Investment-and in fact significant socio economic relationship-must be made by agencies informed by social purpose.

The second plan covered the period 1956-57 to 1960-61 and was based on the models prepared by PC Mahalanobis. The really important model that formed the basis of the second Five year plan was prepared by Mahalanobis in 1953. This was a two sector model and it was used by Mahalanobis to chalk out a time path for income with consistent with certain initial conditions. The stategy of industrialization adopted in the second plan (which is known as the mahalanobis strategy of development) had three main aspects: (1) developing a sound base for initiating the process of long term growth; (2) a high priority to industrialization when actual development began; and (3) emphesis on development of capital goods industries against consumer goods industries against consumer goods industries. This strategy has also been termed import substituting strategy. The Third five year plan covered the period 1961-62 to 1965-66. It kept the basic element of the industrial strategy laid down in the second plan unchanged through if did talk of giving more importance to agriculture and allied activities as compared with the second plan. The war with china in 1962 and with Pakistan in 1965 (and subsequent suspension of foreign aid), drought in the last year of the plan 1965-66 (followed by another drought in 1966-67 ), devaluation of rupee, etc. forced suspension of Five year plans and the fourth plan commenced in 1969-70. The intervening three years 1966-67, 1967-68 and 1968-69 were, therefore, years of plan holiday in which thought annual plans were prepared, there was no overall five year framework.

The 1970s : The Fourth and Fifth Plans

By 1970 a distinct change in the thinking of the planners was clearly discernible. As a result the pioneering study by VM Dandekar and N Rath, Poverty in India in 1971, and the follow up discussion which a number of economists participated, the conviction grew strong that misery were widespread in India and there was an urgent need to take account of this problem in plan exercises. The revelation made by the study that more than 40% of the population was unable to achieve even the minimum necessary level of subsistence called for a drastic revision of plan priorities and programmes. Accordingly, for the first time in Indian Planning history, the Approach Paper of the fifth five year plan talked of a redistributive scheme aiming at bringing down the per capita consumption level of the richest 30% of the population so that the lowest 30% of the population could be guaranteed a minimum level of subsistence. However no definite strategy was enunciated to carry out the actual process of transfer of income to the poor and the draft fifth plan abandoned the exercise. Though the importance of redistribution was stressed that elimination of poverty required a rising rate of growth of domestic product. The assumption behind this belief is that the benefit of more rapid growth will percolate downwards and thus the poor will benefit (this is known as the trickle down approach to poverty alleviation).

The 1980s: The sixth and seventh five year Plans

The sixth plan covered the period 1980-81 to 1984-85 and the seventh plan the period 1985-86 the 1989-90. The sixth plan was formulated against the background of a perspective covering a period of 15 years from 1980-81 to 1994-95. This development perspective visualized accelerated progress towards the removal of poverty, generation of gainful employment and technological and economic self reliance. The plan had argued that a substantial acceleration in the overall rate of growth was an essential condition for the realization of these objectives. However, it admitted that benefits of such achievements do not percolate downwards to the masses of people who continue to remain poor. On account of this reason the development strategy incorporated some specific action programmes like the National Rural Employment Pragramme and some other anti-poverty measures. This sixth plan noted that the planning for medium and long term certain inherent uncertainties Particular emphasis was placed on the following two uncertainties-the weather and the international environment. Weather induced fluctuated in agriculture production and hydel generation could throw plan calculations out of gear. Similarly adverse effects on the plan performance could be caused by unfavourable international environment particularly steep hide in oil prices. The planning commission felt that it was necessary to ensure a rapid increase in the domestic production of oil and alternate energy source and reduce the rate of consumption of petroleum products to safeguard the integrity of our development plan. Although in the sixth plan it was not difficult to identify some points of departure from the Mahalanobis strategy of growth yet the overall approach of the plan was very much within its framework. However, the seventh plan marks a complete break from the past. In this plan, the planners spelt out a new long term developed strategy. The planners stated that over the next fifteen years the planning in this country should address itself to solving the basic problems of the people besides creating conditions for self sustaining growth in terms of both the capacity to finance growth internally and the development of technology. In concrete terms this meant that the planning activity had to be directed towards the elimination of poverty and creating conditions of near full employment, the satisfaction of the basic needs of the people in term of food, clothing and shelter, attaining of universal education and access to health facilities for all. The attainment of these goals, according to the planners, required a strategy different from the one followed in the country in the earlier phase of economic planning. In concrete terms, the seventh plan development strategy contained four substantive elements of change. First, it gave priority to increasing agricultural production through great reliance on new technology. Second, it undermined the role of the public sector and indeed increasing privatization of industrial activity. Third, with liberalization of imports it aimed at raising efficiency in the manufacturing sector. Fourth, planning and administrative procedures. In totality this strategy was a variant of what as Agricultural Development-Led Growth (ASLG) strategy.

The 1990s: The Eighth and Ninth plans

The seventh plan ended in 1989-1990. The eighth plan was due to commence on April 1 1990. However, due to political uncertainties at the centre and the economic crises in 1991, this plan was delayed by 2 years and commenced on April 1 1992. Thus, it covered the period of 1992-93 to 1996-97. The ninth plan covered the period 1997-98 to 2001-02. As we shall discuss in detail in the next chapter, the year 1991 in India marks a complete break from the past as in this year widespread changes in economic policy were introduced. There was now increased emphasis on deregulation of controls and increased liberalization, restricting the role of public sector and providing more facilities to the private sector, encouraging foreign investment in the country and opening up the economical to global competition through various measures like abandoning quantitative restriction on imports, reducing import duties etc. Thus the year 1991 was a watershed for the Indian economy. The macroeconomic stabilization and structural adjustment programme introduced in this year constituted a fundamental department from the past in independent india. This is on account of the following reasons : (1) First, economic growth combined with economic efficiency became the objective function. Although the objectives of reducing poverty was not totally abandoned, it was subsumed in the pursuit of growth on the premise that economic growth is both necessary and sufficient for improving the living conditions of the poor. (2) Second, there was a conscious decision to substantially reduce the role of the state in economic development and pass on the baton to the private sector. From regarding public investment as a key factor in promoting economic development, the view now propagated was that public investment pre-empts scares resources at the expense of the private sector and leads to inefficient resource utilization which constitutes a drain on the exchequer. (3) Third, the degree of openness of the economy was increased at a fast pace. In a complete reversal of the development consensus four decades earlier, the doors were thrown open widely to foreign capital and foreign technology. The new buzzeword is globalization and integration with world economy. In sum India moved from a quest for state-led capitalization for a world of market driven capitalism In line with the liberalization processes unleashed in 1991 the Ninth plan argued our development strategy must be oriented to enabling our broad based and varied private sector to reach its full potential for raising production, creating jobs and raising income levels in society. A vigorous private sector, operating under the discipline of competition and free markets, will encourage efficient use of scares resources and ensure rapid growth at least cost. Our policies must therefore create an environmental which encourage this outcome. In this scenario, the ninth plan called for a reorientation in the role of the state with the focus of its attention shifting from regulating and controlling the private sector to increasing its participation in social development especially in rural area. Therefore the development strategy of the state in ninth plan focused on creating the necessary economic and social infrastructure to enable the unhindered operations of the private sector. Thus the state was expected to pay specific attention to the provision of power and energy, and the development of roads, ports, railways, telecommunications, municipal services etc. In rural areas economic infrastructure included irrigation, rural roads, organized rural markets etc. In addition to the development of infrastructure the state committed itself to provide basic services such as health care education and safe drinking water to the majority of the population, especially in the rural areas. In the industrial sector the strategy was to further liberalise and unshackle the private sector operations and subsequently cut down bureaucratic and government interface.

The Tenth Plan (2002-07)

The tenth plan covered the period 2002-03 to 2006-07. It aimed at achieving 8% per annum growth and laid down a long list of specific and monitorable targets. These targets are in the field of poverty reduction, employment provision, literacy and education, improvement in health and living condition etc. However, in the new liberalized scenario in which the economy has been functioning since 1991 planning has lost much of its meaning as state no longer has the required control on economic variables. It is now only required to pay a facilitatory role so that a proper economic and business environment can be provided to the private sector to expand its activities. The rate of growth actually achieved in the plan is estimated to be 7.8% per annum.

The Eleventh Plan (2007-12)

The Eleventh plan covers the period 2007 to 2012. It emphasizes faster and more inclusive growth. While the target of economic growth has been kept as 9% per annum (higher than the target set in any other plan),this growth must yield broad based benefit and ensure equality of opportunity to all. This broad vision of the Eleventh plan includes several inter-related components : rapid growth that reduce poverty and creates employment opportunities, access to essential services in health and education especially for the poor, equality of opportunity, employment through education and skill development, employment opportunities underpinned by the national rural employment guarantee, environmental sustainability, recognition of womens agency and good governance. With its strategy of faster and inclusive growth, the eleventh plan identified 27 monitorable targets at the national level. These 27 monitorable targets have been divided into 6 main categories : (1) Income and poverty, (2) Education, (3) Health, (4) Women and children, (5) Infrastructure, and (6) Environment.

BOX 27.1 Growth Performance in the Five Year Plans

Target 2.1 4.5 5.6 5.7 4.4 5.2 5.0 5.6 6.5 (per cent per annum) Achievement 3.5 4.2 2.8 3.2 4.7 5.5 5.6 6.5 5.5

First Plan (1951-56) Second Plan (1956-61) Third Plan (1961-66) Forth Plan (1969-74) Fifth Plan (1974-79) Sixth Plan (1980-85) Seventh Plan (1985-90) Eight plan (1992-97) Ninth Plan (1997-2002)

Tenth Plan (2002-07) 8.0 7.8 4.6 1950-51 to 2007-08 3.5 1950-51 to 1980-81 5.7 From 1980-81 to 2007-08 6.3 From 1991-92 to 2007-08 Note: Growth rates for first plans refer to growth in national income. Growth rates for later plans refer in national income. Growth rates for later plans refer to growth rates in GDP (Gross Domestic Product). Source : Government of India, Planning commission, Eleventh Five Year plan, 2007-12 (Delhi 2008) Valume I, Table 2.1, p.29