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CONTEMPORARY INDIA

BITS Pilani
Pilani Campus

Tathagato Chakraborty

BITS Pilani
Pilani Campus

Economic Plans

INDIAS SITUATION POST INDEPENDENCE


Partition Economic Territorial

Backwardness Disputes

FORMATION OF THE PLANNING COMMISSION


The Planning Commission was set up in March 1950 to promote a rapid rise in the standard of living of the people by utilizing the resources of the country, increasing production and offering employment opportunities to all. The Planning Commission has the responsibility for formulating plans as to how the resources can be used in the most effective way.

FUNCTIONS OF THE PLANNING COMMISSION


Assessment of resources of the country Formulation of Five-Year Plans for effective use of these resources Determination of priorities, and allocation of resources for the Plans Determination of requisite machinery for successful implementation of the Plans Periodical appraisal of the progress of the Plan To formulate plans for the most effective and balanced utilization of country's resources. To indicate the factors which are hampering economic development.

1ST FIVE YEAR PLAN (1951-1956)

It was presented by the then Prime Minister Jawaharlal Nehru in the Indian parliament on 8th December,1951 Objectives Community and agriculture development Energy and irrigation Communications and transport Industry Land rehabilitation Social services Target GDP growth of 2.1 per year.

ALLOCATION OF THE PLAN BUDJET


land rehabilitation 4% social services 17% industry 9% transport & communication 24%

Plan Budjet(208.6 bn INR)

others 2%

irrigation & energy 27% agriculture & community development 17%

ACHIEVEMENTS

GDP growth achieved @ 3.6% per year Evolution of good irrigation system There was an improvement in roads, civil aviation,railways,manufacture of fertilizers,electrical equipments. Bhakra Dam and Hirakud Dam. Five Indian Institutes of Technology(IITs) were started as major technical institutions. University Grant Commission was set up to take care of funding and take measures to strengthen the higher education in the country.

2ND FIVE YEAR PLAN (1956-1961)


Objectives Rapid 25%

Industrialisation

increase in National Income


in employment opportunities

Increase

ACHIEVEMENTS
5 steel plants Hydro-electric power project Production of coal increased Increase in the number of railway lines The Atomic Energy Commission was formed in 1957 with Homi J. Bhabha as the first chairman. In 1957 a talent search and scholarship program was begun to find talented young students to train for work in nuclear power.

SOME SHORTCOMINGS

Mahalanobis Model

Unfavorable monsoon in 1957-58 and 1959-60


impacted agricultural production.

The Suez crisis blocked International Trading


Increasing commodity prices.

3RD FIVE YEAR PLAN (1961-1966)

Objectives Increased emphasis on agriculture Power sector given importance Increase in the National Income @ 5% per year. Promotion of economic development in backward areas. Prevent monopolies.

ACHIEVEMENTS

Green Revolution Setting up of Panchayat & Zila Parishads Emphasized on soil conservation, irrigation, aforestation, and dry farming. Building of fertilizer and cement plants. Development of social services and education in India. Improved the quality of life of Indian citizens, and played a crucial role in the growth and development of the country.

PLAN HOLIDAY (1966-69)


Three Annual Plans (1966-69) Plan holiday for 3years The prevailing crisis in agriculture and serious food shortage necessitated the emphasis on agriculture during the Annual Plans. During these plans a whole new agricultural strategy involving wide-spread distribution of High-Yielding Varieties of seeds, the extensive use of fertilizers, exploitation of irrigation potential and soil conservation was put into action to tide-over the crisis in agricultural production. During the Annual Plans, the economy basically absorbed the shocks given during the Third Plan, making way for a planned growth.

Fourth Five Year Plan 1969-1974

SITUATION
India had to reform and restructure its expenditure agenda, following the attack on India in the year 1962 and for the second time in the year 1965 Due to recession, famine and drought, India did not pay much heed to long term goals. It started taking measures to overcome the crisis.

The need for foreign reserves was felt

OBJECTIVES

Economic self-reliance Reduction of foreign-aid Intensive irrigated agriculture Promotion of industrial development

The target of over all growth rate was 5.7% per annum

ACHIEVEMENTS

The achievements of the fourth plan were below targets Agriculture growth was just at 2.8% Green revolution did not perform as expected Industry too grew at 3.9% The Indira Gandhi government nationalized 14 major Indian banks Actual growth rate achieved was 3.4%

Fifth Five Year Plan 1974-1979 SITUATION


The world economy was in a troublesome state when the fifth five year plan was chalked out

Prices in the energy and food sector skyrocketed and as a consequence inflation became inevitable

OBJECTIVES

The fifth plan proposed to achieve two main objectives viz, 'removal of poverty' (Garibi Hatao) and 'attainment of self reliance', through promotion of high rate of growth, better distribution of income and a very significant growth in the domestic rate of savings

Target of growth rate in GDP was 5.5% per annum

OBJECTIVES

to reduce social, regional, and economic disparities for developmental planning to enhance agricultural productivity to initiate land reforms to check rural and urban unemployment to emphasize on household industries to encourage self-employment through a well integrated local planning to encourage import substitution in areas like industrial machinery, chemicals, paper, iron and steel and non-ferrous metals to capture the markets with locational advantages to initiate appropriate use of fiscal, credit and production support policies in the cottage industry sector to develop labor intensive technological improvements

ACHIEVEMENTS

The greatest achievement was an unexpected rise of foreign exchange reserves. In 1974-75, Indian exports crossed 18%. Forex reserves reached up to Rs. 4,000 crs by March 1978-79 Food-grain production was above 118 million tons due to the improvement of infrastructural facilities In the 4th year of this plan, the growth rate was as high as 8.6 % The actual average annual growth rate was 3.9% per annum

ROLLING PLAN (1978 - 80)

The plan was terminated in 1978 (instead of 1979) when Janta Govt. came to power

There were 2 Sixth Plans. One by Janta Govt. (for 1978-83) which was in operation for 2 years only and the other by the Congress Govt. when it returned to power in 1980.

1980 - 1985

SIXTH FIVE YEAR PLAN

SITUATION

At the onset of the Sixth Five Year Plan India, Rajiv Gandhi, the then prime minister prioritized speedy industrial development, with special emphasis on the information technology sector From the Fifth Five Year Plan, the nation had been able to achieve self sufficiency in food. Moreover, the industrial sector was also diversified and science and technology also made a significant advance One of the major hindrances in the way of further development in this period was the boom in the Indian population

OBJECTIVES

Target growth of GDP was 5.3% per annum Increasing industrialization to increase the growth rate of the economy to concentrate on the promotion of efficient use of resources to control poverty and unemployment to initiate modernization for achieving economic and technological self-reliance to introduce Minimum Needs Program for the poor and needy with an emphasis to reduce the discrepancies in income and wealth accumulation to initiate Family Planning Programs in order to check the growing population trends to protect and improve ecological and environmental assets to promote the education at all levels

ACHIEVEMENTS

Achieved Average annual growth rate was 5.7% per annum The transport and communication system improved under this Plan The Indian national highway system was introduced for the first time and many roads were widened to accommodate the increasing traffic Tourism also expanded The sixth plan also marked the beginning of economic liberalization resulting in growth in standard of living of people Family planning also was expanded in order to prevent overpopulation

SEVENTH FIVE YEAR PLAN(1985-1989)

Sixth Five year plan laid the foundation

Sixth Five year plan fruitful in terms of productivity Rate of inflation in control This plan strove to achieve socialism & expansion of energy

OBJECTIVES

Anti-poverty program Improved facilities for education to girls


The government undertook to increase productivity

Communications Emergence of informatics, and hooking up of telecommunications with computers Transport inland waterways, product pipelines, civil aviation, coastal shipping

OBJECTIVES

Social Justice Using modern technology Agricultural development Anti-poverty programs Full supply of food, clothing, and shelter Increasing productivity of small and large scale farmers Making India an Independent Economy GDP of 5.3%

ACHIEVEMETS

A growth in labor force of 39 million people Employment was expected to grow at the rate of 4 percent per year Projections for Balance of Payments: Export Rs.60.7 thousand crore, Imports - (-) 95.4 thousand crore, Trade Balance- (-) Rs.34.7 thousand crore GDP OF 5.7%

PROBLEMS

1989-91 was a period of political instability in India and hence no five year plan was implemented Crisis in FOREX reserves(Left with only 1 $b reserves) Reforms in socialistic economy Free market economy- Privatization & Liberalizaton

EIGTH FIVE YEAR PLAN(1992-1997)

OBJECTIVES

To prioritize the specific sectors which requires immediate investment To generate full scale employment To promote social welfare measures like improved healthcare, sanitation, communication and provision for extensive education facilities at all levels To check the increasing population growth by creating mass awareness programs To encourage growth and diversification of agriculture To achieve self-reliance in food and produce surpluses for increase in exports To strengthen the infrastructural facilities like energy, power, irrigation

OBJECTIVES

To increase the technical capacities for developed science and technology To modernize Indian economy and build up a competitive efficiency in order to participate in the global developments To place greater emphasis on role of private initiative in the development of the industrial sector To involve the public sector to focus on only strategic, hightech and essential infrastructural developments To create opportunities for the general people to get involved in various developmental activities by building and strengthening mass institutions Attain a GDP of 6.2%

ACHIEVEMENTS
GDP growth of 6.7% was achieved Modernization of industries Liberalization , privatization & globalization Rise in Employment Level Poverty, which still afflicted 55% of the population in 1973-74, fell to 39% The literacy rate rose from 52% to 65%

NINTH FIVE YEAR PLAN(1997-2002)

OBJECTIVES
To prioritize agricultural sector and emphasize on the rural development To generate adequate employment opportunities and promote poverty reduction To stabilize the prices in order to accelerate the growth rate of the economy To ensure food and nutritional security

OBJECTIVES
To provide for the basic infrastructural facilities like education for all, safe drinking water, primary health care, transport, energy To check the growing population increase To encourage social issues like women empowerment, conservation of certain benefits for the Special Groups of the society To create a liberal market for increase in private investments To attain GDP growth of 6.5%

ACHIEVEMENTS

GDP annual growth achieved 5.35 % Real investment and the savings rates continued to rise modestly. Substantial liberalisation of central industrial licensing and controls. Reduction in tax rates, the far-reaching liberalization in the trade sector. Reduction in tariff rates changed the business environment and scope for private investment.

Quantitative restrictions were removed at the end of the 9th Plan period.

10TH FIVE YEAR PLAN (2002-2007)


Objectives Reduction of poverty ratio by 5 percentage points by 2007; Providing high-quality employment All children in India in school by 2003; all children to complete 5 years of schooling by 2007; Reduction in gender gaps in literacy rates 2007; Increase in Literacy Rates to 75 per cent within the Tenth Plan period (2002 to 2007);

10TH FIVE YEAR PLAN (2002-2007)


Objectives Continued Increase in forest and tree cover to 25 per cent by 2007 and 33 per cent by 2012; All villages to have sustained access to potable drinking water within the Plan period; Cleaning of all major polluted rivers by 2007 and other notified stretches by 2012; Target GDP is 8%

ACHIEVEMENTS

Achieved GDP 7.66% The overall growth in agricultural sector was 2.5% Growth of manufacturing sector from 3.3% to 8.6% Service sector was fastest growing sector at 15.3% Construction sector grew from 7.5% to 10.8%

11 TH FIVE YEAR PLAN (2002-2007)

Objectives

Income & Poverty


Accelerate GDP growth from 8% to 10% and then maintain at 10% in the 12th Plan in order to double per capita income by 2016-17 Increase agricultural GDP growth rate to 4% per year to ensure a broader spread of benefits Create 70 million new work opportunities. Reduce educated unemployment to below 5%.

Education
Reduce dropout rates of children from elementary school from 52.2% in 2003-04 to 20% by 2011-12 Develop minimum standards of educational attainment in elementary school, and by regular testing monitor effectiveness of education to ensure quality Increase literacy rate for persons of age 7 years or above to 85% Lower gender gap in literacy to 10 percentage points

Health

Reduce infant mortality rate to 28 and maternal mortality ratio to 1 per 1000 live births Provide clean drinking water for all by 2009 and ensure that there are no slip-backs Reduce malnutrition among children of age group 0-3 to half its present level Reduce anaemia among women and girls by 50% by the end of the plan

Women and Children


Raise the sex ratio for age group 0-6 to 935 by 2011-12 and to 950 by 201617 Ensure that at least 33 percent of the direct and indirect beneficiaries of all government schemes are women and girl children Ensure that all children enjoy a safe childhood, without any compulsion to work

Infrastructure

Ensure electricity connection to all villages and BPL households by 2009 and round-the-clock power. Ensure all-weather road connection to all habitation with population 1000 and above (500 in hilly and tribal areas) by 2009, and ensure coverage of all significant habitation by 2015 Connect every village by telephone by November 2007 and provide broadband connectivity to all villages by 2012

Environment
Increase forest and tree cover by 5 percentage points. Attain WHO standards of air quality in all major cities by 2011-12. Treat all urban waste water by 2011-12 to clean river waters.

1st plan

Target GDP 2.1%

Achieved GDP 3.6%

2nd plan

Target GDP 4.5%

Achieved GDP 4.27%

3rd plan

Target GDP 5.6%

Achieved GDP 2.84%

4th plan

Target GDP 5.7%

Achieved GDP 3.30%

5th plan

Target GDP 4.4%

Achieved GDP 4.80%

6th plan :

Target GDP 5.2%

Achieved GDP 5.66%

7th plan

Target GDP 5.0%

Achieved GDP 6.01%

8th plan

Target GDP 5.6%

Achieved GDP 6.78%

9th plan

Target GDP 6.5%

Achieved GDP 5.35%

10th plan
Target GDP 8%
Achieved GDP 7.8%

11th plan
Target GDP 10%

????

1950s

1960s

1970s

1980s

1991

1991/9 2 to 1996/9 7 5.7

1997/9 8 to 2002/0 3 5.2

2003/0 2007 4 to 2008 2006/0 7 8.7 8.7

1) Real GDP Growt h 1.1)Ag ricultur e

3.6

4.0

2.9

5.6

5.3

2.7

2.5

1.3

4.4

4.0

3.7

0.9

4.9

2.6

1.2)Ind 5.8 ustry 1.3) Manuf acturin g 5.8

6.2 5.9

4.4 4.3

6.4 5.8

5.7 4.8

7.0 7.5

4.1 3.9

8.3 9.1

8.6 9.4

1.4)Se rvices
2) ICOR

4.2
3.5

5.2
4.3

4.0
3.6

6.3
6.6

5.9
4.6

6.4
4.0

7.8
4.6

10.2
3.6

10.6
NA

REAL GDP GROWTH


Country 1960s 1970s 1980s 1990s 2000-2006

Brazil China India Indonesia Korea Mexico

5.9 3.0 4.0 3.7 8.3 6.8

8.5 7.4 2.9 7.8 8.3 6.4

3.0 9.8 5.6 6.4 7.7 2.3

1.7 10.0 5.7 4.8 6.3 3.4

3.1 9.5 7.0 4.9 5.2 2.9

Philippines S.Africa Thailand

5.1 6.1 7.8

5.8 3.3 7.5

2.0 2.2 7.3

2.8 1.4 5.3

4.8 4.1 5.0

Source World Development Indicators,World Bank

ICOR
Country Brazil 1960s 2.6 1970s 2.1 1980s 5.5 1990s 9.9 2000-2006 5.1

China
India Indonesia Korea Mexico Philippines S.Africa Thailand

7.9
4.3 2.4 1.5 3.8 3.9 2.6 3.4

4.8
6.6 2.3 2.5 4.1 4.0 6.2 4.2

3.8
3.6 4.6 3.6 8.8 10.7 8.0 4.1

4.0
4.1 6.9 5.7 6.0 8.2 10.7 6.9

4.3
4.0 4.7 5.7 7.6 4.3 4.2 4.5

Source World Development Indicators,World Bank

DEMOGRAPHIC INDICATORS
1996 Populatio n(million) Urban Populatio n(%) Sex Ratio( males for 100 females) 2001 2006 2011

934.22

1012.39

1094.13

1178.89

27.23

28.77

30.35

31.99

107.9

107.2

106.6

106.0

PROJECTED AGE STRUCTURE (IN MILLION)


1997 Under 15 15-59 353.64 532.60 2002 245.11 610.55 2007 334.80 692.64 2012 337.93 758.61

60+
Dependency Ratio: Young Old Total

63.64
0.66

71.94
0.57

84.01
0.48

98.50
0.45

0.12 0.78

0.12 0.69

0.12 0.60

0.13 0.58

DISTRIBUTION OF LABOUR FORCE


Population millions 1978 1983 1994 1997 2002 2007 2012 637.6 718.2 895.0 951.2 1028.9 1112.9 1196.4 2.16 2.10 1.85 1.57 1.57 1.45 % Growth Labour Force millions 255.8 286.6 368.5 397.2 449.6 507.9 562.9 2.07 2.39 2.27 2.48 2.44 2.06 Growth%

PROJECTION OF NATIONAL POVERTY RATIO


1996-97 2001-02 2006-07 2011-12

Rural Urban Total

30.55 25.58 29.18

18.61 16.46 17.98

9.64 9.28 9.53

4.31 4.49 4.37

LITERACY RATES
percentage of literates
90.00% 80.00% 70.00% 60.00% 50.00% 40.00% 34.45% 28.90% 18.33% 52.21% 65.38% 79.90%

43.57%

30.00%
20.00% 10.00% 0.00% 1951

1961

1971

1981

1991

2001

2009

percentage of literates

INDIA : VISION 2020

Agriculture and food processing -- with a target of doubling the present production of food and agricultural products by 2020. Agro food processing industry would lead to the prosperity of rural people, food security and speed up the economic growth; Infrastructure with reliable and quality electric power including solar farming for all parts of the country, providing urban amenities in rural areas and interlinking of rivers; Education and Healthcare: To provide social security and eradication of illiteracy and health for all;

INDIA : VISION 2020


Information and Communication Technology: This is one of our core competencies and wealth generator. ICT can be used for tele-education, telemedicine and e-governance to promote education in remote areas, healthcare and also transparency in the administration; and Critical technologies and strategic industries would witness the growth in nuclear technology, space technology and defence technology

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