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Five Year Plans I – IV

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July 4, 2022

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Five Year Plans I – IV

First five year plan (1951- 1956 )

Objective

Highest priority accorded to agriculture in view of large import of food grain and inflation.
Increasing the rate of investment from 5% to 7%.
10% of total plan outlay on Agriculture followed by transport and communication, social services, power and industry.

Assessment

Agricultural production increased dramatically.
National income went up by 18% and per capita income by 11%.
Targeted growth rate was 2.1% and first plan received 3.6%.
Price level was stable.

Second five year plan (1956- 1961 )

Objective

Rapid industrialization with particular emphasis on the development of basic and heavy industry, also called Mahalanobis plan.
To promote a socialist pattern of society as envisaged at abadie summit of Indian National Congress.
To increase national income by 25% expansion of employment and reduction of inequality.
To increase the rate of investment from 7% to 11% of GDP

Assessment

Moderately successful, targeted growth rate was 4.5% but achieved 4.2%
Durgapur (UK), Bhilai ( USSR ) and Rourkela (W Germany) Steel plants set up.
A few shortage of foreign exchange reserves lead to primary development targets.
Inflation and low agricultural production at Suez crisis.

Third five year plan (1961- 1966 )- Gadgil Yojana

Objective

Indian economy entered take off stage (WW Rostow).
Self-reliant and self generating economy was the goal.
Priority to agriculture and development of basic industries.
To increase the national income by 30% and per capita income by 17%.
The situation created by Indo- Pakistan conflict 1965 two successive years of severe drought, evaluation of currency by 57%, general rise in prices and erosion of resources for plan delayed. 4th plan delayed because between 1966 to 1969 three annual plans were formulated.
Relied heavily on foreign aid (International Monetary Fund).

Assessment

A failure because of worst famine (1956- 66) in 100 years.
Indo – China ( 1962 ) and Indo – Pakistan (1965 ) conflict diverted the resources from development to defense.
Postponement of 4th plan by three years.
Targeted growth rate 5.6% achieved growth rate 2.8%.

Three annual plans ( 1966- 1969 )

Objective

Due to miserable failure of third plan, the government was forced to declare plan holidays. Three annual plans were drawn during this intervening. The prevailing crisis in agriculture and serious food shortage necessitated the emphasis on agriculture during the annual plans.

4th 5 year plan 1969- 1974

Objective

Objective was growth with stability and progressive achievement of self reliance.
Provision of national minimum for weaker sections.
Nationalization of 14 major Indian banks.

Assessment

First two years plan were successful with record foodgrain production on account of green revolution.
Adoption of import substitution policy and export promotion policy widened the industrial base.
Targeted growth 5.7% however the cheap growth rate was 2.01%.
The plan was failure on account of runaway inflation (due to 1972 oil crisis or supply shock), huge influx of refugees from Bangladesh post 1972 Indo -Pak war.