BBA Indian Economy Notes Planning Commission

BBA Indian Economy Notes Planning Commission

BBA Indian Economy Notes Planning Commission :- 

Q.6. “Five year plans in India are caught in dilemmas.” In the light of this Statement, discuss the achievements and failures of planning in India.


What are the main objectives of economic planning in India? How far have these objectives been achieved ?

Ans.                                 Achievements of Economic Planning in India

Economic planning was launched in India on 1 April 1951. Since then ten five year plans have been completed. Eleventh five year plan is in process. Tenth Five Year Plan has been launched on 1 April, 2002. It will last till 31 March 2007. The country has recorded and achieved considerable growth and success in all the sectors of economy during planning era.

Important achievement of economic planning are :

1. Increase in Per Capital Income : Per capital income has also increased significantly during plan period. At current prices, it has increased from 254.7 crore in 1950-51 to 20,968 crore in 2003-04. It is about 82 times at current prices. This growth in per capital income is really creditable in the light of with of population. The population of country has increased from 36.11 crore in 1950-51 to 102.7 crore in 2001.

2. Increase in National Income : National income of India has increased significantly during plan period. At current prices it has increased from 9,142 crore in 1950-51 to crore in 2003-0 This the national income is about 246 times at current prices.

3. Increase in Agricultural Production : India has achieved creditable success in the production of agricultural products. At the time of independence. India has to depend upon imports even for the supply of food grains. This achievement becomes highly remarkable in the light Of massive growth of population during planning period.

Progress in the production important agricultural products has been presented in following

BBA Indian Economy Notes Planning Commission
BBA Indian Economy Notes Planning Commission

4. Increase in Industrial Production : Another great success of economic planning in India is an increase in industrial production. Almost all the industries of country have recorded a tremendous growth as presented in the following table .

BBA Indian Economy Notes Planning Commission
BBA Indian Economy Notes Planning Commission

5. Expansion of Public Sector : Public sector has recorded a tremendous growth during planning era. In 1950-51, there were only 5 public sector enterprises with capital investment of rupes 2o crore. On 1st April, 2002 this number has increased to 240 with capital investment oft 3,90,26 crore These enterprises provide direct employment of all the sectors of economy.

6. Increase in Rate of Savings and Investments : A great success economic planning in India has been massive increase in the rate of domestic savings and capital formation. Rate of gross domestic savings has increase from 10.4% of GDP at current market prices in 1950-51 to 8.1% in 2003-04. Similarly, the rate of gross fixed capital formation has increased from 9.3% of GDP at current market prices in 1950-51 to 26.3% in 2003-04.

7. Social Development : Economic planning has helped in the development of social sector also. Facilities of education and training, research’ health’ housing’ civic amenities and social institutions have recorded a noticeable growth and expansion.

8. Growth of Foreign Trade : Foreign trade of India has also recorded high rate of growth. On the eve of first year plan, exports of India were 606 crore and imports were 608 crore. These figures have increased to about crore and 3,59,108 crore respectively in 2003-04.

9. Infrastructural Development : Planned economic development has helped in the development of infrastructural facilities in the country. Remarkable growth and expansion have been recorded in the field of transportation and communication’ Powers and fuel, irrigation,  science and technology, monetary and financial institutions. It has helped in building a base for rapid and sustained economic growth.

10. Social Justice : All the best efforts have been made during planning period to establish social justice and welfare. Various schemes and programmes have been launched for the welfare of poor and weaker sections of society. Monetary and fiscal policies have been designed in the manner that they may help in minimising inequalities in the distribution of income and wealth, alleviation of  poverty and unemployment etc.

11. Banking Expansion : The country has achieved creditable success in banking sector. This sector has got a 1Aomentum after nationalisation of banks. There were 8,262 offices o commercial banks on 30-06-1969. The number has increased to 66,535 as on 31-03-2003.

12. Other Achiwements :

(i) Development of science and technology.

(ii) Reduction in birth rate and death rate.

(iii) Modernisation and mechanisation of agriculture.

(iv) Modernisation and mechanisation of industry.

Failures of Economic Planning in Inda

1. Increase in Unemployment : Despite best efforts, the problem of unemployment could not he colved, rather it is increasing both the unemployment and undor-developrnent have emerged as a chalhnge to t’ a efforts of economic development.

2. Slow Progress National Income and Per Capital Income : Though both the national income Tild per capital income have increased substantially during planning period, yet it cannot be regarded as satisfactory. The rate of increase, particularly as regards to per capital income, has been very low.

3. Failure of Public Sector : Tremendous growth of public sector enterprises has also proved to be a problem for economy out of 230 operating public sector enterprises. 104 are the class making enterprises. In total, these enterprises have earned a net profit of 8.27% only on their capital employed.

4. Inequality in the Distribut on of Income and Wealth : Despite best efforts of establishing social justice, inequality in the distribution of income and wealth has been increasing. Rich are becoming more rich and Voor are becoming more poor.

5. Increase in Prices : Prices of agricultural and industrial products have gone very high during planning period, It offsets the efforts of economic development.

6. Dependence on Foreign Aid and Foreign Capital : A great failure of economic planning in India is that we have increased our dependent on foreign aid and foreign capital.

7. Increace in Population : A great failure of economic planning in India is the continuous increase in ropulation, It has perhaps been the single most important cause of all the economic and social problems in the country, Population of India has increased about 2.86 times during planning period.

8. Other Failures are : (i) Regional imbalances (ii) Corruption, (iii) Increasing deficit financing (iv) Lack of political stability (v) Lack of political willingness (vi) Lack of public co-operation.

Suggestions to Make Economic Planning Effective

India is facing a number of economic and social problems which can effectively be solved through economic planning. Therefore, economic planning must be successful. Following are some suggestions to make it a real success :

1. To Contain the Growth of Population : The first and the farmost necessity of country is the growth of population must be effectively controlled, According to an estimate, if the population of country is reduced to half, almost all the economic and social problems can be solved automatically Though, it is neither practical nor desirable to reduce the population, however, its growth should be checked and controlled.

2. To Inscite People’s Participation : Economic planning is for people. Therefore, it can be successful only if it gets full active co-operation of people. The plans should be well propagated. The people should come to realisc that these plans are for their and they should be motivated to come forward.

3. Development of Rural Industries : India is a country of villages. Nearly 70% of its population is still living in rural area, Poverty, unemployment a under-employment are the important problems of these areas. All these problems can be collectively and effectively solved if rural industrialisation is achieve. Therefore, the need is that small scale, cottage and agro-based industries should be developed.

4. Clear and Effective Administration : Formulason of effective plans is one thing and effective implementation of these plans is another thing. The need is that effective and honest implementation of plans should be ensured. The system should be so transparent that specific responsibility of officers may be fixed.

5. Balanced and Co-ordinated Growth : India is a vast country, Resources, problems and potentials of all these areas and people of India are different. Therefore, the need is to promote and ensure a balanced and co-ordinated growth. There should be a balances between the development of agriculture and induqtry, rural areas and urban areas, small scale and large scale industries, private and public sector etc.

6. Explorations and Utilisation of Resources : “India is a rich country inhabited by the poor” is perhaps the greatest misfortune of India. India is a country with abundant natural, phvsical and human resources but most of these resources and either unexplored or unutilised or under utilised in the best possible manner.

7. Other Suggestions are

(i) Support of monetary and fiscal policies,

(ii) Practical and feasible plaris and targets.

(iii) Encouragement to savings, particularly small savingsn

(iv) Emphasis on the development of education and training.

(v) Emphasis on the development of science and technology.

Q. 7. Give the salient features of eleventh five year plan.

Ans. Approach and Salient Features of the Eleventh Five Year Plan 2007-12

1. Over the last fifty-six years, planning for economic and social development has been an integral exercise. The transition from a traditional and subsistence economy of the fifties to a modern, industrial and knowledge economy has largely been the outcome of plan exercises spanning a total of ten five-year plans and a few annual plans. Planning is far more than a mere allocation of resources among competing uses. Planning prescribes a direction towards which the economy is sought to be moved with a view to attaining pre-determined goals and objectives. And given the federal character of our polity, it is the combined effort of both Union and State governments towards achieving plan objectives that is given shape in the exercise of five-year plans.

2. One of the most critical part of the planning exercise relates to financing the plan. The economic scenario at the beginning of the Eleventh Plan is certainly better than it was in earlier plans. The state of public finance has improved significantly during the 10th Plan period, As against the approved outlay of 25,73 crore for the Tenth Plan, the revised outlay is OR 33,724.96 crore. The improvernent has come about from higher tax revenue mobilization, both at the centre as well as in the State and containment of non-plan expenditure through strict economy measures.  The state has enacted the Fiscal Responsibility and Budgetary Management (FRBM) Act, 2005. The Act requires the Government to fix rolling targets for fiscal indicators including fiscal and revenue deficits. The proposed plan outlay for eleventh plan has been determined keeping in view the rolling targets for fiscal deficit to be achieved. Share of Central taxes has been assumed to grow @ 10 per cent and the State’s own tax revenues have been assumed to grow @ 13,5 per cent during the Plan period. The normal central assistance has been estimated to grow @10 per cent, The state non-tax revenue is projected to grow @ of 5 per cent. A major proportion of the non-tax revenues come from mining and forest and are dependent on policies of Government of India. Coal royalty, which is the main source of mining revenue continues to be fixed on tonnage basis and is not revised regularly by Government of India. Exploitation of forestry resources is also severely constrained due to national policies.

3. The total size of the Eleventh Plan is 69,788.00 crore at current prices as against the Tenth Plan approved outlay OR 33,724.96 crore. The size of the Eleventh Plan is 2.07 times compared to Tenth Plan while the Annual Plan 2007-08 is 1.33 times that of the approved outlay of the Annual Plan 2006-07.

4. Keeping in view, the historical growth rate and potential of economy, We are targeting an average growth rate of 7.6 per cent for the State of Madhya Pradesh. This is lower than the national target of nine per cent. However, the state economy has been growing at an average growth rate of 4.83 per cent during the period 2002-03 to 2005-06 and therefore, to achieve the target will require a substantial improvement of nearly 2.8 percentage points over the previous plan period. We anticipate the primary sector constituting roughly 32 per cent of the NSDP (at constant price) to grow at 5 per cent per annum, the secondary sector constituting about 26 per cent of the NSDP to grow at 10 per cent per annum and the tertiary sector constituting roughly 42 per cent of the NSDP to grow at 8 per cent per annum.

Q. 8. Describe the various objectives of eleventh five year plan.


Discuss the objectives and priorities of the eleventh five year plan of India.

Ans. Objectives of Eleventh Five Year Plan : The Eleventh Five Year Plan aims to achieve improved quality of life for the citizens of the state and contribute to the larger national goals Of sociol-economic development. This will require faster and more equitable social and economic development of the state. Accordingly, the objectives for the eleventh five year plan are spelt out as under :

1. To achieve an overall growth rate of 7.6%. This is envisaged to be achieved throuoh 5% growth in agriculture and allied sectors, 10% growth in industry and 8% grOwth in service sector.

2. To reduce poverty levels from 38% to 25%.

3. To achieve the literacy rate of 84% by the end of the Plan and reduce gender gap in literacy to 14%.

4. To achieve reduction in drop out rate from 46.8% in 2003-04 to 20% by 2011-12 and eliminate gender disparity in elementary education.

5. To bring down population growth rate to 1.62% by 2012.

6. To improve health parameters-reduce Maternal Mortality Ratio (MMR) to 125, IMR to 40 and TFR to 2.4 so as to bring them near the all India level.

7. To improve the sex ratio (0-6 years) to 950 females per 1000 males.

8. To reduce malnutrition to 30% and anemia to 30%.

9. To provide sustainable access to safe potable drinking water to all independent habitations.  10. To empower women through their socio-economic development and increased participation  in decision making on matters that directly affect them.

11. To strengthen social, economic and political empowerment of weaker sections of the society through welfare of SCs/STs, OBCs, minorities and poor.

12. To expand present irrigation facilities at least by 10.61 lakh hectares through conservation, efficient utilization and development of water resources.

13. To develop strong infrastructure of power to provide adequate and improved quality of power to all the villages and meet the peak demand.

14. To provide a minimum single connectivity by all weather BT roads to all villages with population over 1000 in general and 500 in tribal areas.

15. To encourage use of information and communication technologies to bridge digital divide, generate employment, have e-governance and prepare the state to be a knowledge economy.

The order of above objectives does not reflect the order of priorities. All the objectives are important, internally consistent and mutually reinforcing.

Sectoral Distribution of Plan Outlay : The detailed sectoral outlays have been decided keeping the above mentioned objectives in mind and are given in the Annexure.

The Sectoral Percentage Distribution of Plan Outlays

BBA Indian Economy Notes Planning Commission
BBA Indian Economy Notes Planning Commission

The outlays reflect the public investment in different sectors out of the state plan. now ever, they do not communicate the correct and complete the total public investments in different sectors e.g., the central SUPPORT through Centrally Sponsored Schemes (CSS) like National Rural Employment Guarantee Scheme (NREGS) etc. in Rural Development Sector adds up to about 22,025.70 crore, which is more than double the size of state plan in Rural Development. Same holds true for Serva Sikhsa Abhiyan (SSA). Similarly, support under National Rural Health Mission (NRHM) is also not reflected in the social services plan size.

The outlays do not communicate the correct picture of sectoral distribution either e.g., a very significant proportion Of National Rural Employment Guarantee Scheme (NREGS), Sampoorna Grameen Raojgar Yojana (SGRY), Integrated Wasteland Development Programme (IWDP) and Drought Prone Area Programme (DPAP) resources are deployed to conserve water and enhance the irrigation potential but they are not reflected in the sectoral allocation for irrigation,

The outlays also do not reflect the private sector investment for key public infrastructure like roads, power etc. e.g., over 525 kms of roads costing 1,519-12 crore are being developed through PPP mode using VGF but these investments are not getting reflected in the above sectoral allocations.

Q. 9. Give the suggestions for improvements provided in agriculture, forest, industry and poverty in eleventh five year plan.

Ans. Agriculture and Allied Activities : They are the main stay of state’s economy not only because they contribute about 26% of state domestic product but more so because they employ about 71% of the total work force.’ Improvement in agriculture growth is necessary for greater equity as also to provide market for industry and services. To achieve 5% rate of growth through this sector, the plan aims at increasing productivity through inputs like more irrigation in rain fed areas, improved seeds with increased seed replacement rate, increased and balanced use of fertilizers, encouraging organic farming through use of organic and green manures, bio-pesticides and bio-fertilizers, creating protective irrigation and improving water harvesting through micro-minor, improving ground water recharge through water conservation campaign, construction of field ponds (Balram Talaab, etc.) and extension reforms through Agricultural Technology Management Agency(ATMA), institutional and capacity building, using PPP model and/ strengthening and promoting Agriculture ‘Informatics and Communication through Agriculture Information System Net Work (AGRISNET) and credit availability at lower rate of interest . Special programme for participation of women in agriculture is being launched. Horticulture is proposed to be given a boost through effective extension, ensuring availability of quality planting material, promoting micro-irrigation and doubling the area under horticultural crops with assistance from NHB, NHM, CMPB, APEDA, NAFED and schemes being taken up with state support. Similarly, veterinary and fisheries are being promoted through better extension and development through bankable schemes. A total of? 1,859.63 crore has been provided for agriculture while 320.00 crore has been provided for horticulture in the eleventh plan.

Forest : M.P. has the largest forest cover amongst all the states in the country and is at the forefront of national efforts to conserve India’s rich and varied biodiversity. They are like ecological factories providing the country with numerous tangible and intangible benefits. The approach for the Forest sector the Eleventh Five Year Plan envisages increasing the forest cover to move towards the target of 33% by the end of the Plan. Conservation as the key factor with enhanced focus on three areas, viz. people’s involvement through effective programme, multiple livelihood opportunities through forest sector and effective implementation and monitoring of forestry programmes, This includes effective implementation of working plans that aim at improvement in conditions of both forest and people, eco-development around Protected Areas (PAS), successful relocation and rehabilitation of vil!ages from Protected Areas, adoption of new technologies and regular capacity building of ‘all stake holders, particularly the village level Forest Committees. The Lokvaniki legislation and schemes facilitate forestry on private holdings for improved incomes and environment,

Forestry sector is one of the largest employers in remote and rural areas primarily inhabited by tribals and provides a major source of livelihood through non-timber forest produce like tendu leaves, etc. Provision OR 242,00 crore and 1,210.00 crore has been made for 2007-08 and 2007-12 respectively.

Industry : M.P. has a tremendous potential for fast industrial growth in view of its rich natural resources, fast improving infrastructure, central location, peaceful industrial climate, progressive industrial policy and improved human resource base. Major thrust is on developing industrial infrastructure, which includes industrial areas, industrial growth centres, various industrial parks and efficient management of the same. New Industrial areas are planned specially along North-South corridor to promote food processing industries. Similarly, expansion of existing growth centres and IT Parks, Stone Parks, Apparel Parks and SEZs will attract additional investments. The Industrial Promotion Policy of 2004 is being improved upon further. Project Implementation Clearance Board under the chairpersonship of Chief Secretary has been constituted for single table clearance of mega projects. The Board has facilitated 21 project proposals clearing the path for investments amounting to about 84,237 croi e upto December, 2006.

Bharat Oman Refinery Ltd. has already agreed in principle to bring up a petrochemical complex at Bina, envisaging downstream investment of 6,000 crore in Small and Medium Industries, Recently, an ‘Investors Summit’ was organized at Khajuraho, in which 18 MOUs were signed with of investment amounting to 39,058 crore. The state is thus likely to attract additional in vestment of more than 50,000 crore in large and medium industries during the Plan. 50,000 new manufacturing SS enterprises are targeted to be set up during this period. These units will provide dispersed employment opportunities to nearly people. Further 1,00,000 persons are supposed to be through micro sector enterprises. All such efforts should help achieve a growth of 10% in the industry sector.

The Department of industries is playing the role of a facilitator to promote the growth of micro, small and medium enterprises, which would also be an important source of employment. The new micro, small and medium enterprises development Act 2006 will facilitate growth of such industries and service sector. Computerisation of employment exchanges, converting them into counseling centres, expanding entrepreneurship development programmes and recognizing service enterprises for industrial policy concessions will also contribute to achieving the targeted 8% growth in services.

Poverty Reduction : Efforts at reduction of poverty will require multisectoral interventions to create on farm and off-farm employment opportunities, value addition in agriculture, food processing and forestry sector etc. and better targeting of resources. The departments of rural development and urban development specifically implement programmes directly aimed at
reducing poverty. Broad strategies adopted by these departments include organization and development of SHGs for micro-credit and micro-enterprises, facilitating credit, development of capacities and forward and backward linkages for self employment, providing wage employment during lean season, creation of productive assets on community lands and on individual lands of poor farmers etc.


Q. 10. What are the benefits and schemes provided for rural development in eleventh five year plan.

Ans. Rural Development : One of the key goals would be to bring down the proportion of people below poverty line to 25% by the end of Eleventh Plan. This will be done through effective implementation of various Centrally Sponsored Schemes like NREGS, SGSY, SGRY, IVVDP, DPAP etc. and externally funded programmes of DPIP and MPRLP and state’s SGSY programme. The state has been a front runner in implementation of NREGS providing wage employment of 1,485.72 lakh man days in 2006-07 by December, 2006. The state has organized and developed over 3 lakh, SHGs who have collectively mobilized over 100 crore of group corpus, which is used to provide micro credit for consumptive and productive loans. The SHGs strategy has been found to be quite effective for economic and social empowerment of women and weaker sections. Besides 1,365.36 crore provided for rural development sector in annual Plan Of 2007-08, 3,139.48 crore are likely to be available as ‘central share through various CSS in RD sector, Together, they constitute about 43.5% of the proposed State Plan outlay for 2007-08,


National Rural Employment Guarantee Scheme (NREGS) : The state has been the best performer in the country providing job cards and providing employment to the needy. Over 43 lakh families have been provided job cards and more than 1485 lac man-days were generated upto Dec. 2006. Nearly world have been sanctioned, of which nearly 50% have been completed. Nearly 75% of the works relate to water conservation and 15%, to rural connectivity, This demand driven scheme could play a key role in enhancing the incomes of rural poor and improving the rural infrastructure and create productive assets, which could provide sustainable livelihoods.

Rural Housing : There are nearly 37.5 lakh families without a house or have a thatched kutcha house. In spite of the programme being under Bharat Nirman, the state receives an allocation for constructing only 46,000 houses, which is even less than the allocation to Kerala, even though Kerala is a smaller and more prosperous state compared to M.P. The state government has decided to provide an allocation OR 32.00 crore under Mukhya Mantri Awas Yojana for constructing houses on the same pattern as IA Y for SC and ST houseless families.

Urban Development : During next 5 years, in urban sector, the Government would mainly concentrate on urban infrastructure development, solid waste management, water supply schemes slum development etc., in order to augment the basic civic amenities and infrastructure. GOMP was one of the first states to prepare city development plans of four cities and get projects approved under JNNURM and Integrated Housing and Slum Development Programme (IHSDP) of government of India. During 2007-08, 35 ongoing projects and 15 new projects will be taken up under JNNURM and during the five year plan, a total of 55 projects are proposed to be carried out. Similarly, under IHSDP, 20 ongoing projects and 30 new projects will be implemented during 2007-08 and a total of 150 projects will be carried out in the 11th five year plan. The department will continue to implement Swarna Jayanti Shahari Rojgar Yojana (SJSRY) for self employment of the poor and for providing wage employment.

526 crore have been provided under the scheme for infrastructure development in 125 small and medium towns under the Urban Infrastructure Development Scheme of Small and Medium Towns CUIDSSMT).

With assistance from Department for International Development (DFID) of UK, the government
has launched Madhya Pradesh Urban Management Program (MPUSP) in 4 major cities (Indore, Bhopal, Gwalior and Jabalpur) of the state. The financial assistance is meant for urban management, democratic administration and basic facilities to the poor. MPUSP would provide with financial assistance of? 320 crore for coming 5 years.

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Montey Parjapati




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