Introduction

Economic planning is considered as the most systematic technique

for redressing all economic ills. Various countries of the world have
already experienced the successful implementation of economic
planning in the mean time.

Eulogising this experience of economic planning in different

countries of the world, India adopted economic planning in order to
overcome various economic ills faced by the country during the
middle-part of the twentieth century.

In India the first systematic attempt of economic planning was

made in 1934 when M. Visvesyaryya published his book ‘Planned
Economy for India’. Again in 1937, Indian National Congress set up
the National Planning Committee with Pt. Jawaharlal Nehru as
Chairman.

In the mean time 8 leading industrialists of Bombay (Mumbai)

submitted the ‘Bombay Plan’ in 1943. Again Shri M.N. Roy also
released simultaneously his ’10 year People’s Plan’. After that the
National Planning Committee submitted its long awaited report in
1948.

The Government of India also set up a Department of Planning and

Development in 1944 and it introduced short-term and long-term
plans for restoration of normalcy after war and for economic
reconstruction and development.

But in India the real beginning of Planning was made on March

1950 when the Indian Planning Commission was established. In
July, 1951 the Commission submitted its draft outline of the First
Five Year Plan to be effective from 1951-52 to 1955-56. In the mean
time we have completed almost eleven Five Year Plans.
OBJECTIVES
1. Economic Development:
The main objective of Indian planning is to achieve the goal of
economic development economic development is necessary for
under developed countries because they can solve the problems of
general poverty, unemployment and backwardness through it.

Economic development is concerned with the increase in per capita

income and causes behind this increase.

In order to calculate the economic development of a country, we

should take into consideration not only increase in its total
production capacity and consumption but also increase in its
population. Economic development refers to the raising of the
people from inhuman elements like poverty unemployment and ill
heath etc.

2. Increase Employment:
Another objective of the plans is better utilization of man power
resource and increasing employment opportunities. Measures have
been taken to provide employment to millions of people during
plans. It is estimated that by the end of Tenth Plan (2007) 39 crore
people will be employed.

3. Self-Sufficient:
It has been the objective of the plans that the country becomes self-
sufficient regarding food grains and industrial raw material like iron
and steel etc. Also, growth is to be self sustained for which rates of
saving and investment are to be raised. With the completion of
Third Plan, Indian economy has reached the take off stage of
development. The main objective of the Tenth Plan is to get rid of
dependence on foreign aid by increasing export trade and
developing internal resources.

4. Economic Stability:
Stability is as important as growth. It implies absence of frequent
end excessive occurrence of inflation and deflation. If the price level
rises very high or falls very low, many types of structural imbalances
are created in the economy.
Economic stability has been one of the objectives of every Five year
plan in India. Some rise in prices is inevitable as a result of
economic development, but it should not be out of proportions.
However, since the beginning of second plan, the prices have been
rising rather considerably.

5. Social Welfare and Services:

The objective of the five year plans has been to promote labour
welfare, economic development of backward classes and social
welfare of the poor people. Development of social services like
education, health, technical education, scientific advancement etc.
has also been the objective of the Plans.

6. Regional Development:
Different regions of India are not economically equally developed.
Punjab, Haryana, Gujarat, Maharashtra, Tamil Nadu, Andhra
Pradesh etc. are relatively more developed. But U.P., Bihar, Orissa,
Nagaland, Meghalaya and H.P. are economically backward. Rapid
economic development of backward regions is one of the priorities
of five year plans to achieve regional equality.

Causes
Cause # 1. Stagnant Economy:
When India was freed, it has deep marks of stagnation. During the
phase of fifty years of economic planning, its growth rate is zero or
near.

According to one estimate, growth of national income was about

1.15 per cent during 1860 to 1950 per year and growth of per capita
was at less than 0.5 per cent.

Similar trend has been noticed after the adaptation of plans. This
fact is also reflected from the national income by industrial origin.

Cause # 2. Poverty:
These five year plans have miserably failed to make a dent on
poverty as 40 per cent of population is in tight grip of poverty. The
poverty is greatly responsible for poor diets, low health and poor
standard of living. A large proportion of the population has to go
even without the most essential needs of daily life.

Cause # 3. Unequal Distribution of Income and Assets:

Another failure of the planning is that the distribution of income
and other assets in rural and urban areas continued to be skewed.
The bulk of increased income has been pocketed only by the rich
few while weaker section of the society live hand to mouth and lead
very miserable life.

Cause # 4. Increasing Unemployment:

Increasing unemployment in our country is the burning problem of
the day. At the beginning of the first five year plan the number of
unemployed was hardly 33 lakh but at the end of eighth plan it
reached 350 lakh. At the end of ninth plan, it is likely to exceed 400
lakh.

The pitiful position is found in rural areas where disguised

unemployment and white collar unemployment (educated
unemployment) in urban areas are in a deplorable position. The
rapid increase in unemployment situation is due torpid increase in
labour force due to rapid increase in population, use of capital
intensive techniques instead of labour-intensive techniques,
defective education system, inefficient government administration,
corrupt political environment and instable governments-both
central and states.

Cause # 5. Abnormal Growth of Population:

In all plans, main objective was to check over-population but it has
miserably failed to bridge the galloping population. The rapid
growth of population has aggravated the situation to the worst. This
problem gives birth to twin problems of poverty and
unemployment.

Cause # 6. Inflationary Pressure:

Inflation had been started with the onset of the heavy doses of
investment programmes during different five year plan periods.
Now, it turned to the gravity of the problem as it has created serious
imbalances in the socio- politico-economic relations. The people
with fixed income group find it extremely difficult to maintain the
standard of living.

Cause # 7. Adverse Balance of Payment:

Truly, the production of agricultural and industrial sector has
increased manifold but still we are dependent on imports. In our
plans, we have stressed on export promotion and import
substitution to correct the adverse balance of payment but no
headway has been seen in this direction. It has continuously been
unfavourable.

The situation has further been deteriorated since, the penultimate

year of Sixth Five Year Plan. The situation in Seventh Plan has not
been improved but it is still dismal. In 2001, total external debt was
of Rs. 471724 crores against Rs. 163001 crore in 1991.

Cause # 8. Unproductive Expenditure:

India is deficient in capital due to rising expenditure on
unproductive channels. Moreover, huge investments are made on
the construction of five star hotels and other wasteful consumption.
Its benefits go in the hand of few affluent people who generally
concentrate wealth. Consequently, rich becomes rich and poors lag
behind.

Cause # 9. Huge Amount of Deficit Financing:

To mobilise the resources for different plans, government has
absolutely failed to manage from internal resources. The
government at this time, left with no alternative of deficit financial.
From 1950-51 to 1984-85 total amount of deficit financing in the
country was Rs. 24440 crores. During Eighth Plan, it was proposed
to be Rs. 207000 (8.6% Eighth of total outlay) crores.

Cause # 10. Biased Growth Profile:

At large, Indian plans have given many evils like growth of
monopolistic practices, large inequalities, poverty but still it has
delivered biased growth profile in favour of more well-to-do section
of the society. It has widened the gap between man and man, region
to region. The result is that a large many are below poverty line.

Cause # 11. Vicious Circle of Poverty:

Another major objective of planning in India is the eradication of
poverty. However, we have badly failed on this front also as more
than 30% of India’s population is still-living below poverty line. We
are encircled by vicious circle of poverty. A large proportion of
India’s population does not get even bare necessities of life satisfied.

Cause # 12. Inadequate Social Development:

Despite the 55 years of economic planning in India, we have
miserably failed on the social development front. Economic
planning in India has not been able to make any social change,
particularly in the living standards of the common people and
curbing poverty. The national income and per capita income both
are extremely low as compared to developed countries. We are ill-
fed and ill-nourished.

Cause # 13. Defective Process of Planning:

The defective process of planning which came into force since the
beginning of the planning in India, is also responsible for the failure
of our economic planning. We have followed a fragmented approach
rather than integrative approach towards planning, with the result
that the development activities have not been commensurate with
the investments made in the Plans.

The other important reasons are:

(i) Unrealistic plans;

(ii) Over-ambitious plans;

(iii) Faulty implementation;

(iv) Lack of programmatic approach;

(v) Corrupt administration;

(vi) Non-coordination etc.

Cause # 14. Slow Economic Growth:
Another major reason of failure of economic planning in India is the
slow growth rate of Indian economy. The achievement of different
sectors during the plan period has been much below the scheduled
targets.

AIMS AND ACHIEVEMENTS

Achievement # 1. Increase in National Income and Per

Capita Income:
During planning period national income has increased manifold.
The average annual increase in national income was registered to be
1.2 per cent from 1901 to 1947.

This increase was recorded to be 3 per cent from 1950 to 2000-01.

Moreover, average annual growth rate of national income was 4 per
cent in 1970-80 which, further increased to 5 per cent in 1990-
2000.

The per capita income which was 254.7 at current prices in 1950-51
increased to Rs. 1741.3 in 1980-81 to Rs. 5365.3 in 1990-91 and
further to Rs. 16563.5 in 2000- 01. It is expected to be Rs. 20860.0
during 2003-04.

Achievement # 2. Development in Agriculture:

Agricultural productivity has also marked an upward trend during
the plan period. The production of food-grains which was 510 lakh
tones in 1950-51 increased to 176.4 million tones in 1990-91 and
further to 211.9 million tones in 2001-02.

Similarly, the production of cotton was 21 lakh bales in 1950-51 and

it was expected to be 908 million bales in 1990-91 and further 10.0
million tones in 2001- 02. In the same, the production of sugarcane
was expected to be 241.0 million tones in 1990-91 against the 69
lakh tones in 1950-51. It rose to 298.4 million tones in 2001-02.

Achievement # 3. Development of Industry:

In the first five year plan much of the capital was invested to
develop the industry and defence. About fifty per cent of the total
outlay of the plans was invested for their development. As a result,
industrial production has increased to a great extent. For instance,
the production of cotton cloth which was 4215 million sq. metres in
1950-51.

It was 31.1 million tones in 2001-02. In the same fashion, the

production of sugar was recorded to be 12047 thousand tones in
1990-91 against 1100 thousand tones in 1950-51. It further rose to
15520 thousand tones in 2000-01.

Achievement # 4. Development of Transport and

Communication:
During the planning period, much attention has been paid towards
the development of transport and communication. In the first two
plans, more than one-fourth of the total outlay was invested on the
development of transport and communication.

In 1990-91, the total length of roads increased to 19.92 lakh kms

which increased to 252.2 lakh kms in 1998-99. Similarly route of
railway was 63.1 thousand kms in 2001-02 against 53.6 thousand
km in 1950-51. The Ninth Plan outlay was 19.6%. .

Achievement # 5. Self Reliance:

During the last five decades, considerable progress seems to have
been made towards the achievement of self reliance. We are no
longer dependent on other countries for the supply of food-grains
and a number of agricultural crops. In the same fashion, we have
made substantial investment in basic and heavy industries. We are
in a position to produce all varieties of basic consumer goods.

The emphasis was extended was lord on the development of basic

industries like steel, power and chemical fertilizer. Similar stress
was given on achieving self sufficiency in different sectors.

Achievement # 6. Employment Generation:

In India, the problem of unemployment is most crucial. During the
first Nine plans much emphasis was laid on the creation of larger
employment opportunities, such as, emphasis on the establishment
of small and cottage industries, spread of technical education,
development of self-employment schemes, creation of larger
industries, improvement of agriculture and service sectors etc.

During the first two plans employment opportunities were

generated for about 16 million people.

Again during 1961-71 about 20 million people got fresh job

opportunities. Again during 1981-91, about 28 million people were
provided job opportunities. But with the huge growth of number of
working population, the backlog of unemployment at the end of
each plan is increasing at a rapid rate.

Total backlog which was 5.3 million at the end of first plan gradually
rose to 106 million by the end of Ninth Plan. This backlog on
employment front is likely to further increase during the Tenth Plan
Period.

Achievement # 7. Power:
Total installed capacity (including non-utility), which was only
2,301 MW in 1950, increased to 97,899 MW (including non-utility
of 12,079 MW) by the end of March, 2000. The cumulative capacity
in the public utilities as on March, 2000 in the country has reached
97,837 MW (provisional) comprising 23,816 MW as hydro, 70,186
MW as thermal, 2,680 MW as nuclear and 1,155 MW as wind
energy.

A capacity addition of 40,245 MW in the public utilities has been

targeted for the Ninth Five Year Plan period (1997-2002) and
against this achievement so far during the first three years of the
Plan period were 3,226 MW, 4,242 MW and 4,507 MW respectively.

Achievement # 8. Price Stability:

Attaining economic stability has been considered as one of the
major objective of economic planning throughout the entire plan
period. But unfortunately, the country has been subjected to series
of economic fluctuations and instability in the price level. Instability
and rising prices has been considered the biggest failure of
economic planning in India.
The average of inflation in terms of the Wholesale Price Index
(WPI) increased significantly from 3.3% in 1999-2000 to 7.1% in
2000-2001 due to substantial rise in administered prices of
petroleum products. During 2001-2002, the inflation declined in
terms of WPI.

The 52 weeks average inflation rate declined from 7% at the

beginning of 2001-2002 to 4.7% for the week-ended January 19,
2002. The point-to-point inflation rate reached a low of 1.3% by the
end of January, 2002 which was the lowest in over two decades.

Achievement # 9. Capital Formation:

In India due to the development of agriculture, industry and
defence, the rate of capital formation has also increased. In 1950-51,
the rate of capital formation was 11.0 per cent which in 2000-01
remarkably increased to 21.3 per cent.

Achievement # 10. Development of Science and

Technology:
In the era of planning, India has made much progress in the field of
science and technology. In reality, the development is so fast that
India stands third in the world in the sphere of science and
technology. Indian engineers and scientists are in a position that
they can independently establish any industrial venture.

Achievement # 11. Social and Miscellaneous Services:

Development of social and miscellaneous services is also another
important sector of our five year plans. It consists such vital services
as education, health and family planning, housing, labour welfare
and welfare of backward classes etc. and a considerable amount has
been allotted in our five year plans for the provision of these
services.

These services are significant from the point of view of the poor and
economically backward whose low level of living could be raised
with the help of these services. The outlay during the Ninth Plan on
social and economic services was Rs. 1,82,005 crores, i.e. 21.2% of
the total outlay. The outlay from second plan to Ninth plan moved
between 15% to 21% on social services.
Achievement # 12. Social Justice:
The planning in India has an objective of sustained growth with
social justice. It has also been emphasising the achievement of this
objective. As a result, these plans have been ensuring the
improvement of living standards of the people, removal of poverty,
creation of additional jobs, and reduction in inequalities of income
and wealth.

The objective of sustained growth with justice has been tried to be

achieved over the planning period through several measures like
land reforms, abolition of bonded labour, liquidation of rural
indebtedness, fixation of minimum wages, provision of basic
minimum needs, and reduction of concentration of power and
economic disparities. One of the main objectives of Ninth Plan is
growth with social justice and equity.
CONCLUSION

In our Introduction we have recalled the various stages in the preparation of the Plan
which we now submit to the Government. Its preparation has been a task undertaken
in partnership with the Central Government and the States and leaders of opinion in
all branches of national life whose counsel we have freely sought. In many directions
the Plan calls for a new and much larger effort than ever before. We feel confident
that the people of India will meet the challenge of the Second Five Year Plan.

In a Plan of such wide scope there is always room for differences in emphasis which
must be appreciated. Shri K. C. Neogy has specially stressed th^t in view of the
magnitude of the Plan it will be difficult to implement it in a period of five years and
that deficit financing on an excessive scale may prove dangerous to the economy
and may cause hardship to certain sections of the population. He has also drawn
particular attention to the need for balanced development of transport and production
generally. We agree that these considerations are important and should be
constantly kept in view in carrying out the Plan- These aspects have also been
considered fully in appropriate sections of the Plan.