The Five Year Plans (Part - 1), Economy Traditional UPSC Notes | EduRev

Economy Traditional for UPSC (Civil Services) Prelims

UPSC : The Five Year Plans (Part - 1), Economy Traditional UPSC Notes | EduRev

The document The Five Year Plans (Part - 1), Economy Traditional UPSC Notes | EduRev is a part of the UPSC Course Economy Traditional for UPSC (Civil Services) Prelims.
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First Five Year Plan: 1951-1956
Objects

  1. To rehabilitate the Indian economy devastated by the effects of second world war and partition of the country.
  2. To solve the food crisis.
  3. To check the inflationary tendencies.
  4. To build infrastructure for economic development.
  5. To initiate the measures of social justice.
  6. To build up administrative and other organisations needed for carrying out the programmes of development.

Size and Outlay: The amount of total investment of this plan was Rs. 3360 crores out of which Rs. 1560 crores were invested in public sector and Rs. 1800 crores in private sector.

Achievements
The achievements of this plan were more than satisfactory 1. It achieved an increase of 17.5% in national income against the target of 11%. 2. There was steady rise in agricultural production in the country. Production of agriculture and allied fields showed an increase of 14.7%.

  1.  Industrial production increased by about 40% during the plan.
  2. The rate of investment increased from 5% to about 7.3% of the national income.
  3. Per capita income rose by nearly 11%.
  4. This plan removed some of the problems like food shortage. Abolition of Zamindari and tenancy reforms were effected.

Second Five Year Plan: 1956-61
Objects- Second plan was more ambitious than first plan. It was conceived as a major step towards industrialisation. Main objects of this plan were —

  1. to achieve a sizeable increase in national income.
  2. Rapid industrialisation with emphasis upon the development of basic and heavy industries.
  3. Reduction of inequalities in income and wealth.

Size and Outlay: Total investment of this plan was Rs. 6750 crores out of which Rs. 3650 crores were invested in public sector and 3100 crores in private sector.

Achievements

  1. National income rose by 20% against the target of 25%.
  2. Per capita income increased by 8%.
  3. Rate of investment increased from Rs. 850 crores at the end of first plan to Rs. 1600 crores at the end of this plan.
  4. Industrial production showed an annual increase of 11%
  5. Agricultural production increased substantially. Net irrigated area increased from 56.2 million acres to 70 million acres.
  6. Extension services were introduced throughout the country as an integral part of the Community Development Movement. Over half of the country’s rural population had been covered by this programme.
  7. There was a remarkable expansion of iron and steel industry in the country. Three huge steel plants were set up in public sector at Rourkela, Bhilai and Durgapur. There was an appreciable expansion of many other heavy industries.
  8. Development of village and small industries was also a great achievement of this plan.
  9. Net work of social services like education and health was also expanded considerably

Third Five Year Plan: 1961-1966
Objects

  1. To secure a rise of over 5% per annum in national income.
  2. To achieve self-sufficiency in foodgrains and to increase agricultural production.
  3. The expand basic industries and to establish machine-making industries.
  4. To increase employment opportunities subst-antially.
  5. To bring about a reduction in inequalities in income and wealth.

Size and outlay: Total outlay of third plan was Rs. 10,400 crores, Rs. 6300 crores in public sector and Rs. 4100 crores in private sector.

Achievements

  1. Third plan could not achieve its objectives properly because this plan ran into difficulties due to adverse weather, Chinese aggression and Indo-Pak war etc. Overall performance of the plan was rather disappointing.
  2. National income could increase by 4.1% only against the target of 5%. Industrial Production could increase by 7.9% only against the target of 11%.

Annual Plans (1966-1969)

  • Indian economy had to face many difficulties during third plan. Chinese aggression in 1962 and Indo-Pak war in 1965 placed heavy defence burdens upon the economy. Severe drought of 1965-66 worsened the situation further.
  • On June 5, 1966, Government announced devaluation of rupee.
  • Due to these adverse conditions and continuous uncertainty of foreign aid, fourth plan could not be started on its due time on Ist April, 1966. It could start only on Ist April 1969.
  • This gap of 3 years was known as Plan Holiday. Three annual plans were introduced in these 3 years.
  • Main feature of annual plans was their moderate size. Total outlay over the entire period of three years was Rs. 6626 crores.

Achievements

  1. In first annual plan, national income could increase by 3.2%. Industrial production could increase by 3% only.
  2. The country had to face another drought.
  3. In second annual plan, national income increased by 9% and the production of foodgrains increased substantially.
  4. In third annual plan also, the achievements were very moderate.

Fourth Five Year Plan: 1969-1974
Objects-

  1. Fourth five year plan had two main objects —Growth with stability and the progressive achievement of self-reliance.
  2. Besides, this plan aimed at achieving social justice and equality and creating more employment opportunities.

Size and outlay: Total outlay of this plan was Rs. 24,882 crores out of this, Rs. 15902 crores were for public sector and Rs. 8980 crores for private sector.

Achievements

  1. During the period of fourth five year plan, India faced the problem of Indo-Pak war in 1971, the infuse of ten million refugees together with suspension of foreign aid.
  2. The condition was further worsened by widespread drought of two successive years.
  3. The economy could achieve the only 3.3% growth in national income against the projected rate of 5.7% per annum.
  4. Per capita income could increase only by 1.2% per annum.
  5. Agricultural production could increase by 2.8% only against the target of 5%.
  6. As for industrial production, the growth rate was estimated to be 5% as against the target of 9%. Main reason of setback in industrial production was under utilisation of capacity.
  7. The progress in transport and power sector too was not satisfactory.
  8. The plan could not achieve its main aim growth with stability. There was steep rise in prices during the period

Thus, fourth plan turned out to be a plan with shortfalls all along.

Fifth Five year Plan: 1974-1979

  • Fifth plan was commenced on Ist April, 1974. It was upto 31st March, 1979 but owing to change in Government in 1977, this plan was ended on 31st March, 1978. Thus, virtually, the period of this plan was curtailed to 4 years.

Objects

  1. Fifth plan was commenced with two broad objectives (a) Removal of Poverty (b) Achievement of self-reliance.
  2. The plan estimate that the per capita consumption of the poorest 30% of population (17.3 crores in 1974) would rise from Rs. 25 per month in the current year to Rs. 29 at the end of plan and to Rs. 38 in 1985-86.

Size and Outlay: Total outlay of the plan was Rs. 69,300 crores. Public sector outlay was Rs. 42,300 crores and Rs. 27,000 crores was for private sector.

Achievements

  1. Fifth plan too had as unpleasant performance. International oil crisis led to a four-fold rise in crude oil prices. India was also passing through a severe food shortage at that time.
  2. Annual average rate of growth over the four-year period of this plan works out at 3.9% against the target of 5.5%
  3.  ‘Minimum Needs Programmes’ was launched in this plan with the object of providing adult education, rural health, rural water supply, rural roads electrification, housing assistance to rural landless workers and environmental improvement of urban slums.
  4. The progress was uneven as among the different years of the plan. The output varied owing to weather and drought. In 1975-76 there was an increase of 15.6% in 1975-76 but in 1974-75 & 1976-77, there was decline in 1977-78, again there was an increase of 13.9%.
  5. The growth rate of industrial production was 6% as against the target of 8.2%.
  6. In irrigation and power sector also the progress was much below the target level. In transport and communication sector, however, the progress was satisfactory. 

Sixth five year Plan: 1980-1985

  • Janta Government, soon after the assumption of power in 1977, decided to terminate the fifth plan on the completion of its 4 years in 1978. It formulated a plan for the period 1978-83. But this plan could continue only for two years.
  • With the fall of Janta Govt. in 1980, the new Government decided to terminate the sixth plan of Janta Government and formulated the new sixth plan for 1980-85. Thus, two years of Indian planning era, 1978-1979 & 1979-80, were in dilemma of political instability.

Objectives
Sixth plan had the following main objectives:

  1. To remove unemployment and under-employment.
  2. To raise the standard of living of the poorest sections of the society.
  3. To reduce the inequalities of income and wealth.
  4. To achieve a measurable increase in the welfare of the poor.
  5. To ensure country’s continued progress towards self-sufficiency and growth.

Size and Outlay: Total outlay of sixth plan was fixed at Rs. 1,72,210 crores, Rs. 97,500 crores for pubic sector and Rs. 74,710 crores for private sector. Out of the total outlay, Rs. 1,58,710 crores were for Investment outlay and Rs. 13,500 crores for current outlay.

Achievements

  1. To alleviate rural poverty, the sixth plan launched ‘Integrated Rural Development Programme’ (IRDP).
  2. This programme has been launched with the object of raising production and productivity in agriculture and allied sectors, skill formation and skill up-grading, facilitating adequate credit to support the programmes taken up for rural poor, providing additional employment opportunities for rural poor, and for providing minimum needs etc.
  3. ‘National Rural Employment Programmes’ (NREP) was also launched in sixth plan to generate employment to the rural poor.
  4. Sixth plan continued ‘Minimum Needs Programme’ introduced in fifth plan.
  5. As regards growth of national income, rate achieved is 5.08% during this period.
  6. Regarding agricultural and industrial production, the progress has been little satisfactory. There was record production of foodgrains in 1978-79 and 1981-82.

The Seventh Plan (1985-90)

  • The Seventh Plan came into operation on April 1, 1985.
  • This plan had been designed with a long-term perspective for the period 1985 to 2000.
  • The long-term development strategy gave the highest priority to creation of more oppor-tunities for productive employment.
  • Efforts were made to slow down the rate of population growth and to provide the people with adequate nutrition level.
  • Energy planning was an important constituent of long-term planning.
  • The Plan outlay in the Seventh Plan was Rs 1,80,000 crore at 1984-85 prices.
  •  It included current development outlay of Rs 25,782 crore and gross investment of Rs 1,54,218 crore.
  • Gross investment in the private sector was expected to be Rs 1,68,148 crore.
  • This implied a total investment of Rs 3,22,366 crore of which 94 per cent was to be financed from domestic resources.
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