GENERAL KNOWLEDGE BRIEF INDIAN ECONOMY
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1 GENERAL KNOWLEDGE BRIEF INDIAN ECONOMY HISTORICAL BACKGROUND 1934: Planned Economy for India book written by M. Vishveshvarya. 1938: National Planning Committee set up under JL Nehru. 1944: Bombay Plan by 8 industrialists of Bombay. 1945: People s Plan by M.N Roy. 1950: Sarvodaya Plan by J.P Narayan. PLANNING COMMISSION 15 March 1950 constituted by Government of India. Prime minister was ex-officio chairman of the Planning Commission. Non- constitutional and non- statuary body. Formulated five year plan. Was replaced by Niti Aayog on January 1, 2015 by the Narendra Modi-led NDA Govt. NATIONAL DEVELOPMENTAL COUNCIL Non statuary body Constituted on 6 Aug 1952 Prime Minister is the chairman. Gives representation to states and UT s Evaluates the implementation of planning from time to time Final approval to a five year plan is given by the Parliament. NITI AAYOG NITI stands for National Institution for Transforming India NITI Aayog is the premier policy Think Tank of the Government of India Composition o The Prime Minister is the Ex-officio Chairperson. o Current Vice-Chairperson: Arvind Panagariya o Full-Time Members: Prof. Ramesh Chand, Shri V.K. Saraswat, Shri Bibek Debroy, o CEO: Shri Amitabh Kant o Governing Council: All Chief Ministers and Lieutenant Governors of States and Union Territories At the core of NITI Aayog s creation are two hubs Team India Hub and the Knowledge and Innovation Hub. The Team India Hub leads the engagement of states with the Central government, while the Knowledge and Innovation Hub builds NITI s think-tank capabilities. These hubs reflect the two key tasks of the Aayog.
2 FIVE YEAR PLANS OBJECTIVES FIRST PLAN ( ) o It was based on Harrod-Domar Model. o Community Development Program was launched in 2nd Oct o Emphasized on agriculture, price stability, power & transport. o It was more than a success, because of good harvests in the last two years. o Bhakra Nangal, Damodar Valley, Hera Kund River Valley Projects was established. SECOND PLAN ( ): o Also called Mahalanobis Plan after its chief architect Prof. P.C. Mahalanobis. o Its objective was rapid industrialization. o Advocated huge imports which led to emptying of funds leading to foreign loans. o It shifted basic emphasis from agriculture to industry far too soon. o During this plan, price level increased by 30%, against a decline of 13% during the First Plan. o Rourkela, Bhilai, Durgapur Iron-Steel Plants was mainly established. THIRD PLAN ( ): o At its conception time, it was felt that Indian economy has entered a take-off stage. o Therefore, its aim was to make India a self-reliant and self-generating economy. o Also, it was realized from the experience of first two plans that agriculture should be given the top priority to suffice the requirement of export and industry. o Complete failure due to unforeseen misfortunes, viz. Chinese aggression (1962), Indo-Pak war (1965), and severest drought in 100 years ( ). o Bokaro (Jharkhand) Iron-Steel Plants was established in 1964 with the help of Russia. o In 1964 UTI & IDBI and in 1965 FCI was established. THREE ANNUAL PLANS ( ): o Plan holiday for 3years. o The prevailing crisis in agriculture and serious food shortage necessitated the emhasis on agriculture during the Annual Plans. o During these plans a whole new agricultural strategy involving widespread distribution of High-Yielding Varieties of seeds, the extensive use of fertilizers, exploitation of irrigation potential and soil conservation was put into action to tide-over the crisis in agricultural production.
3 o During the Annual Plans, the economy basically absorbed the shocks given during the Third Plan, making way for a planned growth. FOURTH PLAN ( ): o Based in D.R. Gadgil Model with the aim of Growth with Stability & Progress towards Self Reliance. o Main emphasis on agriculture s growth rate so that a chain reaction can start. o Fared well in the first two years with record production, last three years failure because of poor monsoon. o Had to tackle the influx of Bangladeshi refugees before and after 1971 Indo- Pak war. o In July, 1969, 14 Banks was Nationalized. o In 1974, 1st Nuclear Test was done with the code name Smiling Buddha. FIFTH PLAN ( ): o The fifth plan prepared and launched by D.D. Dhar proposed to achieve two main objectives viz, removal of poverty (Garibi Hatao) and attainment of self reliance, through promotion of high rate of growth, better distribution of income and a very significant growth in the domestic rate of savings. o The plan was terminated in 1978 (instead of 1979) when Janta Govt. came to power. o 2nd Oct. 1975, Regional Rural Bank (RRB) was established. o In 1975, 20 Point programme was launched. ROLLING PLAN ( ): o There were 2 Sixth Plans. o One by Janta Govt. (for 78-83) which was in operation for 2 years only and the other by the Congress Govt. when it returned to power in SIXTH PLAN ( ): o Based on D.T. Kakarwala Model. o Increase in national income, modernization of technology, ensuring continuous decrease in poverty and unemployment, population control through family planning, etc. o In 1980 another 6 Banks was Nationalized. o NABARD was established in 12th July SEVENTH PLAN ( ): o The Seventh plan emphasized policies and programs which aimed at rapid growth in foodgrains production, increased employment opportunities and productivity within the framework of basic tenants of planning. o It was a great success, the economy recorded 6% growth rate against the targeted 5%.
4 o Department of Post starts Speed Post service in o 1989, Jawahar Rojgar Yojana (JSY) was started. EIGHTH PLAN ( ): o The eighth plan was postponed by two years because of political upheavals at the Centre and it was launched after a worsening Balance of Payment position and inflation during o The plan undertook various drastic policy measures to combat the bad economic situation and to undertake an annual average growth of 5.6%. o Some of the main economic performances during eighth plan period were rapid economic growth, high growth of agriculture and allied sector, and manufacturing sector, growth in exports and imports, improvement in trade and current account deficit. o Focus on Human Resource Development. o Introduced LPG Policy. NINTH PLAN ( ): o It was developed in the context of four important dimensions. o Quality of Life, Generation of Productive Employment, Regional Balance and Self-Reliance. o Fail due to Defilation in International market. TENTH PLAN ( ): o Objectives: To achieve the growth rate of 8%. Reduction of poverty ratio to 20% by 2007 and to 10% by Providing gainful high quality employment to the addition to the labour force over the tenth plan period. Universal access to primary education by Reduction in gender gaps in literacy and wage rates by at least 50% by Reduction in decadal rate of population growth between 2001 and 2011 to 16.2%. Increase in literacy rate to 72% within the plan period and to 80% by Reduction of Infant Mortality Rate (IMR) to 45 per 1000 live births by 2007 and to 28 by Increase in forest and tree cover to 25% by 2007 and 33% by All villages to have sustained access to potable drinking water by Cleaning of all major polluted rivers by 2007 and other notified stretches by ELEVENTH PLAN ( ):
5 o Objectives: Accelerate GDP growth from 8% to 10%. Increase agricultural GDP growth rate to 4% per year. Create 70 million new work opportunities and reduce educated unemployment to below 5%. Raise real wage rate of unskilled workers by 20 percent. Reduce dropout rates of children from elementary school from 52.2% in to 20% by Increase literacy rate for persons of age 7 years or above to 85%. Lower gender gap in literacy to 10 percentage point. Increase the percentage of each cohort going to higher education from the present 10% to 15%. Reduce infant mortality rate to 28 and maternal mortality ratio to 1 per 1000 live births Reduce Total Fertility Rate to 2.1. Provide clean drinking water for all by Reduce malnutrition among children between 0-3 years to half its present level. Reduce anaemia among women and girls by 50%. Raise the sex ratio for age group 0-6 to 935 by and to 950 by Ensure that at least 33 percent of the direct and indirect beneficiaries of all government schemes are women and girl children. Ensure all-weather road connection to all habitation with population 1000 and above (500 in hilly and tribal areas) by 2009, and ensure coverage of all significant habitation by 2015 Connect every village by telephone by November 2007 and provide broadband connectivity to all villages by Increase forest and tree cover by 5 percentage points. Attain WHO standards of air quality in all major cities by Treat all urban waste water by to clean river waters. Increase energy efficiency by 20 percentage points by o Clearly failed in a lot of respects. TWELFTH PLAN ( ): o There are Short Term and Medium Term Challenges o Short Term : Reverse the current growth slowdown : 5.5 percent in Aim for 6.5 to 7 percent in o Longer Term: Get back to high growth. This requires accelerating from 5.5% in to over 9% in last two years o Subtitle: Faster, Sustainable, and More Inclusive Growth o Objectives:
6 Achieve inclusive growth Reduce poverty Improve regional equality across states and within states Improve conditions for SCs, STs, OBCs, Minorities Generate attractive employment opportunities for youth Close gender gaps o The status of the 12 th plan is in question due to the dissolution of the Planning Commission. DID THE PLANS ACTUALLY WORK? Plan Target Growth Actual Growth First Plan ( ) 2.9% 3.6% Second Plan ( ) 4.5% 4.3% Third Plan ( ) 5.6% 2.8% Fourth Plan ( ) 5.7% 3.3% Fifth Plan ( ) 4.4% 4.8% Sixth Plan ( ) 5.2% 6.0% Seventh Plan ( ) 5.0% 6.0% Eighth Plan ( ) 5.6% 6.8% Ninth Plan ( ) 6.5% 5.4% Tenth Plan ( ) 8.0% 7.6% Eleventh Plan ( ) 9.0% 8.0%
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