The Economy of India Is Based in Part on Planning Through Its Five-Year Plans, Which Are Developed, Executed and Monitored by the Planning Commission

The economy of India is based in part on planning through its five-year plans, which are developed, executed and monitored by the Planning Commission

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First Five-Year Plan, 1951-1956: The plan addressed, mainly, the agrarian sector, including investments in dams and irrigation. The total planned budget of 206.8 billion (US$23.6 billion in the 1950 exchange rate) was allocated to seven broad areas: irrigation and energy (27.2 percent), agriculture and community development (17.4 percent), transport and communications (24 percent), industry (8.4 percent), social services (16.64 percent), land rehabilitation (4.1 percent), and for other sectors and services (2.5 percent).[4] The most important feature of this phase was active role of state in all economic sectors. Contracts were signed to start five steel plants, which came into existence in the middle of the second five-year plan.

Second Five-Year Plan, 1956-1961: The second five-year plan focused on industry, especially heavy industry. Unlike the First plan, which focused mainly on agriculture, domestic production of industrial products was encouraged in the Second plan, particularly in the development of the public sector. The plan followed the Mahalanobis model, an economic development model developed by the Indian statistician Prasanta Chandra Mahalanobis in 1953. The plan attempted to determine the optimal allocation of investment between productive sectors in order to maximize long-run economic growth. It used the prevalent state of art techniques of operations research and optimization as well as the novel applications of statistical models developed at the Indian Statistical Institute. The plan assumed a closed economy in which the main trading activity would be centered on importing capital goods.[6][7]Hydroelectric power projects and five steel mills at Bhilai, Durgapur, and Rourkela were established. Coal production was increased. More railway lines were added in the north east. The Atomic Energy Commission was formed in 1948 with Homi J. Bhabha as the first chairman. The Tata Institute of Fundamental Research was established as a research institute. In 1957 a talent search and scholarship program was begun to find talented young students to train for work in nuclear power. The total amount allocated under the second five year plan in India was Rs. 4,800 crore.

Third Five-Year Plan, 1961-1966:The third plan stressed on agriculture and improving production of rice, but the brief Sino-Indian War of 1962 exposed weaknesses in the economy and shifted the focus towards the Defence industry. In 1965-1966, India fought a war with Pakistan. The war led to inflation and the priority was shifted to price stabilisation. The construction of dams continued. Many cement and fertilizer plants were also built. Punjab began producing an abundance of wheat.

Fourth Five-Year Plan, 1969-1974: The Indira Gandhi government nationalized 14 major Indian banks and the Green Revolution in India advanced agriculture. Funds earmarked for the industrial development had to be diverted for the Indo-Pakistani War of 1971 and War effort. India also performed the Smiling Buddha underground nuclear test in 1974.

Fifth Five-Year Plan, 1974-1979: Stress was laid on employment, poverty alleviation,