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Discuss the planning strategy adopted in the 2nd, 4th and 5th plan five year plan in India?

Discuss the planning strategy adopted in the 2nd, 4th and 5th plan five year plan in India?


1 Answer

Strategy during the Second Five Year Plan (1956-61):

To give a “big push” to the economy to build an industrial base in terms of non-ferrous metals, coal, rapid expansion of iron and steel, cement, heavy chemicals and other industries of basic importance was the main strategy of the second plan. This plan had given low priority to the agriculture and a forward thrust made in the development of heavy and basic industries. But the plan was conscious about increasing the supply of consumer goods. But this plan was failed and the constraints were shortage of food and industrial raw material, uncertain monsoon, non-availability of adequate power and machines, phenomenal growth of population, rising prices, and shortage of foreign exchange which results in other shortages. Demand pool inflation and depressing growth in real per capita income was the natural outcome.

Strategy during the Fourth Five Year Plan (1969-74):

Growth with Stability and progressive achievement of self-reliance were the two objectives of this plan. To achieve self-reliance and growth, a greater dependence on internally generated resources was to be achieved and in assured irrigated areas, seed, water-fertilizer technology was started to boost production. To control inflation and to reduce dependence on foreign aid this strategy was introduced. But this all was a failure as it did not achieve the objective of growth with stability as the achieved growth rate was short than the target. The plan performance on the self-reliance front was better as exports as a percentage of imports accounts for about 92 percent during the plan period. The Wholesale Price Index (WPI) rose by 57.3 percent and the WPI for food grains increased by 47.3 percent.


Strategy during the Fifth Five Year Plan (1974-79):

Removal of poverty and attainment of self-reliance were the major objectives of this plan. Overall growth rate of GDP 5.5%, vigorous export promotion and import substitution, national minimum needs programme, a good public distribution system (PDS) to supply essential commodities to the poor at reasonable prices, emphasis on agriculture, key and basic industries producing goods for mass consumption and restraint on inessential consumption were the main elements of this plan. But this plan was also failure to achieve its objectives as no serious dent could be made on unemployment and poverty and supply of wage goods could not be adequately increased.

To avoid the negative aspects from these plans, it was necessary to change it in the fourth and fifth plan. Achievement of stability and progress towards self-reliance, attainment of annual average growth rate of 5.7%, correction of regional imbalances through balanced regional development and dispersal of economic activity were the major objectives of fourth plan. There, was a progressive reduction in concentration of income to provide the benefits of development to less privileged. Fourth Plan had been successful with regard to its achievement of estimated rate of savings and investment.

The strategy of Fifth Plan was to promote and develop entrepreneurship, improvement of production units, promotion of small industries and to facilitate fuller utilization of the existing skills and equipment. The major instruments laid down to achieve the objectives of fifth plan were to direct the flow of private investment into preferred uses, appropriate allocation of investment outlays, institutional reforms and to help the process of development to be carried in a non┬Činflationary manner. The major purpose of changing the planning strategy of second plan in fourth and fifth plan as the achievements for second plan were modest and behind the targets. The plan was “over ambitious” or “under cautious.”

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April 24, 2019