Friday, March 10, 2017

What have been the Objectives of the Five Year Plans of India??

The main front of economic planning in India were the five year plans.

These plans were first launched in India on first of April 1951 which ended on March 31st 1956.

Since then these five year plans have been mostly consistent except a few irregularities.

In these gap years, some annual plans were launched. For example, between April 1, 1966 and March 31st 1969, the economic planning was done on an annual basis instead of over a five year span.

Apart from this period, annual plans were also exercised in the years 1979, 1980 and 1990.

These plans were not a replacement for the five plans but only a temporary situation where it was not possible to launch the five year plans due to some administrative problems.

Every five year plan has been very goal oriented in India meaning that there is a specific set of goals to be achieved.

Long term goals of five year plans

Increase in GDP and per capita GDP

GDP stands for Gross Domestic Product.

An increase in the GDP means that the total output of the country in terms of goods and services.

An increasing GDP means that the level of production of various goods and services in our country is also increasing.

This production of goods and services is vital for the population to survive.

Our population is growing every year and if the production of such resources cannot meet the population growth, the economy is in jeopardy.

A consistent increase in GDP directly leads to economic growth.

If the GDP of the country is increasing at a steady rate, but at the same time the population is increasing at a faster rate, then there is no economic growth as the resources and goods available per person will be less.

Another term that is of value here is the Per Capita GDP which is defined as the total output per person.


Per Capita GDP= gross domestic Product/ Population Size

The per capita GDP directly affects the standard of living of the people based on the goods and services that are available to each individual.

The increase in per capita GDP is one of the main goals of the five year plans in India as this increase directly indicates a better living standard for the population of the nation.

An increase in the total GDP of the nation is only possible when the production capacities of the country is amplified.

This can be done by increasing the amount of natural resources that are harvested which can be achieved by deeper exploration.

An increase in the natural resources will increase in the production of finished goods and services that are made available to the people of nation.

Technological enhancements and advancements can also increase the productivity which is defined as the total output divided by the total input.

Therefore increasing the exploration of natural resources and improving and updating the technology are indirect goals of the five year plans.

For consistent economic growth, it is very important that the country change its structural composition from primary sector to secondary and tertiary.

Full Employment

Jobless growth is a meaningless growth.

Full employment does not mean that everybody in the country is employed at any given time.

There will always be a part of the population that is unemployed due to some natural or structural change.

For example, if the economy is shifting form primary or secondary sector to tertiary sector of employment, then until the unemployed people adapt themselves to work under secondary and tertiary sectors, they shall remain jobless.

Structural unemployment is always a part of full employment.

Full employment means that all the people of the working age group, are willing to work and are able to work at the market wages are engaged in some form of productive employment.

In simpler terms, those people who are able to work and willing to work, must get work.

This is an extremely important objective of the five plans in India or any other country’s planning strategies for that matter.

I’ll explain it with a simple example. 

Suppose there are two countries, A and B.

Both these countries have the same rate of economic growth in terms of total income.

In country A, most of the income is earned by a select percentage of the population who are already rich and are getting richer by conducting business.

The rest of the population suffers from unemployment and poverty.

Then there’s country B where the whole population is contributing to the nation’s income as they are earning money through their jobs and businesses.

This means that most of the people in country B are doing productive work.

In which of these two countries, do you think, the people are happier?

Of course country B.

Note that the development rate of both the countries was considered to be equal, but majority of the people of country A are naturally restless and frustrated due to poor financial conditions.

What do you think this mass unrest and frustration will eventually lead to?

The consequences can range anywhere between government changes to terrorism.

Whereas in country B, most of the general population is content, even if they are not the richest, at least they have the sufficient means to lead a good standard of living.

Social unrest, like the ones in the fictional country A, can destroy the economy of a country rapidly either directly by destruction of public property or through violence.

Or indirectly as most of the resources of the nation will be required to be redirected from development sectors to policing such unrest.

In any case, unemployment is not just a household issue, but a national issue which can jeopardize the nation’s economic growth.

That’s why full employment is such an important goal of the five year plans.

Equitable Distribution or Equity

If all the benefits of economic development are only enjoyed by the rich people than the purpose of growth becomes null.

In a society where the rich keep getting richer and the poor get poorer, there is no growth of any sort except the personal financial growth of the rich.

This growth does not contribute anything to the country’s growth.

The poor people struggle for the basic essentials of survival.

For the development of the nation, it is essential that all the benefits of growth are spread across all sections of the society equally, so that the income is distributed equitably.

Equitable distribution of income means social equality, which is one of the principal goals of five year planning.

Please note that there is a difference between equal distribution and equitable distribution.

Equal distribution means that all the citizens of the country, be it a factory worker or a doctor, will share an equal amount from the total national income of the country.

This is pretty stupid as they have different levels of qualifications and the amount of hard work they put into their education and work is also different.

 A factory worker earns about 70,000 rupees a year, whereas a doctor might charge the same amount of money for a single surgery of 6-7 hours.

Equitable distribution means that the difference between the incomes of a doctor and the factory worker be reduced to a just level.

This difference must be socially acceptable and should be proportionate to the skill levels and qualifications of the individuals.

To achieve equitable growth, these unjust differences in income must be combated.

Equity directly leads to social justice and when we combine social justice with economic growth, only then we can achieve the true sense of development.

That is why, the structure of economic planning in India is such that it does not focus merely on economic growth, but economic growth with social justice for the prosperity of the citizens of the country.

I shall now define some basic terms in case there is still any kind of confusion.


Growth means a consistent increase in the GDP of the country for a long period of time.

A short lived increase in GDP holds no importance.

When a nation grows, it must mean that the flow of goods and services available to the citizens of that nation also grows which rises the standard of living of the people.


It means growth of the nation with equity along with positive structural change in the economic structure


Equity means sharing the income of the nation by distributing it equitably so that the benefits of growth are shared by everybody.

Structural changes in the economic sectors imply the shifting of occupational practices from primary sector to secondary or tertiary sectors.

Primary sector refer to agricultural and manual labor.

Secondary sector refers to converting raw materials into finished goods by means of industrialization.

Tertiary sector means providing intellectual services instead of material goods. For best growth of the economy, the shifting of economic sectors should be maximum towards tertiary and minimal towards primary.


As the name suggests, modernization means the improvement and enhancement of the nation’s technical capabilities.

This includes finding and discovering new technologies in various economic sectors in order to increase production output.

Also, with the advancement in technology, new products and services can be made available that contribute towards the economic growth of the nation.

As explained earlier, the production can be increased by either increasing the amount of resources harvested from the nation or by innovating new ways of production.

Using science in the occupational and production sector of the country has made a tremendous impact on our growth rate.

For example, the green revolution in the agricultural SECTOR.

Before this revolution, India was a net importer of food grains which are one of the basic essentials of life.

But after the revolution hit our country, not only did we produce enough for ourselves, but we became net exporters.

Modernization doesn’t only refer to economic transformation, but also social.

Conventional norms must be forgotten and modern views like women empowerment must be incorporated for the development of the nation as it will generate a better quality of workforce and society, in turn increasing the overall development rate.

Self sufficiency

By self-sufficiency, I mean not depending on any other nation and domestically producing the various goods, in particular, food grains.

As I explained in the previous section, after the green revolution, India became an exporter of food grains that also implies that India has become self-sufficient.

The main goal behind being self-sufficient is that once we achieve it, India won’t have to buckle under the political pressure of any country for the basic essentials of life.

Like in 1965, when we were fighting a war with Pakistan.

The United States of America threatened to stop exporting food grains to us unless we stopped the war.

This was nothing new, as at that time the more developed countries used this method to control and influence the developing nations.

Therefore, most countries which were still developing, start on a path to become self-sufficient.

This was one of the most stressed upon principle of the first seven five year plans the basic idea behind which was not to let the fragile economy of India succumb to external political pressure.

Short Term Goals

The short term goals of the five year plans vary from plan to plan.

For example, at the time of the first five year plan, our country was facing a huge shortage of food grains, so the production of food grains was made the principle objective of the economic development.

Similarly, in the second five year plan, industrial development was more focused upon.

In the third five year plan, more stress was given on the need to be self-sufficiency as far as food grains were concerned.

This way, every single five year plan had a short term goal associated with it which is the more imminent matter that needs to be handled promptly.

These short term goals are always in sync with the long term goals that I have explained above.

They are decided on the basis of the needs, means and the transformation in the areas of technique and population.

No comments:

Post a Comment

Add a Comment or Query