Even before India gained its independence, the colonial government had established a planning board that operated from 1944 to 1946. Planning in India dates back to the 1930s. In 1944, three development plans were published by independent manufacturers and economists. Hence, planning was not entirely new to the economy even before independence. Soon after gaining independence, India’s authorities adopted the idea of formal economic planning as a useful strategy for influencing the economy to promote development and social justice. In 1950, the Planning Commission was created. The commission is independent of the government and is only answerable to the Prime Minister. The Minister of State with autonomous authority for planning and program implementation acts as the commission’s Deputy Chairperson, reporting directly to the Prime Minister. Under the direction of the commission, a staff creates national plans, which are then submitted to the National Development Council, which is made up of the Chief Ministers of the States and the Planning Commission, for approval. The proposed plan is subject to amendment by the council. The plan is then given to the cabinet and then to Parliament for approval, after which it becomes an operating document for the Central and State Governments.
Brief View of Five Year Plans
First Five-Year Plan (FY 1951–1955) made an effort to promote balanced economic growth while redressing imbalances brought on by World War II and the partition of India. Priority was given to projects involving agriculture, including those that involved both electricity generating and irrigation.
Second Five-Year Plan (FY 1956–60) placed a strong emphasis on the development of the economy’s infrastructure as well as industrialization, notably of the public sector’s basic, heavy industries. The plan also placed a strong emphasis on social objectives like a more equitable income distribution and the extension of the advantages of economic development to the sizable population of underprivileged people.
Third Five-Year Plan (FY 1961–1965) sought to significantly increase national and per capita income while strengthening the industrial base and making up for the previous plan’s neglect of agriculture. In accordance with the third plan, national income was to increase by more than 5% annually, and self-sufficiency in food grains was targeted by the middle of the 1960s.
The mid-1960s saw a disruption in planning due to economic issues. India experienced two wars in the 1960s: one with China in 1962 and one with Pakistan in 1965. The economy suffered a severe setback as a result of the high rise in defense spending, which also had a detrimental effect on the expansion of the agricultural and industrial sectors. Foreign funding was cut during the war in 1965. Prices increased as a result of everything. From FY 1966 and FY 1968, three annual plans served as a development framework while the plan’s policies and strategies were reevaluated.
Fourth five-year plan (FY 1969–1973) projected for a 24% increase in public development spending over the previous plan. 60% of plan costs came from the public sector, and 13% of plan funding came from foreign aid. 23% of governmental spending went to agriculture, including irrigation; the remainder was primarily allocated to transportation, industry, and electric generation. Although 5.7% annual national income growth was anticipated in the plan, the actual rate was only 3.3%.
Fifth Five-Year Plan (FY 1974–1978) was created in the midst of a sharp rise in crude oil prices in late 1973, and those price increases swiftly necessitated a number of adjustments. Later, in late 1976, the plan was accepted; but, because the new administration had other objectives and projects, it was abandoned at the end of FY 1977. Although the fifth plan was only in place for a single year, it offered some advice for investments over the course of the five-year term. In the fiscal years 1978 and 1979, the economy followed annual plans.
Sixth Five-Year Plan (FY 1980–84) was built on the idea of annual “rolling” plans and was meant to be flexible. It called for almost 1.9 trillion (in FY 1979 values) in development expenditures, of which 57% would come from the public sector and 90% would be funded domestically. Energy (29%), agriculture and irrigation (24%), mining (16%), transportation (16%), and social services (14%), would receive the majority of public sector development investment. The 5.1% annual GDP growth objective specified in the plan was surpassed by 0.3%. Only 10% of the impoverished were able to escape poverty.
Seventh Five-Year Plan (FY 1985–1989), more emphasis was placed on allocating resources for social and energy spending at the expense of business and agriculture. In actuality, transportation and communications saw the largest increase, accounting for 17% of public sector spending throughout this time. About 3.9 trillion in total spending was planned, of which 94% would come from domestic sources, including 48% from the public sector.
Eighth Five-Year Plan (April, 1992) placed more emphasis on market-based policy reform than it did on numerical goals. A total of 8.7 trillion yen was allocated for spending, of which 94% would come from domestic sources, 45% from the public sector. According to government data published in 1992, GDP growth was anticipated to rise from roughly 5% per year during the seventh plan to 5.6% per year during the eighth. Nonetheless, in 1994 experts predicted that yearly growth would be close to 4% over the Eighth Plan’s implementation phase.
Ninth Five-Year Plan is presented in the 50th year of India’s independence. The ninth five-year plan was unveiled. In order to eradicate poverty and increase economic growth while maintaining stable prices, the National Development Council’s ninth five-year plan prioritized agriculture and rural development. It also made sure that everyone, especially the most vulnerable members of society, had access to food and nutrition security. Finally, it provided the bare minimum services of providing safe drinking water, basic health care facilities, and universal education. This strategy included limiting population growth, ensuring environmental sustainability of the development process through social mobilization and participation of people at all levels, empowering women and socially disadvantaged groups like Scheduled Caste, Scheduled Tribes, and Other Backward Classes and Minorities as catalysts for socio-economic change and development, and promoting and developing people’s participatory bodies like Panchayat Raj institutions, co-ops, and other community-based organizations. The goals of the Ninth Plan are these very priorities.
Tenth Five-Year Plan: The first stage of the ten-year road map was only covered by the tenth Five Year Plan. The growth rates of 8% during the Tenth Plan period and 9.3% during the Eleventh Plan were thought to be achievable, and priority should be given to the expansion of employment-intensive sectors.
The tenth plan seeks a GDP growth estimate of 8%. Economic growth is not the only goal of national planning for the years 2002–2007. Over time, development goals have grown to be more widely defined in terms of improving human well-being rather than solely increasing GDP or per capita income.
Eleventh Five-Year Plan (2007-2012): The seven cardinal policy objectives that guide India’s centralized planning process are: growth, social justice & equity, modernization, self-reliance, food, productivity, and employment. They would continue to serve as the Eleventh Plan’s (2007–12) guiding principles, which will be in effect starting on April 1, 2007. Our preparation is heavily influenced by both financial and physical goals. But, it must be acknowledged that the fundamental components in the development of wealth for improved productivity, increased efficiency, and whole new ways of doing things are human and natural resources, scientific methodologies, and technologies. Hence, the Eleventh Plan would emphasize these elements that have hitherto gotten insufficient attention. The Eleventh Plan would be the means of putting the nation in a superpower position, both economically and strategically and scientifically. The Indian government expects the economy to expand at an average annual pace of 8.5% under the eleventh five-year plan. This suggests that in order to maintain imports at their current level of 12.1%, the agricultural sector must increase at a rate of 3.9%, industry at 9.9%, services at 9.4%, and exports at 16%. A subset of industry, the manufacturing sector, is expected to rise implicitly by 12%. Naturally, a number of factors would influence how the aforementioned growth rates interacted with one another. Some of these variables are related to the Indian economy’s internal processes, while others are influenced by the outside world. Only with constant technical advancement and the resulting need for well-organized R&D plans can the growth in agricultural output be sustained over the long run. The industrial sector has benefited greatly from deregulation over the past few years and is now steadily integrating with the global economy. Automobiles, medicines, biotechnology goods, specialized chemicals, and textiles are just a few of the subsectors that have reached previously unheard-of levels of global competitiveness and require help to keep their lead. The two essential and fundamental growth accelerators, infrastructure and talent development, are also receiving extra attention under the Eleventh Plan.
The economy’s fastest-growing sector right now, accounting for around 54% of GDP, is the services sector. By 2020, it is predicted that this industry would add 40 million employment and provide an additional $ 200 billion in yearly revenue. The government is paying particular attention to this sector in the Eleventh Plan so that its potential to generate employment as a growth parameter is fully realized. The Eleventh Plan strategy asks for additional emphasis on education, health, and other socially relevant concerns in addition to high growth rate with goals of enhancing livelihood assistance and boosting employment. The title of the plan, “Towards Faster & More Inclusive Development,” perfectly captures the Planning Commission’s approach to it. Innovative solutions are anticipated as a result of S&T’s significance in the development process. The development of the Eleventh Plan is occurring at a critical time. An organization must operate and provide in real time in a unipolar, genuinely globalized world where trade obstacles are being removed. Every industry, including R&D agencies like CSIR, is subject to intense and serious worldwide rivalry. Either we are overrun by competition, particularly from private sector, national and international R&D laboratories, or we maintain relevance through enhanced and defined emphasis with well-set and clear delivery protocols.
Twelfth Plan (2012–2017): Although the National Development Council (NDC) approved an 8% growth rate for the Twelfth Plan on December 27, 2012, the XII Five-Year Plan of the Government of India was originally intended to attain a 9% growth rate. In order to reduce poverty by 10% during the 12th Five-Year Plan, the government has set a goal. During the Plan time, Ahluwalia stated, “We intend to lower poverty estimates by 9% annually on a sustainable basis.” Earlier, he claimed that during the Eleventh Plan, the rate of poverty fall doubled when addressing a gathering of State Planning Boards and Planning agencies. Using the Tendulkar poverty threshold, the commission had stated that the rate of decline in the five years between 2004–05 and 2009–10 was approximately 1.5% points each year, which was double that of the time between 1993–95 to 2004–05. The initiative intends to improve the nation’s infrastructure projects while preventing any kind of congestion. The planning commission’s document seeks to entice private investments of up to US$1 trillion in the infrastructure expansion of the 12th five-year plan, which will also ensure that the government’s subsidy burden is reduced to 1.5 percent of GDP from 2 percent (gross domestic product). The UID (Unique Identification Number) will act as a platform for cash transfer of the subsidies in the plan.
The objectives of the Twelfth Five-Year Plan were:
- To create 50 million new work opportunities in the non-farm sector.
- To remove gender and social gap in school enrolment.
- To enhance access to higher education.
- To reduce malnutrition among children aged 0–3 years.
- To provide electricity to all villages.
- To ensure that 50% of the rural population has access to proper drinking water.
- To increase green cover by 1 million hectares every year.
- To provide access to banking services to 90% of households.
Future
When the Planning Commission was disbanded, no official plans for the economy are developed anymore, but five-year defense plans are being created. 2017 through 2022 would have been the most recent. There isn’t a thirteenth five-year plan, though.