Fifty Years of Indian Planning

Planning is very essential for any nation to achieve economic development. When India attained its independence, it has to face problems like poverty, economic inequality and social inequalities, etc. In order to achieve the goal of economic development, India planned its economy. It went for five years plans started in 1951. Planning Commission and National Development Council were set up. In the last fifty years India adopted various planning processes to achieve speedy economic development. Directive Principles of our Constitution also laid down that the state shall direct its policy towards securing economic development and economic equality.

The basic philosophy behind the Indian planning had been to increase production to the maximum to achieve high level of national and per capita income, to achieve full employment, to reduce inequalities of income and wealth and to set up a socialist society based on equality and justice and absence of exploitation. Mixed economy has also been important element of our planning. Mixed economy allows coexistence of public and private sectors. In mixed economy government plays a very important and positive role in the economic development. The government demarcates the scope of the two sectors. In the beginning public sector was given emphasis over private sector. The government allocated major proportion of the plan to defence, heavy and basic industries. It also allocated major portion for the creation of infrastructure like roads, railways, hydroelectric projects to ensure long term economic development.

Five year plans formed the core of Indian Planning. The basic aims of five year plans were to secure rapid economic growth and expansion of employment, reduction of disparities in income and wealth and creation of values and attitudes of a free and equal society. In the First Five Year Plan (1951-56) emphasis was on rapid agricultural development to achieve food self-sufficiency and it achieved its targets. So the emphasis in Second Five Year Plan (1956-61) was on development of heavy and basic industries based on Mahalnobis model. Also on establishing a socialistic pattern of society as the goal of economic policy. Then in the Third Plan (1961-66), the aim was to establish a self reliant and self-generating economy. But at the same time it had to give top priority to agriculture along with development of basic industries. The Fourth Plan of 1966 was abandoned due to drought, devaluation and inflationary recession. Instead, three annual plans (1966-69) also known as `Plan Holiday’ were implemented. Subsequently, in Fourth Plan (1969-74), the main objective was growth with stability. But during Fifth Plan (1974-79), the main objectives were removal of poverty and attainment of self-reliance through higher rate of growth and better distribution of income. But the removal of poverty could not take place due to failure of trickle down theory. In earlier plans it was understood that higher growth rate of economy will percolate downwards and poverty could be removed.

From then it was emphasized that poverty needed direct attack for its removal. There were two Sixth Plans. One Sixth Plan (1978-83) was brought under Janata Party. Its objectives were enlargement of the employment potential in agriculture and allied activities and small industries and to raise the incomes of the lowest income classes through a minimum needs programme. But it could not last long. New Sixth Plan (1980-85) was introduced by Congress (I) aiming at direct attack on poverty by creating conditions of an expanding economy. Then again in Seventh Plan (1985-90), the emphasis was on growth in foodgrains production, increase employment opportunities and raise productivity. Finally the Eighth Plan (1992-97) laid down its objectives of higher growth, full employment of poverty, population control and strengthening the infrastructure.

When we analyse the Fiver Year Plans, to a greater extent targets were achieved. We also became selfreliant but distribution of wealth and income could not take place. As a result the emphasis had been on various poverty eradication programmes. Since Sixth Plan various programs like IRDP, NREP, RLEGP, TRYSEM were introduced. Later on Jawahar Rozgar Yojna and Nehru Rozgar Yojna were introduced. Also the rate of growth of the economy by and large has been 3-3.5 percent.

Indian planning has shifted radically towards emphasis on private sector with the advent of liberalization and economic reforms started in 1991. Our balance of payment had gone down, rupee was deprecating and inflation was mounting. Shift in planning was inevitable to integrate into the world economy. Privatization is entering in every field including infrastructure like power and roads. Foreign direct investment is being encouraged. Convertibility of the rupee is on cards. Fiscal and monetary policies are also changing to help the economic reforms. Foreign equity participation is increasing. But full fledged market economy cannot operate in India. We have to continue the principle of mixed economy. Government has to play significant role in order to have a balanced economic development. It has to decentralize its economy and give emphasis to small scale and cottage industries because they are the biggest contributors in exports and earning foreign exchange. We should gradually open our economy to the market forces in selected areas because more than 40% of Indians live below poverty line. If we totally allow our economy to go for market economy, who will take care of our people and backward regions. So it is a question of balance mix otherwise real social justice along with growth will not take place which will create problems for both economy as well as society. Also planning alone cannot achieve the goals. It has to be supported effectively by proper implementation machinery.