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Economic Planning in India & List of all

Five-Year Plans in India .
• For over two centuries, India was drained economically by the Britishers and they also exploited the
resources for their own benefit. When the Britishers left India in 1947, there were several problems such
as poverty, inflation, food shortages, lack of health care, etc. in the country. Leaders believed that
economic planning would bring solutions to most of the issues which were then prevalent in the country.
• Prior to the independence of India, several plans such as the Bombay plan, Gandhian plan, etc, were
devised for the economic development of the country. However, they remained only in the papers and
were never implemented.
• After the formation of the National Planning Commission, India began the planned economic
development by introducing the five-year plan. The first plan in India was launched in 1951. However, in
2017 these were replaced by the 3-year action agenda of NITI Aayog.

Economic Planning in India

Economic planning is referred to as the way of planning and utilising the economic resources available
in the country to a maximum extent with an aim to achieve well-defined socio-economic goals.

Hermann Levy, a German economist defines economic planning as “a means to secure a better balance
between demand and supply by conscious and thoughtful control over, either of production or
distribution”.

The process of economic planning in India involves the following steps,

• The Indian economy was based on the concept of planning. From 1947 to 2017 This was carried through
the Five-Year Plans, developed, executed, and monitored by the Planning Commission (1951-2014) and
the NITI Aayog (2015-2017)
• Listing down the problems that are prevalent in the economy and rearranging them on the basis of
priority. The ones which need to be resolved or addressed immediately, are placed at the top.
• The problems which are to be addressed in the short run and over a long period are identified and
segregated accordingly.
• Target, either in terms of time or quantity is fixed in order to achieve the desired goal. Based on this, the
number of resources required for achieving the target is estimated and are mobilized.
• Finally, when all the resources such as human resources, financial resources, physical and material
resources, etc are arranged, the proposed plan is implemented. Periodic reviews are done in order to
ensure that everything is right on track. If not, then appropriate changes are made in the plan and in the
execution process.
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Types of economic planning

There are several types of economic planning. Some of the important ones are given below:

• Democratic planning: In this type of planning, the economy of a country is controlled by the
representatives of the people. They implement economic planning in the country. In India, we follow the
democratic form of government, and thus democratic planning is employed.
• Decentralized planning: Here the overall targets of production and investment are fixed by the Central
government and the State governments and the local government are given the freedom to achieve their
targets. This type is more prevalent in countries such as France and Great Britain. This type of planning is
more efficient and productive in attaining the result.
• Planning by inducement: In this type, the government uses persuasion to implement certain schemes of
projects and tries to influence investment decisions by offering incentives to the entrepreneurs through
fiscal and monetary policies. However, this is not a time-efficient method.

Planning Commission And The Five Year Plans

• In 1950, the Government of India established the Planning Commission under the Chairmanship of the
first Prime Minister of independent India, Pandit Jawaharlal Nehru.
• The Planning Commission was a non-constitutional body. It functioned under the guidance of the
National Development Council (NDC) which was the prime policy-making body in the country.
• The commission was set up with an objective to formulate economic plans keeping in view the resources
of the country and suggesting the best methods to utilize them effectively and in a balanced manner.
• In order to address the various socio-economic problems that existed in the country, the Government of
India adopted the planning system.
• In July 1951, the Planning Commission presented the draft outline of the first five-year plan which lasted
the period 1951 to 1956.
• From 1951 to 2017, the Government of India implemented 12 five-yearly plans in India in total.

Summary of Five Year Plans in India

The summary of five year plans in India is mentioned below.
Five Year Plan Summary
Plan Period Targeted Growth Actual Growth
First Five Year Plan 1951-56 2.10% 3.60%
Second Five Year Plan 1956-61 4.50% 4.30%
Third Five Year Plan 1961-66 5.60% 2.80%
Fourth Five Year Plan 1969-74 5.70% 3.30%
Fifth Five Year Plan 1974-79 4.40% 4.80%

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Sixth Five Year Plan 1980-85 5.20% 5.70%

Seventh Five Year Plan 1985-89 5% 6%
Eighth Five Year Plan 1992-97 5.60% 6.80%
Ninth Five Year Plan 1997-2002 6.50% 5.40%
Tenth Five Year Plan 2002-07 8% 7.60%
Eleventh Five Year Plan 2007-2012 9% 8%
Twelfth Five Year Plan 2012-17 8% -

List of Five Year Plans in India

We shall discuss the objectives and achievement of all the 12 five-year plans in India one by one.

First Five Year Plan [1951-1956]

Growth Rate: Actual Growth of 3.6% was achieved against the targeted growth of 2.1%

Salient Features:

• The first plan was made based on the Harrod-Domar model which was developed independently by Roy
F. Harrod and Evsey Domar.
• The main objective of this plan was to increase agricultural production and thereby increase growth of the
sector. It also focused on full employment, removal of economic inequalities and power and transport.
• Objectives such as food self sufficiency, rehabilitation of refugees and price stability were achieved to
some extent.
• During the first five-year plan, five Indian Institutes of Technology (IITs) were established.
Second Five Year Plan [1956-1961]
Growth Rate: Second Five year plan underachieved its actual Growth at 4.3% against the targeted
growth of 4.5%

Salient Features:

• Similar to the first plan, this plan was developed on the basis of the Harrod-Domar model.
• This plan was authored by P C Mahalanobis and hence it is also known as the Mahalanobis plan.
• The plan focused mainly on rapid industrialisation with particular emphasis on development of basic and
heavy industries. It also aimed to increase employment opportunities and national income.
• However, due to the shortage of foreign exchange, the plan was not implemented completely and the
targets were pruned.
• The Industrial policy 1956 considered the establishment of a socialistic pattern of society as the goal of
economic policy.

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Third Five Year Plan

[1961-1966]
Growth Rate: India completely failed to achieve its targeted growth of 5.6%. Actual growth stood at
meagre 2.8% only.

Salient Features:

• This plan aimed to make India a self-reliant and self-generating economy. However, towards the end of
the plan, the aim was shifted to the development of defence.
• This plan created a base for the growth of medium and small scale industries and cottage industries.
• It was during this plan period, India resorted to borrowing from the International Monetary Fund (IMF)
for the first time.
• Due to events such as Chinese aggression of 1962, Indo-Pak war of 1965 and severe drought during 1965
to 1966, this plan failed to achieve its targets.

Plan Holidays – Annual Plans [1966-1969]

• As a result of the Third Plan's terrible failure, the government was compelled to declare "Plan Holidays"
from 1966 to 1969.
• The government established three yearly plans known as Plan Holidays from 1966 to 1967, 1967-68, and
1968-69.
• The principal causes of the plan's termination were the Indo-Pakistan and Sino-Indian wars, culminating
in the collapse of the third Five-Year Plan.

Fourth Five Year Plan [1969-1974]

Growth Rate: The targeted growth of 5.6% was not achieved as Actual growth stood at just 3.3%.

Salient Features:

• The fourth plan aimed for growth with stability and being self-reliant particularly in the defence sector.
• The family planning programmes were introduced during this plan.
• Special emphasis was laid on improving the conditions of poor and underprivileged sections of the society
by providing education and employment.
• Post the Indo-Pak war of 1971, there was a huge influx of Bangladeshi refugees into the country which
created scarcity of resources. This led to the failure of the plan.
• Indira Gandhi’s administration nationalized 14 major Indian banks, and the Green Revolution
revolutionized agriculture in India.

Fifth Five Year Plan [1974]

Growth Rate: This was first time after The First Five Year Plan when India achieved actual growth of
4.8% against the targeted growth of 4.4%.

Salient Features:
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• Removal of poverty (Garibi

Hatao) and attainment of self-reliance were the two chief objectives of the 5th five year plan.
• In 1975, the Electricity Supply Act was passed, allowing the Central Government to overcome the
threshold of electricity generation and transmission.
• Since the inception of five yearly plans, for the first time removal of poverty was made the prime
objective of the plan.

Rolling plan [1979-1980]

• The sixth plan for the period 1978 to 1983 was put forward by the Janata government.
• This lasted only for two years. The Congress government which came to power in 1980, removed this
plan from official records and introduced the official 6th plan in 1980.

Sixth Five Year Plan [1980-1985]

Growth Rate: India achieved an actual growth rate of 5.7% against the targeted 5.2%.

Salient Features:

• The foremost aim of the 6th plan was the removal of poverty. It also aimed for higher growth rate,
removal of unemployment, improved productivity, modernization of technology and significant reduction
in the disparities of income and wealth.
• Though there was a famine in the last year of the plan period, most of the targets fixed in this plan were
achieved and thus it was a successful.
• In order to avoid overpopulation, family planning was also increased.

Seventh Five Year Plan [1985-1990]

Growth Rate: Actual growth was 20% more than the targeted growth. Actual growth was 6% against
the targeted growth of 5%.

Salient Features:

• This plan focused on increasing the production of food grains at a larger scale and the employment
opportunities.
• It was a very successful plan and it recorded the highest ever agricultural as well as overall growth rate in
the fiscal year 1988 to 1989.
• Following this plan, there was a plan holiday from 1990 to 1992 due to political instability and economic
crisis that existed then in India.

Plan Holiday [1990-1992]

• Due to the Seventh Plan’s abject failure, the Indian government was compelled to proclaim “plan
holidays” from 1990 to 1992.
• Due to the rapidly changing economic circumstances at the center, the Eighth Plan was unable to launch
in 1990, and the years 1990–91 and 1991–92 were considered as Annual Plans.

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Eighth Five Year Plan

[1992-1997]
Growth Rate: India overachieved her targeted growth of 5.6% to an actual growth of 6.8%.

Salient Features:

• In 1992, issues such as recession in industry, inflation, budget deficits and increases in debt burden
existed. The planners of the 8th plan introduced various measures and policies to combat all these
economical issues.
• Under the Prime Minister Shri P.V. Narasimha Rao, fiscal and economic reforms were introduced.
• Another key objective of the 8th plan was to have universal education and eradication of illiteracy in the
age group of 15 to 35 years.
• Increase in private sector investment, improvement in current account deficit and high growth of
agriculture and allied sectors and the manufacturing sector were achieved through this plan.

Ninth Five Year Plan [1997-2002]

Growth Rate: After overachieving the targeted growth rate for last 3 Five year plans, India failed to
achieve its targeted growth of 6.5% against the actual growth of 5.4%.

Salient Features:

• This plan was mostly an extension of the eighth plan. It focused on growth with social justice and
equality.
• Priority was given to agriculture and rural development for generating adequate productive employment
and eradication of poverty.
• Provisions to provide safe drinking water, PHC facilities, UPE, shelter and connectivity to all in a time
bound manner were made under this plan.
• It also aimed to ensure food and nutritional security to all, particularly to the weaker sections of the
society.
Tenth Five Year Plan [2002-2007]
Growth Rate: Actual growth stood at just 7.6% averse the targeted growth of 8%.

Salient Features:

• In this plan, monitorable targets were fixed for a few key indicators of development.
• Following were the main objectives of the tenth plan:
o Attainment of GDP growth rate of 8% per annum.
o Providing access to basic services such as education, health, drinking water and sanitation.
o Substantial allocation of resources to the social sector and major improvement in governance for
effective use of resources.
o Reduction in poverty to 5% by 2007 and 15% by 2012.
o To reduce the gender gap in literacy and wage rate to 50% by 2007 and population growth to
16.2% during 2001-2011.
o To give sustained access to drinking water for all the villages in the country by 2007.

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Eleventh Five Year Plan

[2007-2012]
Growth Rate: Targeted growth of 9% fell short as the actual growth achieved was just 8%.

Salient Features:

• The theme of the 11th plan was “towards faster and more inclusive growth”.
• Though the Indian economy witnessed growth, it was not perceived as sufficiently inclusive by various
vulnerable sections of the society. Thus the concept of inclusive growth was introduced in this plan.
• Agriculture, infrastructure and education were the key areas of concern during this plan period.
• Around 27 detailed national targets, ranging from enhancing production and incomes to literacy, health,
child development, poverty reduction etc., were set under the 11th plan.
• To boost agricultural, industrial, and service growth rates to 4%, 10%, and 9%, respectively. By 2009, all
people will have access to safe drinking water.

Twelfth Five Year Plan [2012-2017]

Growth Rate: Targeted growth was 8%, but the actual growth for the five years were 5.1% (2012-13),
6.9% (2013-14), 7.2% (2014-15), 7.6% (2015-16), 7.1% (2016-17) respectively.

Salient Features:

Inclusive growth was the central theme and objective of the 12th plan. In order to achieve this target, planners set
25 core monitorable targets most of which are to be achieved by the end of 12th five . They are as follows:

• The overall growth rate of each state should be greater than the previous one.
• Real GDP growth rate – 8.2%
• Manufacturing growth rate – 10%
• Agricultural growth rate – 4%
• Increase mean years of schooling to seven years by 2017.
• Elimination of gender and social gap in enrollment into schools.
• Increasing the access to higher education by increasing the total number of seats for each age category.
• Reducing the head count ratio of consumption poverty by 10% • Generation of 50 million job
opportunities in the non-farm sector.
• Reducing the Infant Mortality Rate to 25 per 1000 live births and Maternal Mortality Rate to 1 per 1000
live births by the end of this plan.
• Reducing the under-nutrition among the children aged 0 to 3 years to half by the end of the 12th plan.
• Also, reducing the total fertility rate to 2.1% by the end of the plan period.
• Adding 30,000 MW of renewable energy capacity.
• Increasing the green cover in the country by 1 million hectare every year.
• Reducing the emission intensity of GDP to 20-25% by 2020.
• Increasing the teledensity in rural areas to 70%.
• Completing the Eastern and Western Freight corridors by the end of the plan period.
• Providing electricity to all the villages in the country by the end of the 12th plan.
• Increasing the infrastructure investment as a percentage of GDP to 9% by the end of the plan.
• Increasing the gross irrigated area from 90 million hectare to 103 million hectare.
• Connecting all the villages with all weather roads.

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• Upgrading all the national and

state highways to two-lane standard by the end of 12th plan.
• Ensuring that at least 50% of the rural population have access to 55 LPCD piped drinking water supply
and 50% of gram panchayats to achieve Nirmal Gram Status by the end of plan period.
• Proving 90% of households in the country an access to banking services by the end of the plan period.
• Providing the subsidies and welfare related benefits to the beneficiaries by direct bank account transfer.

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History Of Economic Planning In India

• The concept of economic planning was not completely new in India. In 1934, Sir Visvesvaraya published
a book entitled “Planned Economy For India”. He was the first person in the country to advocate economic
planning for India.
• Towards the end of 1938, the National Planning Committee under the chairmanship of Pandit Jawaharlal
Nehru was established by then President of INC, Netaji Subhash Chandra Bose. The main objective of the
Congress to set up the committee was to provide ways and means for the establishment of new industries
and also for the development of the existing ones.
• Following this, few historically significant economic plans were made, most of which remained only in the
papers.

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Some of the plans are discussed below:

• Bombay Plan:

o In 1944, the then eight leading Indian industrialists published a plan for the economic
development of the country, which came to be known as the Bombay plan.
o The plan aimed to double the per capita income and the national income of that period.
o It proposed to increase the output of the agricultural sector by two times and the industrial sector
by five times within the period of 15 years.
o The total cost of the plan was Rs.10,000 crores which was to be invested over the 15 years. o
The Bombay plan stressed the fact that in order for the economy of any country to grow,
government intervention and regulation is a key factors.
• People’s Plan:

o The Indian Federation of Labour came up with an alternative plan to the Bombay plan which was
known as the People’s plan. This plan was drafted by M.N. Roy in 1944.
o The plan aimed to provide basic needs to all the people in the country within a period of 10 years.
It was an Rs.15000 crores plan.
o To achieve the aim, the plan laid a special emphasis on the development of agriculture through
the nationalization of land. The rationale behind this is that agriculture is the major occupation as
well as the backbone of the country.

• Gandhian Plan:

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o In 1944, S.N. Agarwal,

then principal of Wardha Commercial college, authored the Gandhian plan. It was framed in the
light of the Gandhian principles.
o The fundamental feature of this plan was that it aimed to develop a decentralised self-sufficient
agricultural society with an emphasis on the development of the cottage industries.
o The cost estimated to execute this plan was Rs. 3500 crores.

• Colombo Plan for India:

o The Colombo Plan was a 6-year plan which proposed to spend Rs.1,839 crores on development
projects during the period 1951 to 1956.
o The plan aimed to increase the production of food grains, industrial raw materials, and finished
goods in order to improve the living conditions of the people of South and South-East Asia.

Objectives Of Economic Planning In India

Some of the major objectives of economic planning in India are as follows:

• Economic growth - It is the first and foremost objective of economic planning in India. Economic growth
of a country can be achieved by increasing the real national income and per capita income in the country.
Economists argue that when both per capita income and national income grow in real terms, a higher
standard of living for every individual as well as society as a whole can be achieved.
• Reduction in poverty - At the time of independence more than fifty percent of India’s population was
poor. Lack of employment is a major cause of poverty. There are a lot of people in the country who are
not even getting a square meal a day. Thus the planning commission decided to prepare an appropriate
plan to remove poverty completely from the country.
• Modernization of the economy - Since the inception of economic planning, modernization of the Indian
economy has been the key objective of the planners. The structural and institutional changes in economic
activities in three major sectors of the economy i.e. agriculture, industry, and services will lead to a
progressive and modern economy. It is also very essential to develop a diversified economy that produces
a wide variety of goods.
• Increase in employment - Employment is one of the key factors involved in the production process of
goods and services. Unemployment is the cause of various social problems such as poverty, crime, etc. So
the planners of the Indian economy put the creation of employment as one of the major objectives of
economic planning.
• Reduction in income inequality - In India, there is a diverse economic standard of its population and
income disparity is one of the major concerns in the Indian society. A large section of the society falls
under the lower-income category while few are under the high-income category. The main reason for this
disparity is the unequal distribution of asset holding such as per capita land holding, possession of

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movable and immovable property from inheritance, etc. Thus the planners, while planning the economy
of the country, aim to reduce this inequality.

NITI Aayog And Its Action Agenda

• In January 2015, the Government of India replaced the Planning Commission with an institution called
NITI Aayog (National Institution for Transforming India) by passing a resolution.
• It is the premier think tank of the Government of India. It acts as the quintessential platform of the
Government, as it brings the Indian states to act together in the national interest.
• The initiatives of NITI Aayog include o Three-year Action Agenda o Fifteen-year vision and o
Seven-year strategy.
• Some key functions of NITI Aayog are designing policy and programme frameworks, fostering
cooperative federalism, providing advice and encouraging partnerships between key stakeholders and
various national and international institutions, designing strategic and long-term policies and programme
frameworks, and monitoring their progress and efficacy.

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