After gaining independence in 1947, India found itself in a state of poverty and underdevelopment, left by the colonial government. The country embarked on a journey to address the needs of its citizens within a sovereign democratic system. It was evident that political independence needed to be accompanied by economic progress. To achieve this, India initiated a process of economic planning.
Definition of Economic Planning: Economic planning involves the organized coordination and efficient utilization of a nation’s available resources to attain specific social and economic objectives within a predefined timeframe. Jawaharlal Nehru, one of India’s founding leaders, emphasized that economic planning goes beyond mere listing of activities; it is not just a matter of political idealism but rather a prevailing and effective approach in modern times. It serves as a superior method for advancing an economy and plays a crucial role in rapidly enhancing a nation’s productive capabilities. H.D. Dickenson notes that economic planning involves significant economic decisions, such as determining what to produce, how much to produce, and how resources should be allocated. These decisions are made consciously by an authorized body after a comprehensive assessment of the entire economic system.
In 1950, the Planning Commission was established with Jawaharlal Nehru as its first chairman. As per the Planning Commission, “Economic Planning implies the allocation of a nation’s resources across various developmental endeavors in line with national priorities.” This statement underscores the importance of strategically deploying resources to meet the country’s most pressing needs.
The Industrial Policy Resolution of 1948 and the Directive Principles of the Indian Constitution emphasized the pivotal role of the public sector in economic development. Simultaneously, the private sector was encouraged to contribute to the nation’s development goals.
Time Period of Planning in India
A Plan is a document showing detailed scheme, program and strategy worked out in advance for fulfilling an objective
Planning in India
| Plans | Time Period Covered | |
| First Plan | 1951-56 | |
| Second Plan | 1956-61 | |
| Third Plan | 1961-66 | |
| Annual Plan | 1966-67 | |
| Annual Plan | 1967-68 | |
| Annual Plan | 1968-69 | |
| Fourth Plan | 1969-74 | |
| Fifth Plan | 1974-79 | |
| Annual Plan | 1979-80 | |
| Sixth Plan | 1980-85 | |
| Seventh Plan | 1985-90 | |
| Annual Plan | 1990-91 | |
| Annual Plan | 1991-92 | |
| Eighth Plan | 1992-97 | |
| Ninth Plan | 1997-02 | |
| Tenth Plan | 2002-07 | |
| Eleventh Plan | 2007-12 | |
| Twelfth Plan | 2012-17 | |
Planning Objectives vs Plan Objectives
Planning Objectives, also known as “Perspective objectives,” are the long-term goals that are meant to be accomplished over a span of twenty years. These objectives serve as the foundation for what is known as a “Perspective plan,” which is built upon the framework of a five-year plan.
The primary planning objectives encompass:
(a) Growth (b) Modernization (c) Self-reliance (d) Equity
On the other hand, Plan Objectives, which are often sector-specific, are the short-term goals aimed at achievement within a five-year timeframe. For instance, in the initial five-year plan, the primary focus was on the development of the agricultural sector, while the subsequent five-year plan shifted its emphasis toward the growth of heavy and basic industries.
Despite the variation in specific goals across different five-year plans in India, they all ultimately aim to achieve:
(a) Growth (b) Equality
Difference between Planning Objectives and Plan Objectives
Planning Objectives
1. They are long-term objectives to be achieved over 20 years period.
2. They are general goals.
3. They are common to all plans.
4. They aim at structural changes.
5. They are also called ‘Perspective Plan’.
6. Their objectives relate to growth, modernisation, self-reliance and equity.
Plan Objectives
1. They are objectives to be achieved in short-term of 5 years.
2. They are specific goals.
3. They vary from plan to plan.
4. They aim at quantitative changes.
5. They are also called ‘Five Year Plan.’
6. They are different in different five-year plans. Basically the objectives relate to growth and equality.
Objectives of Planning in India
The objectives of planning in India can be categorized into long-term goals, which encompass:
- Modernization: Modernization entails the adoption of new technologies, innovative production methods, and a shift in societal perspectives. For instance, this may involve embracing high-yielding seed varieties or promoting gender empowerment. However, it’s worth noting that modernization, while beneficial, can also lead to reduced labor demand due to increased technological efficiency.
- Self-Reliance: Self-reliance refers to decreasing dependence on imports for goods that can be domestically produced. Achieving self-reliance is vital for a nation as it reduces vulnerability to foreign interference in domestic policies. India’s self-reliance objectives include ensuring self-sufficiency in food production, reducing reliance on foreign aid and imports through increased domestic production, boosting exports, and increasing the contribution of industries to the Gross Domestic Product (GDP).
- Economic Growth: Economic growth involves a sustained increase in the overall production of goods and services within a country over a specific period. Such growth implies that the economy can thrive without heavy reliance on external assistance. A key indicator of economic growth is the Gross Domestic Product (GDP), which measures the total market value of all goods and services produced in the country within a year. The distribution of this production across different economic sectors reflects the structural composition of the economy.
- Equity: Equity focuses on reducing income and wealth inequality, uplifting disadvantaged sections of society, and promoting a more equitable distribution of economic power. India’s socialist approach aims to enhance the living standards of all citizens and foster social justice by addressing disparities in income and wealth. Measures to achieve equity include land redistribution in rural areas, progressive taxation, policies to curb monopolistic practices, and targeted support for economically disadvantaged groups such as landless laborers, small farmers, economically disadvantaged individuals, and the handicapped.
Balancing the pursuit of higher economic growth with the goal of social justice is a crucial aspect of India’s economic planning. These two objectives are often referred to collectively as “Development with Social Justice,” signifying the need to harmonize economic progress with the promotion of a fair and just society.
Features of Economic Policy Pursued from 1950 till 1990
Economic policy in India between 1950 and 1990 can be divided into two distinctive phases, each with its own set of objectives and strategies:
Phase I: Growth-Oriented Development Strategy (1951-1965) – Import Substituting Industrialization
- First Five Year Plan (1951-56): The initial Five-Year Plan was primarily a restorative effort aimed at addressing the post-independence challenges. It sought a modest annual growth rate of 2.1% in national income, with a strong focus on agricultural development. The plan performed better than expected, achieving a 3.6% annual growth rate in national income.
- Second Five Year Plan (1956-61): The Mahalanobis model, named after its architect P.C. Mahalanobis, adopted an import substitution-led growth strategy, emphasizing the development of a robust industrial base, particularly heavy and basic industries. This strategy aimed for self-reliance but resulted in imbalances such as food shortages, inflation, foreign exchange problems, and unemployment. The plan aimed for 4.5% annual economic growth but achieved only 4%.
- Third Five Year Plan (1961-66): This plan retained the industrial strategy while focusing on the development of agriculture and related activities. It emphasized public sector growth, infrastructure development, and reducing economic concentration. Despite the aim of a 5.6% annual increase in national income and self-sufficiency in food production, this plan faced challenges, including bad harvests and conflicts, leading to a lower growth rate of 2.2% per annum.
Phase II: Equity-Oriented Development Strategy (1966-1990)
- Annual Plans (1966-69): These plans introduced the “Green Revolution,” shifting the focus toward technological advancements in agriculture to increase productivity. This approach included high-yielding seeds, chemical fertilizers, and controlled water supply. Agricultural and industrial sectors became more interconnected, and price support policies were introduced.
- Fourth Five Year Plan (1969-74): This plan aimed to achieve growth with stability, with an emphasis on reducing fluctuations in agricultural production and foreign aid dependence. Despite a target of 5.7% annual growth in national income, poor monsoons and power shortages led to an actual growth rate of 3.4%.
- Fifth Five Year Plan (1974-79): This plan primarily stressed the importance of economic growth in poverty reduction, targeting a 4.4% annual increase in national income. The economy’s performance during this plan was relatively better, with national income growing at a rate of 4.9% per annum.
- Sixth Five Year Plan (1980-85): This plan shifted its focus to food and fuel, witnessing the expansion of the Green Revolution and greater reliance on petrochemical and consumer durable industries. It marked a shift in anti-poverty strategy from general growth to targeted programs for the poor. The plan aimed for a 5.2% annual growth in national income and succeeded, mainly due to a good agricultural performance and growth in the service sector.
- Seventh Five Year Plan (1985-90): The plan concentrated on improving existing facilities and human resource development, with a direct approach to addressing poverty, unemployment, and regional disparities. Green Revolution was extended to new areas, emphasizing rice productivity in the Eastern region and dryland areas. The plan aimed for 5% annual growth in national income, ultimately exceeding this target.
In summary, the overarching objectives throughout this period were to accelerate economic growth, modernize agriculture and industry, achieve self-reliance, promote social justice, and reduce income inequality. However, as noted by Prof. A.K. Sen, there was an inherent conflict between the objectives of growth and welfare, making it challenging to achieve both simultaneously.
2.3.6 Short-Period Goals/Objectives of Plans
Table 2.5 Plan Objectives
| Plan | Emphasis or Focus Area |
| First FYP | Agricultural development |
| Second FYP | Import substitution led growth, heavy and basic industries |
| Third FYP | Economic sufficiency |
| Fourth FYP | Technological reforms in agriculture, growth with stability |
| Fifth FYP | Elimination of poverty |
| Sixth FYP | Food and fuel strategy |
| Seventh FYP | Human resource development |
| Eighth FYP | Privatisation, liberalisation and globalisation |
| Ninth FYP | Growth with social justice and equity |
| Tenth FYP | Growth with social justice and equity |
| Eleventh FYP | Faster, broad-based and inclusive growth |
| Twelfth FYP | Faster, sustainable and more inclusive growth |
Objective Type Questions
1.What is the primary goal of economic planning in India?
a) Achieving international recognition b) Promoting self-sufficiency in food production c) Maximizing imports and foreign aid d) Encouraging dependence on foreign assistance Answer: b) Promoting self-sufficiency in food production
2.Who was the first chairman of the Planning Commission of India? a) Mahatma Gandhi b) Jawaharlal Nehru c) Sardar Patel d) Dr. B.R. Ambedkar
Answer: b) Jawaharlal Nehru
3.What is the time period covered by the First Five-Year Plan in India?
a) 1951-55 b) 1956-61 c) 1961-66 d) 1966-70
Answer: a) 1951-55
4.What are the primary planning objectives in India’s economic planning?
a) Expansion and international recognition
b) Growth, modernization, self-reliance, and equity
c) Dependence on foreign aid and imports
d) Income and wealth inequality
Answer: b) Growth, modernization, self-reliance, and equity
5.What is the main focus of Plan Objectives in India’s Five-Year Plans?
a) Achieving long-term goals
b) Structural changes in the economy
c) Specific short-term goals for each plan
d) Income and wealth inequality
Answer: c) Specific short-term goals for each plan
6.Which phase of economic policy in India was characterized by “Import Substituting Industrialization”?
a) Phase I: Growth-Oriented Development Strategy (1951-1965)
b) Phase II: Equity-Oriented Development Strategy (1966-1990)
c) Phase III: Liberalization and Globalization (1991-present)
d) Phase IV: Sustainable and Inclusive Growth (2002-present)
Answer: a) Phase I: Growth-Oriented Development Strategy (1951-1965)
7.What was the primary focus of the Third Five-Year Plan (1961-66) in India?
a) Reducing income inequality
b) Achieving self-sufficiency in food production
c) Encouraging technological advancements in agriculture
d) Industrial growth and public sector expansion
Answer: d) Industrial growth and public sector expansion
8.During which Five-Year Plan in India was the “Green Revolution” introduced, focusing on technological advancements in agriculture?
a) First Five-Year Plan
b) Second Five-Year Plan
c) Third Five-Year Plan
d) Fourth Five-Year Plan
Answer: b) Second Five-Year Plan
9.What was the main emphasis of the Seventh Five-Year Plan (1985-90) in India?
a) Economic growth with stability
b) Promoting import substitution
c) Human resource development and addressing poverty
d) Self-reliance in food production
Answer: c) Human resource development and addressing poverty
10.What conflict did India face in the pursuit of both growth and welfare objectives during its economic planning period?
a) A conflict between urban and rural development
b) A conflict between government and private sector
c) A conflict between growth and income inequality
d) A conflict between self-reliance and import dependence
Answer: c) A conflict between growth and income inequality
11.What was the emphasis of the Eighth Five-Year Plan in India (1992-97)?
a) Growth with stability
b) Privatization, liberalization, and globalization
c) Technological reforms in agriculture
d) Self-reliance in food production
Answer: b) Privatization, liberalization, and globalization
12.Which plan aimed for “Faster, broad-based, and inclusive growth” in India?
a) Tenth Five-Year Plan
b) Eleventh Five-Year Plan
c) Twelfth Five-Year Plan
d) Fourth Five-Year Plan
Answer: b) Eleventh Five-Year Plan
13.During which phase of India’s economic policy was there an emphasis on the development of heavy and basic industries?
a) Phase I: Growth-Oriented Development Strategy (1951-1965)
b) Phase II: Equity-Oriented Development Strategy (1966-1990)
c) Phase III: Liberalization and Globalization (1991-present)
d) Phase IV: Sustainable and Inclusive Growth (2002-present)
Answer: a) Phase I: Growth-Oriented Development Strategy (1951-1965)
14.What is the primary goal of the Green Revolution in India’s economic planning?
a) Promoting imports of agricultural technology
b) Achieving self-reliance in food production
c) Encouraging heavy industry development
d) Reducing the role of the public sector
Answer: b) Achieving self-reliance in food production
15.Which Five-Year Plan in India primarily stressed the importance of economic growth in poverty reduction?
a) First Five-Year Plan
b) Fourth Five-Year Plan
c) Fifth Five-Year Plan
d) Seventh Five-Year Plan
Answer: c) Fifth Five-Year Plan
16.What was the emphasis of the Sixth Five-Year Plan (1980-85) in India?
a) Human resource development
b) Achieving self-sufficiency in food production
c) Food and fuel strategy
d) Import substitution-led growth
Answer: c) Food and fuel strategy
17.During which Five-Year Plan was there a shift in anti-poverty strategy from general growth to targeted programs for the poor in India?
a) Second Five-Year Plan
b) Fourth Five-Year Plan
c) Sixth Five-Year Plan
d) Seventh Five-Year Plan
Answer: c) Sixth Five-Year Plan
18.What was the primary goal of the Twelfth Five-Year Plan in India?
a) Achieving self-reliance in food production
b) Encouraging technological advancements in agriculture
c) Promoting import substitution
d) Achieving faster, sustainable, and more inclusive growth
Answer: d) Achieving faster, sustainable, and more inclusive growth
19.What was the primary focus of the Ninth Five-Year Plan in India?
a) Growth with stability
b) Privatization and liberalization
c) Growth with social justice and equity
d) Technological reforms in agriculture
Answer: c) Growth with social justice and equity
20.What is the main objective of the Perspective Objectives in India’s economic planning?
a) Achieving growth within a five-year timeframe
b) Achieving self-sufficiency in food production
c) Establishing long-term goals for a 20-year period
d) Reducing income and wealth inequality
Answer: c) Establishing long-term goals for a 20-year period