At the time of Independence, India faced various problems such as mounting inflation & disequilibrium in the economy due to the Second World War, severe food shortage, an influx of refugees due to partition. So, the Indian government, after Independence, adopted the concept of planning for the economic development of the country. From 1947 to 2017, the Indian economy was carried through the Five-Year Plans, developed & executed by the Planning Commission (1951-2014).
Planning Commission was set up on 15 March 1950 by an Executive Resolution of the Indian Government, with the Prime Minister as the ex-officio chairman of the commission. The first meeting of the National Planning Commission was held on 28 March 1950 in New Delhi. The key objectives of the Planning Commission were:
- Optimum use of the material, capital, and human resources of the country.
- To formulate a plan for effective and balanced utilization of resources,
- To determine the stages in which the plan is to be carried out.
- To determine the national priorities between the programs and projects accepted in the plan.
- Allocation of resources among various sectors as per priorities.
- To determine stage-by-stage execution of Plan.
On 17 August 2014, the Planning commission was dissolved and replaced by a think tank, known as the NITI Aayog (National Institution for Transforming India).
First Five-Year Plan
Five-Years Plans are integrated & centralized national economic programs. The first Five-Year Plan was implemented in the Soviet Union (USSR) in 1928 by Joseph Stalin. Most of the communist states and some capitalist countries subsequently adopted these plans. Indian launched its first Five-Year Plan immediately after Independence under the socialist influence of Jawaharlal Nehru.
In 1951, Jawaharlal Nehru (First Prime Minister of India) introduced the First Five-Year Plan to the Indian Parliament. The Plan borrowed the ideas from the USSR’s five-year Plan developed by Domar. Therefore, it was based on Harrod-Domar Model with few changes.
The First Five Year Plan in India covered the period from 1 April 1951 to 31 March 1956. The plan focused mainly on the development of the primary sector. The key objectives of the first plan were to achieve self-sufficiency in food production, accelerate the industrial growth rate, strengthen infrastructure, generate employment, contain inflation, and correct economic equilibrium in the Indian economy.
The total planned budget in the first plan was Rs. 2069 crore (later increased to Rs. 2378 crore), which was allocated to seven broader areas: Agriculture and community development (17.4%), irrigation & energy (27.2%), rehabilitation of landless farmers (4.1%), industry (8.6%), transport & communications (24%), social services (16.6%), and other sector & services (2.5%). As first Five-Year Plan gave the highest preference to Agriculture and Irrigation, it is also known as Agriculture & Irrigation Plan.
Key Notable Points
- The first large-scale Multipurpose river valley project: Hirakund Dam on the Mahanadi river in Odisha, was build during the First Five-Year Plan.
- In 1952, Jawaharlal Nehru also inaugurated the Bhakra Nangal Project.
- During this period, many other irrigation projects were started, including Damodar Valley Dams.
- Since the First Five-Year Plan, the considerable emphasis had been laid on the land reforms, as the three-fourth population of the country was dependent on agriculture for their income.
- In 1951, the Government abolished the Zamindari system and pronounced the ‘land to the tiller‘ policy, abolishing the intermediaries and regularizing the tenancies.
- With the abolishment of intermediaries, the land tenures were now in the hands of landlords who cultivate the land and tenants who hold leased land from the landlords.
- During First Five-Year Plan, India had its first general elections of Lok Sabha from 25 October 1951 to 27 March 1952.
- Himachal Pradesh voted for the first Lok Sabha elections in 1951.
- Shyam Saran Negi from the Kinnaur district of Himachal Pradesh cast the first vote in the 1951 general elections.
- In 1952, India launched the National Family Planning Program and became the first country in the developing world to create a state-sponsored family planning program. The program aimed to lower Fertility Rate and slow population growth as a means to propel economic development.
- On 2 October 1952, Jawaharlal Nehru introduced the first major development programme: Community Development Programme (CDP), in village Narela at the outskirt of Delhi, followed by 5011 blocks in the country, with moto as Collective Self-Reliance Programme.
- The programme provided an administrative framework so that the government might reach the district, tehsil, and village levels. All the districts of the country were divided into blocks.
- Block Development Officer (BDO) appointed as in charge of each block. Below the BDO, Village Level Workers (VLW) were appointed who keep in touch with 10-12 villages.
- However, the Community Development Programme (CDP) failed to implement all over India due to less participation of people and shortage of funds.
- The Government, therefore, decided to launch another programme alongside the CDP, with the idea of having a wider range and more people’s participation.
- On 2 October 1953, the Indian Government inaugurated the National Extension Service (NES) Programme.
- The programme launched with stress on agriculture, social education, and rural communication.
- The basic idea underlying both the NES and CDP programmes was the same. Funds were reduce for NES blocks, and each NES block had about 100 villages.
- During the First Plan, the Indian government with the World Health Organization (WHO) addressed children health’s and reduced infant mortality, indirectly contributing to the population growth.
- During the First Plan, India signed the Panchsheel Agreement with China on 28 April 1954.
- India also took part in the Bandung Conference held in April 1955.
- In December 1954, the Indian Parliament, for the first time, adopted a resolution on the ‘Socialistic Pattern of Society‘ as the objective of economic policy.
- In 1955, Indian National Congress (INC), in its Avadi Session, officially adopted the resolution to establish a Socialistic Pattern of Society as a goal of the party.
- In 1956, University Grants Commission (UGC) was established to take measures to strengthen higher education. UGC also take care of fundings for higher education in the country.
- At the end of the first plan period, the Five Indian Institutes of Technology (IITs) were started as major technical institutions.
The First Five-Year Plan was quasi-successful for the government.
- The targeted growth rate in the first Five-Year Plan was 2.1% Gross Domestic Product (GDP) every year, and the achieved growth rate was 3.1%.
- Foodgrain production increase from 52.2 million tonnes in 1951 to 67 million tonnes in 1956.
- Although the target for the national income growth was 11%, the actual increase was 18%.
- During this time, per capita income increase by 11%.
- Industrial Index Production with 1951 as base year rose from 100 in 1950-51 to 139 in 1955-56 with annual growth of 7.8%.