FIVE-YEAR PLANS OF INDIA

The Planning Commission was set up by a Resolution of the Government of India in March 1950 in pursuance of declared objectives of the Government to promote a rapid rise in the standard of living of the people by

efficient utilization of the resources of the country, increasing production and

offering opportunities to all for employment in the service of the community.

o The Planning Commission was charged with the responsibility of

Making assessment of all resources of the country,

Augmenting deficient resources, Formulating plans and Balanced utilization of resources and determining priorities.

FIRST FIVE YEAR PLAN (1951-1956)

The first Indian Prime Minister, Jawaharlal

Nehru presented the first five-year plan to the Parliament of India on 8 December 1951.

The plan addressed, mainly, the agrarian sector, including investments in dams and irrigation.

Total budget: 206.8 billion (INR) or USD$23.6 billion.

OBJECTIVES

ACHIEVEMENTS

Improvement in standard of living Community and agriculture development Energy and irrigation Communications and transport Industry Land rehabilitation Social services Target of GDP growth 2.1 per year Achieved had been 3.6% per year

GDP 3.6% per year Evolution of good system

irrigation

Improvement of

Roads Civil aviation Railways Telegraphs Posts Manufacture of fertilizers Electrical equipment

SECOND FIVE YEAR PLAN (1956-1961)

OBJECTIVES To increase the national income by 25%. To make the country more industrialized To increase employment opportunities so that every citizen gets a job

ACHIEVEMENTS

5 steel plants A hydro-electric power project Production of coal increased More railway lines Land reform measures

Development of

Mining and industry Community and agriculture development Power and irrigation Social services Communications and transport Miscellaneous

Improved the living standards of the people

The large enterprises in seventeen industries were nationalized

THIRD FIVE YEAR PLAN

(1961-1966)
OBJECTIVES

ACHIEVEMENTS

More stress to agriculture

Decentralization

subsidies Sufficient help

Organizations formed
Panchayat Zila Parishads

Effective use of country's resources To increase the national income by 5% per year To increase the production of agriculture so that the nation is self sufficient in food grains To provide employment opportunities for every citizen of the country To establish equality among all the people of the country

Laid emphasis on
oil conservation irrigation Afforestation dry farming

Many fertilizer and cement plants were built Green Revolution

FOURTH FIVE YEAR PLAN (1969-1974)

OBJECTIVES

ACHIEVEMENTS

To reform and restructure govts. expenditure agenda (defense became one major expense) To facilitated growth in exports To alter the socio economic structure of the society

Great advancement has been made with regard to India's national income considered as one of the emerging powers served as a stepping stone for the economic growth Food grains production increased

FIFTH FIVE YEAR PLAN 1974 TO1979

OBJECTIVES

PROBLEMS

To reduce social, regional, and economic disparities To enhance agricultural productivity To check rural and urban unemployment To encourage selfemployment Production support policies in the cottage industry sector To develop labor intensive technological improvements

The international economy was in a trouble Food, oil, and fertilizers where prices sky-rocketed Several inflationary pressures

ACHIEVEMENTS

Food grain production was above 118 million tons due to the improvement of infrastructural facilities Bombay High had shot up the commercial production of oil in India

SIXTH FIVE YEAR PLAN 1980 TO1985

OBJECTIVES

ACHIEVEMENTS

To improve productivity level

To initiate modernization for achieving economic and technological self-reliance To control poverty and unemployment To develop indigenous energy sources and efficient energy usage To promote improved quality of life of the citizens To introduce Minimum Needs Program for the poor To initiate Family Planning

Speedy industrial development

Emphasis on the information technology sector self sufficiency in food science and technology also made a significant advance several successful programs on improvement of public health government in the Indian healthcare sector Government investments in the Indian healthcare sector

SEVENTH FIVE YEAR PLAN 1985 TO 1989

OBJECTIVES

ACHIEVEMENTS

Anti-poverty program Improved facilities for education to girls The government undertook to increase productivity of Oilseeds,Fruits,Vegetables Pulses,cereals,Fish Egg,Meat,milk. Communications Emergence of informatics, and hooking up of telecommunications with computers Transport

Social Justice Removal of oppression of the week 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

PERIOD BETWEEN 1990-1992

1989-91 was a period of economic instability in India and hence no five year plan was implemented.

In 1991, India faced a crisis in Foreign Exchange (Forex) reserves, left with reserves of only about US$1 billion. Thus, under pressure, the country took the risk of reforming the socialist economy.

EIGHTH FIVE YEAR PLAN 1992 TO1997

OBJECTIVES

ACHIEVEMENTS

Prioritize the specific sectors which requires immediate investment To generate full scale employment 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 strengthen the infrastructural facilities To place greater emphasis on role of private initiative in the development of the industrial sector

Rise in the employment level Poverty reduction Self-reliance on domestic resources Self-sufficiency in agricultural Production GDP Growth Per Annum 5.6

NINTH FIVE YEAR PLAN 1997 TO 2002

OBJECTIVES

To prioritize rural development To generate adequate employment opportunities To stabilize the prices To ensure food and nutritional security 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

To create a liberal market for increase in private investments

ACHIEVEMENTS

A combined effort of public, private, and all levels of government Ensured the growth of India's economy. Service sector showed fast growth rate

TENTH FIVE YEAR PLAN (2002-2007)

OBJECTIVES

To transform the country into the fastest growing economy of the world Targets an annual economic growth of 10% Human and social development The social net Industry and services: Industry, Minerals, Energy, Information technology, Tourism, Real estate, Construction, Internal trade

Forests and environment Science and technology Special area programs Schooling to be compulsory for children

ELEVENTH FIVE YEAR PLAN (2007-2012) OBJECTIVES

Income & Poverty

Education
Health Women and Children Infrastructure Environment

LIBERALIZATION

INTRODUCTION
Liberalization of the economy means to free it from direct or physical controls imposed by the government. Economic reforms were based on the assumption that market forces could guide the economy in a more effective manner than government control. Examples of one other underdeveloped countries like Korea, Thailand, Singapore, etc. that had achieved rapid economic development as a result of liberalization were kept in consideration. Economic liberalization refers to both macroeconomic stabilization and micro-structural change.

WHAT MADE INDIA TO LIBERALIZE

A Balance of Payments crisis in 1991 which pushed the country to near bankruptcy. the Rupee devalued and economic reforms were forced upon India. Indian central bank had refused new credit and foreign exchange reserves had reduced to the point that India could barely finance three weeks worth of imports

REFORMS DURING
LIBERALIZATION

Abolition of industrial licensing and registration

Liberalizing the MRTP act

Freedom for expansion and production

Increase in the investment limit of the small industries Freedom to import capital goods Freedom to import technology Free determination of interest rates

IMPACT OF THESE REFORMS

Annual growth in GDP

A rate of growth that will double average income in a decade Rapid Growth in all sectors. Exports of information technology enabled services particularly strong.

COMPONENTS OF LIBERALIZATION

Industrial Liberalizatio n

Trade Liberalizatio n

Fiscal Sector Reforms

Financial Liberalizatio n

1.Industrial Liberalization
Industrial Sector was among the first sectors to be liberalized in India in a series of measures. Industrial licensing has been abolished except in a small number of sectors where it has been retained on strategic considerations.

Abolition of industrial licensing,

Reduction in the reservation of public sector, Facilitated easy access to foreign technology,

Restriction were removed on expansion and,

Opening the economy to FDI.

FOREIGN DIRECT INVESTMENT IN INDIA

Foreign investment is more than 24% in the equity capital of units manufacturing items reserved for the small scale industries. Foreign Investment Promotion Board (FIPB) is a competent body to consider and recommend foreign direct investment.

2.Trade Liberalization
Trade policy allowing domestic providers (of goods and/or services) to compete more freely in world markets and foreign providers.
TRADE SECTOR REFORMS

ELIMINATION OF IMPORT LICENSING

RATIONALISATION OF TARIFF STRUCTURE

ADOPTION OF FLEXIBLE EXCHANGE RATE

3. Financial Liberalization
Financial liberalization (FL) refers to the deregulation of domestic financial markets and the liberalization of the capital account. In one view, it strengthens financial development and contributes to higher long-run growth. In another view, it induces excessive risk-taking, increases macroeconomic volatility and leads to more frequent crisis.

FINANCIAL LIBERALIZATION
REFORMS

REFORMS IN BANKING SECTOR

REFORMS IN CAPITAL MARKET

REFORMS IN INSURANCE

4. Fiscal Sector Reforms

India's fiscal sector reforms help to raise the rate of savings and investment in India. This further helps to enhance the productivity of public expenditures.

India has established itself as one of the fastest growing economies in the world. India is also advancing towards the economical growth and improvement in literacy.

During 1999-2000, India's domestic savings and investment was estimated to grow by 23% and Indian economy was expected to grow by 6.4% although the average growth rate declined to 6.0% in comparison to earlier year.

In the first five year plan, India had attained an average annual growth rate by 3.5%. Indian economy showed an average growth rate of 6.4%, which was 5.9% in the 80's. At the end of the 8th Five Year Plan, the annual growth rate of India reached 6.9 percent. During the period from 1991-92 the Indian economy passed through a tough time. The overall economic growth in this period declined to 1.1% and the total fiscal deficit became 8% of the GDP.

Foreign Investments after liberalization

Total Foreign Investment (US$ million) US$ million
18000 16000 14000 12000 10000 8000 6000 4000 2000 0

15,872

5,138 103
1990-91 1994-95

5,385

6,789

8,152 5,639

1997-98

2000-01

2001-02

2002-03

2003-04

Indian Foreign Exchange Reserves: a steady rise after liberalization

Foreign exchange reserves (US$ billion) 150 100

118.3 75.4 54.1 17.0

1995-96 2001-02 2002-03 2003-04

50

2.2
0 1990-91

Import duty Reductions after liberalization

Reduction in Peak Customs Duties on Manufactured items
160 140

in per cent

120 100 80 60 40 20 0

150 110

50
1991 Mar-92 Mar-95

42
Mar-97

38.5
Mar-00

30
Mar-02

25
Mar-03

20
w.e.f March 2004

Challenges Ahead
1. Governance Need for elimination of large number of Rules & Regulations in the books. Sharply reducing the number of implementing agencies. Moving towards single window clearance.

2.

Infrastructure: A Challenge and an opportunity

Investments required up to 2012 US$ 334 billion Power Generation - US$ 143 billion. Power Transmission & Distribution US$ 116 billion. Roads US$ 40 billion. Ports US$ 20 billion. Railways US$ 15 billion.

CONCLUSION

Where India used to have one stock exchange, which still operated pretty much like in the nineteenth century, today it has a modern stock exchange running parallel to that one.

The Capital Issues Committee was abolished, and companies were allowed to borrow freely.
Where the banking system at one stage had to lend over 60 percent of its deposits to the government, and most of the others had to be lent as the government dictated, now it has a large degree of freedom to lend where commercial considerations dictate.

ARGUMENTS IN THE FAVOR OF LIBERALIZATION

Increase in rate of economic growth Increase in competitiveness of industrial sector Reduction in poverty and inequality Fall in fiscal deficit Control on prices Decline in deficit of BOP Increase in Efficiency

ARGUMENTS AGAINST LIBERALIZATION

Less importance to agriculture.

Pressure by IMF and World Bank. More depending on Foreign Debt. Dependence on Foreign technology. Undue importance to Privatization. Problem of Unemployment.