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Indian Economy / Development Planning

India's Five Year Plans Summary


    India continued its Five Year Plans starting from 1951 until the Planning Commission was being replaced by NITI Aayog. In between the Five Year Plans, some Annual Plans were executed because of the financial situation of the country at that particular period of time.

    Five Year Plans in India

    • The period of first Five Year Plan was during 1951-56. It gave priority to rapid agriculture development so as to gain self-sufficiency in food production. It was successful plan in terms of macro economic aggregates but industry sector was neglected.
    • The period of second Five Year Plan was during 1956-61. It is known as Nehru-Mahalanobis model of economic development. It gave priority to industrial sector. But industry was not developed satisfactorily. It was not a successful plan though firm foundation was made for industrialization.
    • The period of third Five Year Plan was during 1961-66. It gave priority to the infrastructure sector. Green Revolution was started during this period. During this period, Planning Commission lost its vigour and focus was shifted towards PMO ( Prime Minister's Office ). It gave miserable performance due to Chinese aggression ( 1962 ), Indo-Pak war ( 1965 ) and Inflation pressures. Planned holiday was declared after third 5 year plan. Three Annual plans have come during 1966-67, 1967-68 and 1968-69.
    • The period of fourth Five Year Plan was during 1969-74. The slogan of this Plan was Garibi Hatao. The major objective is growth with stability, social justice and equality. 14 private banks were nationalized in the year, 1969. It was not a successful Plan in achieving the targets.
    • The fifth Five Year Plan was planned originally for the period 1974-79. In the middle of the planning, Janata Party came to power. Fifth plan was terminated 1 year before the scheduled time i.e. It was only for 1974-78. Major objectives include removal of poverty and employment generation. For the first time PDS ( Public Distribution System ) was established. Minimum Needs Programme ( MNP ) was started during the fifth Plan.
    • Rolling Plan ( 1978-83 ) was planned for 5 years. But it got survived only for two years. In Rolling Plan, originally there will be a plan. The very next year, the plan will be reviewed and one more 5 year plan will be made with the next year as base year. In the rolling plan, every annual plan will have a 5 year perspective in terms of macroeconomic aggregates.
    • The period of sixth Five Year Plan was during 1980-85. Energy sector was given the priority. The major objective of this Plan is to improve the quality of the life of people through MNP and progressively reduce the regional inequalities.
    • The period of seventh Five Year Plan was during 1985-90. In the Plan also, Energy sector was given top priority. Major objectives include improving efficiency with greater stress on human resources development. Technology missions were launched in different activities. A successful plan in terms of achieving targets. The economy exhibited resilience for the first time. In the next two years, two Annual Plans were initiated during the periods, 1990-91 and 1991-92.
    • The period of eighth Five Year Plan was during 1992-97. This plan is known as Rao-Manmohan Singh model of economic development. Launching of economic reforms took place by means of Liberalization, Privatization and Globalization. It was a successful plan in terms of achieving macroeconomic targets with an accelerated growth in GDP.
    • The period of ninth Five Year Plan was during 1997-2002. During this Plan, the programme of Basic Minimum Services came into existence similar to MNP. The concept of Self Help Groups came into existence. It was not a successful plan because of shortfall in GDP growth rate and continuous degradation of fiscal situation.
    • The period of tenth Five Year Plan was during 2002-07. The objective was growth with equity and stability. Launching of Mahatma Gandhi National Rural Employment Guarantee Scheme took place to generate employment in unorganized sector. The performance of the Indian economy was not satisfactory because GDP growth rate, savings rate and investment rate fell short of the target.
    • The period of eleventh Five Year Plan was during 2007-12. The objective was economic reforms with human face. GDP growth rate was targeted at 8.1% but only 7.9% growth rate was achieved.
    • The period of twelfth Five Year Plan was during 2012-17. The objective was faster, more inclusive and sustainable growth. The GDP target was fixed at 8%. The status of the twelfth Five Year Plan is in question because of the termination of the Planning Commission.

    Gadgil-Mukherjee Formula

    • Up to third Five Year Plan and during the Annual Plans ( 1966-69 ), allocation of Central Plan Assistance ( CPA ) did not use any formula.
    • For Fourth and Fifth Plans, Gadgil Formula was used for allocating CPA. Gadgil Formula used the following parameters to calculate the funds for different states, (i) Population ( 60% ), (ii) Per Capita Income ( PCI ) ( 10% ), (iii) Tax Effort ( 10% ), (iv) Ongoing Power and Irrigation Projects ( 10% ) and (v) Special Problems ( 10% ).
    • For Sixth and Seventh Five Year Plans and Two Annual Plans ( 1990-92 ), the formula was modified. The weightage for Ongoing Power and Irrigation Projects was removed and the weightage for PCI was increased to 20%.
    • From Eighth Five Year Plan onwards, Pranab Mukherjee modified the Gadgil Formula by increasing weightage for PCI to 25% and reduced the weightage of Special Problems to 7.5% and added Performance in place Tax Effort and gave a weightage of 7.5% to it. The Performance includes Tax Effort, Fiscal Management, Female Literacy, Population Control, Land Reforms and Completion of Externally Aided Projects.