The economy of India is based in part on planning through its five-year plans, developed, executed and monitored by the Planning Commission. With the Prime Minister as the ex officio Chairman, the commission has a nominated Deputy Chairman, who has rank of a Cabinet minister. Montek Singh Ahluwalia is currently the Deputy Chairman of the Commission. The tenth plan completed its term in March 2007 and the eleventh plan is currently underway.

First plan (1951-1956)

The first Indian Prime Minister, Jawaharlal Nehru presented the first five-year plan to the Parliament of India on December 8, 1951. The total plan budget of 206.8 billion INR (23.6 billion USD in the 1950 exchange rate) was allocated to seven broad areas: irrigation and energy (27.2 percent), agriculture and community development (17.4 percent), transport and communications (24 percent), industry (8.4 percent), social services (16.64 percent), land rehabilitation (4.1 percent), and other (2.5 percent). The plan promoting the idea of a self reliant closed economy was developed by Prof. P. C. Mahalanobis of Indian Statistical Institute and borrowed the ideas from USSR's five year plans developed by Domer. The plan is often referred to as the Domer-Mahalanobis Model.

The target growth rate was 2.1 percent annual gross domestic product (GDP) growth; the achieved growth rate was 3.6 percent. During the first five-year plan the net domestic product went up by 15 percent. The monsoons were good and there were relatively high crop yields, boosting exchange reserves and per capita income, which went up 8 percent. Lower increase of per capita income as compared to national income was due to rapid population growth. Many irrigation projects were initiated during this period, including the Bhakra Dam and Hirakud Dam. The World Health Organization, with the Indian government, addressed children's health and reduced infant mortality, contributing to population growth.

At the end of the plan period in 1956, 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.


Second plan (1956-1961)




Third plan (1961-1966)

The third plan stressed on agriculture and improving production of rice, but the brief Sino-Indian War in 1962 exposed weaknesses in the economy and shifted the focus towards defense. In 1965-1966, the Green Revolution in India advanced agriculture. The war led to inflation and the priority was shifted to price stabilization. The construction of dams continued. Many cement and fertilizer plants were also built. Punjab begun producing an abundance of wheat.

Many primary schools were started in rural areas. In an effort to bring democracy to the grassroot level, Panchayat elections were started and the states were given more development responsibilities.

State electricity boards and state secondary education boards were formed. States were made responsible for secondary and higher education. State road transportation corporations were formed and local road building became a state responsibility.Gross Domestic Product rate during this duration was lower at 2.7% due to 1962 Sino-Indian War and Indo-Pakistani War of 1965.

Fourth plan (1969-1974)

At this time Indira Gandhi was the Prime Minister. The Indira Gandhi government nationalized 19 major Indian banks. In addition, the situation in East Pakistan (now independent Bangladesh) was becoming dire as the Indo-Pakistani War of 1971 and Bangladesh Liberation War took place.


Fifth plan (1974-1979)

Stress was laid on employment, poverty alleviation, and justice. The plan also focused on self-reliance in agricultural production and defense. In 1978 the newly elected Morarji Desai government rejected the plan. Electricity Supply Act was enacted in 1975, which enabled the Central Government to enter into power generation and transmission.

Sixth plan (1980-1985)

Called the Janata government plan, the sixth plan marked a reversal of the Nehruvian model.

When Rajiv Gandhi was elected as the prime minister, the young prime minister aimed for rapid industrial development, especially in the area of information technology. Progress was slow, however, partly because of caution on the part of labor and communist leaders.

The Indian national highway system was introduced for the first time and many roads were widened to accommodate the increasing traffic. Tourism also expanded.


Family planning also was expanded in order to prevent overpopulation. In contrast to China's harshly-enforced one-child policy, Indian policy did not rely on the threat of force. More prosperous areas of India adopted family planning more rapidly than less prosperous areas, which continued to have a high birth rate.

Seventh plan (1985-1989)

The Seventh Plan marked the comeback of the Congress Party to power. The plan lay stress on improving the productivity level of industries by upgradation of technology.

Period between 1989-91

1989-91 was a period of political instability in India and hence no five year plan was implemented. Between 1990 and 1992, there were only Annual Plans. In 1991, India faced a crisis in Foreign Exchange (Forex) reserves, left with reserves of only about $1 billion (US). Thus, under pressure, the country took the risk of reforming the socialist economy. P.V. Narasimha Rao)(28 June 1921 – 23 December 2004) also called Father of Indian Economic Reforms was the twelfth Prime Minister of the Republic of India and head of Congress Party, and led one of the most important administrations in India's modern history overseeing a major economic transformation and several incidents affecting national security. At that time Dr. Manmohan Singh (currently, Prime Minister of India) launched India's free market reforms that brought the nearly bankrupt nation back from the edge. It was the beginning of privatization and liberalization in India.

Eighth plan (1992-1997)

Modernization of industries was a major highlight of the Eighth Plan. Under this plan, the gradual opening of the Indian economy was undertaken to correct the burgeoning deficit and foreign debt. Meanwhile India became a member of the World Trade Organization on 1 January 1995.This plan can be termed as Rao and Manmohan model of Economic development. The major objectives included, containing population growth, poverty reduction, employment generation, strengthening the infrastructure, Institutional building, Human Resource development, Involvement of Panchayatraj, Nagarapalikas, N.G.OSand Decentralisation and peoples participation. Energy was given priority with 26.6% of the outlay. An average annual growth rate of 6.7%against the target 5.6% was achieved.

Ninth plan (1997-2002)


Tenth plan (2002-2007)

The main objectives of the 10th Five-Year Plan were:

* Reduction of poverty ratio by 5 percentage points by 2007;











* Economic Growth further accelerated during this period and crosses over 8% by 2006.

Eleventh plan (2007-2012)

The eleventh plan has the following objectives:

1. Income & Poverty



* Create 70 million new work opportunities.

* Reduce educated unemployment to below 5%.

* Raise real wage rate of unskilled workers by 20 percent.

* Reduce the headcount ratio of consumption poverty by 10 percentage points.

2. Education



* Increase literacy rate for persons of age 7 years or more to 85%

* Lower gender gap in literacy to 10 percentage points


3. Health

* Reduce infant mortality rate to 28 and maternal mortality ratio to 1 per 1000 live births

* Reduce Total Fertility Rate to 2.1


* 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

4. Women and Children



* Ensure that all children enjoy a safe childhood, without any compulsion to work

5. Infrastructure





6. 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.

* Increase energy efficiency by 20 percentage points by 2016-17.

Posted by Guide Wednesday, April 29, 2009


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