Five-year plans of India
From Wikipedia, the free encyclopedia
 |
Please help improve this article or section by expanding it. Further information might be found on the talk page or at requests for expansion. This article has been tagged since January 2007. |
Indian Economy is based on the concept of planning. This is carried through her five-year plans, developed, executed and monitored by the Planning Commission. With the Prime Minister as the ex-officio Chairman, the commission has a nominated Deputy Chairman, who has rank of a Cabinet Minister. Montek Singh Ahluwalia is currently the Deputy Chairman of the Commission. The Tenth Plan is currently underway.
Contents |
[edit] First plan (1951-1956)
Prime Minister Jawaharlal Nehru presented the first five-year plan to Parliament on December 8, 1951. Its total budget of 206.8 billion rupees ($23.6 billion in 1950 dollars exchange rate) was divided between seven areas: Agriculture and Community Development (17.4%), Irrigation and Power (27.2%), Transport and Communications (24%), Industry (8.4%), Social Services (16.64%), Rehabilitation, (4.1%) and Miscellaneous (2.5%). During First Five-Year Plan net domestic product went up by 15%. The monsoons cooperated, and harvests were good during the plan period, boosting exchange reserves and per capita income, which went up by 8%. Lower increase of per capita income as compared to national income was due to the rapid increase in population.
Many irrigation projects were started during this five year plan. Bhakra-Nangal, Hirakud, and Mettur dam in South India are few examples. The World Health Organization together with the Indian government addressed the health needs of children and reduced infant mortality in a big way. This was one of the reason for the very rapid increase in population during these years.
At the end of the plan (1956) five IITs were started as major technical institutions. University Grant commission was formed to take care of higher education needs from the funding point of view.
Contracts were signed to start 5 steel plants. However these plants did not come into existence until the middle of the next five year plan.
[edit] Second plan (1956-1961)
The second five-year plan focussed on industry, especially heavy industry. Domestic production of industrial products was encouraged, particularly in the development of the public sector. The plan followed the Mahalanobis model, an economic development model developed by 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.
The dams that were started in the first five year plan were finished in this plan and irrigation canals started feeding hundreds of thousands of hectares of newly irrigated land. Hydroelectric power projects were started in the second five year plan. Notable one being Mahatma Gandhi Hydro Electric project at Sharavati, Koyna Dam project in Present day Maharastra and then Bombay state.
Five steel mills at Bhilai, Durgapur, Jamshedpur were also started. Coal production was increased. More railway lines were added in the north east.
Atomic Energy Commission was formed in 1957 with Homi J. Bhabha as the head of the AEC. Nehru took Nuclear power development under his own wings, and supported Bhabha. Tata Institute of Fundamental Research was started during this plan period as the seed research institute. In 1957 a talent search and scholarship program was started to get the brightest young minds to start career in the nuclear field.
War with China was a rude awakening about the lack of defence readiness. Peace loving Nehru was dealt a blow by Mao Tse Tung, and his Hindi Cheeni Bhabhai slogan was found to be hallow.
Monsoons failed during these years and population explosion continued unabated.
Pakistan and U.S.A. were allies under the CEATO agreement. The U.S. administration looked at India as a semi communistic, socialistic country. The Non-Aligned Movement of which India was the founding member was seen by the western powers with suspicion.
All in all these years were not very productive for the Indian economy.
[edit] Third plan (1961-1966)
The planned stress was on agriculture, but due to the Sino-Indian War of 1962 focus shifted towards defence and development. The war exposed the weakness of the Indian economy.
In 1965-66, the Green Revolution was started for the advancement of Indian agriculture. The wars lead to rising prices in India. The priority was thus shifted to price stabilization.
India continued on with dam building. Hundreds of small and large dams were built during this five year plan. Many cement and fertilizer plants were also built. Punjab started producing an abundance of wheat.
Many primary schools were started in rural areas. In an effort to bringing democracy to the grass roots, Panchayat elections were started. The nation was reformulated under linguistic states in the first five year plan only. Now these states were given more and more development responsibilities.
State electricity Boards were formed. State secondary education Boards came into existence. States were made responsible for college level and high school level education. State Road transportation corporations were formed and local road building became state responsibility.
[edit] Fourth plan (1969-1974)
During the early period of the plan, several droughts affected the economy. Indian Currency was devalued due to rising inflation. Then an annual plan was introduced to resolve immediate problems, but the focus of the plan still remained on major problems such as unemployment and poverty. This focus remained unchanged despite the sharp rise in crude oil prices.
Mrs. Indira Gandhi was the Prime Minister of India. The situation in India's neighborhood was unstable, with the Vietnam War underway in Southeast Asia. She tried to control the capital market by nationalizing 19 of India's major banks. The situation in East Pakistan(now Bangladesh) was also getting worse. During 1971 more than ten million illegal Bangladeshi immigrants poured into India as refugees fleeing the reign of terror unleashed by Pakistani Army General Yahya Khan who was the military dictator of Pakistan.
The refugee crisis thus hijacked India's fourth five year plan. India sent 300,000 troops surrounding East Pakistan and liberating it in fifteen days. The new nation of Bangladesh was born in December 1971. Pakistan's 93000 troops surrendered to the Indian army, which were later released to Pakistan after the Simla Agreement of 1972.
Funds earmarked for the industrial development had to be used for the war effort. India also tested (underground) a "peaceful" atomic weapon in 1974 as a reply to President Nixon's crude gun-boat diplomacy of bringing the U.S. 7th fleet into the Bay of Bengal as a threat to the Indian army operation in Bangladesh (the East Pakistan).
[edit] Fifth plan (1974-1979)
Stress was laid on employment, poverty removal, and justice. The plan also focussed on self reliance with respect to agricultural production and defence. During the fourth and fifth plans, stress was on ratuinal minimum; but it was realized that poverty still plagued the nation. Hence, in 1978 the newly elected Morarji Desai government rejected the plan.
[edit] Sixth plan (1978-1983)
Called the Janata Government Sixth Five Year Plan. The new government rejected the Nehruvian Model of economy, laying stress on village and cottage industries and natural mobilization of resources, to increase employment.
When Rajiv Gandhi was elected as the prime minister, the young prime minister wanted India to make rapid industrial development. He wanted Information Technology to be used for the benefits of the masses of India. However computer phobia was so prevalent in the labor leaders of communist parties that he had to tread very slowly into this avenue.
Some concessions were given to the industries to experiment with computerisation, and was hooked on computers ever since.
The idea of a National Highway system was introduced for the first time and many roads were widened to accommodate the increase in road traffic.
The idea of tourism and India as a tourist destination started taking shape. After the devaluation of the rupee it became very cheap for foreigners visiting India and enjoying Indian luxury at a very low cost.
The planners and bureaucrats realized that public funds alone would not be able to achieve the required rate of growth. So they started thinking of bringing the private sector into the planning.
Family planning also had to be looked at seriously. The growth of population had to be curbed. China was achieving spectacular results with its forced sterilization method. But using force to enforce family planning in India won't work. However control of birth rate was made a priority. Educated people adopted to family planning readily. It was the rural population that still continued to have a high birth rate.
Control on food prices was eliminated and ration shops were closed. This increased the food prices rapidly, putting pressure on the family budget. Cost of living was going up faster than the increase in productivity during this plan period.
[edit] Seventh plan (1980-1985)
The Seventh Plan marked the comeback of the Indian National Congress Party into power. Stress was laid on improving the productivity level of industries by upgradation of technology.
[edit] Period between 1989-91
The 1989-91 years, was a time of political instability in India and hence no five year plan was implemented. Between 1990 and 1992, there were only Annual Plans. In 1991, India faced a crisis in Foreign Exchange (Forex) reserves, left with reserves of only about $1 billion (US). Thus, under pressure, the country took the risk of reforming the socialist economy. At that time Dr. Manmohan Singh (currently, Prime Minister of India) helped India to a great extent. It was the beginning of privatization and liberalization in India.
[edit] Eighth plan (1992-1997)
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.
[edit] Ninth plan (1997-2002)
The target growth rate for the ninth plan was proposed to be 7%. India was able to achieve the target as a sound base for rapid growth had already been laid in the country.
[edit] Tenth plan (2002-2007)
The main objectives of the 10th Five-Year Plan are:
- Reduction of poverty ratio by 5 percentage points by 2007;
- Providing gainful and high-quality employment at least to the addition to the labour force;
- All children in school by 2003; all children to complete 5 years of schooling by 2007;
- Reduction in gender gaps in literacy and wage rates by at least 50% by 2007;
- Reduction in the decadal rate of population growth between 2001 and 2011 to 16.2%;
- Increase in Literacy Rates to 75 per cent within the Tenth Plan period (2002-3 to 2006-7);
- Reduction of Infant mortality rate (IMR) to 45 per 1000 live births by 2007 and to 28 by 2012;
- Reduction of Maternal Mortality Ratio (MMR) to 2 per 1000 live births by 2007 and to 1 by 2012;
