The compilation of these Indian Economy (1950-1990) Notes makes students exam preparation simpler and organised.
Five Year Plans
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 the economic planning as well. This is where the five year plan was born. Let us study a bit more about them.
Indian Economy after Independence
In the post-independence era, the leaders of the country had some precarious decisions to take. One of them was which type of economic model would India follow? In those times there were two models followed by most countries in the world – capitalist economy and socialist economy.
Our first Prime Minister Jawaharlal Nehru preferred the socialist model. But in a democracy like India, a pure socialist economy can not flourish. Capitalism was also not suited since the government had to build up an economy and look after the common man and his needs. So as a solution our economy combined aspects of both socialism and capitalism.
It was decided India would develop a strong socialist society, where the public sector would take care of its citizens. But the government would also promote and encourage a strong private sector for the future. There would be no prohibition on private property or wealth keeping our democracy in mind.
Five Year Plan
An economic plan allocates the resources of a nation to fulfill the general and specific goals as planned by the government for a specified period. In India, these plans are made for five years and hence are known as five-year plans. These five-year plans are ultimately a short-term plan for a perspective plan. A perspective plan outlines the long-term goals of a nation, spanning twenty years.
In India, after the independence, the government set up a Planning Commision in 1950. This commission would be responsible for framing and implementing the five-year plans of the country. They began their efforts with the first five-year plan in 1950.
The Goals of the Five Year Plans
Every five-year plan is developed with a specific goal in mind. But there is never one 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 five generalized goals of a five-year plan, wherein a particular plan one or two are given the most importance. In fact, some of the goals are actually conflicting. So let us now look at these five types of goals we cover in the five-year plans.
This is the first and the most basic goal of an economic plan. Growth in terms of an economy focuses on the increase of the Gross Domestic Product (GDP) of the country. GDP is a way to measure the growth of an economy. The higher the GDP more the common public can benefit from the economic policies of the country.
This economic growth actually happens due to an increase in the production capacity of a nation for either its goods or its services. This can be due to an influx of capital into the economy as well. The sector in which the growth is happening is also important. There are three basic sectors – agricultural, industrial, and service. Their respective contributions make up the structural composition of the GDP.
For very many years India’s primary focus was the agricultural sector. It was the main contributor to our GDP. And it also saw the highest growth rate in the initial five-year plans.
Modernisation refers to the integration of technology in the economy. Innovation, inventions, and advancement in technology play a huge part in upgrading our economy and increasing its output. One example would be the introduction of modern agricultural techniques which increased output. Over the years, the Indian economy also saw a major boom in the IT industry due to modernization.
Another aspect of modernization would be our advancement as a society. Leaving behind discriminatory practices and pushing towards an equal, fair and modern society.
A 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. This basically meant that anything we were capable of producing domestically we did not import.
Especially food and agricultural products were never imported as long as possible. This was to ensure we not only became self-reliant but also to protect our sovereignty. Because importing basic essentials from other nations would make us dependent on them. Then after 1991, the government finally opened up our economy to the global markets once we had already established a domestic base.
Now the previous three goals mainly relate to the economy. But the development of the economy only is not sufficient. The five-year plans must also focus on the development of our society. It is essential to ensure that these benefits from the economy are enjoyed by all members of society. This is where equity comes in.
Equity 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 the inequality in our society.
In which year was the first five-year plan passed?
The correct option is D. India became independent in 1947 but our first economic plan came out in 1951 under the guidance of the PM and chairman of the Planning Commision Jawaharlal Nehru.