Advantages Of Five Year Plan According To Indian Economy

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After India gained Independence in 1947 it basically had to rebuild its economy from scratch. The leaders of those times had to pick the type of economy India would be and also outline economic planning as well. This is where the five year plan was born. The concept of economic planning in India is derived from Russia (now USSR). Since 1951 to 2017 India has launched 12 five year plans. 

From 1947 to 2017, Indian economy is committed to the concept of planning. This planning was carried through the Budget and five years plan developed, executed and monitored by Planning Commission (1951-2014) and Niti Aayog (2014 -2017).   It is due to the following basic facts about Indian economy, five year plans acquired more significance:

1. Country's savings were very low and could only be raised substantially if the Government follows totalitarian methods (form of Govt. which includes control of everything under one authority and allows no opposition). This is against the principles of our Government. 

2. Population in India was growing at a very high rate which means that national income should go faster, if the population has to improve economically.

3. To achieve an increase of 5% per annum in the national income, investment to the extent of 15% of national income per year required. This rate of investment was very high which India would not be able to achieve this figure on its own even in 15 to 20 years.

4. The estimate of weekly unemployment does not give a complete picture of employment situation because millions of workers do not get regular work even for a week. 

Every five year plan is developed with a specific goal in mind. But, there is no solitary objective of the plan. The plan is supposed to work towards the perspective plan and must cover a few important objectives. However, it is not possible or practical to give equal importance to all  aspects of a plan.

There are basically four generalized goals of a five year plan, wherein a particular plan are given the most importance. In fact, some of the goals are actually conflicting. These are actually the pillars on which the role of Five year plans are designed for the Indian economy to grow:

1) GROWTH - Growth in terms of an economy focuses on increase of Gross Domestic Product (GDP) of the country which is a way to measure its economy. Higher the GDP more the common public can benefit from the economic policies of the country. The economic growth actually happens due to an increase in the production capacity of a nation for either its goods or services. This can be due to an influx of capital into the economy. The sector in which the growth is happening is also very important. The three basic sectors are - Agriculture, Industry and Services. Their respective contributions make up the structural composition of GDP. 

2) MODERNIZATION - It refers to an integration of technology in the economy. Inventions, Innovations and advancement in technology play a huge role in upgrading our economy and increasing its output. 

3) SELF RELIANCE - New economy like India's post independence can become too reliant on imports. So for seven editions of the five year plan, the government promoted self -reliance, which means that anything we were capable of producing domestically we did not import especially food and agricultural products were never imported as long as possible. After 1991, the government finally opened up our economy to the global markets once we had already established a domestic base.  

4) EQUITY -  The previous three goals mainly relate to the economy. Besides the development of economy, five year plans must also focus on development of our society. It is essential to ensure that these benefits from the economy are enjoyed by all members of the society. This is where the equity comes in. It focuses on ensuring that all citizens of our country have their basic needs for Food, Housing, clothing etc. fulfilled. It also looks to reduce the wealth gap and inequality in our society. 

In India, these plans are made for five years and hence are known as five year plans. For a long time, there had been a feeling that a country as diverse and big as India, centralized planning could not work beyond a point due to its one size- fits all - approach.    


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