Subject - Economic and Social Development
Chapter - Economic Planning in India

What is Planned Economy

Planned economy is one in which the state owns (partly or wholly) and directs the economy.While such a role is assumed by the State in almost every economy, in planned economies, it is pronounced: for example in communist and socialist countries- former USSR and China till the 1970’s. In such a case a planned economy is referred to as command economy or centrally planned economy or command and control economy

What are the main goals of Indian planning

• Planning has the following long term goals
  1. Growth
  2. Modernization
  3. self-reliance and
  4. social justice

• Economic growth is the increase in value of the goods and services produced by an economy.

• Economic development refers to growth that includes redistributive aspects and social justice.

• Modernization is improvement in technology. It is driven by innovation and investment in R & D. Education is the foundation of modernization.

• Self-reliance means relying on the resources of the country and not depending on other countries and the MNCs for investment and growth.
  
  The term self-reliance should not be confused with self-sufficiency — the former means depending on resources of the country and avoid dependence on external flows; the latter means that the country has all the resources it needs.

• Social justice means inclusive and equitable growth where inequalities are not steep and benefits of growth reach all- rural-urban, man-woman; caste divide and inter-regional divides are reduced.

History of Planning

First Plan (1951-56)

The First Plan stressed more on agriculture, in view of large scale import of food grains and inflationary pressures on the economy. Other areas of emphasis were power and transport.

Second Plan (1956-61)

With agricultural targets of previous plan achieved, major stress was on the establishment of heavy industries.

Third Plan (1961-66)

It tried to balance industry and agriculture. The aim of Third Plan was to establish a self sustaining economy. For the first lime, India resorted to borrowing from IMF, Rupee was also devalued for the first time in 1966.

Annual Plans

As the Third Plan experienced difficulties on the external front (war with China in 1962 and Pakistan in 1965); and the economic troubles mounted on the domestic front- inflation, floods, forex crisis- the Fourth Plan could not be started from 1966. There were three annual plans till 1969.

Fourth Plan (1969-74)

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.

Fifth Plan (1974-79)

The main objective of the Plan was Growth for Social Justice.

Sixth Plan (1980-1985)

Removal of poverty was the foremost objective of Sixth Plan.

Seventh Plan (1985-90)

This Plan stressed on rapid growth in food-grains production and increase in employment opportunities.

Eighth Plan (1992-1997)

This Plan was formulated keeping in view the process of economic reforms and restructuring of the economy.

Ninth Five Year Plan (1997-2002)

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.

Tenth Five Year Plan (2002-2007)

The economy was expected to grow at the rate of 8 %

11th Five Year Plan (2007-2012)

Government set an average annual growth target of 9 per cent for the 11th Plan — beginning with 8.5 per cent in the first year and closing with 10 per cent in 2011-12

The main objective of 12th Five Year Plan

The twelfth plan has the following objectives

• Basic objective: Faster, More inclusive, and Sustainable growth
• Is 10% growth feasible? Realistically, even 9% will need strong policy action. Could aim at 9.0 to 9.5 percent
• Energy, Water and Environment present major sectoral challenges. Can we address them without sacrificing growth?
• Can we find resources to create a world class infrastructure?

For growth to be more inclusive we need

• Better performance in agri-culture
• Faster creation of jobs, especially in manufacturing
• Stronger efforts at health, education and skill development
• Improve effectiveness of programs directly aimed at the poor
• Special programs for socially vulnerable groups
• Special plans for disadvantaged/backward regions

Define Recession

The standard definition of a recession is a decline in the Gross Domestic Product (GDP) for two or more consecutive quarters.

Difference between Depression and Recession

A depression is any economic downturn where real GDP declines by more than 10 percent. A recession is an economic downturn that is less severe.
 

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