Constraints for Planning commission since inception

Planning commission was setup in 1950 with the aim to formulate five year plans to uplift India’s stature. After independence, Indian economy was in doldrums without any flourishing industry except agriculture which was the prime sector with 80% of population dependent on it. Government had to take various tough calls in order to improve livelihood, but were faced with various political and social constraints accompanied with external turbulence.

The first five year plan (1951-1956), focused on agricultural development and was based on Harrod-Domar model. The government’s objective was to improve savings which would further contribute towards growth and not much heed was given towards technology. However, the plan is said to be successful as it achieved growth rate of 3.6% more than its set target. The second five year plan (1956-1961) pushed forward initiatives to boost industrialization. Emphasis on heavy industries through private investment was conceptualized. The plan was based on P.C Mahalanobis model and achieved growth rate of 4.1%. The third five year plan (1961-1966) experienced balance of payment problems and the declining international price of primary products. Foreign exchange was the new constraint that planning commission addressed by focusing on trade surplus and direct domestic consumption to reduce imports. The initiative was widely acknowledged, however due to Indo-Sino war of 1962, it failed to accomplish its set target of 5.6%. 

During the years of 1966-1969, India faced acute famine and extreme drought coupled with the Indo-Pak war of 1965. India was isolated from foreign supply which included food aid too. Thus the commission (Plan holiday) had to deal with wage-good constraint which was addressed with environmental sustainability or green revolution. The fourth five year plan (1969-1974) focused on growth with stability and progressive achievement of self reliance. “Garibi Hatao”, proclamations were wide spread during 1971 elections. This plan failed as it achieved growth rate of 3.3% against the target of 5.7%. In 1974 fifth plan (1974-1979) was introduced with agriculture being the top priority followed by industry and allied sector.  Minimum needs and anti-poverty concepts were recognized. Though the plan achieved the growth of 4.8% against the set target of 4.4%, it was dropped in 1978 only to continue it with rolling plan (1978-1979) which was nothing but the 5th plan annual continuation.

In earlier models, savings constraint and industrialization was evident, but sixth plan (1980-1985) gave due diligence to development of infrastructure. The plan was said to be more realistic and visionary and it achieved a growth rate of 5.7% against marked target of 5.5%. In the seventh plan (1985-1990), for the first time private sector was prioritized over public sector and the strategy designed by political bodies was operationalized by technocrats. The financial emergency of 1991 terminated the rollout of 8th plan and two annual plans were introduced (1990-1991 and 1991-1992). The eighth plan from 1992-1997 marks the development of human resource with emphasis given on education, employment and human health. The plan turned out to be successful with 6.8% against marked target of 5.7%. The ninth plan’s objective was “growth with justice and equity”. The financial plan was taken into account for the first time to address financial constraint which was inhibiting the growth of economy. The tenth five year plans (1997-2002) aimed to double per capita income within 10 years span and reduce poverty by 15% by 2012. Labour force was increasing and providing employment was becoming a major constraint. The intended growth rate was 8% but it could achieve 7.2% by 2002. The eleventh plan (2002-2007) aimed to achieve “faster and more inclusive growth” with set target of 8.1%. The global crisis of 2008 and 2009 drought affected the economy but India did fairly well with achievement of 7.9%. The twelfth five year plan (2007-2012) was affected by global economy and Indian economy was also relatively slow. The plan was focused on “Faster, more inclusive and sustainable growth” with the projected growth rate of 8%. 

Thus we saw, how India has performed economically over the years since its independence and how the global, economical and political framework affects the economy of a nation as a whole. 

Shalini Singh 

PGDM Batch  2019-2021      

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