The Five Year Plans- 2 | Indian Economy for UPSC CSE PDF Download

The Eighth Plan (1992-97)

The Eighth Five Year Plan redefined central planning in India by moving away from a highly centralised system towards indicative planning. The Planning Commission shifted its emphasis from strict resource allocation to setting priorities, identifying bottlenecks and facilitating higher growth through coordination, resource mobilisation and efficient utilisation of funds. The Plan sought to combine macroeconomic stabilisation with a renewed focus on human development and infrastructure to create a sustainable growth process.

Distinguishing features

• Indicative planning: the Plan provided a strategic vision and priorities rather than fixed, mandatory targets; it aimed to guide and coordinate, not centrally control, economic activity.
• Human development as core: the Plan recognised that healthier, better educated people are essential for sustained economic growth and human well-being.
• Infrastructure priority: to support rapid and sustained development, the Plan prioritised power, transport and communications for expansion and modernisation.
• Non-inflationary financing: emphasis was placed on correcting fiscal imbalances and funding the Plan in a manner that avoided inflationary pressures and excessive internal or external debt.
• Integrated approach: the Plan stressed coordination across sectors and agencies to overcome fragmented implementation that had reduced returns on previous investments.
• People's participation: the Plan sought to change passive dependence on the State to a proactive role for citizens in development - "people must be operative and the government must cooperate."
• Performance orientation: the Plan focused on improving performance, quality consciousness, competitiveness, operational efficiency and the timely completion of projects.
• Rural employment: special attention was paid to creating employment opportunities in rural areas to reduce distress migration to urban centres.

Allocation and financing

• The Plan proposed an average growth rate of 5.6 per cent per annum for the Plan period.
• Total national investment proposed: Rs. 7,98,000 crores.
• Public sector outlay: Rs. 4,34,100 crores.
• State and Union Territory plans: size projected at Rs. 1,86,235 crores.
• Central plan outlay: Rs. 2,47,865 crores. (For comparison, the Seventh Plan outlay was Rs. 1,80,000 crores - Rs. 89,466 crores for States and UTs and Rs. 95,534 crores for the Centre.)
• Public sector outlays were to be financed by a combination of budgetary support and domestic and foreign borrowings.
• Budgetary support: total budgetary support in the Eighth Plan was estimated at Rs. 1,88,475 crores (1991-92 prices), which is 43.4% of the outlay; budgetary support determines the scale of sectors that lack access to internal resources or borrowings.
• Even in infrastructure areas that have access to internal resources and borrowing (for example power and railways), a minimum level of budgetary support was recognised as necessary to ensure project viability and service delivery.

Plan focus

1. Clear prioritisation of sectors and projects to operationalise policy initiatives in fiscal, trade and industrial reforms and human development.
2. Ensure availability of resources for priority sectors and their effective utilisation to complete projects on schedule and avoid cost and time overruns.
3. Create a social security net through employment generation, improved health care and extensive education facilities across the country.
4. Establish organisations and delivery systems so that benefits from social sector investments reach intended beneficiaries.

Objectives

1. Generate adequate employment aiming for near full employment by the turn of the century.
2. Contain population growth through popular cooperation supported by suitable incentives and disincentives.
3. Universalise elementary education and eradicate illiteracy among the 15-35 age group.
4. Provide safe drinking water and primary health care (including immunisation) to all villages and the entire population; eliminate manual scavenging.
5. Promote growth and diversification of agriculture to achieve self-sufficiency in food and generate exportable surpluses.
6. Strengthen infrastructure (energy, transport, communication, irrigation) to support sustainable growth.
7. Rely primarily on domestic resources for financing investments, build technical capability in science and technology, and pursue modernisation and competitive efficiency to benefit from global developments.

Implementation emphasis

The Eighth Plan emphasised institutional and managerial reform as much as resource flows. Its integrative approach aimed to co-ordinate central and state efforts, reduce project fragmentation, and improve project management so that given resources generate higher and timely outputs. Performance monitoring, quality control and competitiveness were prioritised to enhance public sector efficiency and to attract private participation where appropriate.

The Ninth Plan (1997-2002)

Background and macroeconomic setting

• The Ninth Plan was prepared in the context of recent macroeconomic stabilisation and policy reform. The Eighth Plan (1992-97) itself had been launched after a severe balance of payments crisis that emerged in 1990-91, when foreign exchange reserves fell sharply.
• The deterioration in the trade balance after the Gulf War (1990) and lower remittances from Indian workers in the Gulf led to a decline in the current account and foreign reserves, which fell to about US$ 1.1 billion by June 1991.
• In July 1991 the Government initiated stabilisation measures, including a substantial devaluation of the rupee, and measures to reduce the fiscal deficit.
• The fiscal deficit of the Central Government was reduced from 8.3 per cent of GDP in 1990-91 to 5.9 per cent in 1991-92 as part of these stabilisation efforts.
• A broad programme of structural reforms began in 1991, including dismantling of industrial licensing, liberalisation of foreign trade, financial sector reform, tax reform and reductions in tariff protection.
• When the Eighth Plan was formulated, targets were set conservatively in view of the setbacks of 1990-92 and the need for fiscal discipline.
• Actual performance during the Eighth Plan exceeded expectations: over the first four years average growth was above 5.7% per annum and the Plan was likely to end close to a 6 per cent average, surpassing the 5.6% target.
• Agriculture performed relatively well, averaging a growth rate of 3.8 per cent per annum during the four years (despite a setback in 1995-96), and was expected to average about 3.5% over the full Plan period against the target of 3.1%.
• The industrial sector recovered strongly in 1994-95 and 1995-96 after slow growth in the earlier years, though it might marginally fall short of the Seventh Plan target of 7.6%.
• Inflation performance was mixed. Following stabilisation, Wholesale Price Index (WPI) inflation fell from a peak of 16% in 1992-93 to 8.3% in 1993-94, rose to 10.9% in 1994-95, and averaged 7.8% in 1995-96, with a low of 5% in January 1996. The average WPI inflation over the Eighth Plan was about 8.8% per annum. Consumer Price Index (CPI) based cost-of-living inflation was higher, in the range of 9.3-9.6% per annum.
• On the external front, foreign exchange reserves were rebuilt from the low of US$ 1.1 billion in July 1991 to above US$ 18 billion by the mid-1990s.
• The total outlay for the Ninth Plan was revised down to Rs. 8,59,200 crores from an earlier Rs. 8,75,200 crores.

Approach and directions in the Plan

• Continue and extend the achievements of the Eighth Plan.
• Encourage higher capital investment in agriculture to increase productivity and rural incomes.
• Improve the living standards of the poor through targeted social programmes.
• Develop basic facilities and public goods-education, health, water supply, sanitation and rural infrastructure.
• Reduce disparities in social sectors to improve effectiveness and equity of public services.
• Reduce regional inequalities by emphasising balanced regional development.
• Control fiscal and other financial deficits through disciplined public finance management.

Role of the State and areas requiring State intervention

• Although liberalisation and private sector participation were important, the economy was not yet in a position to rely entirely on market forces. The State retained an important role in addressing market failures and social objectives.
• Key areas for State action included improving living standards of the poor in rural and urban areas, improving work and living conditions of the unorganised labour force, and expanding educational and employment opportunities for weaker social groups (scheduled castes, scheduled tribes, other backward classes), minorities, women, children and persons with disabilities.
• The Plan emphasised fiscal prudence: regulating debt programmes, preparing long term policies to reduce revenue deficits, and ensuring healthy utilisation of public assets.
• Export promotion through stable and supportive foreign trade policies, improvements in infrastructure quality and quantity, urban management, and environmental protection were identified as priorities requiring public action.

Areas identified for special attention

• Regulation and reduction of public debt burdens to improve the financial position of the Central and State Governments.
• Policies to reduce losses in public enterprises and better utilise existing public assets.
• Firm and stable foreign trade policies aimed at export promotion.
• Quantitative and qualitative improvements in infrastructure services.
• Address problems arising from urbanisation and plan measures for urban management and basic services.
• Measures for environmental protection and correcting ecological imbalances.

Objectives of the Ninth Plan

1. Create productive employment and give priority to development of agriculture and rural areas to eliminate poverty.
2. Accelerate economic development while keeping prices stable.
3. Ensure food and nutrition security for all, with special attention to the weaker sections.
4. Provide basic minimum services-clean drinking water, primary health care, universal primary education and housing-and ensure their availability.
5. Control population growth rate through effective measures and popular participation.
6. Maintain environmental balance by mobilising public support and people's participation at all levels.
7. Empower women and socially disadvantaged groups (scheduled castes, scheduled tribes, other backward classes and minorities) so they can become agents of economic development and social change.
8. Encourage mass participation institutions such as Panchayati Raj bodies, co-operatives and voluntary organisations.
9. Strengthen efforts towards attaining self-sufficiency in key areas.

Self-dependence priorities

1. Restore and maintain a sustainable balance of payments position.
2. Curtail the growth of foreign debt and seek to reduce the foreign debt burden.
3. Increase reliance on non-debt foreign resources (such as exports and remittances) to finance development needs and external obligations.
4. Attain self-sufficiency in foodgrains through productivity improvements and diversification.
5. Ensure sustainable utilisation and conservation of national natural resources, including medicinal and herbal resources.
6. Pursue technological self-reliance by strengthening domestic capabilities in science and technology.

Conclusion

Both the Eighth and Ninth Plans marked a transition in India's planning paradigm: from a centralised, allocation-driven system to one that emphasised indicative planning, macroeconomic stability, structural reform and people-centred development. While the Eighth Plan consolidated stabilisation and shifted focus to human development and infrastructure, the Ninth Plan built upon those gains, stressing poverty eradication, rural development, employment generation, fiscal prudence and self-reliance as pillars for medium-term growth and social progress.