BITS PilaniPilani Campus

CONTEMPORARY INDIA

Tathagato Chakraborty

BITS PilaniPilani Campus

Economic Plans

INDIA’S SITUATION POST INDEPENDENCE

Partition

Economic Backwardness

Territorial 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

irrigation & energy

27%

agriculture & community

development17%

transport & communication

24%

industry8%

social services17%

land rehabilitation4%

others2%

Plan Budjet(208.6 bn INR)

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 Industrialisation

25% increase in National Income

Increase in employment opportunities

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 Plan1969-1974

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

SITUATION

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 Plan1974-1979

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

SITUATION

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%. For-ex 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.

SIXTH FIVE YEAR PLAN1980 - 1985

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, high-tech 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%

× 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%

ACHIEVEMENTS

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 2016-17 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.

3rd plan Target GDP 5.6% Achieved GDP

2.84%

2nd planTarget GDP 4.5% Achieved GDP 4.27%

1st plan

Target GDP 2.1% Achieved GDP 3.6%

6th plan :Target GDP 5.2% Achieved GDP

5.66%

5th planTarget GDP 4.4% Achieved GDP 4.80%

4th plan

Target GDP 5.7% Achieved GDP 3.30%

9th plan Target GDP 6.5% Achieved GDP

5.35%

8th planTarget GDP 5.6% Achieved GDP 6.78%

7th plan

Target GDP 5.0% Achieved GDP 6.01%

11th plan Target GDP

10% ????10th plan

Target GDP 8% Achieved GDP 7.8%

1950s

1960s

1970s

1980s

1991 1991/92 to 1996/97

1997/98 to 2002/03

2003/04 to 2006/07

2007 – 2008

1) Real GDP Growth

3.6 4.0 2.9 5.6 5.3 5.7 5.2 8.7 8.7

1.1)Agriculture

2.7 2.5 1.3 4.4 4.0 3.7 0.9 4.9 2.6

1.2)Industry

5.8 6.2 4.4 6.4 5.7 7.0 4.1 8.3 8.6

1.3) Manufacturing

5.8 5.9 4.3 5.8 4.8 7.5 3.9 9.1 9.4

1.4)Services

4.2 5.2 4.0 6.3 5.9 6.4 7.8 10.2 10.6

2) ICOR

3.5 4.3 3.6 6.6 4.6 4.0 4.6 3.6 NA

3) WPI Inflation(avg)

1.2 6.4 9.0 8.0 10.3 9.6 4.6 5.5 NA

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

Brazil 5.9 8.5 3.0 1.7 3.1China 3.0 7.4 9.8 10.0 9.5India 4.0 2.9 5.6 5.7 7.0

Indonesia 3.7 7.8 6.4 4.8 4.9Korea 8.3 8.3 7.7 6.3 5.2Mexico 6.8 6.4 2.3 3.4 2.9Philippines 5.1 5.8 2.0 2.8 4.8S.Africa 6.1 3.3 2.2 1.4 4.1Thailand 7.8 7.5 7.3 5.3 5.0

REAL GDP GROWTH

Source World Development Indicators,World Bank

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

Brazil 2.6 2.1 5.5 9.9 5.1China 7.9 4.8 3.8 4.0 4.3India 4.3 6.6 3.6 4.1 4.0Indonesia 2.4 2.3 4.6 6.9 4.7Korea 1.5 2.5 3.6 5.7 5.7Mexico 3.8 4.1 8.8 6.0 7.6Philippines 3.9 4.0 10.7 8.2 4.3S.Africa 2.6 6.2 8.0 10.7 4.2Thailand 3.4 4.2 4.1 6.9 4.5

ICOR

Source World Development Indicators,World Bank

DEMOGRAPHIC INDICATORS1996 2001 2006 2011

Population(million)

934.22 1012.39 1094.13 1178.89

Urban Population(%)

27.23 28.77 30.35 31.99

Sex Ratio( males for 100 females)

107.9 107.2 106.6 106.0

PROJECTED AGE STRUCTURE (IN MILLION)

1997 2002 2007 2012

Under 15 353.64 245.11 334.80 337.93

15-59 532.60 610.55 692.64 758.61

60+ 63.64 71.94 84.01 98.50

Dependency Ratio:Young

0.66 0.57 0.48 0.45

Old 0.12 0.12 0.12 0.13

Total 0.78 0.69 0.60 0.58

DISTRIBUTION OF LABOUR FORCEPopulation Labour Force

millions % Growth millions Growth%

1978 637.6 255.8

1983 718.2 2.16 286.6 2.07

1994 895.0 2.10 368.5 2.39

1997 951.2 1.85 397.2 2.27

2002 1028.9 1.57 449.6 2.48

2007 1112.9 1.57 507.9 2.44

2012 1196.4 1.45 562.9 2.06

PROJECTION OF NATIONAL POVERTY RATIO

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

Rural 30.55 18.61 9.64 4.31

Urban 25.58 16.46 9.28 4.49

Total 29.18 17.98 9.53 4.37

LITERACY RATES

1951 1961 1971 1981 1991 2001 20090.00%

10.00%20.00%30.00%40.00%50.00%60.00%70.00%80.00%90.00%

18.33%28.90%

34.45%43.57%

52.21%

65.38%

79.90%

percentage of literates

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;

Information and Communication Technology: This is one of our core competencies and wealth generator. ICT can be used for tele-education, tele-medicine 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

INDIA : VISION 2020

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