Planning is the deliberate control and

direction of the eco by a central authority for the purpose of achieving definite targets and objectives within a specified period of time.
The planning mechanism is an urgent

necessity in an underdeveloped / developing economy to end poverty and stagnation.

It is the making of major eco decisions( what,

how and whom)

Objectives and Strategies of planning in India

1. Improvement in std of living of the people 2. Rapid increase in N.I and P.I 3. Achieving full employment 4. Rapid industrialisation

5. Self-sufficiency in food and basic raw materials

6. Reduction in disparities in income and wealth 7. Removal of poverty

8. Sustained growth
9. Removal of imbalances 10. Providing economic security

Formulation and success of a plan require:1. Plg commission

2. Statistical data
3. Objectives 4. Fixation of targets and priorities 5. Mobilisation of resources 6. Efficient administration without

curruption 7. Proper devpt policy 8. Public co-orperation

 1st f y plan

1951-1956( agriculture) 2nd f y plan 1956-1961(heavy industry) 3rd f y plan 1961-1966(agri> defence ind) 4th f y plan 1969-1974(G.r agri>ind>war) 5th f y plan 1974-1979 (emp,poverty,agr) 6th f y plan 1980-1985(eco liberalisation) 7th f y plan 1985-1990(imp pdty,tech..) 8th f y plan 1992-1997(pov, pop, empl) 9th f y plan 1997-2002(same+ ind,agr..) 10th f yplan 2002-2007(same+income..) 11th f yplan 2007-2012 (inc,pov,edn,women,child, health,envt..

ECONOMIC PLANNING IN INDIA

In the present context of planning in India 2 principle components govt. mobilises domestic resources and also foreign finance for development of infrastructure and heavy industries

 govt. adopts certain economic policies

(taxation, industrial licensing, wages, prices and interest rates) which stimulate pvt. economic activity and ensure harmony between social objectives of the govt. and behaviour of pvt. producers

IMPORTANT FEATURES OF INDIAN PLANS 1. Indicative planning no element of compulsion in Indian govt. lays down plans even for those sectors on which it has no control e.g. agriculture( It is a national plan based on the principles of decentralisation in the operation and execution.) 2. Physical planning means allocation of resources men, material, and power to accomplish the targets laid down in plan documents

3.

Indian planning is social planning rather than pure economic planning That is why influence of political environment is felt in Indias economic planning 4. Unreliable data - particularly below State level. They are neither not available or are full of mistakes and gaps

Objectives of economic planning

Up to 7th 5-year plan 1. economic growth - 2nd, 3rd plan & 4th 2. Self reliance 3. Removal of unemployment 4. Reduction of income inequalities 5th & 6th 5. Elimination of poverty 6. Modernisation 7th plan The govt. which assumed office in 1991 abandoned the long term objectives of economic planning Its main concern was to implement macroeconomic stabilisation through fiscal correction

OBJECTIVES OF ECONOMIC PLANNING 1. Economic growth It was assumed that economic growth would remove the income inequalities 1st plan target 2.1% annual increase in national income; achieved 3.5% per annum growth in national income 2nd ,3rd & 4th 5- year plan target annual growth rates - 4.5%, 5.6%, & 5.7% respectively achieved - 4.2%, 2% & 3.4% respectively

 3rd 5 year plan gave too much importance

to both agriculture and industries from the point of view of economic growth 3rd plan a flop 1962- a war was fought with China resulting in stagnation of agricultural output and industrial production. Focus was given to defense expenditure. Food prices rose, causing rioting. 1965 war with Pakistan reduced foreign aid 1965 and 1966 droughts further disrupted the economy

 Green revolution took place in this background in 1966 67

Annual plans were there. Long term planning was

suspended for the time being Greater reliance was placed price mechanism to achieve industrial efficiency 4th plan laid stress on raising agriculture and creating buffer stock. Thus main emphasis on growth with stability Target increase in national income 5.7% per annum, achieved 3.2% per annum Instability could not be eliminated

 5th 5 year plan target -per annum 4.4%

increase in national income per annum, achieved 4.7%, but failed to create any solid foundation for sustained growth For this emphasis on increase in investment rate Fluctuations experienced in rate of growth due to ups and downs in agricultural production 1st 3 decades of economic planning GDP increased at rate of 3.5% per annum Hindu rate of growth

 6th 5- year plan Janata govt. came into

power, stressed on village cottage industries and rejected the Nehruvian model, but public sector failed to generate surplus
target 5.2% per annum

achieved - 5.5% per annum due to * good agricultural performance and * growth in services sector

 7th 5 year plan allocation of resources to transport and communication at the expense of industry and agriculture Target - 5%, achieved 5.6%
1st half growth rate 3.8% but due to bumper harvest in 1988-89 and 1989-90 plan target exceeded target

Major criticism of 1980s growth-

* * * *

high fiscal deficit pressure on BoP inflation inefficient utilisation of resouces

 1990 91 growth rate - 3.4% in GDP per

annum but could not be carried forward in 1991-92 (rate of growth - .8%) 8th plan 5-year plan - target 5.6% achieved 6.5% 9th 5- year plan - bad performance target 6.5%, achieved 5.5%

 Reasons * low agricultural growth in the

beginning * reduced demand for industrial goods * slowdown in world economy 10th 5- year plan - target 8% growth rate achieved 7.8% leaving the 1st year the rest of the 4 years growth rate 8.7%

2. Self Reliance
India dependent during independence on foreign countries for

* food grain especially from USA * transport equipment, machine tools, heavy engineering goods etc. * foreign aid had to got for stepping up the investment rate stated for the 1st time in 3rd 5- year plan more concrete form given in the 4th plan

 5th plan to reduce BoP problem 2 pronged strategy

* export promotion * import squeez This policy and unexpectedly large pvt. Remittances considerably improved BoP problem, however due to 1980s liberalisation in foreign sector led to strains on BoP conclusion: self reliance in *food * capital equipment but India is dependent on foreign petroleum resources and hot inflows of global finance capital

3. Removal of unemployment
Unemployment leads to poverty For the growth of employment not only increase in

investment is needed but also, the choice of techniques should also be correct Main focus of Indian plans have been on production targets To remove unemployment, increase in employment at the rate of 3% per annum restructuring pattern is needed in favour of areas, sectors where employment is generated. However since introduction of liberalisation measures, this objective was not getting the priority

4. Reduction in inequalities Indian plans never made any serious attempts towards this. Planning Commission gave its approach in the 4th plan regarding inequqlities. In its opinion fiscal measures not so important in removing inequalities. To solve this problem it stressed on economic growth 5th plan gave removal of poverty as a major objective but did not make any reference to problem of inequality

 6th plan spelled the need to remove poverty

but did not give any steps to remove inequalities 7th plan did not pay any attention to this objective Inequality is closely linked with inequalities in ownership of agricultural land and concentration of economic power in industrial sector

5. Elimination of poverty
Removal of poverty was for the first time

mentioned as an objective in the 5th plan Till the completion of the 4th plan poor hardly benefited from the plans. This was due to defective approach of the economic planning, which encouraged concentration of economic power and caused inflation The commissions belief that trickle down effect of growth would be felt and poverty would be reduced. This was stated in 1978 draft plan

The 6th plan document realised the mistake and said that specific policy measures to influence the output and also favouring mass production More even and class distribution, paying special attention to stimulating growth in more backward regions

6. Modernisation For the 6th plan clearly gave modernisation as an objective Modernisation according to the plan document is the institutional and structural changes in economic activity. It means *shift in sectoral composition of trade * diversification of activities * advancement of technology and institutional innovation

 Over the planning period with this criteria there was modernisation
In the 7th plan the concept of modernisation was

narrowed down, and it now meant only technological advances Technological advances have taken place from 3 areas : * application of computers and electronics to production process * improvement in fuel efficiency of industrial equipments * use of new materials

The 7th plan 4 substantive elements of change gave priority to increasing agricultural production induced increasing privatisation of industrial activity Efficiency in manufacturing sector by liberalising imports Emphasis shifted from regulatory to facilitatory

1991 problems faced by the govt.

Inflation -16.7% Foreign exchange problem Deceleration of rate of growth of GDP

8th 5- year plan -1992 - 97

3 different govts. gave the approval to the

approach paper Average rate of growth 6.8% It considered the same objective as that of the 7th plan It emphasized on cooperative federalism Stressed importance on infrastructure development Plan indicative in nature, focussing on policies

 Also provided 15 year perspective aimed

to achieve 8% growth rate per annum in medium term and a rate of 6.5% during plan period GDP grew at 5.35% Shortfall due to poor performances in sectors of agriculture and industrial

8th 5- year Plan

Two main aims of the plan Alleviating poverty Providing safety net for those who will be affected by structural adjustment programme Actual employment growth rate 2% target 2.6%

9th 5 year plan

Growth with social justice and equality by

concentrating on agriculture rural development to provide more employment Target growth rate 8% actual 7.7% against the prevailing growth rate of 5.5% Long term vision doubling per capita income in next 10 years Actual performance -

Actual performance Benefits did not reach disadvantaged

SC and STs and minorities Regional imbalances across states and even within states was noticed

5- year plans

1st - 1951 56 2nd - 1956 61 3rd - 1961 66 Annual plans - 1966 69 4th - 1969 - 74 5th - 1974 79 6th - 1980 - 85 7th - 1985 - 90 Annual Plans - 1990 - 1992 8 th 1992 - 97 9th - 1997 - 2002 10th 2002 - 2007 11th 2007 - 2011

1st 5 year plan - 1950 - 56

2 main objectives Correction of disequilibrium caused by war and partition Proposed initiation of all round balanced development raising national income and stds. of living Highest allocation of resources for transport and communications no large scale industrialisation

2nd 5 year plan 1956 - 61

2nd plan was based on Mahalanobis model which emphasized adoption of large scale

industrialisation programmes Objectives Increase in national income so as to raise stds. of living Rapid industrialistion with emphasis on basic and heavy industries Expansion of employment opportunities Reduction of inequalities in income main aim creating basic industrial infrastructure