The five-year plan is a method of planning economic growth over limited periods by the use of quotas. It was used first in the Soviet Union and later in other socialist states. India's first five-year plan was launched in 1951. The 12th five-year plan concluded in 2017 and the five-year plans got terminated. The five-year plan is now replaced by the NITI Aayog’s 3-year action agenda, 7-year strategy paper and 15-year vision document. Let us take a look at all of the country's previous Five Year Plans, which are important for UPSC Exams.

What is a Five Year Plan?

• Economic planning in India began after the country's independence in 1950 when it was thought important for the country's economic growth and development.
• This was carried out through the Planning Commission (1951-2014) and the NITI Aayog's (2015-2017) Five-Year Plans, which were established, implemented, and monitored.
• Under the socialist influence of first Prime Minister Pt. Jawahar Lal Nehru, the idea of five-year economic planning was borrowed from the Soviet Union.
• The first eight Indian five-year plans focused on expanding the public sector through massive investments in heavy and basic sectors, but since the start of the Ninth five-year plan in 1997, the focus has moved to make the government a growth facilitator.
• Each five-year plan began on April 1 and ended on March 31 of the following year, therefore five-year plans cover five financial years by convention.
• Between the third and fourth five-year plans, three annual plans were introduced. The Indira government launched the fifth five-year plan, but the Janta Alliance government abandoned it one year before it was supposed to conclude.
• In 1978, the Janta government implemented the Rolling plan in place of a regular plan.
• From 1978 to 1983, this rolling plan was known as the 6th plan, but after the Janta government was deposed, the incumbent Indira government abandoned it and established its own sixth plan in 1980.
• Because India's economy was in disarray in 1990-92, the Eighth Five-Year Plan began two years later than planned.

Five-Year Plans: Long-term goals

• To raise the living standards of India's citizens, a high growth rate is required.
• For prosperity, there must be economic stability.
• An economy that is self-sufficient.
• Reducing inequality and promoting social justice
• The economy is being modernized.

What is the Planning Commission?

• The Planning Commission of India was a government body that formulated India's Five-Year Plans, among other things. The planning commission was tasked with ensuring that everyone could participate in community service.
• The Planning Commission reported directly to the Prime Minister of India. It was founded on March 15, 1950, under Prime Minister Jawaharlal Nehru's presidency. The Central/Union Government established the Planning Commission, which was not established by the Constitution or statute.
• The Planning Commission was established by a resolution issued by the Indian government in March 1950. The government's key objectives were to push for a rapid rise in Indians' living standards through successful resource exploitation, higher output, and opportunities for everyone to engage in the service of society.
• The Planning Commission was entrusted with assessing all of the country's resources, enhancing valuable resources, developing plans for the most productive and balanced use of resources, and establishing priorities. Pandit Nehru was the first Chairman of the Planning Commission.
• It was dissolved in 2014, and NITI Aayog took its place.

First Five Year Plan

• It was established under the leadership of Jawaharlal Nehru from 1951 to 1956.
• It was based on the Harrod-Domar model, but with some modifications.
• Its main focus was on the country's agricultural development.
• This plan was a success, with a 3.6% growth rate (more than its target of 2.1% ).
• At the conclusion of this strategy, the country had five IITs.

Second Five Year Plan

• It was established between 1956 and 1961, under Jawaharlal Nehru's leadership.
• It was created using the P.C. Mahalanobis Model from 1953.
• Its main focus was on the country's industrial development.
• This plan fell short of its target growth rate of 4.5%, achieving 4.27% instead.
• However, many experts rejected this idea, and India suffered a payment problem in 1957 as a result.

Third Five Year Plan

• It was created between 1961 and 1966, under Jawaharlal Nehru's leadership.
• The plan is also known as the 'Gadgil Yojna,' after D.R. Gadgil, the Deputy Chairman of the Planning Commission.
• The plan's principal goal was to make the economy self-sufficient. Agriculture was emphasized, as was the improvement in wheat production.
• India was involved in two wars during the implementation of this plan: (1) the Sino-India conflict of 1962 and (2) the Indo-Pakistani war of 1965.
• These battles exposed our economy's weaknesses and moved attention to the defense industry, the Indian Army, and price stabilization (India witnessed inflation).
• Due to wars and drought, the plan failed. The target growth rate was 5.6%, but the actual rate was only 2.4%.

Plan Holidays

• From 1966 to 1969, the government announced three annual plans known as Plan Holidays in response to the failure of the previous plan.
• The Indo-Pakistani and Sino-Indian wars were the primary causes of the plan's cancellation, resulting in the failure of the third Five-Year Plan.
• Annual plans were made during this period, and agriculture, its related sectors, and the industry sector were given equal attention.
• In order to boost the country's exports, the government announced a rupee devaluation.

Fourth Five Year Plan

• Under the leadership of Indira Gandhi, it lasted from 1969 to 1974.
• This plan had two primary objectives: expansion with stability and gradual self-sufficiency.
• 14 major Indian banks were nationalized during this period, and the Green Revolution began. The 1971 Indo-Pakistani War and the Bangladesh Liberation War occurred.
• One of the Plan's major goals was to implement family planning programs.
• This plan failed, with a growth rate of only 3.3% compared to the aim of 5.7%.

Fifth Five Year Plan

• It lasted from 1974 to 1978.
• The Garibi Hatao, employment, justice, agricultural output, and defense were all prioritized in this plan.
• In 1975, the Electricity Supply Act was changed, a Twenty-Point Program was started, the Minimum Needs Programme (MNP) was established, and the Indian National Highway System was established.
• This plan was overall successful, with a growth rate of 4.8% vs the aim of 4.4%.
• The freshly elected Moraji Desai government put an end to this scheme in 1978.

Rolling Plan

• The Rolling Plan had effect from 1978 to 1990, following the end of the fifth Five-Year Plan.
• The Rolling Plan was rejected by Congress in 1980, and a new sixth Five-Year Plan was introduced.
• Under the Rolling plan, three plans were introduced:

(1) This plan was for the current fiscal year's budget;

(2) it was for a definite number of years— 3, 4, or 5 years;

(3) it was a long-term perspective plan— 10, 15, or 20 years.

• The plan has various advantages, including the ability to change targets and the ability to adapt projects, allocations, and other aspects of the plan to the economy of the country. This indicates that if the aims can be changed each year, it will be difficult to meet the goals and the market will become unstable.

Sixth Five Year Plan

• Under the leadership of Indira Gandhi, it lasted from 1980 until 1985.
• The plan's main goal was to achieve economic liberalization by eliminating poverty and creating technological self-sufficiency.
• It was built on Yojna investment, infrastructure changes, and a growth model trend.
• Its target growth rate was 5.2%, but it really grew at 5.7%.

Seventh Five Year Plan

• It lasted from 1985 to 1990, and Rajiv Gandhi was the prime minister during that time.
• This plan's aims include the creation of a self-sufficient economy, possibilities for gainful employment, and technological advancement.
• With a focus on 'food, work, and productivity,' the Plan planned to increase foodgrain output, increase employment possibilities, and raise productivity.
• The private sector was given precedence over the public sector for the first time.
• Its goal growth rate was 5.0%, but it ended up at 6.01%.

Annual Plans

• Because of the volatile political climate in the country's capital, the Eighth Five-Year Plan could not be implemented.
• For the years 1990-91 and 1991-92, two annual programs were established.

Eighth Five Year Plan

• It lasted from 1992 to 1997, with P.V. Narasimha Rao as its leader.
• The development of human resources, such as employment, education, and public health, was given primary importance in this strategy.
• The New Economic Policy of India was launched by the Narasimha Rao government during this plan.
• Rapid economic growth (highest annual growth rate so far – 6.8%), high growth in agriculture and allied sectors, and manufacturing sector, growth in exports and imports, and improvement in trade and current account deficit were some of the significant economic outcomes during the eighth plan period. Despite the fact that the public sector's portion of total investment had fallen to around 34%, a strong growth rate was attained.
• This plan was a success, with an annual growth rate of 6.8% compared to the aim of 5.6.

Ninth Five-Year Plan

• Under the leadership of Atal Bihari Vajpayee, it lasted from 1997 to 2002.
• The plan's main goal was "Growth with Social Justice and Equality."
• It was launched on the 50th anniversary of India's independence.
• This strategy fell short of its 6.5% growth target, achieving a rate of 5.6% instead.

Tenth five-year plan

• It lasted from 2002 to 2007, with Atal Bihari Vajpayee and Manmohan Singh as its leaders.
• The goal of this strategy was to double India's per capita income in the next ten years.
• It aimed to get the poverty rate down to 15% by 2012.
• Its goal growth rate was 8.0%, but it only reached 7.6%.

Eleventh Five-Year Plan

• It lasted from 2007 to 2012, and Manmohan Singh was the prime minister during that time.
• C. Rangarajan was in charge of preparing it.
• The main focus of the conference was "rapid and more inclusive growth."
• It grew at an annual pace of 8%, compared to a projection of 9% growth.

Twelfth Five-Year Plan

• It lasted from 2012 to 2017, with Manmohan Singh as its head.
• The main focus of the conference is "Faster, More Inclusive, and Sustainable Growth."
• Its target growth rate was set at 8%.

Post Five Year Planning era

• For a long time, there had been a feeling that centralized planning, with its one-size-fits-all approach, could only go so far in a country as diverse and large as India.
• As a result, the NDA government abolished the Planning Commission and replaced it with the NITI Aayog. As a result, there were no thirteen Five Year Plans, but a five-year defense plan was created.
• It's vital to understand that the NITI Aayog's documents have no financial implications. They are only government policy guide maps.
• Because it lacks financial powers, the three-year action plan simply serves as a general road map for the government. It does not define any plans or allocations.

Conclusion

Economic planning in India began after the country's independence in 1950 when it was thought important for the country's economic growth and development. This was carried out through the Planning Commission (1951-2014) and the NITI Aayog's Five-Year Plans, which were established, implemented, and monitored (2015-2017).

FAQs

Question: What was the primary objective of the First Five-Year Plan?

Question: Which Five-Year Plan focused on heavy industries and industrialization?

Question: What role did the Green Revolution play in India’s Five-Year Plans?

Question: How did the Eighth Five-Year Plan differ from previous plans?

Question: When were the Five-Year Plans in India discontinued?

MCQs

1. Which of the following sectors was the primary focus of the First Five-Year Plan?

A. Industry

B. Agriculture

C. Defense

D. Education

2. Which model was adopted for the Second Five-Year Plan?

A. Gandhian model

B. Mahalanobis model

C. Nehruvian model

D. Keynesian model

3. During which plan was the Green Revolution introduced in India?

A. First Five-Year Plan

B. Third and Fourth Five-Year Plans

C. Eighth Five-Year Plan

D. Twelfth Five-Year Plan

4. What significant change occurred during the Eighth Five-Year Plan (1992–1997)?

A. Focus on heavy industries

B. Introduction of Green Revolution

C. Shift towards economic liberalization

D. Focus on defense spending

5. When was the Planning Commission replaced by NITI Aayog?

A. 2005

B. 2015

C. 1991

D. 2017

GS Mains Questions and Model Answers

Q1: Discuss the role of Five-Year Plans in shaping India’s economic development post-independence.

Answer: India’s Five-Year Plans played a crucial role in shaping the country’s economic development post-independence. The First Plan focused on agriculture, addressing food shortages, while the Second Plan emphasized industrialization through heavy industries. Over the years, the Plans introduced key reforms, such as the Green Revolution, which transformed the agricultural sector, and economic liberalization in the Eighth Plan, which promoted privatization and globalization. The Plans aimed at achieving poverty reduction, employment generation, and balanced regional development, contributing to India’s transformation from an agrarian economy to a mixed economy with a strong industrial base.

Q2: Evaluate the impact of economic liberalization on India’s development during the Eighth Five-Year Plan.

Answer: The Eighth Five-Year Plan (1992–1997) marked a significant shift in India’s economic policy with the introduction of economic liberalization. This involved reducing government intervention in the economy, encouraging privatization, and opening up to global trade. The liberalization process led to an increase in foreign investment, higher GDP growth, and the development of sectors like IT, services, and manufacturing. However, it also resulted in challenges such as increasing income inequality and the decline of public sector enterprises. Overall, the Eighth Plan laid the foundation for India’s integration into the global economy.

Q3: Analyze the reasons for discontinuing the Five-Year Plans in India and replacing them with NITI Aayog.

Answer: The decision to discontinue the Five-Year Plans and replace the Planning Commission with NITI Aayog in 2015 was driven by several factors. The centralized planning approach of the Five-Year Plans became less relevant in a market-driven economy, where flexibility and decentralization were needed to address the diverse needs of states. The rise of globalization, private sector participation, and the need for a more dynamic policy framework led to the creation of NITI Aayog, which emphasizes cooperative federalism and acts as a think tank for long-term strategic planning. NITI Aayog allows for more state-level autonomy in implementing policies, promoting inclusive growth, and fostering innovation.

Previous Year Questions on Five Year Plans

1. UPSC CSE Prelims 2019

Question: Which of the following plans marked the beginning of economic liberalization in India?

A. First Five-Year Plan

B. Sixth Five-Year Plan

C. Eighth Five-Year Plan

D. Tenth Five-Year Plan

Answer: C

Explanation: The Eighth Five-Year Plan (1992–1997) marked the beginning of economic liberalization in India, with a focus on privatization, reducing government intervention, and promoting globalization.