Fact Sheet

    The Planning Commission is engaged in an exercise to reorient the planning process and redefine the role of Planning Commission as part of the proposal for reorientation of planning process and restructuring of the Planning Commission with a view to make it more responsive to the changing domestic and global economic scenario. Given the predominant thinking, global as well as domestic, from the nature of development policy and economic management, the proposal outlines the desired process of planning, the appropriate mechanism and the role expected of Planning Commission in attaining our development objectives.

Planning over years :

First Plan :

The First Plan stressed more on agriculture, in view of large scale import of foodgrains and inflationary pressures on the economy. Other areas of emphasis were power and transport. The annual average growth rate, measured by National Income, during the First Plan was estimated as 3.61% as against a target of 2.1%

Second Plan :

This Plan was a major watershed in our efforts to establish a socialistic pattern of society. With agricultural targets of previous plan achieved, major stress was on the establishment of heavy industries. Rate of investment was targeted to increase from 7% to 11%. The Plan achieved a more than targeted growth rate of 4.32%. This Plan envisaged to give a big push to the economy so that it enters the take off stage.

Third Plan :

The aim of Third Plan was to establish a self sustaining economy. The Third Plan witnessed an increasing trade deficit and mounting debt obligation. For the first time, we resorted to borrowing from IMF. Rupee was also devalued for the first time in 1966. India's conflict with Pakistan and repeated droughts also contributed in the failure of this Plan.

Annual Plans :

With the Third Plan going awry, the economy degenerated to a level wherein the Fourth Plan could not be started in time. Instead as a stopgap arrangement planning was made annual. The Annual Plans continued for three years, viz., 1966-67, 1967-68 and 1968-69.

Fourth Plan :

Starting from April 1, 1969, the main objective of this Plan was Growth with stability. The Plan laid special emphasis on improving the condition of the under-privileged and weaker sections through provision of education and employment. Reducing the fluctuations in agricultural production as well as impact of uncertainties of foreign aid was also a point of emphasis of this Plan. The Plan aimed at a target growth of 5.7% and the achievement against this was 3.21%.

Fifth Plan :

This Plan was a part of a long-term Perspective Plan covering a period of 10 years from 1974-75 to 1984-85. The Perspective Plan attempted to co-ordinate various goals of economy in terms of a new slogan Garibi Hatao. With the coming of the new Government the main objective of the Plan was changed from Growth with Social Justice to Growth for Social Justice. A new pattern of yearly assessment of Plan was introduced in the form of Rolling Plan. The targeted growth rate measured by Gross Domestic Product at factor cost was 4.4% and we achieved 4.8%.

Sixth Plan :

This Plan was unique in the sense that it was formulated after taking into account the achievements and the shortcomings of past three decades of planning. Removal of poverty was the foremost objective of Sixth Plan. Another area of emphasis was infrastructure, which was to be strengthened for development of both industry and agriculture. The achieved growth rate of 5.7% was more than the targeted one.

Seventh Plan :

This Plan stressed on rapid growth in food-grains production and increase in employment opportunities. The growth rate of 5.81% achieved in this Plan was more than the targeted one.

Eighth Plan :

This Plan was formulated keeping in view the process of economic reforms and restructuring of the economy. The main emphasis of this Plan were, a) to stabilize the adverse balance of payment scenario, b) human development as main focus of planning, c) improvement in trade and current account deficit. This Plan was indicative in nature. The Plan was formulated in a way so as to manage the transition from a centrally planned economy to market led economy without destroying our age old socio-cultural fabric. The targeted annual average rate of growth of the economy during Eighth Plan was 5.6%. Against this, we achieved an average annual growth of 6.5%.

Plan Outlay from First to Ninth Plan is indicated in the following Table:-

(Rs. Crore)

Note : First Plan total outlay is the 1952 Original Plan Provision

The Fifth Plan total outlay excludes Rs. 450.00 crores for Hill and Tribal Areas

Outlays are at prices at base year of Plan

* The State Outlay for Ninth Plan includes the figures for UTs.

The Ninth Five Year Plan (1997-2002) obtained the final approval of National Development Council (NDC) on 19^th February, 1999. The salient features of the Ninth Five Year Plan are a target annual average growth rate of 6.5 per cent for the economy as a whole, and a growth rate of 3.9 per cent for agriculture sector, among others. The key strategies envisaged to realise this target rest on attaining a high investment rate of 28.2 per cent of GDP at market prices. The domestic saving rate, which determines the sustainable level of investment, is targeted at 26.1 per cent of the GDP, resulting in a current account deficit of 2.1 per cent for the Ninth Five Year Plan. Care has been taken to ensure achievement of a sustainable growth path in terms of external indebtedness as well as fiscal stability. Accordingly, the target growth rates for import & export are estimated at 10.8 per cent and 11.8 per cent per annum respectively.

Priority to agriculture and rural development with a view to generating adequate productive employment and eradication of poverty;

Accelerating the growth rate of the economy with stable prices;

Ensuring food and nutritional security for all, particularly the vulnerable sections of society;

Providing the basic minimum services of safe drinking water, primary health care facilities, universal primary education, shelter, and connectivity to all in a time bound manner;

Containing the growth rate of population;

Ensuring environmental sustainability of the development process through social mobilisation and participation of people at all levels;

Empowerment of women and socially disadvantaged groups such as Scheduled Castes, Scheduled Tribes and Other Backward Classes and Minorities as agents of socio-economic change and development;

Promoting and developing people's participatory institutions like Panchayati Raj institutions, cooperatives and self-help groups;

Strengthening efforts to build self-reliance.

The Ninth Plan has incorporated Special Action Plans on :-

Doubling of food production and making India hunger free in 10 years;

Rapid improvement in physical infrastructure;

National Water Policy;

Social Infrastructure : Rural Housing, Urban Housing, Health Care Services, Education, Urban Water Supply and Sanitation; Rural Water Supply and Sanitation and;

Information Technology

The Ninth Plan has been formulated keeping in view the fast emerging Market oriented growth economy. But it is accepted that the Market based growth is likely to elude the more backward regions, thus necessitating the Government intervention. Public investment in infrastructure will be designed in such a way so that it helps the less well-off States in order to correct large regional imbalances.

The Ninth Plan assumes an Incremental Capital-Output Ratio (ICOR) of 4.3, which implies an assumption of average domestic savings and investment rates of 26.1 per cent and 28.2 per cent of GDP, respectively. The Ninth Plan proposes an investment of Rs. 2171 thousand crore during the period 1997-2002 at 1996-97 prices, most of which (92.6% amounting to Rs. 2011 thousand crore) could be financed from domestic resources. Investment in the public sector would be Rs. 726 thousand crore constituting about 33 per cent of the total investment as against the level of 34.3 per cent realised during the Eighth Plan period. The public sector outlay is proposed at Rs. 8,59,200 crore, out of which the Central Plan outlay would be Rs. 4,89,361 crore, which includes provision to implement the additional requirements of Special Action Plans. The Central Budgetary Support to the Plan is targeted at Rs. 374,000 crore at 1996-97 prices.

A statement on Public Sector Outlays by Major Heads of Development for the Ninth Plan is enclosed at Annexure I..

Broad picture in respect of growth targets and actual achievements is indicated in the Table given below. Economic growth is the outcome of numerous factors interacting with each other. For resource-constrained developing countries, capital accumulation or investment is the most important factor for increasing the productive capacity of the economy as well as for improving the productivity of the other factors of production. The Indian Planning methodology has therefore traditionally focused on the relationship linking growth to the investment rate and the incremental capital-output ratio (ICOR). Accordingly, the Indian Plans have been essentially investment Plans, dealing with the allocation of investible resources among different sectors, maintaining inter-sectoral consistency towards attaining the targeted rates of growth. The Planning Commission is regularly getting the feedback on performance of various development programmes through the network of Government Evaluation Organisations in the Center and States. Growth performance in the Five Year Plans is indicated in the Table given below:-

(per cent per annum)

@ Based on New Series of NAS(base=1993-94)

* During the first three years of the Plan

Notes : (1) The growth targets for the first three Plans were set with respect to National Income. In the Fourth Plan it was Net Domestic Product. In all the Plans thereafter, Gross Domestic Product has been used.

(2) The actual growth rate for the Ninth Plan period are based on Quick Estimates for 1999-2000 of CSO, Government of India.

The pre-Independence stagnant economy started growing after Five Year Plans were launched. The growth rate in terms of GDP was slightly less than 4% during the first three decades of planning. The seventies saw the growth rate dipping below 3% per annum.

It was only in the eighties that growth rate crossed 5.5% per annum. The overall growth rate during Eighth Plan was 6.5% per annum. The growth rate in the first three years of Ninth Plan are 5%, 6.8% and 6.4% respectively, as per National Accounts Statistics 2000, published by the Central Statistical Organisation.

One of the major achievements of our planning process has been a commendable increase in our industrial production. Industrial production registered a major hike in Second and Third Plans. Our industrial growth rate of first two decades of planning round about 6%. In the seventies the growth fell below 4% due to stagnation in PSUs. But eighties saw a revival in industrial growth rate. The overall industrial growth rate during Eighth Plan was 8.42%. Since 1996-97, the industrial growth rate is facing stagnation due to overall recession, foreign competition, infrastructural limitation and low industrial investments. It is likely to remain at 8.2% in the Ninth Plan period.

Over the past four decades the country has made considerable progress in the sphere of education. Education for all has been the thrust of every Plan. Though we have not yet achieved this goal, but still considerable dent has been made in this field. The total literacy rate was 52.2% in 1991.

Right from the First Five Year Plan, consistent efforts have been made for the upliftment of poverty stricken masses. Many developmental programmes and special poverty alleviation schemes have been started to tackle this slur. Planning Commission do not have any estimation of percentage of people below poverty line at the time of independence. The earliest estimate in this regard is available for the year 1973-74. According to this, the percentage of people below poverty line has declined from 55% in 1973-74 to 36% in 1993-94.

But still poverty remains a major concern of the nation. The Ninth Plan has put special emphasis on poverty alleviation programmes. Apart from continuing the old schemes some new programmes have also been added. Planners have adopted a twin pronged approach to wipe out this black spot from our society - one through direct methods, i.e., different developmental programmes and other through indirect method which revolves around the overall economic development of the country.

Evolution of Poverty Alleviation Programmes :

The Mid-Term Appraisal (MTA) exercise for the Ninth Five Year Plan was initiated by the Planning Commission with a view to assess the performance of the Plan for the years it has been implemented and to take corrective action to effectively achieve the objectives laid out for the Plan period as a whole.

Revised Sectoral Growth Targets for the Ninth Five Year Plan and the Achievements for the first three years for the Plan are indicated in the Annexure II

The growth rate of the economy during first three years of the Plan appears to be significantly below the target rate of 6.5 per cent per annum. In 1997-98 the economy was estimated to have grown only at 5 per cent, which was a sharp reduction from the 7.5 per cent attained in the previous year. The principal cause of this reduction was the negative growth rate of Agriculture during 1997-98. The Manufacturing sector also witnessed a sharp decline in its growth just above 4 per cent as compared to the double-digit levels that had been attained during the previous three years. In 1998-99 the economy bounced back to record a growth of 6.8 per cent primarily on account of a sharp recovery in agricultural growth. The Manufacturing sector, however, continued to perform badly and registered a growth rate marginally below 4 per cent. In both these years, the Services sectors continued to perform well and prevented the GDP growth from slipping further.

For 1999-2000, the quick estimate by Central Statistical Organisation (CSO) indicates a growth rate of only 6.4 per cent. On this basis, the average growth rate for first three years of the Plan will be 6.1 per cent per annum. However, it is felt that the CSO estimates for 1999-2000 may be on the lower side since they have not fully taken into account the positive developments in the latter half of the year, particularly in Agriculture and Manufacturing. Planning Commission’s estimates would place the growth for this year in the range of 6.7 per cent to 6.9 per cent, which would yield an average growth rate for the first three years of 6.2 per cent.

Some of the measures suggested in the Mid-Term Appraisal include : bringing down the fiscal deficit and rate of inflation, appropriate pricing of services, competition policy, effective targeting of subsidy etc.

The total outlay for the Central sector in the Annual Plan 2000-01 at Rs.117333.78 crore, amounts to an increase of 13 per cent over the Budget Estimates (BE) of Rs.103520.93 crore for Annual Plan 1999-2000 and an increase of 22 per cent over Revised Estimates (RE) of Rs.96309.94 crore for Annual Plan 1999-2000. This outlay for Central sector 2000-01 is proposed to be financed by budget support of Rs.51275.60 crore (43.7 per cent) and IEBR of the Central Public Sector Enterprises of Rs.66058.18 crore (56 per cent). The amount to be raised through IEBR for financing the Central sector Plan for 2000-01 has gone up by 11 per cent over the corresponding figure of Rs.59520.93 crore in the Annual Plan 1999-2000.

The Gross Budgetary Support (GBS) for the plan of Central sector 2000-01 at Rs.51275.60 crore is higher by 16.5 per cent over the Budget Estimates of Rs.44000 crore provided in the Annual Plan 1999-2000 and 17.4 per cent higher over Revised Estimates of Rs.43660.58 crore in RE of Annual Plan 1999-2000.

(Rate of Growth in GDP)

(* As per CSO Estimates)