s F oreign E xchange R eserves, at E nd of P eriod I ndicated

1 Includes 7.1 million ounces of gold, valued at Rs 62.50 per tola ($35 per ounce), held by the Reserve Bank of India, foreign assets of the Reserve Bank and authorized dealers, and government balances held abroad.

2 Includes liabilities of the Reserve Bank and authorized dealers to nonresident official institutions and banks. Data include net borrowing of $188 million (Rs 0.89 billion) from the International Monetary Fund between April 1956 and June 1957.

A consideration even more important than the size of the legally required reserves is the adequacy of foreign exchange reserves for trade purposes, with account being taken not only of seasonal requirements but also of the necessity of providing safeguards against crisis pressures. At the present level, gross short-term foreign assets are equal to about 40 per cent of annual imports, a level which appears to be adequate. However, in view of the need for emergency food imports which may arise, more than a working balance needs to be maintained. When account is taken of the foreign exchange commitments under the Second Five Year Plan and the recent trends in the reserve position, it is likely that a substantial part of the existing sterling balances will be utilized in the next 12 to 18 months; however, in view of the considerations mentioned above, an attempt may be made later to rebuild reserves to some extent.

The external assistance received during the First Plan period amounted in all to Rs 2.96 billion ($622 million), of which Rs 1.08 billion remained unutilized and was thus available for the Second Plan ( Table 15 ). If all of this sum had been used for the First Plan, there would have been little reduction in sterling balances during the First Plan years. Some carry-over at the end of the Second Plan period has also to be assumed.

F oreign A id R eceived by I ndia D uring P eriod of F irst F ive Y ear P lan (P ublic S ector )

The foreign exchange requirements of the Second Plan as revised are placed at about Rs 16–17 billion, against the original estimate of Rs 11 billion. Substantial resources, of the order of Rs 6.1 billion ($1.28 billion), have been authorized by other countries and international institutions since the commencement of the Second Plan, i.e., between April 1956 and March 1958. They comprise credits from the United Kingdom and the U.S.S.R. for steel projects, U.S. Public Law 480 assistance, loans from the IBRD, a second loan from the U.S.S.R. for heavy machinery plant and other schemes, $225 million of aid from the Export-Import Bank of Washington and the U.S. Development Loan Fund, other U.S. assistance, Colombo Plan aid, and credits from Japan, Canada, and other countries. Much the larger part of this assistance directly helps to cover the foreign exchange requirements of the Second Plan projects. The saving from import restrictions, curbs on travel, and other measures adopted since the end of 1956 is estimated to be substantial. If the “core” of the Plan is to be adhered to, most of the cuts affecting capital imports will, indeed, have to be restored; neither can other imports be rigidly restricted to the 1955–56 level. However, credit may be taken for a sizable net saving from import restrictions for the whole Plan period. Some provision may also be made for an inflow of foreign capital into the private sector; this is apart from assistance from the International Bank for Reconstruction and Development and the International Finance Corporation to private enterprises, which is included along with IBRD assistance to projects in the public sector. Thus, utilization of sterling balances, external assistance authorized so far, net saving from import cuts, and inflow of private capital, together provide a substantial part of the exchange requirements. Thus, on the whole, there still appears to be a foreign exchange gap of about Rs 5.5 billion (about $1.15 billion) that remains to be covered. The gap relates almost wholly to the implementation of the “core” of the Plan.

The drawing of $200 million from the IMF is regarded as short-term accommodation (three to five years) and is not included in the estimate of resources. In the First Plan period, apart from the wheat loan, aid from the United States under the Indo-U.S. program amounted to Rs 1.4 billion; assistance from other countries (mostly under the Colombo Plan) was Rs 500 million. On present indications, a substantial increase in U.S. assistance may be expected during the Second Plan period. Some relief has been provided by short-term and medium-term credits made available by other countries. As of February 1958, deferred payment commitments amounted to about Rs 1.35 billion ($284 million) for the public sector and private sector together, including the credit of $158 million from the Federal Republic of Germany for the Rourkela Steel Plant. Repayments on these credits commence from April 1961. The IBRD may be expected to continue to provide important assistance. By the end of 1957 it had already provided assistance amounting to $356 million for both public and private enterprises in India. The railways are the main beneficiary in the public sector; and the iron and steel industry has obtained the main share in the private sector. Other loans have been made for developing electric power and agriculture, for purchasing passenger aircrafts and for assisting an investment corporation that has been set up to help private enterprise. Another loan program for the development of parts and power projects is under discussion.

Thus viewed, the foreign exchange prospect for the five-year period does not appear bleak, but it is sufficiently difficult to require from the Indian authorities the utmost caution and effort in husbanding foreign exchange resources and using them to maximum advantage. More than internal finance, the availability of foreign exchange is the determinant of the scale of the Plan. The major aspect of the present situation is that considerable import commitments have been made, estimated at Rs 8.64 billion at the end of March 1958, so that a substantial part of the available foreign exchange resources is already earmarked, and 1958–59 also is likely to show a large payments deficit. The (short-term) foreign assistance received so far may pose a difficult problem later; it is estimated at present that repayments will rise from Rs 350 million in 1959–60 to Rs 1.23 billion in 1961–62 and will taper off subsequently. As for the longer term prospect, once production in the new steel plants gets under way, other import-replacing industries are established, and agricultural production again increases, i.e., from about the fourth year of the Plan, some improvement in the situation may be expected. In fact, from 1960, India expects to export some pig iron and steel.

The large wheat loan of 1951 from the United States contributed to the maintenance of stability during the First Plan years. By an agreement signed in August 1956 for the purchase of U.S. agricultural commodities worth $360 million, the United States also undertook to finance, during the period ending June 30, 1959, the sale for Indian rupees of certain agricultural commodities to the Government of India. Wheat, cotton, rice, dairy products, and tobacco are the commodities to be supplied, wheat sales amounting to $200 million and cotton sales to $70 million. In February 1958, it was agreed to substitute wheat for part of the cotton and other supplies. Negotiations have also been initiated to provide additional wheat supplies in exchange for manganese and other minerals. Of the rupee proceeds, India would receive $234.1 million in long-term loans and $54 million by way of grants for economic development. Under the terms of the agreement, part of the loan is to be reloaned to private enterprise as medium-term credit through the Refinance Corporation being set up. To the extent that these supplies are intended to cover the foodgrain imports provided for in the Plan estimates, they are a direct part of the foreign exchange resources for the Plan. The foodgrain import total for the Plan period has been raised from 6 million tons to about 10 million tons; actually, imports of wheat and rice in the two years 1956–57 and 1957–58 are estimated at 5.7 million tons. Experience in 1956 and 1957 underlines what was only to be expected: that any considerable stepping up of development expenditure means additions to large numbers of small incomes and enhances the demand for and raises the prices of articles of mass consumption, like food and cloth; the pressure will be greater still if deficit financing takes place on a substantial scale. It is for this reason that agricultural targets were revised upward. Under these circumstances, the U.S. supplies of foodgrains have an important role in filling the gap in domestic production and maintaining stable conditions in the economy.

D eficit finance

The Plan document, as well as the budget statements of the Finance Minister, makes it clear that the Indian authorities are aware of the dangers of excessive deficits. The outside limit to deficit financing is placed under the Plan at Rs 12 billion; in assessing its likely impact on the economy, the drawing down of sterling balances must be set against the proposed deficit. The remaining deficit represents the net addition to currency arising from the Government’s budgetary operations, which would also result in some secondary expansion of bank credit, though this would be limited by the fact that people in India have a preference for holding currency rather than bank money. In a developing economy, the basic trend of governmental operations is expansionist. With the many contingent demands on resources and the likelihood of shortages arising in such fields as agricultural supplies and foreign exchange, and with deficit financing of this order, the problem of economic policy is that of containing the emerging inflationary pressures by an increase in domestic production, supplemented by imports, and by appropriate fiscal and monetary policies, physical controls, and allocations. This, broadly, is the view of the authorities in India.

In the circumstances prevailing in India, as development proceeds apace and the bounds of the money economy are gradually extended, it would not be a stable, but a somewhat rising, ratio of money to income that would have to be maintained as incomes rose, provided that money was still held mainly for transaction purposes. Any substantial degree of inflation is, however, the very negation of planning in finance; its most damaging effect is on the poorest and most vulnerable sections of the community. It is likely to distort seriously the allocation of resources and, by misdirecting them into speculative and unproductive channels, to frustrate the program of development itself. There is no way of precisely estimating beforehand the amount of deficit financing which might be deemed useful and which would not result in serious inflation; this is, within limits, a matter of broad judgment. 12 Basically, as long as real resources are available and additional government expenditure is conducive to an increase in productive activity and raises real incomes, deficit financing is useful. But there is a limit beyond which deficit financing begins to impair the economy. The extent to which this limit can be pushed depends on the degree of technical, managerial, and administrative coordination and efficiency that is attained and the measure of popular cooperation and willingness to submit to austerity and discipline that is forthcoming, with a view to maximizing the resources available for investment. The limit is real and has to be kept in view, especially when the process of planning is essentially democratic.

The original Second Plan estimates placed a limit to deficit financing 13 of Rs 12 billion, in a Plan outlay (public sector) of Rs 48 billion, compared with an over-all deficit of Rs 4 billion in an actual Plan outlay of Rs 19.60 billion during 1951–52 to 1955–56. At the time the estimates were prepared, a certain calculated risk could be taken in placing deficit financing fairly high—agricultural and industrial production was rising remarkably, prices actually had been falling until June 1955 and the price rise in the subsequent months was very moderate and could be construed largely as a corrective to the earlier decline, and there was a cushion in sterling balances. By the second half of 1957 circumstances had changed. Even at the time of the original estimates, it was recognized that the position would have, to be reviewed from time to time, especially since the deficits were likely to be larger in the initial years, as tax and other resources would take time to develop. The actual over-all deficit in 1956–57 was about Rs 2.0 billion, and the estimated deficit in 1957–58, net of a substantial increase in taxes, is Rs 3.8 billion. In view of recent developments in the economy, especially in prices, the Finance Minister has indicated that total deficit financing during 1956–57 to 1960–61 should be limited to about Rs 9–10 billion. An over-all deficit of Rs 2.0 billion is estimated for 1958–59.

R evision of the plan

When account was taken of the internal resources available through taxation, borrowing, and other sources, it became clear in the second half of 1957 that the deficit finance limit that had been envisaged would be exceeded by a substantial amount. The question therefore arose whether some modification of the original Plan might not be advisable. Any such modification was more likely to be carried out in an orderly way if it was well thought out beforehand. The probability of a shortfall in Plan outlays was also indicated by the progress of the Plan up to that time. The total outlay in 1956–57 was originally estimated at Rs 8.3 billion; revised estimates reduced this figure to Rs 7.6 billion; and the actual outlay was probably about Rs 6.7 billion. Similarly, actual outlay in 1957–58 is likely to be less than Rs 8.5 billion, compared with the original estimate of Rs 9.6 billion. Thus, the actual expenditure during the first two years of the period leaves a very large outlay to be made in the next three years if the total Plan outlay is to be realized. The administrative problems which would arise in organizing these increases might be very difficult. A total Plan outlay of Rs 10.0 billion is proposed for 1958–59.

It has been stated that Indian planning has a long-term perspective into which successive (Five Year) Plans are fitted. If planning is to be a continuous process, subject to change and adjustment as experience is gained, there should be a measure of flexibility within each Plan period itself. The Second Plan, therefore, specifically provides for annual review, and the Plan itself is regarded as a broad framework, in terms of which programs for each year are worked out in detail. Thus, in a period when both external and internal resources are under pressure and an inflationary price upsurge threatens the economy, some rephasing of the Plan, involving deferment of schemes not already undertaken or slowing down the tempo of projects already under construction, would be in order.

There are three problems in the current economic picture of India; the most serious from the viewpoint of the Plan is the substantial decline in external reserves and the gap that has to be bridged in the foreign exchange budget of the Plan. A worsening of the food position and the possibility of a rise in food prices, and a general sluggishness of voluntary savings, are the other two. In view of these trends a certain rephasing of the Plan was difficult to avoid. The Indian authorities have decided to maintain the ceiling of Rs 48 billion, originally envisaged in financial terms for the public sector; this means a curtailment of the Plan in real terms. At the same time, they are determined to carry through in the Plan period what is termed the hard core of the Plan—steel, coal, transport, and ancillary power projects. Outside this core, outlays would be made only where substantial amounts have already been spent. No new schemes are to be undertaken until provision for those already started is adequate; schemes which save or earn foreign exchange, which use the power, irrigation, and other resources already created and thus bring early returns, or which eliminate the transport bottleneck have been assigned priority.

In making the 1957–58 tax proposals, including the new taxes on expenditure and wealth, the Finance Minister recognized that they “add up to a varied and somewhat formidable bill of fare” but commended his proposals and policies with the statement that “in no circumstances should the Plan suffer from lack of our own effort.” There is no doubt of the Indian Government’s determination to maximize tax resources, to limit deficit financing, and to take whatever steps are necessary to maintain the Plan, for the impetus of the Plan dominates both Indian thinking and the Indian economy. There are, however, several important elements upon which, at all times, the progress of the Plan depends. More than anything else, the strain on India’s foreign exchange resources imposed a curtailment of the Plan. There are, moreover, always limits beyond which efforts to increase internal resources by means of taxation and similar measures cannot be pushed. If the attempt is made to ignore these limits, larger deficits, with all their disastrous consequences, become inevitable. The Reserve Bank of India stated in its 1957 Annual Report that “the Plan targets for both the public and private sectors need to be rigorously and urgently reviewed.” It was also realized that it would not suffice to be apprehensive and resort to ad hoc adjustments as the situation developed. The whole Plan might then get out of hand as a result of inflation, or it might disintegrate in the face of inadequate foreign exchange resources. At the time that this paper was being completed, 14 the precise directions in which the rephasing of the Plan was to be effected were under examination.

The adjustments likely to be required would not necessarily distort the Plan. They would imply that the less essential schemes, and some projects with a very high foreign exchange component, would be dropped or postponed. The increase in national income might still amount to 18–20 per cent in five years, i.e., an annual rate of growth of 3.5–4 per cent. This would mean an annual increase of 2.5 per cent in per capita income, an increase which is certainly not small. As for the size of the Plan outlay itself, it may be recalled that, as late as December 1954, the Taxation Enquiry Commission, presumably after informal consultations with members of the Planning Commission, had placed the probable level of the Second Plan at Rs 35 billion, broadly on the assumption that it should correspond at least to the average for the last two years of the First Plan. The Commission’s tax recommendations were to some extent governed by this assumption. When the Plan frame was prepared in March 1956, the outlay was placed higher, but at only Rs 43 billion; subsequently, this was moved up to Rs 48 billion as it was felt that an outlay of Rs 43 billion would be inadequate to attain the objectives set. This total itself was subsequently revised upward. If the general economic background—both internal and external—had been propitious, the larger Plan could have been carried through. The adjustments required when unforeseen changes in circumstances make this achievement extremely difficult do no more than restore the somewhat more modest shape which, at an earlier stage, appears to have been intended for the Plan.

As valuable experience is gained and beneficial results are attained, systematic appraisal of the impact of the development process on the living conditions of various groups in the economy, in both rural and urban areas, would be useful, since the Second Five Year Plan is part of a longer term development program. Important institutional changes are taking place, through land reform, community development, growth of the cooperative movement, and other policies. To what extent these, in turn, impinge on productivity in various sectors is important but is not yet calculable. In recent years, there has been steady growth in the economy which has raised real income all around and has also improved living standards. There has probably been a slight shift in incomes to the agricultural sector, and it is possible, though no definite conclusion can be drawn, that in the process of growth a somewhat better distribution of income has resulted. Some of these aspects are being studied in universities and other centers, sponsored by the Research Programs Committee of the Planning Commission. The studies cover three main fields: the employment and income impact of certain major multipurpose projects in particular regions, the changing pattern of urban and rural economic structure in selected centers, and problems of public administration, in particular of personnel and organization.

While difficulties have currently arisen in financing the Plan, and resources are being stretched, it is important to stress the progress attained so far: the technical and administrative tasks have been by and large faced competently, and major projects in steel, irrigation and electricity, fertilizers, locomotives, and various other fields are shaping up well. When a large development program is under way and every section in the community is called upon to make sacrifices, economy and efficiency in administration—not only in ordinary general government, but also in executing the development projects themselves—evoke greater response from the people in shouldering the burdens ; if the community is impressed that waste in public expenditures is avoided at each stage and that beneficial schemes of development are being completed with a high degree of efficiency, additional tax burdens become acceptable as the main source of finance for the development schemes. This is adequately recognized in India, and special efforts are being made to secure economy and efficiency. There has evolved over the years a well-tried administrative system; the personnel are, by and large, competent, and, especially at the higher levels, they are comparable to those in any of the advanced countries. No less important is the thinking and response of the people; awareness of economic change itself is affecting, albeit slowly, the traditional social attitudes which have inhibited progress, and the process of development itself is in turn facilitated. The inert weight of local prejudice and tradition is gradually giving way, partly under the impact of community development schemes. The response of the people is also fostered by the approach and techniques of planning adopted; while necessarily the Plan is largely centralized, there is scope for local initiative and participation, and there is no attempt at compulsory conditioning of the people. The Second Five Year Plan is crucial in the sense that, attending primarily as it does to essential requirements, such as the creation of the basic economic and social overheads and meeting such urgent needs of the people as food and clothing, it is modest in comparison with urgent requirements; but in relation to resources, it is somewhat ambitious. If the difficulties in mobilizing the necessary resources for the Plan are met, in part with external assistance, and the Plan succeeds substantially, it would set the tone for the longer term perspective and would render further growth less uncertain.

Mr. Sarma, Chief of the South Asia Division, was educated at the University of Madras and the University of Bombay. He has been a member of the staff of the Reserve Bank of India since 1948 and has served with the Finance Commission of India (1952) and with the Taxation Enquiry Commission of India (1953–54).

“Working at home or very near home in the villages would be less fatiguing than in factories because the workers would be able to take some rest as and when necessary. Household activities and family life would not be disrupted. . . . Through a policy of industrial dispersal it would be possible to combine the advantages of both economic and political democracy in an effective manner. This would be a solution entirely in keeping with Indian social and cultural traditions” (Prof. P. C. Mahalanobis, in Sankhya , December 1955). “. . . Technological advance may recently have given some advantage to ‘deglomerative’ tendencies in industry. The Indian movement of industry ‘back to the village’ is to be supplied ultimately with modern machinery and electric power. It is contrary to the experience of other countries, which have progressed through the division of labor and the saving of overhead capital made possible by urban concentration. Yet it is not inconceivable that India may develop an original pattern of industrialization along these lines” (Prof. Ragnar Nurkse, in Quarterly Journal of Economics , May 1957). For a diagnosis of the character of the unemployment problem in the Indian economy, see B. K. Madan, Reserve Bank of India, Bulletin , September and December 1955.

For a diagnosis of the character of the unemployment problem in the Indian economy, see B. K. Madan, Reserve Bank of India, Bulletin , September and December 1955.

Planning Commission, Second Five Year Plan (New Delhi, 1956).

Stephen Garvin, India: A Survey for British Industrial Firms (Federation of British Industries).

Scheduled bank credit on October 18, 1957 was actually Rs 8.5 billion. The purpose of the Reserve Bank’s request was to enable the banking system to enter the ensuing busy season, which normally runs from November to April, in an improved position. The busy season is related mainly to the movement of crops to the market, and is characterized by increases in note circulation and bank credit.

The Village and Small Scale Industries Committee examined the new employment potential of estimated outlays for the development of small-scale industries. In a Report submitted in October 1955, the Committee placed total outlay at Rs 2.6 billion, of which nearly two fifths would be on cotton spinning and weaving, which would provide new employment for 450,000 persons and fuller, more remunerative, and seasonal employment for nearly 4.5 million persons.

The dilemma is not peculiar to Indian development. Experience in Italy since 1950 shows that high rates of investment and of income growth do not necessarily provide an adequate solution for the unemployment problem. A reason for the “large” size of India’s investment program lies in the effort to combine the two, by deepening as well as by widening the capital structure.

Investment takes place in the rural sector in the form of direct employment of labor and materials in digging wells, constructing small farm houses and storage facilities, and making various improvements. This investment is difficult to estimate, particularly on a net basis. According to data collected by the National Sample Survey in 1950–51, the value of improvements and construction of houses, wells, roads, etc., was Rs 15 per rural household per annum; another Rs 13 was the value of investment in implements and land improvement. On the basis of these data, total investment for all rural households works out at Rs 1.63 billion. A part of this would be monetary investment, though not all could be deemed net investment. On the other hand, since the Survey was made, there have been increased contributions in kind for local works. On the whole, therefore, nonmonetary investment in the rural sector may be placed at over Rs 1 billion, or 1 per cent of national income.

In the Plan frame that preceded, and formed the basis for formulating, the Second Plan, total outlay was placed at Rs43 billion and was allocated as follows: industry and mining 26 per cent, transport and communications 22 per cent, agriculture and irrigation (including rural development) 22 per cent, construction and social services 17 per cent, electricity 11 per cent, and miscellaneous 2 per cent. The investment portion of the total was placed at Rs 34 billion. The objectives were a growth of 5 per cent per annum in national income and the creation of new employment for 11 million persons.

A steel plant being built at Rourkela with technical assistance from the Federal Republic of Germany is expected to go into full production by 1959 and to turn out 720,000 tons of finished flat products annually. A plant at Bhilai is being aided by the U.S.S.R.; the Russians have agreed to supply equipment on credit, repayable in 12 years from completion of the work, at 2½ per cent. The estimated output is 770,000 tons of heavy and medium products, and the completion date is the end of 1959. A plant at Durgapur has U.K. backing, financial and technical, and originated in a Colombo Plan survey; this is the largest contract ever placed with a British company. Output is estimated at 790,000 tons of medium and light steel sections. The expansion of the Tata Iron and Steel Company commenced in 1953. In 1955 an agreement was concluded with the Kaiser organization in the United States for technical assistance in a plan to raise annual output to a total of 2 million ingot tons by 1958; loans from the International Bank for Reconstruction and Development provide a main source of financing. The Indian Iron and Steel Company has placed orders in the Federal Republic of Germany and the United Kingdom, with a view to stepping up output to 800,000 tons of ingot steel and 400,000 tons of pig iron; it also is aided by the IBRD.

In the agricultural year 1956–57, about 2.4 million acres were brought under the Japanese method of cultivation.

Imports of foodgrains were valued at Rs 1,020 million ($214 million) in 1956–57, compared with Rs 290 million ($61 million) in 1955–56. Imports from the United States under Public Law 480 in 1956–57 amounted to about Rs 430 million ($90 million).

Any attempt to distinguish between development schemes which because they are quick-yielding might properly be financed by deficits, and other schemes would not be practicable. In any case, such demarcation has little validity for a large development program, as it would result in deficit financing on a large scale.

Over-all deficit, comprising borrowing from the central bank and drawing down of cash balances.

March 1958.

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Front Matter
National Currency Counterpart of Drawings on the Fund
Economic Development in India: The First and the Second Five Year Plans
Advance Deposits on Imports
A Note on Gold Production and Additions to International Gold Reserves
Exchange Depreciation, Financial Policy, and the Domestic Price Level
Natural resources
Industrialization and savings
Defense requirements
Foreign trade
Development and employment
Availability of trained personnel: the priority of education
Land reform
Community development
Price mechanism and controls
Role of Private Enterprise
Monetary and price trends
Developments in 1956 and 1957
Planning procedures
Objectives of planning
Investment and output: restraint on consumption
Size and Structure of the Plans
Progress under First Plan and output targets under Second Plan
Investment in the private sector
Revised costs of the Plan
Estimates for financing the Plan
Loans and Small Savings
Other Budgetary Sources
External finance
Deficit finance
Revision of the plan

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Five year plans in India

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Nitish Yadav

Kirit Parikh

sectoral allocation of resources. It provides a method of determining 1 some of the major implications of the goals of an economic plan. One of the recent exercises with the model has been its application to a set of targets for the Fourth Five Year Plan period which were prepared 2 by the Perspective Planning Division of the Planning Commission. In this brief note we shall present the results of the calculations with respect to the investment and savings :requirements of the PPD targets and compare these results with the estimates of the Perspective Planning Division itself and alternative estimates prepared by Joel Bergsman and

In book: Dweep-Deepika: the Souvenir of Majuli College Golden Jubilee, Edition: First, Publisher: Majuli College, Jorhat, Assam, Editors: Debajit Saikia, pp.123-129

Dilip Saikia

Imran Karim

rimjhim bajpai

AARF Publications Journals

Economic planning is considered as the most systematic technique for redressing all economic defects. Various countries of the world have already experienced the successful implementation of economic planning in the mean time. In India the first systematic attempt of economic planning was made in 1934 when M. Visvesyaryya published his book ‘Planned Economy for India’. Again in 1937, Indian National Congress set up the National Planning Committee with Pt. Jawaharlal Nehru as Chairman. First economic plan came in existence in 1951 and currently 12th plan is in progress. Indian Economy has undergone several transition stages. At this point of time it is the necessity of the hour to understand and realize the importance of economic planning in India.

In book: Indian Economy after Liberalisation: Performance and Challenges, Edition: First, Chapter: 2, Publisher: SSDN Publication, New Delhi, Editors: Dilip Saikia, pp.47-80

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English Essay on “Five Year Plans” Complete Essay, Paragraph, Speech for Class 10, 12 Students.

Five Year Plans

Ever since India got its independence, we are working on our economy L as per the Five Year Plans. This system of framing Five Year Plans was a good arrangement devised, by which the growth in different spheres could be suggested monitored while functioning and changed if the necessity arose. These mega plans have served us as building blocks of our national economy. A brief overview of these plans would give us a fairly clear picture of our developmental programs. These plans would also highlight for us the targets set through these fifty years of India’s independence.

The First Five Year Plan came into existence for the years 19511956. This had a public sector outlay of Rs. 2356 crore-while the actual expenditure was only Rs. 1960 crores. The Private Sector investment was 1800 crores. The chief features of this plan were the spread of community development projects and an effort to raise the living standards of the people.

The Second Five Year Plan was to cover the period from 19561961. This plan had its set objective in industrialization- the building up of rural India and the enhancing of employment opportunities. Now, in this Plan, the Public Sector outlay was Rs. 4800 crores, and the actual expenditure was only Rs. 4672 crores. The Private Sector investment was Rs. 3110 crores. It was in this period that the National income rose by 19.5 percent.

The Third Five Year Plan covered the period from 1961-1966. This Plan targeted an increase in the national income by about 5% per annum. Besides this, self-sufficiency in food and the development of sectors like steel, fuel, machinery, and power had become the prime objectives. The public sector outlay was Rs. 7500 crores, and expenditure was Rs. 8577 crores. Private sector investment was now Rs. 4190 crores. This plan failed owing to the price rise of about 20 percent, Chinese aggression, Indo-Pak conflict and to cap it all poor monsoon. All these factors contributed to the failure of this plan. The year 1964-65, was declared as a period of ‘Plan Holiday’.

The Fourth Five Year Plan was then made to cover the period of 1969-74. This Plan had two main objectives. It had ensured that growth would be followed with stability and self-reliance.

At this time still, another target to be followed was the attainment of social justice and upliftment of the weaker sections of the society. In this plan, the Public Sector outlay was Rs. 15902 crores, and that of the Private Sector was Rs. 8980 crores. It seems that the target levels were always now being set too high and so, here again, the target growth of 5.7% was never achieved.

The Fifth Five Year Plan dates from 1974-79. This plan once again aimed to remove poverty and achieving self-reliance. This plan started a minimum need program with measures for checking inflation. This time the outlay for the public sector was Rs. 3030 crores and the private sector outlay was Rs. 2704 crores. This plan was terminated in the fourth year only i.e. 1978 only. The national income increased by 5.2 percent.

The Sixth Five Year Plan covered the period from 1980-85. This Plan had several objectives like the growth rate of the economy, reduction in poverty and unemployment, improvement in the general quality of life. An eye was also to be kept on the growth of population, and improvement was to be made in the ecological and environmental assets of the nation. Providing the Public Sector outlay was made Rs. 97500 crores that for and the private sector was Rs. 75710 crores. In the process of this plan period, the national income grew at 5.4 percent per annum.

The Seventh Plan period covered the years 1985-’90. This also targeted growth in the production of food grains, the increase o opportunities for employment, and the raising of productivity in all sectors of the economy. Now the public sector outlay was Rs. 180, 00 crores. In this period many targets were even exceeded. The annual growth rate of GDP was 5.8 percent as against the plan target of 5 percent. The production of food grains increased however, public sector savings fell short of the target. The gap between income and expenditure of the Government increased.

The Eighth Five Year Plan was from the year 1992-’97. This was delayed by two years. This plan had also set for itself several objectives, like the generation of employment, control of population growth, the spread of elementary education, and the growth of the economy, in order to enable the Indian economy to compete with major free markets of the world.

The Ninth Five Year Plan was to cover the year from 1997 to 2002 and has an outlay of Rs. 8, 80,000 crores. This plan was rather ambitious.

With an overview of the Indian Five Year Plan, we can say that they have undoubtedly been tools in the boosting and the shaping of our economy. We have been able to meet many of the objectives laid down by the plans. These plans have succeeded in building the industrial and economic infrastructure of the country. The growth of the Private Sector can also be attributed to these plans.

These plans have helped us in building ourselves, but, they are not without their limitations and bottlenecks. The major setbacks are red-tapism, bureaucratic delays, unstable Governments, misallocation of resources to nonpriority areas. With these ongoing hazards, our economy faces a slowdown, and thus, the growth rate is now less than 5%. The core sectors are being ignored by planners in the interest of their short-term gains.

While making such plans we must remember to project a well-balanced plan so that the development of infrastructure and improvement of the standard of living of the messes go hand in hand. So, in brief, we can say that such plans form a very good and efficient system but such planning should be balanced and must be worked in a systematic way. Goals must be set for all sections of our society and we must ensure that the implementation of these set goals are followed to the last word and it must be seen that the goals must see that all sections of the society grow along simultaneously.

However, down the line, there has been something wrong, somewhere and that is why as we see the economic scenario in India there is a considerable gaping gap between the Haves and the Have Not. This in itself indicates that there has been something intrinsically wrong in our economic policies which have made the rich become richer and the poor become poorer. This is not the purpose of any development in the economy. The year’s financial programming must see that the benefits accrue to the poorest of the poor. We have had slogans of Garibi Hatao but, in practice, they were just eye-catching slogans, not apparently meant to be followed by successive Governments of the last fifty decades. If this slogan had been earnestly worked upon, be sure we would not find this poverty in India, and India trailing behind in the list of third-world powers.

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How One Family Lost $900,000 in a Timeshare Scam

A mexican drug cartel is targeting seniors and their timeshares..

This transcript was created using speech recognition software. While it has been reviewed by human transcribers, it may contain errors. Please review the episode audio before quoting from this transcript and email [email protected] with any questions.

Hello, James.

Hey. How’s it going?

Yeah. I’m not having much luck. So the problem is funding. And all of my money is in Mexico, all of it.

From “The New York Times,” I’m Katrin Bennhold. This is “The Daily.” A massive scam targeting elderly Americans who own timeshare properties has resulted in hundreds of millions of dollars sent to Mexico.

Once you move forward and make your payment, if anything were to happen, he will directly pay you the full amount of what you’re entitled to, including the gains. He will pay you the full amount.

You’ve got all my money. It’s been sent. I sold a freaking house.

Listen to this. I sold a house that I grew up in so that I could come up with funds to send to Mexico.

I don’t even have anything from the sale, nothing.

My colleague Maria Abi-Habib on one victim who lost everything and the people on the other side of the phone.

That’s it. That’s it. There’s nothing —

You know what? That’s what has been said every freaking time. Every time, just pay this. That releases the funds.

But that’s why we won’t allow it to happen again. This is the last time, James.

It’s Friday, April 12.

Maria, you’ve been looking into this scam that’s targeting Americans. Where did your investigation start?

So several weeks ago, I received a phone call from a lawyer based in St. Petersburg, Florida, who had been contacted by a family who was very concerned that the father, this man named James, was in the middle of being scammed. He’d sent hundreds of thousands dollars to Mexico. And he was considering sending another $157,000 when his daughter decided to call up this law firm and try to get her father to stop, stop sending money to Mexico.

So I called him a few weeks ago as I was trying to understand what was going on.

Hi, James. How are you?

Good. Thank you.

He’s asked that his last name be withheld for privacy concerns because he’s quite embarrassed about the story that I’m about to tell you.

You’re retired now, but what were you doing for work? And if your wife was working, what was her job?

I was with the Highway Patrol.

James is a retired state trooper from California. And his wife Nikki is a former school nurse.

She was born in ‘51. So 71-ish.

Two. She’s just reminded me, 72.

And they’re both in their early 70s. And they own this timeshare that is in Lake Tahoe, California. And they bought it in the 1990s for about $8,000.

And for someone who did not grow up vacationing in a timeshare, remind me how exactly timeshares work.

Timeshares are essentially vacation properties. And they tend to be beach resorts. And multiple people can buy into this property. The ownership is a shared ownership. And this gives you the right to use the timeshare for one to two weeks out of every year.

And so James and Nikki used their timeshare every other year with their daughters. But as they hit retirement age and their daughters are growing up and starting their own families, they’re just not really using it that much anymore. And timeshares require the owners to pay off yearly maintenance fees. And so they’re starting to think about maybe letting go of their timeshare and selling it.

Then one day, in late 2022, James gets a phone call from a company that is purporting to be based out of Atlanta, Georgia called Worry Free Vacations.

Worry Free Vacations?

That sounds enticing.

Yeah. And they start off with a simple question, which is, do you want to buy a timeshare? And James says, I already have a timeshare. And then they say, great. Well, what about selling the timeshare? Do you want to sell? There’s this Mexican businessman, and he’s interested in your timeshare. And he’s willing to buy it for about $20,000.

So we figured, well, what the heck? If we can make a few bucks on it, we’ll go for it.

And James jumps at the opportunity.

And did he do anything to try and verify that this was real?

Yeah. So remember, James is former law enforcement. And he feels very confident in his abilities to sniff out untrustworthy people. So he goes online, and he googles this Mexican businessman and sees that, yeah, he is a real person.

He’s a very well-respected individual in Mexico, very well off. And —

And this makes James feel at ease, that he’s selling to a legitimate person, that Worry Free Vacations are who they claim to be and that he’s going to double his money overnight, essentially.

And what happens next?

Well, a couple of weeks after he makes the agreement with the buyer, he’s told that he needs to send a couple thousand dollars to facilitate the purchase.

What does that mean, facilitate?

[MUSIC PLAYING]

I can’t remember specifically whether it was supposed to be cross-border registration —

So he’s being told that there are these fees that are paid directly to the Mexican government.

Or SPID or some other fee that was Mexican government required or not.

A lot of these fees are the same types of fees that you would pay in the United States for a real estate transaction. So he begins wiring money to an account in Mexico.

After that —

— a few days later, we get a notification. Well, everything went well, except that we have to pay an additional fee.

Every time that he sends one fee, he’s being told that he’s got to send another fee right afterwards.

Does he get suspicious at any point?

His wife is suspicious. After the first couple of payments, she starts saying, this does not feel right.

But James is the former law enforcement officer, right? And he’s the one that basically handles the family finances. And he’s confident that all of this is going to work out because he’s being told that the buyer of the timeshare will reimburse James for all of these fees once the sale goes through.

Michael from the Worry Free Vacations was constantly reassuring me the money’s in that account. Check with the commercial escrow account. It’s there. It’s just these fees have to be paid, and you’re being reimbursed for all of this.

They’re sending James documents that show all of the reimbursements that he’s owed and how much money he’s going to get. And this just makes him feel like all of this is kosher.

We have this commercial escrow company that was involved out of New York. So there was an air of legitimacy that I was comfortable with.

Maybe OK, these guys just need one more fee and everything is going to finally be cleared.

But about a year in, James starts to get suspicious. He begins asking questions because he wants his money.

And every time I asked, hey, is there a way I can get a partial release of these funds, there was always no, these funds have to be paid from your account before they’re released.

But Worry Free Vacations, they pivot. And they tell him that, listen, there are all these complications. It’s going to be really hard to get your money out from this transaction.

I could pay about $30,000 and change to reinvest the $313,000 into an environmentally-conscious development in Loreto, Mexico.

Instead, we’ve got this other investment opportunity in Mexico.

And I’m sure you know where that is, over on the East Coast of Baja.

And that is going to make you a huge return, even more money than you had thought that you were going to make, much more than the $20,000.

I’m supposed to have 54 million pesos in a Mexican bank account.

So this is now no longer just about his timeshare. They are now partners in a real estate investment.

Right. And there’s this whole new round of fees and fines associated with that.

So how many payments would you say?

Quite a few. Couple dozen at least, maybe more.

When was your last payment?

It would have been 17 January.

Uh-huh. And what was that for?

Good question.

And all along, he believed it was necessary to pay these costs just to get the money that he’s owed.

The amount of money that I’ve sent to Mexico is just freaking exorbitant. And I mean, it is approaching $900,000 or more.

And at this point, he’s sent about $900,000 to Mexico over about a year and a half.

Nearly $1 million.

That was almost all the money that he and his wife had saved for their retirement.

It also included money from the sale of James’s childhood home and money that he had borrowed from his daughter and son-in-law, about $150,000 from them.

It’s awful. So they were completely cleaned out by these guys.

Yeah. And this is when his daughter asks a law firm to look into this, which is the point in the story when I meet James. And when we start talking, it was clear to me that he just did not know what to think, even after losing this much money.

So this started in 2022. When did it end?

We’re still in it.

And he’s still talking to the scammers.

And as a matter of fact, presently, there was a request for $157,000 and change to clear up this whole thing. It would clear the entire issue out. Now —

And James is even considering putting a second mortgage on his house to send that money that he’d been promised would finally clear all this up — one final payment of $157,000.

It really sounds like he’s still wanted to believe that this was somehow legit.

Yeah. It was pretty clear to me that he was being scammed. But I didn’t definitively know what was going on, so I asked him if he could start recording his phone calls with the scammers.

Would you be so kind as to do me a favor?

Would you be willing to give them a call and record them?

[LAUGHS]: I’ll let you in on a little secret. I’ve been recording them.

And it turns out he already had been.

Worry Free Vacations.

So he shared the recordings of these calls that he’d had with these scammers over the last year or so. And it was just remarkable. It gave me huge insight into how the scam worked and the way that it sounded over the phone.

Is this is Michael in? I think he’s trying to call me. I couldn’t get through pick up.

Yes, I believe he did try to call you, sir. Give me a second. I think he’s only going to be in for a couple of minutes. One second.

There are two main takeaways for me listening to these calls.

Good afternoon. Michael McCarthy.

Michael, I missed your call. I was trying to pick up.

Yeah, don’t worry. Yeah, I figured something was wrong with your phone. Everything OK?

The first is that these scammers had really gotten to know James so well, and they really made James believe that Worry Free was a company that was working for him.

That’s why we need to hurry up and get this money over to you. Because hey, I’m losing my mind too. I’m not even here to convince you, James. I’m not — I’m your broker, and —

One of the things they continuously say is, trust me.

Look, I’m doing everything I can in my power and will on my end. So James, just look — like I told you from the get-go, I’m going to resolve this. And we are doing it. I just need you to focus on the goal.

They would refocus the conversation on what James needed to do to get his money back.

Look, if you make your payment as a security deposit, right away they will release the funds to you. With these —

And the other thing —

I’ve been having so much trouble trying to reach you, and I have not been successful.

— is that the scammers had created this elaborate cast of characters.

Why don’t you answer my calls?

And some of them were really aggressive. James shared a recording of this one man who claimed to be an agent for the Mexican government. And he basically started yelling at James.

I don’t care if your wife is at the hospital. To be honest with you, I don’t give a damn! But you know where I do give a damn? It’s your money, and my name is written all over it! Do you understand?

And he even threatened James. If James didn’t pay off these fines, then he would lose all the money that he’d sent to Mexico already.

You could get the best lawyer you want. You could get whoever you want. And this is not a threat. This is facts. But anyways, who am I to convince you, right?

Well, thank you for the information. And — are you still there? Hello?

Wow. So these scammers were basically doing a good cop, bad cop routine to stop James from walking away and to squeeze every last penny out of him.

If you provide me your email, contact information, I will certainly be happy to forward all of the wire transfer information from my bank account to you so that you can see where those funds went.

Yeah, that would be great. I have your email.

James asks me, a reporter who’s based in Mexico, who speaks the language, if I could help him figure out where his money had gone to.

Thank you very much. I really appreciate your assistance.

I’m just doing my job. Thanks again, and we’ll talk soon.

And the only way that I could figure that out was to understand who was on the other side of the phone.

We’ll be right back.

So Maria, who was on the other side of that phone line?

So by the time that I’d met James, I’d already gotten a tip from US law enforcement agencies that they were seeing a new trend. Mexican drug cartels were getting involved in the timeshare scam industry.

Drug cartels?

Yeah. And not just any drug cartel. This is one of the most notorious, violent, bloody drug cartels that exists in Mexico and Latin America, the Jalisco New Generation cartel. And when I looked at James’s bank records, guess what? All the money that he was sending was going to various bank accounts that were all located in Jalisco state in Mexico.

Wow. So why would the drug cartels get into the timeshare scamming business?

It is a huge business. The FBI told me that it’s about $300 million in profits over the last five years.

But the thing is is that the potential for it to actually be multitudes more is huge. Because the FBI estimates that most of the scams are actually not even reported. In fact, only about 20 percent are. So that means the total timeshare scam business could actually be much larger than the $300 million that they have knowledge of over the last five years.

But wait. I thought the drug business was a pretty lucrative business in itself. So why get into the scamming of elderly people for their properties in Lake Tahoe?

Well, you have to remember that these drug cartels, they’re not just doing one thing. They’re doing multiple things. They’re essentially conglomerates. Because it’s really expensive to run a cartel. You need to pay off officials, both Mexican and American. You need to maintain basically an army in order to secure your routes up to the United States, ports of entry into Mexico from Colombia. And any big business, you need to diversify your income to make sure that you keep the money flowing. Because you never know when one business is going to be shut down by authorities or taken over by your rivals.

We’ve reported that they’re now in the avocado business and the construction business. And timeshare fraud is basically no different than any of those. So we’re seeing that the cartels have their fingers in many pies, the legitimate and the illegitimate economy here in Mexico.

It’s kind of fascinating to think of these drug cartels as like sprawling diversified business empires. But when did the cartels first get into the scamming business?

So Jalisco New Generation started about 15 years ago.

And when they started to consolidate their empire in Jalisco state, they found that there were all these scam timeshare call centers all over the state that were being run by various players, and that this was a huge, huge moneymaker. Because essentially, all you have to do is call up retired senior citizens in the US and Canada. It doesn’t take that much money to run that kind of a scheme. There’s no product you’re making.

So essentially, they conducted a hostile takeover of these call centers. They went in. They kicked down doors and dragged out the people who were managing these call centers by their hair and threatened to kill them unless they gave up the call centers or started handing over a cut of what they made. And slowly, slowly Jalisco New Generation cartel took over the entire timeshare fraud industry.

Interesting. Were you able to find any of these call centers?

So these call centers are pretty hard to find. They look like any other storefront. But I was able to visit two that were located in an upscale neighborhood in Guadalajara, which is the capital of Jalisco state. And it was just really perturbing because it was just so normal. Two villas about a mile away from each other outside. Outside of one villa, parents were walking by, holding their children’s hands as they did drop off at school.

It was right next to a park where people taking their morning exercise or their dogs for a walk. There was no real sign that the cartel was doing business there. But a few months before, Mexican law enforcement had found the bodies of eight young people who had used to work at one of these call centers and said that the Jalisco cartel had killed them.

Wow. What happened?

So I wasn’t able to talk directly to any of the victims’ families. They’re just too scared. But in general, this is usually how it starts.

The cartel seeks out English speakers to work for their call centers. Sometimes they don’t even tell them what exactly they are doing. They would tell the recruits that the job was adjacent to the hotel industry.

You have to remember, Jalisco is a huge, huge tourism magnet for Americans and Canadians and others. And the cartel would get their call lists from bribing hotel employees to give them the names of people who stayed at these hotels and also at the timeshare resorts. And the people who would work at the call centers are provided the names and a manual of what you need to do when you call, like a loose script of how to try to suck as much money as you can out of these people up North in Canada and the States.

So we don’t know for sure what exactly happened with the eight young Mexicans who were killed last year. But through an intermediary, one sibling told us that when their family member knew what their job actually was, they became extremely uncomfortable and tried to leave the call center and find another job maybe.

But the Jalisco New Generation cartel is known for being extremely brutal. They chop off heads, and they’ll put them on the gates of a playground, for instance. So that everybody in the neighborhood knows what went down. And in this case, it’s possible that they wanted to send a warning that there’s no defection from their timeshare call centers.

So basically making a very scary example of these guys, in case anyone else is thinking about quitting one of the call centers.

Exactly. And one man, who runs an organization who advocates for missing people and actually organizes search parties to comb the forests of Jalisco state looking for the missing, says that he knows of about 30 people who have disappeared from the call centers in Jalisco state since 2017. So while Americans and Canadians might be losing much of their life savings, in Mexico, this is actually deadly.

Are the authorities doing anything about this?

Not really, other than the fact that these two call centers were shut down. The authorities haven’t arrested others. They’re not putting pressure on Mexican banks, for instance, to look into these payments coming from senior citizens in the US or Canada. And you have to remember that people are really afraid. But you also have to remember that in Mexico things are not that clear. There is a lot of corruption and government collusion with organized crime and cartels.

And the tourism industry, it is huge in Mexico and particularly in Jalisco state. This is a multi-billion dollar industry. They don’t want Americans or Canadians or Europeans who are coming to Jalisco for its beautiful beaches and its mountains to hear about these stories regarding the cartels being involved in the tourism industry and think, I’m not going to send my family there for that beach vacation. It’s just simply too dangerous.

So everybody has an incentive to have the scam continue, whether because they’re too afraid and don’t want to speak out or because they’re in on it.

So in a way, local authorities have an interest in sweeping it under the carpet in order to just maintain this idea of a tourist destination.

Exactly. I mean, the spokeswoman for the prosecutor’s office was very responsive to me until I told her what I wanted to ask her questions about. And then she just simply never answered any of my texts or phone calls.

So Maria, based on everything you know, all the information you have, would you say that you’re confident that the cartels were the ones who scammed James?

Yes, 100 percent. Everything I’ve seen points in that direction.

What did James say when you told him this?

So it took him quite a while to really allow himself to believe it. On the advice of his lawyers, he stopped picking up the phone calls. And about a week ago, they stopped after the scammers kept trying to call him.

But you said he was in it for over a year. Why do you think it took him so long?

Can you tell me, after all of that had been presented to you, why do you think you weren’t willing to be entirely convinced?

Well, I actually asked him that question.

That’s a very good question. Why wasn’t I able to pick up on that right away? And I think in the back of my mind, I’m finding out that I’m a little more stubborn than I thought I was.

And for him, it was pretty complicated.

And I think that I didn’t want to believe that I had fallen for this. I didn’t feel I was that foolish and stupid when it came to this. You know? I guess I didn’t want to believe that I could be fooled.

To come to terms with the fact that he had lost so much money was to come to terms with the fact that he wasn’t the person that he thought that he was, that he wasn’t this kind of clever former law enforcement officer who was used to fighting the bad guys and winning.

I’m disappointed in myself. There’s a huge level of anger towards the perpetrators. And all of those things wrapped into one. And part of that, I think, contributes to not wanting to actually believe that I was wrong.

Hmm. Yeah, I hear you. I’m sorry. I can hear the pain in your voice.

[LAUGHS]: Yeah.

Some of it’s based on shame, right? That he lost all this money, everything that he’s worked for, and the fact that this was all supposed to be money that his children and his grandchildren were going to inherit. And now it’s gone.

And have you told your daughter that you think you’ve come to terms with the fact that this might have been a scam?

Oh, she’s been involved. Yeah. They know.

My daughter does.

I’m sorry. This is a tough time.

So I’ve got to make some sort of arrangement to compensate them for this on top of our regular debt. So yeah. It’s been a swell experience, all of it brought on by my — evidently, my stubbornness to believe that I couldn’t possibly be a victim.

How’s your wife doing throughout this whole process, with this new knowledge?

She’s not real happy, obviously, at all. I hear a lot of “I told you so.” And at this point, I’ve got no defense. She’s absolutely right. There’s no question about it.

Do you worry this is going to affect your marriage?

Yes, there has been an effect.

And do you think that at this point there’s any way for James and his family to get some kind of justice or at least find some kind of closure?

Ay. Justice? Unlikely.

At this point, I’m not necessarily expecting much in the way of restitution.

And as for closure, it’s a little bit too soon to tell. In a way, James has gone through several stages of acceptance for what happened. There’s fear. There’s shame. There’s resignation. And now he’s talking to me partly because he feels like it’s a public service, that he needs to be vocal so that other people don’t go through what he’s gone through and fall for the scam. And I think it also helps him feel a little bit empowered in a situation for over the last year and a half he was at the mercy of these people who were calling him multiple times a week.

I want to try to get as much information to as many of these official organizations as possible. I have a streak of anger through me now that I’ve developed to the point where I’m not going to let this go.

Well, Maria, thank you.

Thank you for having me.

Here’s what else you need to know today. OJ Simpson, the football star who was accused and later acquitted of murdering his former wife and her friend, died of cancer at his home in Las Vegas, his family said Thursday. He was 76.

Today’s episode was produced by Astha Chaturvedi and Will Reid, with help from Clare Toeniskoetter and Lindsay Garrison. It was edited by Brendan Klinkenberg and Michael Benoist, contains original music by Marion Lozano, Rowan Niemisto, Dan Powell, Pat McCusker, and Will Reid, and was engineered by Chris Wood. Our theme music is by Jim Brunberg and Ben Landsverk of Wonderly.

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That’s it for “The Daily.” I’m Katrin Bennhold. See you on Monday.

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Warning: this episode contains descriptions of violence.

A massive scam targeting older Americans who own timeshare properties has resulted in hundreds of millions of dollars sent to Mexico.

Maria Abi-Habib, an investigative correspondent for The Times, tells the story of a victim who lost everything, and of the criminal group making the scam calls — Jalisco New Generation, one of Mexico’s most violent cartels.

On today’s episode

Maria Abi-Habib , an investigative correspondent for The New York Times based in Mexico City.

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How a brutal Mexican drug cartel came to target seniors and their timeshares .

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IMAGES

List of all Five Year Plans of India with their Objectives and Targets
Five Year Plans of India List, Objectives, Achievements
India’s five year plan
Five Year Plan in India
FIVE YEAR PLANS IN INDIA PART 1/INDIAN ECONOMIC DEVELOPMENT
Five Year Plan in India PDF Download

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Five Year Plan of India || Planning Commission ,NITI Aayog

COMMENTS

Five Year Plans
Five Year Plan: Highlights: First Five-Year Plan (1951-56) The First Five Year Plan laid the thrust of economic development in India. It was presented by the first Indian Prime Minister, Jawaharlal Nehru to the Parliament of India. K.N Raj, a young economist, argued that India should "hasten slowly" for the first two decades. It mainly addressed the agrarian sector, including investment in ...
Five-Year Plans of India
The Sixth Five-Year Plan was a great success to the Indian economy. The target growth rate was 5.2% and the actual growth rate was 5.7%. Seventh Plan (1985-1990) 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 ...
List of Five Year Plans In India, History & Objectives
The history and objective of economic planning in India, the objectives and assessment of Five Year Plans in India are discussed. Dissolution of the Planning commission and setting up of NITI Aayog is also briefed. Also, Download the list of India's Five Year Plans in PDF format. For UPSC 2024 preparation follow BYJU'S.
Five Year Plans of India List, Objectives and Achievements
Here is a complete list of Five Year Plans of India along with the Time Period and its Salient Features: Five Year Plan. Time Period. Salient Features. Achievements. First Plan. 1951-1956. Focused on agriculture, power, and irrigation. Targeted a 2.1% increase in national income.
Five Year Plans of India
The objectives of the 12th Five Year Plan of India include: Achieving a growth rate of 9 percent. Ensuring a growth rate of 4 percent in the agricultural sector. Ensuring that the commercial energy supplies grow at a rate of 6.5-7 percent per year. Developing a holistic water management policy.
Five Year Economic Planning in India: History, Overview & More
Five-year economic planning in India is a process of formulating and implementing a centralized and integrated national economic program for a period of five years. The fiver years plans however, have been replaced bu NITI Aoyog in 2015. The planning process involves a wide range of stakeholders. This includes the government, the private sector ...
Five-Year Plans Of India UPSC
The Ninth Five-Year Plan achieved a GDP growth rate of 5.4% against a target of 6.5%. The agriculture industry grew at a rate of 2.1% against the target of 4.2%. The industrial growth in the country was 4.5% which was higher than that of the target of 3%. The service industry had a growth rate of 7.8%.
India's Five-Year Plans: A Comprehensive Overview of Economic
The first Five Year Plan focused on agriculture, and subsequent plans shifted their focus to different sectors of the economy. First Five Year Plan (1951-56) It was based on Harrod-Domar Model. Influx of refugees, severe food shortage & mounting inflation confronted the country at the onset of the first five year Plan.
Five Year Plan: Concepts, Goals, Growth, Equity, Modernisation ...
In India, these plans are made for five years and hence are known as five year plans. These five year plans are ultimately a short-term plan for a perspective plan. A perspective plan outlines the long-term goals of a nation, spanning twenty years. In India, after the independence, the government set up a Planning Commision in 1950. This ...
India's Five-Year Plans Impact on Economic Growth
Each Five-Year Plan in India is a detailed blueprint outlining the allocation of resources, targets, and policies for a five-year period. The plans are instrumental in shaping the nation's economic and social landscape. The Chronology of India's Five-Year Plans First Five-Year Plan (1951-1956)
PDF FIVE YEAR PLANS Introduction
Plans between 1966 and 1969, the fourth Five-year plan was started in 1969. 7.6 The Eighth Plan could not take off in 1990 due to the fast changing political situation at the Centre and the years 199091 and 1991- 92 were treated as Annual Plans. The - Eighth Plan was finally launched in 1992 after the initiation of structural adjustment policies.
Economic Planning in Practice: Indian Experience and NITI Aayog
five-year plan avoid ed it, fearing class hatred and the . accepted idea was that th e society cou ld be transformed as . ... India's second five-year plan from 1956-61 (Mahalanobis,
Five Year Plans of India (Summary): Objectives, Achievements, Failures
Now instead of 5-year plans, a three year period was meant to implement 3 annual plans. It is also called plan holidays. This period was generally come due to the ongoing Indo Pakistan War. This led to a decrease in the country's resource utilization. The major reason was the failed third five-year plan. Fourth Five Year Plan (1969 - 1974 ):
12th Five-Year-Plan and Its Results in India
Abstract. India uses a system of five-year plans to ensure the economic growth of the country. The 12th five-year plan was implemented from 2013 to 2018. However, within each of the plans, there are both achievements and failures, which can be assessed only after its implementation is completed. This study has attempted to identify the major ...
Growth of Indian economy under the various-five year plans of the
After the termination of the fifth Five Year Plan, the Rolling Plan came into effect from 1978 to 1990. In 1980, Congress rejected the Rolling Plan and a new sixth Five Year Plan was introduced. Three plans were introduced under the Rolling plan: (1) For the budget of the present year (2) this plan was for a fixed number of years- 3,4 or 5 (3 ...
PDF Economic Planning In India
The first eight five year plans in India emphasised on growing the public sector with huge investments in heavy and basic industries, but since the launch of Ninth five year plan in 1997, attention has shifted towards making government a growth facilitator. An overview of all Five Year Plans implemented in India is highlighted below.
(PDF) Five Year Plans of India
The total amount allocated under the Second Five Year Plan in India was Rs.48 billion. This amount was allocated among various sectors: power and irrigation, social services, communications and transport, and miscellaneous. "The target growth rate was 4.5% and the actual growth rate was 4.27%.
India's Five Years Plan
India's Five Years Plan. Better Essays. 6466 Words. 26 Pages. Open Document. Origin. Five year plans were first introduced in the erstwhile Soviet Union in 1928 for controlled and rapid economic development. Much of the Soviet industrial successes are a result of the implementation of its five year plans.
Economic Development in India: The First and the Second Five Year Plans
INDIA'S FIRST FIVE YEAR PLAN covered the period from April 1951 through March 1956; the Second Five Year Plan covers the period from April 1956 through March 1961. The main objectives of planning in India are, broadly, to double real national income in less than 20 years and to double the per capita income in 25 years.
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The Landscape of Education and Health. In 1947, India had a population of 340 million with a literacy rate of just 12%, today it has a population of nearly 1.4 billion and a literacy rate of 74.04%. The average life expectancy has also risen from 32 years to 70 years in 2022. Though India has shown remarkable progress In terms of literacy rate ...
Five year plans in India
Five Year Plans of India. Nitish Yadav. Download Free PDF. View PDF. A comparison of calculations of investment and savings requirements for India's fourth five year plan. 1965 •. Kirit Parikh. sectoral allocation of resources. It provides a method of determining 1 some of the major implications of the goals of an economic plan.
English Essay on "Five Year Plans" Complete Essay ...
These plans would also highlight for us the targets set through these fifty years of India's independence. The First Five Year Plan came into existence for the years 19511956. This had a public sector outlay of Rs. 2356 crore-while the actual expenditure was only Rs. 1960 crores. The Private Sector investment was 1800 crores.
How One Family Lost $900,000 in a Timeshare Scam
A Mexican drug cartel is targeting seniors and their timeshares. Hosted by Katrin Bennhold. Produced by Asthaa Chaturvedi and Will Reid. With Clare Toeniskoetter and Lynsea Garrison. Edited by ...