PHILOSOPHY AND STRATEGY OF

INDIAN PLANNING UPTO

6TH PLAN

SUBMITTED TO:
MR. JAGWANT SINGH
SUBMITTED BY:
DAVINDER KAUR(8128)
GARIMA BANSAL(8129)
MBE 2ND SEM
 PHILOSOPHY

• The philosophy for the five year plans in India includes:

economic planning

democratic socialism

mixed economy
 FIRST FIVE YEAR PLAN (1951-1956)

• At that time India was faced with 3 problems- influx of

refugees, severe food shortage & inflation.

• India had also to correct disequilibrium in the economy

caused by 2nd world war and partition of the country.

• First plan emphasised, as its immediate objectives the

rehabilitation of refugees, rapid agricultural
development to achieve food self- sufficiency
control of inflation.
• First plan attempted a process of all round balanced
development which could ensure

rising national income

steady improvement in the living standard of

people over a period of time.

• Economic planning- first five year plan expressed

clearly the long-term objectives or goals of economic
planning in India as follows-

maximum production and full employment

attainment of economic equality or social justice
 SECOND FIVE YEAR PLAN (1956-1961 )

• Second plan was conceived in an atmosphere of

economic stability.

• Agricultural targets fixed in the first plan had been

achieved.

• Price level had registered a fall and consequently

Indian economy had reached a stage where agriculture
could be assigned a lower priority.

• Basic philosophy of second plan was to give push to

the economy so that it enters the take – off stage.
• Besides, the govt. announced its industrial policy in
1956.

• This necessitated the orientation of economic policy

to conform to the national goal of socialist economy.

• Accordingly, Second plan aimed at rapid

industrialization .

• Democratic socialism- philosophy of democratic

socialism in second plan was to raise incomes at the
lowest level and to reduce the incomes at the top
levels.

• Second plan states that the basic criterion of

economic decisions in a socialist economy is not
private profit but social gain.
• Mixed economy- mixed economy has the salient
features of capitalism and socialism.

• The role of mixed economy in second plan have been

outlined in the following words :

in an economy which gets increasingly diversified,

there is scope for both the public and private sectors
to expand simultaneously.
 THIRD FIVE YEAR PLAN( 1961-1966 )

• By the beginning of third plan, Indian planners felt that

Indian economy had encountered the “ take-off stage”.

• Third plan set as its goal the establishment of a self-

reliant and self-generating economy.

• Experience of first two plans suggested that

agriculture should be assigned top priority.

• Third plan accordingly gave top priority to agriculture

but it also laid adequate emphasis on the development
of basic industries.
• However, because of India's conflicts with china in
1962 and with Pakistan in 1965, the approach of the
third plan was later shifted from development to
defense and development.

• Mixed economy- nationalization of major commercial

banks in 1969 was big step to channelize investment
in socially desirable lines of production.
 FOURTH FIVE YEAR PLAN (1969 -1974)

• original draft outline of fourth plan under the stewardship

of Ashok Mehta had to be abandoned on account of the
pressure exerted on the economy by two years of
drought, devaluation of the rupee and the inflationary
recession.

• Three annual plans(1966-1969) described as “ plan

holiday “ were implemented.

• India learnt a bitter lesson during indo-Pakistan war.

• Fourth plan (1969-1974) set before itself the two principal

objectives of “ growth with stability “ and “ progressive
achievement of self- reliance”.
• Fourth plan aimed at 5.5 % average rate of growth in
national income.

• Economic planning- the philosophy of economic

planning in fourth plan was that greater equality could
be achieved in part by transfer of income through
fiscal, pricing and other policies.

• Democratic socialism- the philosophy of democratic

socialism in fourth plan was to establish progressive
and rapidly growing economy based on high levels of
productivity, the application of science & technology
and the use of manpower resources.
 FIFTH FIVE YEAR PLAN ( 1974-1979 )

• Fifth plan was introduced at the time when country was

reeling under a veritable economic crisis arising out of
a run-away inflation, fueled by the hike in oil prices
since sep 1973.

• The original approach paper of the fifth plan prepared

under C. Subramaniam in 1972 emphasized that “ the
main cause of abject poverty were open unemployment
, under-employment and low resource base of very
large no. of producers in agriculture and service
sectors.

• Elimination of poverty could not be attained simply by

acceleration in the rate of growth of economy.
• This approach was eventually abandoned and final
draft of fifth plan prepared and launched by D.P.Dhar
proposed to achieve two objectives- removal of
poverty and attainment of self-reliance through
promotion of higher rate of growth, better distribution
of income and a very significant step-up in the
domestic rate of savings.

• Fifth plan was however terminated by the janata party

at the end of the fourth year of the plan in march 1978.
 SIXTH FIVE YEAR PLAN ( 1978-1983 )

• There were two sixth plans.

• The janata party sixth plan openly praised the

achievements of economy in terms of self-reliance and
modernization.

• But Nehru model of growth was responsible for

growing unemployment, for the concentration of
economic power in the hands of few powerful business
families for the widening of inequalities of income.

• Janata plan sought to reconcile the objectives of

higher production with those of greater employment.
• Focus of janata plan was enlargement of the
employment potential in agriculture and allied
activities.

• After the defeat of janata party, congress came to

power in 1980 and decided to have a new sixth plan.

• When the new sixth plan ( 1980-85 ) was introduced by

the congress, the planners rejected the janata
approach and brought back Nehru model of growth by
aiming at a direct attack on the problem of poverty by
creating conditions of an expanding economy.

• Economic planning- the philosophy of economic

planning in sixth plan was the traditional growth
approach with usual assumption that employment
would increase with rise in investment.
 STRATEGY OF INDIAN PLANNING
Each plan is formulated to achieve set objectives. In
order to achieve these objectives certain activities are
undertaken. For instance, the First five year plan
aimed at “ correcting the disequilibrium in the
economy caused by the war and partition of the
country”. Simultaneously, it had to overcome food
shortage in the country. To achieve this objective , it
laid emphasis on the development of agriculture. It is
called the strategy of the first plan. Strategy refers to
the detailed actions and policies which are to be
adopted to achieve definite objectives.
 STRATEGY OF FIRST FIVE YEAR PLAN
(1951 - 1956)
1. The objective of the first plan was to rehabilitate the
economy disrupted on account of world war II and
partition of the country and to increase the production
of food grains, cotton and jute. Hence the strategy
adopted was to give priority to the development of
agriculture.
2. Target of increased production of food grains, jute and
cotton was mainly achieved by bringing more land
under cultivation. Facilities of irrigation were also
extended.
3. Of the total public sector outlay, 37% was spent on
agriculture and irrigation. According to the strategy of
the plan, 4.9% of the total public sector outlay was
spent on heavy and basic industries.
STRATEGY OF SECOND PLAN (1956-1961)
1. Agriculture production exceeded the target in the first
plan. The planning commission, therefore, formulated
the second plan on the assumption that agricultural
production will proceed on self-sustained basis. Hence,
in the strategy of second plan, agricultural development
was accorded low priority.
2. Strategy of the second plan was based on MAHALANOBIS
MODEL. This model was developed by noted economist
Prof. MAHALANOBIS . It emphasized the need for the
establishment of large and basic industries so as to
achieve rapid rate of economic development.
3. Consequently on the one hand consumer goods
industries like textile, sugar, cement etc., would develop
and on the other hand due to more production of
tractors, agricultural machines etc. agriculture would
made progress by leaps and bounds.
Main elements of the strategy of the second plan based
on MAHALANOBIS model were:
1. Establishment of iron and steel plants and other basic
industries.
2. Emphasis on the development of cottage industries
with a view to increase employment opportunities and
production of consumer goods.
3. In the second plan, the share of industries in the public
sector outlay increased from 4.9% to 24.1% and that of
agriculture and irrigation decreased from 37% to
20.9%.
 STRATEGY OF THIRD FIVE YEAR
PLAN(1961-1966)
• ‘Balanced Growth’ was adopted as the strategy of third
plan. Agriculture and industry both received equal
treatment with regard to their development. Main
elements of the strategy of this plan were:
• Development of agriculture to achieve self sufficiency
in the production of food grains.
• Completion of the construction of basic industries set
up during the second plan and establishment of some
new industries.
• Initiation of employment oriented programmes to
augment employment opportunities.
• Removal of inequalities in the distribution of income
and wealth.
Although the strategy of the third plan was to a large
extent much better, yet owing to several factors like
Indo –China war and Indo-Pak war, failure of monsoon,
drought etc., it failed to achieve its goals. Because of
the losses suffered in the Third plan, the succeeding
Fourth plan had to be deferred for three years and in
its place three one- year plans were introduced.
STRATEGY OF THREE ONE -YEAR PLANS

• The main element of the strategy of the three one-year

plans was ‘STABILITY’ in the economy so as to pave
the way for the smooth initiation of the Fourth plan.
Greater stress was laid on the development of
agriculture. It promoted GREEN REVOLUTION IN THE
COUNTRY.
STRATEGY OF FOURTH FIVE YEAR PLAN
(1969- 1974)
Aim of the fourth plan was ‘GROWTH WITH STABILITY’ .
Main elements of the strategy pursued in Fourth plan
were:
1. Intensive Development Programme was adopted for
accelerated development of agriculture. Under this
programme great emphasis was laid on the use of better
seeds, chemical fertilizers, mechanization, etc. Buffer
stocks of food grains were built and public distribution
system was started.
2. External assistance to the country had stopped in the
wake of Indo- Pak war in 1965. Hence more importance
was given to import substitution to attain the objective
of self reliance. Import of food grains was to be reduced
by increasing its production within the country.
3. With a view to checking the concentration of economic
power, MRTP act and industrial licensing policy were
enforced more strictly. Financial help was given to
weaker sections, small entrepreneurs and small and
marginal farmers.
4. In order to reduce regional inequalities, public sector
industries were established in backward regions.
Private entrepreneurs were encouraged to set up their
industries in these regions.
5. Social welfare programmes were extended.
 STRATEGY OF FIFTH FIVE YEAR PLAN
(1974-1979)
• ‘REMOVAL OF POVERTY’ was the sole objective of the fifth plan.
Main elements of the strategy adopted during the fifth plan were:
1. Programmes were introduced to meet the minimum needs of the
poor.
2. Family planning programme was enforced effectively.
Financial assistance was given to self employed persons. They
were imparted technical training to increase their productivity.
Land was redistributed with a view to raising the level of
employment in rural areas.
3. More emphasis was placed on the adoption of employment-
oriented projects.
4. Special programmes were introduced to improve small and
marginal farmers.
5. Special programmes were initiated to accelerate the export
growth rate.
 STRATEGY OF SIXTH FIVE YEAR
PLAN( 1980-1985)
The sixth plan began in 1980. Main elements of the
strategy of this plan were:
1. To make significant increase in the growth rate of the
economy, to increase the efficiency in the use of
natural resources and to improve productivity.
2. To promote modernization to achieve economic and
scientific self sufficiency.
3. To alleviate poverty and unemployment.
4. To encourage policies controlling population growth by
making people accept small family norm.