Five Year Plans and NITI Aayog — TNPSC Group II/IIA Economy

Overview

India adopted economic planning through Five Year Plans from 1951 to 2017. These plans guided resource allocation and set economic priorities. For TNPSC Group 2/2A, know the key features of each plan, the models used, major achievements, and the transition to NITI Aayog.

Background of Economic Planning in India

Planning Commission

• Established: March 15, 1950 (by Cabinet Resolution)
• Chairman: Prime Minister (ex-officio)
• Deputy Chairman: Effective head; equivalent to Cabinet Minister
• Inspiration: Soviet Union's Five Year Plans
• Dissolved: January 1, 2015 by PM Modi

Key Economic Models Used

P.C. Mahalanobis (1893–1972):

• Father of Indian Planning; founded Indian Statistical Institute (ISI)
• His model: Invest in capital goods (heavy industry) to create future growth
• The 2nd Plan's emphasis on steel plants (Bhilai, Durgapur, Rourkela) was based on this

All 12 Five Year Plans

1st Five Year Plan (1951–1956)

• Focus: Agriculture, irrigation, and power
• Model: Harrod-Domar
• Achievements: Bhakra-Nangal Dam; land reforms; community development
• Target: 2.1% growth; Achieved: 3.6%
• Key: Post-partition rehabilitation; foodgrain shortage addressed

2nd Five Year Plan (1956–1961) — Most Important

• Focus: Rapid industrialisation; heavy industries
• Model: Mahalanobis Model
• Steel Plants: Bhilai (Soviet help), Durgapur (British help), Rourkela (German help)
• Target: 4.5%; Achieved: 4.3%
• Bombay Plan: Influenced early planning philosophy

3rd Five Year Plan (1961–1966)

• Focus: Self-sustained growth; agriculture and industry
• Setbacks: Sino-Indian War (1962), Indo-Pakistan War (1965), drought
• Target: 5.6%; Achieved: 2.8% (major failure)
• "Plan Holiday" (1966–69): Three Annual Plans instead of a new Five Year Plan

4th Five Year Plan (1969–1974)

• Slogan: "Growth with Stability and Progressive Achievement of Self-Reliance"
• Bank nationalisation (1969) — 14 major banks
• First bank: Punjab National Bank nationalised
• Green Revolution gained momentum
• Target: 5.7%; Achieved: 3.3%

5th Five Year Plan (1974–1979)

• Focus: Poverty removal (Garibi Hatao) and self-reliance
• Introduced: Minimum Needs Programme
• Terminated one year early (1978) by Janata government
• 20-Point Programme by Indira Gandhi
• Target: 4.4%; Achieved: 4.8%

6th Five Year Plan (1980–1985)

• Focus: Economic liberalisation, poverty reduction
• Introduced: NABARD (National Bank for Agriculture and Rural Development)
• TRYSEM: Training Rural Youth for Self-Employment
• Target: 5.2%; Achieved: 5.7%

7th Five Year Plan (1985–1990)

• Focus: Food, work, productivity
• Slogan: "Food, Work and Productivity"
• Jawahar Rozgar Yojana launched
• India's first attempts at partial liberalisation
• Target: 5%; Achieved: 6% (success)
• Annual Plans: 1990–1992 (political instability)

8th Five Year Plan (1992–1997)

• Focus: Human development, modernisation, technology
• Background: 1991 Economic Crisis and LPG reforms
• Human Development Index focus introduced
• Narasimha Rao-Manmohan reforms implemented during this plan
• Target: 5.6%; Achieved: 6.8%

9th Five Year Plan (1997–2002)

• Focus: "Growth with Social Justice and Equality"
• Emphasis on agriculture and rural development
• Y2K bug management for IT sector
• Target: 7%; Achieved: 5.5%

10th Five Year Plan (2002–2007)

• Focus: Achieving 8% growth; doubling per capita income in 10 years
• Bharat Nirman infrastructure programme
• Target: 8%; Achieved: 7.6%
• Emphasis on economic governance, infrastructure

11th Five Year Plan (2007–2012) — Closest to Target

• Focus: "Faster and More Inclusive Growth"
• MGNREGA (2005) continued; RTI (2005)
• Bharat Nirman, health, education emphasis
• Right to Education Act (2009) — Article 21A
• Target: 9%; Achieved: 8%

12th Five Year Plan (2012–2017) — Last Plan

• Focus: "Faster, More Inclusive and Sustainable Growth"
• Digital India, Smart Cities Mission
• Target: 8%; Achieved: ~6.9%
• Last Five Year Plan — replaced by NITI Aayog's framework

Summary: Growth Rates

NITI Aayog (2015–Present)

Structure

Documents Produced by NITI Aayog

NITI Aayog vs Planning Commission

Key Facts for TNPSC Group II/IIA

• First Five Year Plan: 1951–1956; Harrod-Domar model; focus on agriculture
• Second Five Year Plan: 1956–1961; Mahalanobis Model; heavy industries; Bhilai, Durgapur, Rourkela steel plants
• Plan Holiday: 1966–1969 — Annual Plans due to wars and drought
• 6th Plan: NABARD established
• 11th Plan: Highest growth achieved — 8% (target was 9%)
• 12th Plan (2012–2017): Last Five Year Plan; focus on inclusive and sustainable growth
• Planning Commission dissolved: January 1, 2015
• NITI Aayog established: January 1, 2015 by PM Modi
• NITI Aayog Chairperson: Prime Minister; Governing Council includes all Chief Ministers
• NITI Aayog is an advisory body — does NOT allocate funds to states

Previous Year MCQ Patterns

Q: Which economic model was used in India's Second Five Year Plan? a) Harrod-Domar Model b) Mahalanobis Model c) Solow Model d) Keynesian Model

Q: India's Planning Commission was replaced by NITI Aayog in: a) 2014 b) 2015 c) 2016 d) 2017

Q: The Third Five Year Plan (1961–1966) failed to achieve its targets mainly due to: a) Floods and famine b) Sino-Indian War and Indo-Pakistan War c) Economic recession d) Excessive population growth