Rajasthan Board RBSE Class 11 Economics Notes Chapter 16 Economic Planning
→ Economic planning implies the method in which central planning officials implement economic programmes and policies to achieve preplanned objectives within a definite time period keeping in mind the resources of country.
→ The concept of economic planning was pioneered in the world for the first time by Soviet Union.
→ The mixed model of economy has been adopted in India, in which the public sector also exists along with the private sector. That is, both of these sectors work jointly.
→ A 10-year plan was made in 1934 for the first time by Sir M.Visvesvaraya. He has described economic planning in his book “Planned Economy For India”. He is also called the father of Indian Planning.
→ In 1944, eight industrialists from Mumbai came together and prepared a 15 year “Bombay Plan” which is also called “Tata Birla Plan.”
→ Apart from this, revolutionary leader M.N.Roy (earlier known as Narendrath Bhattacharya) created the Jana Yojna in 1944, and socialist leader Jaiprakash Narayan put forth the ‘Sarvodaya Plan’ in 1950.
→ National Planning Committee was formed in 1938 before independence under the charirmanship of Jawaharlal Nehru.
→ The committee suggested that all infrastructural industries should be under state control and it set a target of doubling the living standard of people in the next ten years.
→ Planning Commission was established in 1950 and it was given the task to make plans.
→ The schemes made for 5 years are called Five Year Plans and the long term plan of 20 years for long-term objectives is called Perspective Plan.
→ The purpose of economic planning is to accelerate the speed of development.
According to the planners, objectives were divided into two major categories:
1. Long term or common objectives- Under this category, objectives like sustained development, total employment, equality, self efficiency, modernisation, etc. were included.
2. Short term or specific objectives- Objectives covered under 5 year plans were included in this category.
→ The period of the First Five-year Plan was from 1951 to 1956, which mainly focused on the development of the agricultural sector.
→ The tenure of second five year plan was from 1956 to 1961. It mainly focused on the development of basic and heavy industries. The second five-year plan was called the economic constitution and model of this plan was a four- sector developmental model propounded by Prof. P. C. Mahalanobis.
→ The tenure of the third five year plan was from 1961 to 1966. The main objective of this plan was to build a self-reliant and self-sustained economy.
→ India had to bear the brunt of wars with China in 1962 and with Pakistan in 1965. The wars and currency devaluation created a situation where the fourth five year plan could not be started in time.
→ Due to the above reasons, three one year plans were made between 1966-69, which is known as Plan Holiday in the history of economic planning.
→ The tenure of fourth five year plan was from 1969 to 1974. The action strategy of this was to achieve development and self reliance along with strategic stability.
→ The tenure of fifth five year plan was from 1974 to 1979. This plan focused on achieving poverty eradication and self-reliance.
→ The slogan “Garibi Hatao” was given by Mrs. Indira Gandhi in 1975 under the 20-point programme.
→ Under fifth five year plan, a special programme named “Minimum Needs Programme” was launched for the poor section of the society.
→ The Janata Party government came into power in 1977 and it initiated a Rolling Plan for the period 1978 to 1983 after concluding the fifth five year plan one year before its fixed tenure.
→ The tenure of the sixth five year plan was from 1980 to 1985. The main objective of this plan was to eradicate poverty.
→ The tenure of seventh five year plan was from 1985 to 1990. The main objective of this plan was increase in employment, production and productivity.
→ Because of swiftly changing political situations at the centre, the eighth five-year plan was started in 1992 after the two annual plans of 1990-91 and 1991-92 and it continued till 1997. Its main obj ective was to provide ample opportunities for employment.
→ During 1990-91, the condition of Balance of Payment and inflation had deteriorated due to which the need of annual plan emerged.
→ The tenure of ninth five year plan was from 1997 to 2002. The main objective of this plan was to promote economic development along with social justice. Under this plan, the policy of consolidation was also implemented.
→ The tenure of tenth five-year plan was from 2002-2007. The main objective of this plan was to improve the quality of life.
→ The tenure of the eleventh five-year plan was from 2007 to 2012. The main objective of this plan was accelerated and more inclusive development.
→ For this purpose, 27 major targets were fixed in the plan which were divided into 6 main classes
- Poverty
- Education
- Healthcare
- Women and Children
- Basic Infrastructure
- Environment.
Achievements of 5 year plan are as follows:
- Growth in national income
- Development in agricultural Sector.
- Growth in Industries.
- Balance of payment.
- Life expectancy which was 32 years in 1951 increased to 65 years in 2001.
- The basic economic structure and basic social structure developed speedily in the plan duration.
- Development of the education system.
- Increase in rate of savings and investments also became possible.
Following are the failures of the five year plans :
- Failure in eradication of poverty.
- Low rate of increase in employment.
- Increase in inequality of income and wealth.
- Stagnant industrial growth.
• The period of twelfth five-year was decided to be from April 1, 2012 to March 31,2017. The main objective of this plan was ‘faster, sustainable and more inclusive growth’.
In order to achieve the target, 25 basic indicators were fixed, out of which the major ones are given below
- Achieving GDP growth rate of 8.0 per cent.
- Achieving agricultural growth rate of 4.0 per cent.
- Achieving manufacturing growth rate of 10.0 per cent.
- Achieving decline in consumption poverty by 10% points.
- Generating 50 million new employment opportunities in the non-farm sector.
- Mean years of schooling to be increased to seven years by the end of Twelfth FYP. (Five Year Plan)
- Reducing IMR (Infant Mortality Rate) to 25 and MMR (Motemal Mortality Rate) to 1 per 1,000 live births.
- Improving Child Sex Ratio (0-6 years) to 950 by the end of the Twelfth FYP.
- Reducing Total Fertility Rate to 2:1 by the end of Twelfth FYP.
- Increasing investment in infrastructure as a percentage of GDP to 9 per cent by the end of Twelfth FYP.
- Increasing the gross irrigated area from 90 million hectare to 103 million hectare.
- Increasing the green cover by one ‘million hectare per year.
- Providing access to banking services to 90 per cent Indian households by the end of Twelfth FYP.
→ Accepting sustainability of environment, as basic to sustainability, attention has been paid to the detrimental effects of environmental pollution and greenhouse gases on climate change.
→ The Planning Commission was established on March 15, 1950.
→ It is a non- constitutional and a non-statutory unit established for the formation of plans.
→ It is a Think-Tank for economic development whose ex-officio chairman is the Prime Minister.
→ Apart from the chairman, it has a vice-chairman, 6 ex-officio members of the cabinet and a member secretary. The number of members may be increased.
→ The National Development Council (NDC) is a non-statuary unit that works as a link of forming coordination between the planning commission and various states.
→ The Planning Advisory Council under the chairmanship ofK.C.Niyogi suggested the establishment of this organization.
→ The government established the National Development Council (NDC) on 6th August 1952.
→ Its ex-officio chairman is the Prime Minister and its secretary is also the secretary of the Planning Commission.
→ Its other members include the chief ministers of states, all the members of the cabinet, administrators of union territories and members of the planning commission.
→ The major function of NDC is to discuss the national plans drafted by the Planning Commission and to give them a final form.
→ The central government dissolved the Planning Commission, and established the NITI. Aayog (National Institute for Transforming India) on 1st January, 2015.
→ The Niti Aayog is a Think Tank which takes decisions on policy-related matters and makes the states an equal participant in policy formation and decision-making.
→ The ex-officio chairman of Niti Aayog is the Prime Minister. Additionally, a vice- chairman and all the members would be full time members, the maximum number of part time members will be 2, honorary members will be 4 who will be selected from among the cabinet by the Prime Minister.
→ Members of executive/administrative council (chief ministers of states and Lieutenant- governors of Union territories) and members of regional councils are included among its full time members.
→ Dr. Arvind Panagariya from Rajasthan has been appointed the first vice-chairman of the NITI Aayog.
→ The NITI Aayog will work on the principle of Cooperative Federalism.
→ NITI Aayog with play the role of a Think Tank and will be capable of providing impartial and appropriate advice to the government.
→ Definition of Economic Planning: According to the Planning Commission, “Economic Planning refers to the mechanism of allocating the resources of the country in developmental activities according to accepted national priorities”.
Economic Planning Class 11 RBSE Notes Important Terms
• Economic Planning- Implementation of economic plans and policies by the Central Planning officer for the achievement of pre-determined objectives in a fixed time period, keeping in mind all the resources of the country.
• Mixed Economy- An economic system having the joint participation of private and state enterprise. Example- Indian Economy.
• Perspective Plan- 20 year Long-term Plan.
• Growth- The increase in the production capacity of the goods and services in the country. Example- machines, tools, banking, transport, etc.
• GDP- Gross domestic product (GDP) is a monetary measure of the market value of all final goods and services produced in a year.
• Primary sector- The sector of the economy in which, agriculture, animal husbandry forestry, fisheries are included.
• Secondary sector- The sector of the economy that includes manufacturing industries.
• Tertiary or Service sector- The sector of an economy concerned with banking, insurance, communication and other services.
• Full employment- The condition in which virtually all who are able and willing to work get employment.
• Equality- The state of being fair and impartial and in which the rich do not become richer and the poor do not become poorer.
• Self reliance- Reducing and finally ending the import of those products which have the possibility of being produced in the country.
• Modernization- Using modem technology in place of traditional methods.
• Sustainable Development- Such development, which can be attained to fulfill the needs of the present generation without compromising with the needs of the future generation.
• Devaluation- The reduction in the official value of a currency in relation to other currencies.
• Inflation- Inflation is the state in which the general level of prices of goods and services increase and, consequently, the purchasing power of currency falls.
• Social Justice- Justice in terms of the distribution of wealth, opportunities and privileges within a society.
• Balance of Payment- It is the record of all economic transactions between the residents of the country and of the world in a particular period.
• Fiscal Consolidation- Fiscal Consolidation refers to the policies undertaken by Governments to reduce their deficits and accumulation of debt stock. ‘
• Inclusive Growth- Inclusive growth means economic growth that creates employment opportunities and empowers the people by providing them education and developing their qualities and helps in reducing poverty.
• Budget Deficit- A budget deficit occurs when governmental expenditures exceed revenue, and it is an indicator of poor financial health.
• Consumption Poverty- A measure of poverty on the basis of consumption.
• Greenhouse Gases- Gases that contribute to global warming by absorbing infrared radiation, like- Methane, Carbon dioxide, Chlorofluoro carbon Water Vapour, Ozone, etc.
• Co-operative Federalism- Cooperative federalism is a concept of federalism in which national, state and local governments interact cooperatively and collectively to form policies.
• Black Economy- That part of a country’s economic activity which is unrecorded and untaxed by its government.