Five Year Plan and their Importance

Five Year Plan is usually spread over a period of two to three years. The first stage is the consideration of the general approach, to the formulation, involving an examination of the state of economy, an appraisal of past trends in production, and the rate of growth in relation to the long-term view of the economy. The second stage consists of studies, which are intended to lead to a consideration of the physical content of the plan. While these studies processed, the planning commission constitutes group for each sector, composed of its own specialists and those of Ministries and non-official experts, while the review the situation in their respective field and make the assumptions to be made in the formulation of the plan, and indicate the targets of production to be achieved. The five years plans are discussed as follows:

  1. The First Five-Year Plan (1951-55): The World war II and India’s participation caused regional imbalances and ruined the economy. This Five year plan aimed to stimulate the balanced economic development by correcting the regional imbalances. Therefore, this plan emphasized on the projects related to agriculture, power generation and irrigation.
  2. The Second Five-Year Plan (1956-60): This plan focused on industrialization of public sector based small and heavy industries and encouraged the infrastructural activities. It also aimed at achieving equable distribution of income and providing benefits to the unprivileged people of the society.
  3. The Third Five-Year Plan (1961-1965): The main objective of third five year plan was to raise the growth rate of economy at the rate above of 5% per Year., thereby increasing the per capital income of the country. The ways to achieve this goal was to expand the industrial activities and encourage agricultural production which was sideline in the previous plan. The plan also aimed to become self-reliant to fulfill the demand and supply of food grains.
  4. The Fourth-Five Year Plan (1969-1973): This plan continued to emphasis on agricultural including irrigation which received public outlay of 23%. The public expenditure was increased upto 24% over the previous plan. 14 Indian banks were nationalized by the government of India. The target growth rate for this plan was 5.7%, but it actually accounted 3.3% only.
  5. The Fifth Five-Year Plan (1974-75): This plan was formulated in 1973 but due to the rapid rise in prices of crude oil, the amendments were made in the prevailing fourth plan. In the late 1976, the fifth plan gained approval but was concluded by the end of 1977. Hence, the fifth plan was in effect for an year only, even though its investment policies were followed for five years. However, annual plans were formulated for the year 1978 and 1979, known as ” rolling” plans.
  6. Sixth Five-Year Plan (1980-84): The plan came into effect from April 1980. The basic aim of sixth five year plan was to bring in sustainable economic growth and to improve the standard of living. Other than this, it also made effort to reduce the level of poverty and unemployment. Overall, the plan was a success, it achieved a growth rate of 5.1% as against the target of 5.4%.
  7. The Seventh Five-Year plan (1985-89): This plan focused on social Justice, use of advanced technology, poverty reduction and agricultural development. The total expenditure was budgeted nearly Rs/- 3.9 trillion in which 94% was financed from domestic resources, while 48% of this 94% of was contributed by the public sector. Growth rate of the seventh five year plan was 5% while it was targeted to achieve 6.1%.
  8. Eight Five-Year Plan (1992-1997): It was enforced in April 1992. It mainly emphasized on the market based policy reforms with a total government expenditure of Rs/- 8.7 Trillion out of which 94% was financed from domestic resources, while 45% of this 94% was contributed by public sector. An increase from 5.0% in annual GDP was expected but it marked a growth rate of 4% only.
  9. Ninth Five-Year Plan (1997-2001): The aim of this plan was to increase the economic growth and reduce inequality. The targeted GDP for this year was 6.5% which recorded merely 5.4%. This target was set on the specific assumptions like low Incremental Capital Output Ratio (ICOR), increase in domestic savings, high revenue collection and low fiscal deficit.
  10. Tenth Five Year Plan (2002-2007): Due to the poor performance of previous plans, the tenth plan aimed to achieve growth rate of 8% p.a. While ir recorded the highest GDP of 7.7% till now. Resulting this high with rate, India was listed in the ten fastest developing countries of the world. The major target points for the plan were to reduce poverty rate, increase the level of employment and literacy.
  11. Eleventh Five Year Plan (2007-2012): It is aimed to achieve ” faster and more inclusive growth”. With this objective, the plan came into effect from 2007 to 2012. During this plan, the economy of India was much stronger than before, It attained the growth rate of 8% against the targeted rate of 9%. There was a steady growth in the sector like agriculture, industries and services.
  12. Twelfth Five Year Plan (2012-2017): The main objective of this plan is to achieve the faster and inclusive growth of the economy. It also targets to attain the growth rater of 8% till the end of the plan.