Economy
Economic Planning and NITI Aayog
The Five Year Plans (1951–2017)
All twelve Five Year Plans for CGPSC: periods, themes, models, growth targets and results, plan holidays, the Rolling Plan, and Bhilai's link to the Second Plan.
Prerequisites
- Foundations of Economic Planning in India: the Planning Commission, NDC and the Mahalanobis model
- Basic Concepts and National Income: what a “5% growth rate” actually measures
The Hook: How a Village Became Steel City
Connect
In the early 1950s, Bhilai (भिलाई) was a cluster of villages beside the Howrah–Bombay railway line in Durg district. Then the Second Five Year Plan decided India must make its own steel. An agreement with the Soviet Union was signed in 1955, the first blast furnace was lit in 1959, and Bhilai became one of the three public-sector steel plants of that Plan, alongside Rourkela (West German help) and Durgapur (British help).
Seventy years later, the Bhilai Steel Plant still shapes Durg–Bhilai’s economy and the state’s identity. Every plan left marks like this. Which plan built what, which ones failed, and why did the series end in 2017?
Why it matters: “Which plan had which theme / model / slogan?” is one of the most dependable Prelims question types in Economy. Mains asks you to evaluate 65 years of planning.
All Twelve Plans at a Glance
| Plan | Period | Focus / theme | Growth target vs achieved (% per year)* |
|---|---|---|---|
| First | 1951–56 | Agriculture, irrigation, power; Harrod–Domar model | 2.1 → 3.6 |
| Second | 1956–61 | Rapid industrialisation, heavy industry; Mahalanobis model | 4.5 → about 4.3 |
| Third | 1961–66 | “Self-reliant and self-generating economy” | 5.6 → 2.4 (failure) |
| Plan holiday | 1966–69 | Three Annual Plans | — |
| Fourth | 1969–74 | “Growth with stability and progressive achievement of self-reliance” | about 5.6–5.7 → 3.3 |
| Fifth | 1974–79 (ended 1978) | Removal of poverty (garibi hatao) and self-reliance | 4.4 → about 4.8 |
| Rolling Plan | 1978–80 | Janata government’s annual rolling plans | — |
| Sixth | 1980–85 | Removal of poverty, employment | 5.2 → about 5.4 |
| Seventh | 1985–90 | “Food, work and productivity” | 5.0 → about 6.0 |
| Annual Plans | 1990–92 | Political instability, then the 1991 crisis | — |
| Eighth | 1992–97 | Human resource development; indicative planning begins | 5.6 → 6.8 |
| Ninth | 1997–2002 | “Growth with social justice and equality” | 6.5 → about 5.4 |
| Tenth | 2002–07 | 8% growth; double per-capita income in ten years; monitorable targets | 8.0 → about 7.6 |
| Eleventh | 2007–12 | “Towards faster and more inclusive growth” | 9.0 → about 8.0 |
| Twelfth | 2012–17 | “Faster, more inclusive and sustainable growth” | 8.0 → (last plan; not formally assessed against target) |
*Growth figures are the ones commonly cited in Planning Commission material and standard references. Sources differ by a few decimal points (for example 7.9 or 8.0 for the Eleventh Plan), so learn the pattern (which plans beat or missed targets) rather than the second decimal.
Plan by Plan: What to Remember
First Plan (1951–56): agriculture first
- Drafted when food shortages and Partition refugees were pressing problems; priority to agriculture, irrigation and power.
- Multipurpose river projects: Bhakra–Nangal, Damodar Valley, and Hirakud on the Mahanadi, the river that rises in Chhattisgarh’s Dhamtari district.
- Community Development Programme launched on 2 October 1952.
- Beat its modest target, helped by good monsoons.
Second Plan (1956–61): the Mahalanobis plan
- P.C. Mahalanobis model: invest in heavy and capital-goods industry first.
- Backed by the Industrial Policy Resolution, 1956, which reserved key industries for the public sector.
- Three public-sector steel plants: Bhilai (USSR), Rourkela (West Germany), Durgapur (UK).
- Problems: foreign-exchange shortage, inflation, neglect of agriculture.
Third Plan (1961–66): the failure
- Goal: a self-reliant and self-generating economy; balanced attention to agriculture and industry.
- Derailed by the China war (1962), the Pakistan war (1965) and severe droughts (1965–66 and 1966–67). Growth of about 2.4% against a 5.6% target.
Plan holiday (1966–69)
- No five-year plan; three Annual Plans instead.
- The rupee was devalued in June 1966, and the Green Revolution strategy (high-yielding varieties, fertiliser, irrigation) began in these years. See Indian Agriculture.
Fourth Plan (1969–74)
- Theme: “growth with stability and progressive achievement of self-reliance”.
- Gadgil formula for central assistance to states adopted; 14 major banks nationalised (July 1969).
- Hit by the 1971 war, the refugee influx and the 1972–73 drought.
Fifth Plan (1974–79, ended in 1978)
- Focus on removal of poverty and self-reliance; the Minimum Needs Programme and the Twenty-Point Programme (1975) belong to this period.
- The Janata government terminated it a year early, in 1978.
Rolling Plan (1978–80)
- The Janata government adopted a rolling plan: each year a new annual plan and a revised five-year plan. The idea is associated with the economist Gunnar Myrdal.
- Abandoned when the Congress returned in 1980 and launched a fresh Sixth Plan.
Sixth Plan (1980–85)
- Removal of poverty; the Integrated Rural Development Programme (IRDP) was extended nationwide, and the National Rural Employment Programme began.
- Also marks the start of cautious liberalisation of some controls in the 1980s.
Seventh Plan (1985–90)
- “Food, work and productivity”; growth of about 6%.
- Jawahar Rozgar Yojana (1989) for rural wage employment.
- Rising fiscal and current-account deficits by the end of the decade set the stage for 1991.
Annual Plans (1990–92)
- Political instability (three governments in two years) and the 1991 balance-of-payments crisis meant no new plan until 1992. See Economic Reforms of 1991.
Eighth Plan (1992–97): first plan after the reforms
- Launched under P.V. Narasimha Rao; priority to human resource development (education, health, employment).
- Indicative planning formally adopted; the private sector given a larger role.
- Growth of about 6.8%, well above target.
Ninth Plan (1997–2002)
- “Growth with social justice and equality”; emphasis on agriculture and rural development.
- Missed its target (about 5.4% against 6.5%), partly because of the East Asian financial crisis (1997) and a global slowdown.
Tenth Plan (2002–07)
- Target 8% growth and doubling per-capita income in ten years.
- Introduced monitorable targets (poverty, literacy, infant mortality and so on) and gave states their own growth targets.
Eleventh Plan (2007–12)
- “Towards faster and more inclusive growth”; target 9%.
- Growth near 8% despite the 2008 global financial crisis.
- Large flagship programmes for inclusion (rural employment, health, education). See Poverty, Unemployment and Inclusive Growth.
Twelfth Plan (2012–17): the last plan
- “Faster, more inclusive and sustainable growth”; growth target set at 8% (the approach paper had proposed 9%).
- Before it ended, the Planning Commission was replaced by NITI Aayog (1 January 2015), and no Thirteenth Plan followed. NITI’s vision–strategy–action framework took over. See NITI Aayog.
Evaluating 65 Years of Planning (for Mains)
| Achievements | Shortcomings |
|---|---|
| Built a base of heavy industry, steel, power, dams and public-sector enterprises (Bhilai, BHEL and others) | Low growth for decades (“Hindu rate of growth”, about 3.5% in 1950–80) |
| Food self-sufficiency after the Green Revolution | Public-sector inefficiency, losses and the licence raj |
| Institutions of science, higher education and research | Agriculture and employment neglected in the early plans; persistent poverty |
| Poverty programmes and the welfare framework (IRDP, MNP, rural employment) | Regional imbalance: mineral-rich tribal regions such as Bastar gained little from projects built on their land |
| Planning reached villages through community development and later panchayats | Over-centralised, top-down “one size fits all” schemes; weak implementation |
Chhattisgarh angle for Mains
- Bhilai Steel Plant (Second Plan, Soviet collaboration) is the region’s best-known product of planning; it created the Durg–Bhilai industrial belt.
- Hirakud (First Plan) on the Mahanadi links the state’s main river to early plan projects; the Mahanadi basin downstream later became a subject of Chhattisgarh–Odisha water dispute.
- Undivided Madhya Pradesh’s eastern districts (today’s Chhattisgarh) supplied minerals, power and forest wealth to plans for decades, yet stayed among the poorer regions. This regional-imbalance argument was part of the case for a separate state in 2000. See Formation of the State.
Memory Tricks
Plan themes in one line each
- Agriculture (Harrod–Domar)
- Mahalanobis, heavy industry
- Self-reliance (and the wars)
- Stability with growth
- Poverty removal (garibi hatao), ended early
- Poverty again (IRDP)
- Food, Work, Productivity
- Human resources; Indicative
- Social Justice and equality
- 8%, Double per-capita income
- Faster + Inclusive
- Faster + Inclusive + Sustainable
Chain (first letters, Plans 1 to 12): “A Man Seeks Stable Pay; Pays For Health, Social justice, Double income, Inclusion, Sustainability.”
The three breaks
66–69, 78–80, 90–92. Think “war-drought holiday, Janata roll, crisis pause”.
Don’t Confuse
| This | vs | That |
|---|---|---|
| Eleventh Plan: faster and more inclusive growth | vs | Twelfth Plan: faster, more inclusive and sustainable growth |
| Plan holiday 1966–69: three Annual Plans after wars and drought | vs | Rolling Plan 1978–80: Janata government, revised every year |
| First Plan model: Harrod–Domar | vs | Second Plan model: Mahalanobis |
| Bhilai: USSR | vs | Rourkela: West Germany; Durgapur: UK |
| Fifth Plan (1974–79) ended in 1978 | vs | Sixth Plan (1980–85) started fresh after the Rolling Plan |
Common Mistakes
MCQ traps
- “The Second Plan was based on the Harrod–Domar model.” False. That was the First; the Second was Mahalanobis.
- “Indicative planning began with the Seventh Plan.” False. It began with the Eighth Plan (1992–97).
- “There were three plan holidays.” Only 1966–69 is called the plan holiday. 1978–80 was the Rolling Plan and 1990–92 had Annual Plans; some books loosely call these “holidays” too, so read the option carefully.
- “Bhilai was built with British help.” False. Soviet help; Durgapur was British.
- “The Thirteenth Plan began in 2017.” False. The Twelfth was the last plan.
Practice
All questions below are original practice questions written in CGPSC style. They are not previous-year questions.
Level 1: Foundation
- The plan holiday lasted from ______ to ______.
- The Seventh Plan’s slogan was “food, work and ______”.
- The Bhilai Steel Plant was set up during the ______ Five Year Plan with the help of the ______.
Answers
- 1966 to 1969.
- productivity.
- Second; Soviet Union (USSR).
Level 2: Prelims MCQs
Q1. Consider the following statements about India’s Five Year Plans:
- The Fifth Five Year Plan was terminated a year before its scheduled end.
- The Eighth Five Year Plan was the first to adopt indicative planning.
- The Twelfth Five Year Plan had the theme “Towards faster and more inclusive growth”.
Which of the statements given above is/are correct?
- (a) 1 only
- (b) 2 and 3 only
- (c) 1 and 2 only
- (d) 1, 2 and 3
Answer and explanation
(c) 1 and 2 only. Statement 1 is correct: the Janata government ended the Fifth Plan in 1978. Statement 2 is correct: the Eighth Plan (1992–97) moved to indicative planning after the 1991 reforms. Statement 3 is wrong: “Towards faster and more inclusive growth” is the Eleventh Plan; the Twelfth added “sustainable”.
Q2. Match List I (Five Year Plan) with List II (Focus):
| List I | List II |
|---|---|
| A. First Plan | 1. Growth with social justice and equality |
| B. Second Plan | 2. Agriculture and irrigation |
| C. Seventh Plan | 3. Heavy industry |
| D. Ninth Plan | 4. Food, work and productivity |
- (a) A-2, B-4, C-3, D-1
- (b) A-3, B-2, C-4, D-1
- (c) A-2, B-3, C-1, D-4
- (d) A-2, B-3, C-4, D-1
Answer and explanation
(d) A-2, B-3, C-4, D-1. First Plan: agriculture, irrigation and power. Second: heavy industry (Mahalanobis). Seventh: food, work and productivity. Ninth: growth with social justice and equality.
Q3. Which one of the following was the main reason for the “plan holiday” of 1966–69?
- (a) The Planning Commission was abolished
- (b) The wars of 1962 and 1965 and the droughts of the mid-1960s
- (c) The balance-of-payments crisis of 1991
- (d) The Janata government’s adoption of a rolling plan
Answer and explanation
(b). The Third Plan was derailed by the China war (1962), the Pakistan war (1965) and severe droughts, so the government ran three Annual Plans before starting the Fourth Plan in 1969. Option (d) describes 1978–80; option (c) relates to 1990–92.
Q4. Which pair of public-sector steel plant and foreign collaborator is correctly matched?
- (a) Bhilai: United Kingdom
- (b) Rourkela: Soviet Union
- (c) Bhilai: Soviet Union
- (d) Durgapur: West Germany
Answer and explanation
(c) Bhilai: Soviet Union. The three Second-Plan steel plants were Bhilai (USSR), Rourkela (West Germany) and Durgapur (UK). Every other option swaps a partner.
Q5. The objective of “doubling per-capita income in ten years” and the introduction of monitorable targets for states are associated with which plan?
- (a) Eighth
- (b) Ninth
- (c) Tenth
- (d) Eleventh
Answer and explanation
(c) Tenth (2002–07). It set an 8% growth target, aimed to double per-capita income in a decade, and gave states their own growth and monitorable targets.
Level 3: Mains Answer Writing
Q1. (60 words) Why is the Second Five Year Plan called the “Mahalanobis Plan”?
Model answer outline
- Based on P.C. Mahalanobis’s model: investment priority to heavy and capital-goods industry for long-run growth.
- Backed by the Industrial Policy Resolution, 1956; public-sector steel plants at Bhilai, Rourkela, Durgapur.
- Limits: agriculture and consumer goods neglected; foreign-exchange strain.
- One line: Bhilai in Chhattisgarh is its most visible legacy.
Q2. (150–200 words) “Planning gave India an industrial base but not inclusive growth.” Critically evaluate with reference to the Five Year Plans.
Model answer outline
- Intro: Twelve plans (1951–2017) aimed at growth, self-reliance and equity.
- Achievements: heavy industry and steel (Second Plan); dams and power (First Plan); food self-sufficiency (Green Revolution); scientific and educational institutions.
- Shortcomings: slow growth till 1980; licence raj and loss-making PSUs; plan failures (Third Plan); persistent poverty; neglect of employment and human development until the Eighth Plan.
- Course correction: poverty focus (Fifth, Sixth); human development (Eighth); inclusion (Eleventh, Twelfth).
- Chhattisgarh angle: Bhilai and the mineral belt fed national industry, but tribal districts like Bastar remained under-developed, part of the case for statehood in 2000.
- Conclusion: the statement is broadly true; inclusion entered planning late, and NITI Aayog now tries to target it through programmes like Aspirational Districts.
Quick Revision Table
| Plan | Key fact |
|---|---|
| 1st (1951–56) | Agriculture; Harrod–Domar; Hirakud, Bhakra–Nangal; CDP 2 Oct 1952 |
| 2nd (1956–61) | Mahalanobis; heavy industry; Bhilai (USSR), Rourkela (W. Germany), Durgapur (UK) |
| 3rd (1961–66) | Self-reliance; failed (wars, drought) |
| 1966–69 | Plan holiday, three Annual Plans |
| 4th (1969–74) | Growth with stability; Gadgil formula; bank nationalisation 1969 |
| 5th (1974–79) | Poverty removal; ended 1978; MNP, Twenty-Point Programme |
| 1978–80 | Rolling Plan (Janata) |
| 6th (1980–85) | Poverty removal; IRDP nationwide |
| 7th (1985–90) | Food, work, productivity; JRY 1989 |
| 1990–92 | Annual Plans |
| 8th (1992–97) | HRD; indicative planning; 6.8% growth |
| 9th (1997–2002) | Growth with social justice and equality |
| 10th (2002–07) | 8% target; double per-capita income; state targets |
| 11th (2007–12) | Faster and more inclusive growth |
| 12th (2012–17) | Faster, more inclusive and sustainable growth; last plan |
Key Takeaways
Key Takeaways
- Twelve plans, 1951–2017, with three breaks: 1966–69 (plan holiday), 1978–80 (Rolling Plan), 1990–92 (Annual Plans).
- First = agriculture (Harrod–Domar); Second = heavy industry (Mahalanobis); Bhilai is the Second Plan’s gift to Chhattisgarh.
- The Third Plan failed; the Eighth beat its target and began indicative planning.
- Eleventh = faster and more inclusive; Twelfth adds sustainable and was the last.
- Learn the growth pattern, not decimals: sources differ slightly on achieved rates.
What’s Next
- NITI Aayog: what replaced the plans after 2015
- Economic Reforms of 1991: the crisis between the Seventh and Eighth Plans
- Industrial Policy and MSMEs: the industrial policy resolutions behind the plans
- Chhattisgarh: Minerals, Energy and Industries: Bhilai and the state’s industrial belt today
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