The Bombay Plan

A small group of influential business leaders in Bombay drew up and published in January 1944, a plan for the economic development of India.

Sarvodaya Plan (1950) -It was drafted by Jaiprakash Narayan. The plan was mainly inspired by the Gandhian Plan provided by S N Agarwal & the Idea of Sarvodaya presented by another Gandhian leader Vinoba Bhave.

People’s Plan

The People’s Plan was Authored by M N Roy and drafted by the Post- War Re-Construction Committee of the Indian Federation of Labour.

Planning by Direction or Totalitarian Planning Planning by direction embodies the means to fulfil plan targets through "orders and instructions". These are generally legal and are therefore binding on the operating units of an economy. This method, thus, assumes the form of compulsion as implied in law. In the operational sense, this compulsion takes the form of directives to fulfil targets as per programmes of the plan such as production figures, delivery schedules, quota fixing, price controls, foreign exchange use, etc.

Planning by Inducements or Democratic Planning--  Planning by inducements incorporates elements of material incentives which are associated with the market. For this reason it is also called the method of market incentives. These are not legally binding. Nor do they take the form of laws

Centralised Planning and Decentralised Planning - centralised planning choices are made by the planning office. Decentralised planning is associated with capitalist economies for the reason that the market mechanism prevails in such cases. The principal characteristic of Development Strategies is the dominance of the market in decision-making.



Five Year Plans:

1st Five year plan (period - 1951- 1956)

Background – Refugee crisis post partition, Food shortages

Focus – Agriculture(irrigation), rehabilitation, primary sector

ModelHarrod-domar model with small modifications

Important activities:   construction started on

  • Bhakra dam on satluj river in himachal Pradesh,
  • Hirakud dam on Mahanadi river in Orissa
  • Damodar Valley Corporation(DVC) on damodar river in west bengal & jharkhand
  • 5 IIT’s started during the plan


Achievements: The target growth rate was 2.1% annual gross domestic product (GDP) growth; the achieved growth rate was 3.6% the net domestic product went up by 15%.


2nd  Five year plan (period - 1956-1961)

Background – Rising population, unemployment

Focus – Heavy industry & manufacturing

Model – P.C. Mahalanobis & Indian Statistical Institute

Important activities:

  • Rapid industrialization,
  • Establishment of TIFR, AEC.
  • Hydroelectric power projects and five steel plants at Bhilai, Durgapur, and Rourkela were established with the help of the Soviet Union, Britain (the U.K) and West Germany respectively. Coal production was increased. More railway lines were added in the north east.


Achievements: Failed to achieve planned growth rate of 4.5%.

3rd Five year plan (period - 1961-1966)

Background – High fiscal deficit

Focus – Agriculture & industry

Model –  John Sandy and Sukhamoy Chakraborty's model.

Important activities:

  • 1962 – war with china
  • 1965 war with pakistan
  • devaluation of the currency
  • IMF help sought
  • states given primary & secondary schooling responsibility
  • Sindri fertilizer plant established

Achievements: GDP growth rate of 2.4% was much lower than 5.6% originally targeted.

Plan holiday (1966-67 to 1968-69)

The failure of 3rd plan and lack of resources, forced government to abandon making plans for the 3 year period, devaluation of the rupee to increase exports was tried doring the period.

One notable success was the increase in production by almost 40% in the 3 year period because of efforts put in during the previous plans.

4th Five year plan (period - 1969-1974)

Background – plan was taking place after the period of green revolution, government wanted to invest in agriculture Food shortages

Focus – Food self- reliance

Model – Gadgil formulae.

Important activities:

  • 14 major Indian banks nationalized
  • Buffer stock concept introduced
  • Drought prone area programme launched

Impacted by:

  • Bangladesh war
  • Global oil crisis

Achievements: growth rate 0f 3.3% was less than targeted 5.6%


5th Five year plan (period - 1974- 1979)

Background – Plan period started in the backdrop of  global oil shock, recession & unemployment, which led to emergency

Focus – self- reliance in food and defence.


Important activities:

  • Minimum needs programme
  • National highways developed
  • 20 point programme launched

Impacted by:

  • Emergency in 1975
  • Global oil crisis

Achievements: growth rate 0f 4.8% was more than targeted 4.4%

Rolling plan (1978-80)

This plan was not one that was properly applied but was one that was an accounting jugglery, because of the following,

  • Janata party government curtailed the previous plan 1 year ahead of schedule to start plan no 6.
  • Janata party was in power for only 2 year & when new congress government came to power it added 1 year to the original 6th

6th Five year plan (period - 1980- 1985)

Background – Plan period started with the end of janata party government rule & tight control of markets.

Focus – economic liberalization of markets started.


Important activities:

  • NABARD established
  • Family planning launched

Impacted by:

  • Punjab militancy

Achievements: growth rate 0f 5.7% was more than targeted 5.2%


7th  Five year plan (period - 1985- 1990)

Background – Plan period started with the assassination of prime minister & fresh elections.

Focus – Food, work & productivity

Model – push towards more liberalisation

Important activities:

  • Increasing exports
  • Increasing agriculture production
  • Optimum utilization of existing industrial capacapacity.

Impacted by:

  • Liberalized imports
  • drought

Achievements: growth rate 0f 6.01% was more than targeted 5.0%

Annual plans (1990-91 to 1991-92)

Because of extreme foreign exchange crisis, it was a period of adjustment and change in economic policy from closed to open economic policy.

8th Five year plan (period - 1992- 1997)

Background – Balance of payment crisis led to liberalization, violence in Punjab & Jammu & Kashmir

Focus – Liberalisation, Privatization & Globalisation

Model – LPG Model

Important activities:

  • Rapid economic growth.
  • Trade opened
  • Big push to increase electricity production.
  • Investment in social welfare
  • Local self government reforms

Impacted by:

  • End of cold war
  • Forex crisis
  • With the opening up of the economy, governmrnt role in development reduced going forward, which was left to private enterprises

Achievements: growth rate 0f 6.8% was more than targeted 5.6%.


9th, 10th, 11th & 12th   Five year plan (period - 1997- 2017)

Background – All these plans started post liberalization, with focus on welfare rather than investing in PSU’s, government role shifted from hands on approach to that of hands off approach, to that of facilitator of business.

Focus – Increase production of  agriculture & minerals, development of infrastructure & availability of consumer goods.


Important activities:

  • Development of electricity, roads & healthcare.
  • Sanitation and childcare
  • Social welfare of elderly.

Impacted by:

  • Coalition governments
  • Unproductive subsidy




Plan Types by control:

Centralized vs decentralized


Communist vs capitalist


Imperative vs indicative


Planning from above vs planning from below

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