Five-Year Plans of India

Background of the five-year Plan?

• Five-Year Plans (FYPs) are centralized and integrated national economic programs. Joseph Stalin implemented the first Five-Year Plan in the Soviet Union in 1928.

• India launched its First FYP in 1951, immediately after independence, under the socialist influence of India’s first prime minister, Jawaharlal Nehru.

Concept of FYPs?

• The idea of a five-year plan is simple- The Government of India prepares a document with all its income and expenditure for five years.
• The budget of the central government and all the state governments is divided into two parts: non-plan budget and plan budget.
• The non-plan budget is spent on routine items yearly. The planned budget is spent on a five-year basis as per the priorities fixed by the plan.
• The model of the Indian Economy was premised on the concept of planning based on five-year plans from 1951-2017.
• The Five Year Plans were formulated, implemented, and regulated by a body known as the Planning Commission.
• The Planning Commission was replaced by a think tank called NITI AAYOG in 2015.
• The Niti Aayog has come out with three documents — a 3-year action agenda, a 7-year medium-term strategy paper, and a 15-year vision document.

First Five-Year Plan:

• It was launched for the duration of 1951 to 1956, under the leadership of Jawaharlal Nehru.
• It was based on the Harrod-Domar model with a few modifications. 
• Its main focus was on the agricultural development of the country.
• This plan was successful and achieved a growth rate of 3.6% (more than its target of 2.1%). 
• At the end of this plan, five IITs were set up in the country. 

Second Five-Year Plan:

• It was made for the duration of 1956 to 1961, under the leadership of Jawaharlal Nehru. 
• It was based on the P.C. Mahalanobis Model made in the year 1953. 
• Its main focus was on the industrial development of the country.
• This plan lags behind its target growth rate of 4.5% and achieved a growth rate of 4.27%. 
• However, many experts criticized this plan and as a result, India faced a payment crisis in the year 1957.

 Third Five-Year Plan:

• It was made for the duration of 1961 to 1966, under the leadership of Jawaharlal Nehru. 
• This plan is also called ‘Gadgil Yojna’, after the Deputy Chairman of Planning Commission D.R. Gadgil.
• The main target of this plan was to make the economy independent. The stress was laid on agriculture and the improvement in the production of wheat. 
• During the execution of this plan, India was engaged in two wars: (1) the Sino-India War of 1962 and (2) the Indo-Pakistani War of 1965. These wars exposed the weakness in our economy and shifted the focus to the defense industry, the Indian Army, and the stabilization of the price (India witnessed inflation). 
• The plan was a flop due to wars and drought. The target growth was 5.6% while the achieved growth was 2.4%. 

Plan Holidays:

• Due to the failure of the previous plan, the government announced three annual plans called Plan Holidays from 1966 to 1969.
• The main reason behind the plan holidays was the Indo-Pakistani war and the Sino-India war, leading to the failure of the third Five Year Plan.
• During this plan, annual plans were made and equal priority was given to agriculture its allied sectors, and the industry sector.
• In a bid to increase the exports in the country, the government declared a devaluation of the rupee. 

Fourth Five-Year Plan:

• Its duration was from 1969 to 1974, under the leadership of Indra Gandhi.
• There were two main objectives of this plan i.e. growth with stability and progressive achievement of self-reliance.
• During this time, 14 major Indian banks were nationalized and the Green Revolution was started. Indo-Pakistani War of 1971 and the Bangladesh Liberation War took place. 
• Implementation of Family Planning Programmes was among the major targets of the Plan
• This plan failed and could achieve a growth rate of 3.3% only against the target of 5.7%.

Fifth Five-Year Plan:

• Its duration was 1974 to 1978.
• This plan focussed on Garibi Hatao, employment, justice, agricultural production, and defence.
• The Electricity Supply Act was amended in 1975, a Twenty-point program was launched in 1975, the Minimum Needs Programme (MNP), and the Indian National Highway System was introduced. 
• Overall this plan was successful and achieved a growth of 4.8% against the target of 4.4%.
• This plan was terminated in 1978 by the newly elected Moraji Desai government. 

Rolling Plan:

• After the termination of the fifth Five Year Plan,  the Rolling Plan came into effect from 1978 to 1980. 
• In 1980, Congress rejected the Rolling Plan, and a new sixth Five Year Plan was introduced. 
• Three plans were introduced under the Rolling plan: (1) For the budget of the present year (2) this plan was for a fixed number of years– 3,4 or 5 (3) Perspective plan for long terms– 10, 15, or 20 years. 
• The plan has several advantages as the targets could be mended and projects, allocations, etc. were variable to the country’s economy. This means that if the targets can be amended each year, it would be difficult to achieve the targets and will result in destabilization in the Indian economy. 

Sixth Five-Year Plan:

• Its duration was from 1980 to 1985, under the leadership of Indira Gandhi. 
• The basic objective of this plan was economic liberalization by eradicating poverty and achieving technological self-reliance.
• It was based on investment Yojna, infrastructural changes, and trends to the growth model.
• Its growth target was 5.2% but it achieved a 5.7% growth.

Seventh Five-Year Plan:

• Its duration was from 1985 to 1990, under the leadership of Rajiv Gandhi. 
• The objectives of this plan include the establishment of a self-sufficient economy, opportunities for productive employment, and up-gradation of technology.
• The Plan aimed at accelerating food grain production, increasing employment opportunities & raising productivity with a focus on ‘food, work & productivity
• For the first time, the private sector got priority over the public sector.
• Its growth target was 5.0% but it achieved 6.01%.

Annual Plans:

• Eighth Five Year Plan could not take place due to the volatile political situation at the center.
• Two annual programs were formed for the years 1990-91& 1991-92.

Eighth Five-Year Plan:

• Its duration was from 1992 to 1997, under the leadership of P.V. Narasimha Rao. 
• In this plan, the top priority was given to the development of human resources i.e. employment, education, and public health.
• During this plan, Narasimha Rao Govt. launched the New Economic Policy of India.
• Some of the main economic outcomes during the eighth plan period were rapid economic growth (highest annual growth rate so far – 6.8 %), high growth of agriculture and allied sector, and manufacturing sector, growth in exports and imports, improvement in trade, and current account deficit. A high growth rate was achieved even though the share of the public sector in total investment had declined considerably to about 34 %
• This plan was successful and got an annual growth rate of 6.8% against the target of 5.6%.

Ninth Five-Year Plan:

• Its duration was from 1997 to 2002, under the leadership of Atal Bihari Vajpayee. 
• The main focus of this plan was “Growth with Social Justice and Equality”.
• It was launched in the 50th year of independence of India.
• This plan failed to achieve the growth target of 6.5% and achieved a growth rate of 5.6%.

Tenth Five-Year Plan:

• Its duration was from 2002 to 2007, under the leadership of Atal Bihari Vajpayee and Manmohan Singh. 
• This plan aimed to double the Per Capita Income of India in the next 10 years.
• It also aimed to reduce the poverty ratio to 15% by 2012.
• Its growth target was 8.0% but it achieved only 7.6%.

Eleventh Five-Year Plan:

• Its duration was from 2007 to 2012, under the leadership of Manmohan Singh
• It was prepared by C. Rangarajan.
• Its main theme was “rapid and more inclusive growth”.
• It achieved a growth rate of 8% against a target of 9% growth. 

Twelfth Five-Year Plan:

• Its duration is from 2012 to 2017, under the leadership of Manmohan Singh.
• Its main theme is “Faster, More Inclusive and Sustainable Growth”
• Its growth rate target was 8%.

In 2024, there is no active five-year plan, the last active plan was from 2012-2017 as the central govt discontinued this 5-year plan policy in  2017. And opted for a long-term development strategy to be developed by Niti Aayog.

Related Links:

• MGNREGA
• Atma Nirbhar Bharat