The Five-Year Plans of India were a series of national development programmes implemented by the Government of India from 1951 to 2017.[1] Inspired by the Soviet model, these plans aimed to promote balanced economic growth, reduce poverty and modernise key sectors such as agriculture, industry, infrastructure and education.[2]
The Planning Commission, chaired ex-officio by the prime minister, conceptualised and monitored the plans until its replacement by the NITI Aayog (National Institution for Transforming India) in 2015. The plans evolved to address changing developmental priorities, introducing innovations like the Gadgil formula in 1969 for transparent resource allocation to states.[3] While the five-year plans significantly shaped India's economic trajectory, they were discontinued in 2017, transitioning to a more flexible framework under the NITI Aayog.[4][5][6]
History
Five-Year Plans (FYPs) are centralized and integrated national economic programs. Joseph Stalin implemented the first Five-Year Plan in the Soviet Union in 1928. Most communist states and several capitalist countries subsequently have adopted them. China continues to use FYPs, although China renamed its Eleventh FYP, from 2006 to 2010, a guideline (guihua), rather than a plan (jihua), to signify the central government's more hands-off approach to development. India launched its First FYP in 1951, immediately after independence, under the socialist influence of India's first prime minister, Jawaharlal Nehru.[7]
First Plan (1951–1956)
The first Indian prime minister, Jawaharlal Nehru, presented the First Five-Year Plan to the Parliament of India and needed urgent attention. The First Five-year Plan was launched in 1951 which mainly focused in the development of the primary sector. The First Five-Year Plan was based on the Harrod–Domar model with few modifications.
This five-year plan's president was Jawaharlal Nehru and Gulzarilal Nanda was the vice-president. The motto of the First Five-Year Plan was "Development of agriculture" and the aim was to solve different problems that formed due to the partition of the nation, second world war. Rebuilding the country after independence was the vision of this plan. Another main target was to lay down the foundation for industry, agriculture development in the country and to provide affordable healthcare, education in low price to people.[8]
At the end of the plan period in 1956, five Indian Institutes of Technology (IITs) were started as major technical institutions. The University Grants Commission (UGC) was set up to take care of funding and take measures to strengthen the higher education in the country. Contracts were signed to start five steel plants, which came into existence in the middle of the Second Five-Year Plan. The plan was deemed successful for the government having outperformed growth projections.
Second Plan (1956–1961)
The Second Plan focused on the development of the public sector and "rapid Industrialisation". The plan followed the Mahalanobis model, an economic development model developed by the Indian statisticianPrasanta Chandra Mahalanobis in 1953. The plan attempted to determine the optimal allocation of investment between productive sectors in order to maximise long-run economic growth. It used the prevalent state-of-the-art techniques of operations research and optimization as well as the novel applications of statistical models developed at the Indian Statistical Institute. The plan assumed a closed economy in which the main trading activity would be centred on importing capital goods.[9][10] From the Second Five-Year Plan, there was a determined thrust towards substitution of basic and capital good industries.
The total amount allocated under the Second Five-Year Plan in India was Rs. 48billion. This amount was allocated among various sectors: power and irrigation, social services, communications and transport, and miscellaneous. The second plan was a period of rising prices. The country also faced foreign exchange crisis. The rapid growth in population slowed down the growth in the per-capita income.
The target growth rate was 4.5% and the actual growth rate was 4.27%.[11]
The plan was criticized by classical liberal economist B.R. Shenoy who noted that the plan's "dependence on deficit financing to promote heavy industrialization was a recipe for trouble". Shenoy argued that state control of the economy would undermine a young democracy. India faced an external payments crisis in 1957, which is viewed as confirmation of Shenoy's argument.[12]
Third Plan (1961–1966)
The Third Five-year Plan stressed agriculture and improvement in the production of wheat, but the brief Sino-Indian War of 1962 exposed weaknesses in the economy and shifted the focus towards the defence industry and the Indian Army. In 1965, India fought a war with Pakistan. There was also a severe drought in 1964-65. The war led to inflation and the priority was shifted to price stabilisation. The construction of dams continued. Many cement and fertilizer plants were also built. Punjab began producing an abundance of wheat.
Many primary schools were started in rural areas. In an effort to bring democracy to the grass-root level, Panchayat elections were started and the states were given more development responsibilities. For the first time India resorted to borrowing from IMF. Rupee value devalued for the first time in 1966.
State electricity boards and state secondary education boards were formed. States were made responsible for secondary and higher education. State road transportation corporations were formed and local road building became a state responsibility.
The target growth rate was 5.6%, but the actual growth rate was 2.4%.[11]
Due to miserable failure of the Third Plan the government was forced to declare "plan holidays" (from 1966 to 1967, 1967–68, and 1968–69). Three annual plans were drawn during this intervening period. During 1966–67 there was again the problem of drought. Equal priority was given to agriculture, its allied activities, and industrial sector. The government of India declared "Devaluation of Rupee" to increase the exports of the country. The main reasons for plan holidays were the war, lack of resources and increase in inflation.
Fourth Plan (1969–1974)
The Fourth Five-Year Plan was delayed for more than a year amid disagreements over India's economic development strategy.[13]
The plan adopted the objective of correcting the earlier trend of increased concentration of wealth and economic power. It was based on the Gadgil formula focusing on growth with stability and progress towards self reliance. At this time Indira Gandhi was the prime minister.
The Indira Gandhi government nationalised 14 major Indian banks (Allahabad Bank, Bank of Baroda, Bank of India, Bank of Maharashtra, Central Bank of India, Canara Bank, Dena Bank, Indian Bank, Indian Overseas Bank, Punjab National Bank, Syndicate Bank, UCO Bank, Union Bank and United Bank of India[14]) and the Green Revolution in India advanced agriculture. In addition, the situation in East Pakistan (now Bangladesh) was becoming dire as the Indo-Pakistan War of 1971 and Bangladesh Liberation War took funds earmarked for industrial development.
The concept of a buffer stock was first introduced and a buffer stock of 5 million tonnes of food grains was envisaged
The Drought Prone Area Program (DPAP) was launched
The target growth rate was 5.6%, but the actual growth rate was 3.3%.[11]
Fifth Plan (1974–1978)
The Fifth Five-Year Plan laid stress on employment, poverty alleviation (Garibi Hatao), and justice. The plan also focused on self-reliance in agricultural production and defence. In 1978 the newly elected Morarji Desai government rejected the plan. The Electricity Supply Act was amended in 1975, which enabled the central government to enter into power generation and transmission.[15]
The Indian national highway system was introduced and many roads were widened to accommodate the increasing traffic. Tourism also expanded. The twenty-point programme was launched in 1975. It was followed from 1975 to 1979.
The Minimum Needs Programme (MNP) was introduced in the first year of the Fifth Five-Year Plan (1974–78). The objective of the programme is to provide certain basic minimum needs and thereby improve the living standards of the people. It is prepared and launched by D.P.Dhar.
The target growth rate was 4.4% and the actual growth rate was 4.8%.[11]
Rolling Plan (1978–1980)
The Janata Party government rejected the Fifth Five-Year Plan and introduced a new Sixth Five-Year Plan (1978–1980). This plan was again rejected by the Indian National Congress government in 1980 and a new Sixth Plan was made. The Rolling Plan consisted of three kinds of plans that were proposed. The First Plan was for the present year which comprised the annual budget and the Second was a plan for a fixed number of years, which may be 3, 4 or 5 years. The Second Plan kept changing as per the requirements of the Indian economy. The Third Plan was a perspective plan for long terms i.e. for 10, 15 or 20 years. Hence there was no fixation of dates for the commencement and termination of the plan in the rolling plans. The main advantage of the rolling plans was that they were flexible and were able to overcome the rigidity of fixed Five-Year Plans by mending targets, the object of the exercise, projections and allocations as per the changing conditions in the country's economy. The main disadvantage of this plan was that if the targets were revised each year, it became difficult to achieve the targets laid down in the five-year period and it turned out to be a complex plan. Also, the frequent revisions resulted in the lack of stability in the economy.
Sixth Plan (1980–1985)
The Sixth Five-Year Plan marked the beginning of economic liberalisation. Price controls were eliminated and ration shops were closed. This led to an increase in food prices and an increase in the cost of living. This was the end of Nehruvian socialism. The National Bank for Agriculture and Rural Development was established for development of rural areas on 12 July 1982 by recommendation of the Shivaraman Committee. Family planning was also expanded in order to prevent overpopulation. In contrast to China's strict and binding one-child policy, Indian policy did not rely on the threat of force [citation needed]. More prosperous areas of India adopted family planning more rapidly than less prosperous areas, which continued to have a high birth rate. Military Five-Year Plans became coterminous with Planning Commission's plans from this plan onwards.[16]
The Sixth Five-Year Plan was a great success to the Indian economy. The target growth rate was 5.2% and the actual growth rate was 5.7%.[11]
Seventh Plan (1985–1990)
The Seventh Five-Year Plan was led by the Congress Party with Rajiv Gandhi as the prime minister. The plan laid stress on improving the productivity level of industries by upgrading technology.
The main objectives of the Seventh Five-Year Plan were to establish growth in areas of increasing economic productivity, production of food grains, and generating employment through "Social Justice".
As an outcome of the Sixth Five-Year Plan, there had been steady growth in agriculture, controls on the rate of inflation, and favourable balance of payments which had provided a strong base for the Seventh Five-Year Plan to build on the need for further economic growth. The Seventh Plan had striven towards socialism and energy production at large. The thrust areas of the Seventh Five-Year Plan were: social justice, removal of oppression of the weak, using modern technology, agricultural development, anti-poverty programmes, full supply of food, clothing, and shelter, increasing productivity of small- and large-scale farmers, and making India an independent economy.
Based on a 15-year period of striving towards steady growth, the Seventh Plan was focused on achieving the prerequisites of self-sustaining growth by 2000. The plan expected the labour force to grow by 39 million people and employment was expected to grow at the rate of 4% per year.
Some of the expected outcomes of the Seventh Five-Year Plan India are given below:
Under the Seventh Five-Year Plan, India strove to bring about a self-sustained economy in the country with valuable contributions from voluntary agencies and the general populace.
The target growth rate was 5.0% and the actual growth rate was 6.01%.[17] and the growth rate of per capita income was 3.7%.
Annual Plans (1990–1992)
The Eighth Plan could not take off in 1990 due to the fast changing economic situation at the centre and the years 1990–91 and 1991–92 were treated as Annual Plans. The Eighth Plan was finally launched in 1992 after the initiation of structural adjustment policies.
Eighth Plan (1992–1997)
1989–91 was a period of economic instability in India and hence no Five-Year Plan was implemented. Between 1990 and 1992, there were only Annual Plans. In 1991, India faced a crisis in foreign exchange (forex) reserves, left with reserves of only about US$1 billion. Thus, under pressure, the country took the risk of reforming the socialist economy. P.V. Narasimha Rao was the ninth prime minister of the Republic of India and head of Congress Party, and led one of the most important administrations in India's modern history, overseeing a major economic transformation and several incidents affecting national security. At that time Dr. Manmohan Singh (later prime minister of India) launched India's free market reforms that brought the nearly bankrupt nation back from the edge. It was the beginning of liberalization, privatisation and globalization (LPG) in India.
Modernization of industries was a major highlight of the Eighth Plan. Under this plan, the gradual opening of the Indian economy was undertaken to correct the burgeoning deficit and foreign debt. Meanwhile, India became a member of the World Trade Organization on 1 January 1995. The major objectives included, controlling population growth, poverty reduction, employment generation, strengthening the infrastructure, institutional building, tourism management, human resource development, involvement of Panchayati rajs, Nagar Palikas, NGOs, decentralisation and people's participation.
Energy was given priority with 26.6% of the outlay.
The target growth rate was 5.6% and the actual growth rate was 6.8%.[18]
Ninth Plan (1997–2002)
The Ninth Five-Year Plan came after 50 years of Indian Independence. Atal Bihari Vajpayee was the prime minister of India during the Ninth Plan. The Ninth Plan tried primarily to use the latent and unexplored economic potential of the country to promote economic and social growth.[citation needed]
Providing gainful and high-quality employment at least to the addition to the labour force.
Reduction in gender gaps in literacy and wage rates by at least 50% by 2007.
20-point program was introduced.
Target growth: 8.1% – growth achieved: 7.7%.
The Tenth Plan was expected to follow a regional approach rather than sectors approach to bring down regional inequalities.
Expenditure of ₹43,825 crore (US$5.1billion) for tenth five years.
Out of total plan outlay, ₹921,291 crore (US$110billion) (57.9%) was for central government and ₹691,009 crore (US$80billion) (42.1%) was for states and union territories.
Eleventh Plan (2007–2012)
It was in the period of Manmohan Singh as the prime minister.
It aimed to increase the enrolment in higher education of 18–23 years of age group by 2011–12.
It focused on distant education, convergence of formal, non-formal, distant and IT education institutions.
Rapid and inclusive growth (poverty reduction).
Emphasis on social sector and delivery of service therein.
Empowerment through education and skill development.
Reduction of gender inequality.
Environmental sustainability.
To increase the growth rate in agriculture, industry and services to 4%, 10% and 9% respectively.
The Twelfth Five-Year Plan of the Government of India has been decided to achieve a growth rate of 9% but the National Development Council (NDC) on 27 December 2012 approved a growth rate of 8% for the Twelfth Plan.[19]
With the deteriorating global situation, the deputy chairman of the Planning Commission, Montek Singh Ahluwalia, has said that achieving an average growth rate of 9 percent in the next five years is not possible. The final growth target was set at 8% by the endorsement of the plan at the National Development Council meeting held in New Delhi.
"It is not possible to think of an average of 9% [in the Twelfth Plan]. I think somewhere between 8 and 8.5 percent is feasible," Ahluwalia said on the sidelines of a conference of State Planning Boards and departments. The approached paper for the Twelfth Plan, approved last year, talked about an annual average growth rate of 9%.
"When I say feasible... that will require a major effort. If you don't do that, there is no God-given right to grow at 8 percent. I think given that the world economy deteriorated very sharply over the last year...the growth rate in the first year of the 12th Plan (2012–13) is 6.5 to 7 percent."
He also indicated that soon he should share his views with other members of the commission to choose a final number (economic growth target) to put before the country's NDC for its approval.
The government intends to reduce poverty by 10% during the 12th Five-Year Plan. Ahluwalia said, "We aim to reduce poverty estimates by 9% annually on a sustainable basis during the Plan period". Earlier, addressing a conference of State Planning Boards and Planning departments, he said the rate of decline in poverty doubled during the Eleventh Plan. The commission had said while using the Tendulkar poverty line, the rate of reduction in the five years between 2004 and 2005 and 2009 and 2010, was about 1.5% points each year, which was twice that when compared to the period between 1993–95 to 2004–05.[20] The plan aims towards the betterment of the infrastructural projects of the nation avoiding all types of bottlenecks. The document presented by the planning commission is aimed to attract private investments of up to US$1 trillion in the infrastructural growth in the 12th five-year plan, which will also ensure a reduction in the subsidy burden of the government to 1.5 percent from 2 percent of the GDP (gross domestic product). The UID (Unique Identification Number) will act as a platform for cash transfer of the subsidies in the plan.
The objectives of the Twelfth Five-Year Plan were:
To create 50 million new job opportunities in non-agricultural sectors.
To remove gender and social gaps in school enrollment.
To enhance access to higher education.
To reduce malnutrition amongst children aged 0–3 years.
To provide electricity to all villages.
To ensure that 50% of the rural population has access to proper drinking water.
To increase green coverage by 1 million hectares every year.
To provide access to banking services to 90% of households.
Future
With the Planning Commission dissolved, no more formal plans are made for the economy, but Five-Year Defence Plans continue to be made. The latest would have been 2017–2022. However, there is no Thirteenth Five-Year Plan.[21]
The economy of Ethiopia is a mixed and transition economy with a large public sector. The government of Ethiopia is in the process of privatizing many of the state-owned businesses and moving toward a market economy. The banking, telecommunication and transportation sectors of the economy are dominated by government-owned companies.
The economy of Morocco is considered relatively liberal, governed by the law of supply and demand. Since 1993, in line with many Western world changes, Morocco has followed a policy of privatisation. Morocco has become a major player in African economic affairs, and is the 6th largest African economy by GDP (PPP). The World Economic Forum placed Morocco as the most competitive economy in North Africa, in its African Competitiveness Report 2014–2015.
The gross domestic product (GDP) of Niger was $16.617 billion US dollars in 2023, according to official data from the World Bank. This data is based largely on internal markets, subsistence agriculture, and the export of raw commodities: foodstuffs to neighbors and raw minerals to world markets. Niger, a landlocked West African nation that straddles the Sahel, has consistently been ranked on the bottom of the Human Development Index, at 0.394 as of 2019. It has a very low per capita income, and ranks among the least developed and most heavily indebted countries in the world, despite having large raw commodities and a relatively stable government and society not currently affected by civil war or terrorism. Economic activity centers on subsistence agriculture, animal husbandry, re-export trade, and export of uranium.
The economy of Pakistan is categorized as a developing economy. It ranks as the 24th-largest based on GDP using purchasing power parity (PPP) and the 43rd largest in terms of nominal GDP. With a population of 254.4 million people as of 2024, Pakistan's position at per capita income ranks 161st by GDP (nominal) and 138th by GDP (PPP) according to the International Monetary Fund (IMF).
The economy of Paraguay is a market economy that is highly dependent on agriculture products. In recent years, Paraguay's economy has grown as a result of increased agricultural exports, especially soybeans. Paraguay has the economic advantages of a young population and vast hydroelectric power. Its disadvantages include the few available mineral resources, and political instability. The government welcomes foreign investment.
The economy of Tanzania is a lower-middle income economy that is centered around Manufacturing, Tourism, Agriculture, and financial services. Tanzania's economy has been transitioning from a planned economy to a market economy since 1985. Although the total GDP has increased since these reforms began, GDP per capita dropped sharply at first, and only exceeded the pre-transition figure in around 2007.
The economy of Thailand is dependent on exports, which accounted in 2021 for about 58 per cent of the country's gross domestic product (GDP). Thailand itself is a newly industrialized country, with a GDP of 17.922 trillion baht (US$514.8 billion) in 2023, the 9th largest economy in Asia. As of 2018, Thailand has an average inflation of 1.06% and an account surplus of 7.5% of the country's GDP. Its currency, the baht, is ranked as the tenth most frequently used world payment currency in 2017.
The economy of India is a developing mixed economy with a notable public sector in strategic sectors. It is the world's fifth-largest economy by nominal GDP and the third-largest by purchasing power parity (PPP); on a per capita income basis, India ranked 141th by GDP (nominal) and 125th by GDP (PPP). From independence in 1947 until 1991, successive governments followed the Soviet model and promoted protectionist economic policies, with extensive Sovietization, state intervention, demand-side economics, natural resources, bureaucrat-driven enterprises and economic regulation. This is characterised as dirigism, in the form of the Licence Raj. The end of the Cold War and an acute balance of payments crisis in 1991 led to the adoption of a broad economic liberalisation in India and indicative planning. India has about 1,900 public sector companies, with the Indian state having complete control and ownership of railways and highways. The Indian government has major control over banking, insurance, farming, fertilizers and chemicals, airports, defense, essential utilities, and the energy sector. The state also exerts substantial control over digitalization, broadband as national infrastructure, telecommunication, supercomputing, space, port and shipping industries, which were effectively nationalised in the mid-1950s but has seen the emergence of key corporate players.
The Licence Raj or Permit Raj is a pejorative for the system of strict government control and regulation of the Indian economy that was in place from the 1950s to the early 1990s. Under this system, businesses in India were required to obtain licences from the government in order to operate, and these licences were often difficult to obtain.
The economy of Kerala is the 11th largest in India, with an annual gross state product (GSP) of ₹13.11 lakh crore in 2024–2025. Per-capita GSP of Kerala during the same period is ₹372,783 (US$4,300), the sixth largest in India. In 2019–20, the tertiary sector contributed around 63% of the state's GSVA, compared to 28% by secondary sector, and 8% by primary sector.
Poverty in India remains a major challenge despite overall reductions in the last several decades as its economy grows. According to an International Monetary Fund paper, extreme poverty, defined by the World Bank as living on US$1.9 or less in purchasing power parity (PPP) terms, in India was as low as 0.8% in 2019, and the country managed to keep it at that level in 2020 despite the unprecedented COVID-19 outbreak. According to the World Bank, India experienced a significant decline in the prevalence of extreme poverty from 22.5% in 2011 to 10.2% in 2019. A working paper of the bank said rural poverty declined from 26.3% in 2011 to 11.6% in 2019. The decline in urban areas was from 14.2% to 6.3% in the same period. The poverty level in rural and urban areas went down by 14.7 and 7.9 percentage points, respectively. According to United Nations Development Programme administrator Achim Steiner, India lifted 271 million people out of extreme poverty in a 10-year time period from 2005–2006 to 2015–2016. A 2020 study from the World Economic Forum found "Some 220 million Indians sustained on an expenditure level of less than Rs 32 / day—the poverty line for rural India—by the last headcount of the poor in India in 2013."
The economic development in India followed socialist-inspired politicians for most of its independent history, including state-ownership of many sectors; India's per capita income increased at only around 1% annualised rate in the three decades after its independence. Since the mid-1980s, India has slowly opened up its markets through economic liberalisation. After more fundamental reforms since 1991 and their renewal in the 2000s, India has progressed towards a free market economy. The Indian economy is still performing well, with foreign investment and looser regulations driving significant growth in the country.
The Five-Year Plans for the National Economy of Pakistan, were the series of nationwide centralised economic plans and targets as part of the economic development initiatives, in the Pakistan. The plan was conceived by the Ministry of Finance (MoF), and were studied and developed by the Economic Coordination Committee (ECC) based on the theory of Cost-of-production value, and also covered the areas of Trickle-down system. Supervision and fulfillment of this programme became the watchword of Pakistan's civil bureaucracy since early 1950s.
The economic liberalisation in India refers to the series of policy changes aimed at opening up the country's economy to the world, with the objective of making it more market-oriented and consumption-driven. The goal was to expand the role of private and foreign investment, which was seen as a means of achieving economic growth and development. Although some attempts at liberalisation were made in 1966 and the early 1980s, a more thorough liberalisation was initiated in 1991.
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The Five-Year Plans of Bhutan are a series of national economic development plans created by the government of Bhutan since 1961.
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The Growth and Transformation Plan (GTP) was a national five-year plan created by the Ethiopian government to improve the country's economy by achieving a projected gross domestic product (GDP) growth of 11-15% per year from 2010 to 2015. The plan included details of the cost and specific targets the government expects to hit by pursuing the following objectives.
Vietnam joined the World Bank Group (WBG) on 21 September 1956. Before the mid-1980s, Vietnam was one of the world's least developed countries. A series of economic and political reforms launched in 1986, known as Đổi Mới, caused Vietnam to experience rapid economic growth and development, becoming a lower middle-income country. The World Bank (WB) has maintained a development partnership with Vietnam since 1993. As of 25 March 2019, it has committed a total of US$24 billion in loans, credits, and grants to Vietnam through 165 operations and projects, 44 of which are active as of 2019 and comprise US$9 billion. With an estimated extreme poverty rate below 3% and a GDP growth rate of 7.1% in 2018, Vietnam's economy continues to show fundamental strength and is supported by robust domestic demand and export-oriented manufacturing.
The economic policy of the Indira Gandhi premiership was characterized by moderate tax increases on higher income Indians, bank nationalisation, and the green revolution. Gandhi presided over three Five-Year Plans as Prime Minister, two of which succeeded in meeting the targeted growth.
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