Business System Latest Five year plan, Study notes of Business Systems

Download Business System Latest Five year plan and more Study notes Business Systems in PDF only on Docsity! Five Year Plans Meaning of Plan An economic plan may be described as a specific set of quantitative economic targets to be achieved in a given period of time. Just as the goals of a political system are spelled out in a constitution, so the goals of an economy are spelled out in a Plan. However, unlike the constitution the Plan is transitory. What is the Planning Commission? It was first set up by the Union government in March, 1950 to promote a rapid rise in the standard of living of the Indian people by efficient exploitation of national resources, increasing production and offering opportunities to all for employment in the service of the community. The Planning Commission is charged with the responsibility of making assessment of all resources in the country, augmenting deficient resources, formulating plans for the most effective and balanced utilization of resources and determining priorities. The prime minister is the chairman of the Planning Commission, but the Commission is actually run by the deputy chairman (who enjoys the rank of Cabinet minister or minister of state, depending on his years in public life), and members of the Commission. Whom does the Planning Commission report to? The Planning Commission works under the overall guidance of the National Development Council, India's prime policy-making body, which guides the nation on the development process. The Commission advises and provides guidance for the formulation of India's Five-Year Plans, Annual Plans and state government plans. It also monitors plan programs, projects and schemes. Objectives of Planning The resolution of the Planning Commission, singles out three principles as special terms of reference in the preparation of a Plan: that the citizens, men and women, equally, have the right to an adequate means of livelihood; that the ownership and control of the material resources of the community are distributed in a manner that best serves the common good; and that the operation of the economic system does not result in the concentration of wealth and means of production to the common detriment. Continued…. For the first eight Plans the emphasis was on a growing public sector with massive investments in basic and heavy industries, but since the launch of the Ninth Plan in 1997, the emphasis on the public sector has become less pronounced and the current thinking on planning in the country, in general, is that it should increasingly be of an indicative nature. First Plan (1951-56) Objectives To restore the economy which had run down ,resist the prevalent inflationary pressures, build up the transport system and ease the food and raw material position. To build up appropriate viable administrative and other organizations for development purpose and future progress. To initiate measures of social justice on a wider scale. Budget Public outlay 19.6 Agriculture 2.9 Irrigation 3.1 Power 2.6 Village ,small industries 0.4 Organized industries, mining 0.7 Transport & communications 5.2 Other social services 4.6 Budgetary resources of which 14.4 Additional taxation 2.6 Internal private savings 6.9 External assistance 1.9 Deficit financing 3.3 Rs bn Budget Public outlay 46.7 Agriculture 5.5 Irrigation 4.3 Power 4.5 Village ,small industries 1.9 Organized industries, mining 9.4 Transport & communications 12.6 Other social services 8.6 Budgetary resources of which 25.6 Additional taxation 10.5 Internal private savings 14.1 External assistance 10.9 Deficit financing 9.5 Private Investment 31.0 Rs bn COMPARISON: A->AGRICULTURE, B->IRRIGATION, C->POWER, D->RURAL SMALL SCALE INDS.,E->ORGANISED IND.MINING,F->TRANSPORT&COMM,G->S.SERVICE FIRST PLAN SECOND PLAN Achievements Failures A large no. of hydroelectric and thermal power plants were constructed. Industrial sector achieved remarkable progress and three huge cement and fertilizers industries were set up. Social services like health and education improved a lot. It showed welcome reorientation in favour of heavy industry. Second plan was termed as crisis of ambitions. The plan was not ambitious in relation to needs of the people. It failed in creating job opportunities and unemployment was still prevailing. Lack of realism in assumptions upon which second plan proposals. (problem of inflation was grossly underestimated, prospects of agriculture exaggerated) Despite its double development expenditure than first plan it was a failure with deterioration in living standards , economic inequalities increased and agriculture remained more or less static. Increase in national income proved to be only 20% as against the target of 25%. COMPARISON: 2ND PLAN 3RD PLAN A:AG,B:IRR,C:POWER,D:RURAL SMALL SCALE IND.,E:ORGANISED IND.MINING F:TRANSPORT&COMM,G:SOCIAL SERVICES Failures Third plan was not able to improve economic and social conditions and it proved even more frustrating than second plan. Neither industry nor agriculture fared well in this plan. Rate of growth of national income was less than half of the rate it aimed at. Industrial production was lower than the target of 11% per annum. In many respects the third plan period was abnormal, two wars broke out (1962-China war and 1965 indo-pak war) in this period which disturbed the plan and the focus was shifted to defence activities. At the end of third plan the situation was so gloomy and unsettled that the formulation of next five year plans was suspended. After third plan three annual plans were formulated from 1966-69 to overcome the failures of last plan. Efforts were made to solve immediate problems like restoring the economy to normal, to complete the work of projects already in progress. Budget Public outlay 157.8 Agriculture 23.2 Irrigation 13.5 Power 29.3 Village ,small industries 2.4 Organized industries, mining 28.6 Transport & communications 30.8 Other social services 29.9 Budgetary resources of which 120.2 Additional taxation 42.8 Internal private savings 65.4 External assistance 20.9 Deficit financing 20.6 Private Investment 89.8 Rs bn DIFFERENTIAL STATISTICS 0 5 10 15 20 25 30 35 A B C D E F G 3rd PLAN 4rth PLAN A:AGRICULTURE,B:IRRIGATION,C:POWER,D:VILLAGE SMALL SCALE IND., E:ORGANISED IND. MINING,F:TRANS&COMM,G:SOCIAL SERVICES PUBLIC OUTLAY 3rd:Rs85.8Bn 4rth:Rs157.8Bn Achievements Failures There was substantial increase in production of alloys and special steel, aluminium, automobile tyres, petroleum refinery products, electronics goods , machine tools, tractors and heavy electrical equipment. Greater degree of sophistication and self- reliance was achieved in industrial sector. Rate of growth of national income and per capita income were below their targets . Industrial production growth rate was mere 3.9 % per annum. The course of production in industry remained erratic throughout the plan period and with acceptance of wide demands for dearness allowance, compounded by international oil crisis created, ensured to upset all physical targets implied in the plan investment outlays. Income disparities continued to widen and a large number of people still remained poor. DIFFERENTIAL STATISTICS 0 10 20 30 40 50 60 70 80 90 A B C D E F G 4rth PLAN 5th PLAN A:AG, B:IRR,C:POWER,D:RURAL SMALL SCALE INDUSTRIES, E:ORGANISED IND.MINING,F:TRANS &COMM,G:SOCIAL SERVICES PUBLIC OUTLAY 4rth:Rs157.8Bn 5th: Rs394.3Bn Achievements Failures Rate of agriculture production was 4.2, the highest rate achieved since inception of planning. Only targets relating to food grains and cotton were achieved in fifth plan. Industrial sector performance was not satisfactory. Inflation was still prevalent when plans were terminated by Janta government. Janata plan(1979-80) This plan was formulated for one year when janata govt. took charge from congress govt in 1978. In this plan emphasis was laid on small and cottage industries and also on agriculture. Its objectives were removal of unemployment, appreciable rise in standard of living of poorest sections of society and real per capita income to grow at highest possible rate. DIFFERENTIAL STATISTICS A:AG, B:IRR, C:POWER, D:SSI, E:ORGANISED IND. MINING, F:TRANS,&COMM, G:SOCIAL SERVICES. PUBLIC OUTLAY 5th: Rs394.3Bn 6th: Rs1,104.7Bn Achievements Failures Growth of national income was 5.3 % as against the targeted rate of growth of 5.2 %. Agricultural production also exceeded the target. Important improvements were made in petroleum refineries and petro -chemical plants to reduce energy consumption and improve yields. Objective of social justice was achieved by minimum needs programme which aims at improving the living conditions of the poor and their access to education and health. Decline in incidence of poverty Performance fell short in case of basic industries like steel, fertilizers, cement, and textiles. Machine building and chemical industries suffered from obsolete technologies and high prices of input. In broad sense, sixth plan helped the country to move towards the objectives of growth, self reliance and social justice. Seventh Plan (1985-90) Objectives To achieve growth, equity and social justice, self- reliance, improved efficiency and productivity; To accelerate the production of foodgrains; To increase employment opportunities; To initiate rapid expansion of scientific and technological capabilities; To undertake execution of programmes which will facilitate the improvement in the basic priorities, viz., food, work and productivity. Achievements Failures Average annual increase in foodgrains production was 3.6 %. Several special programmes like Jawahar Rozgar Yojana were introduced. Industrial growth accelerated during this plan period to 8.7% pa. Rural electrification increased significantly and covered 81% of the villages by the end of the seventh plan. 10 lakh houses were constructed/upgarded each year during the seventh plan in the urban areas. Mining sector showed a substancial decline. Failed to reduce population growth. Actual public sector expenditure in the seventh plan increased by 21.5% against the envisaged outlay. Eighth Plan (1992-97) Objectives Universalization of elementary education and complete eradication of illiteracy; Strengthening of infrastructure in order to support growth process; Provision of safe drinking water and primary health care, complete elimination of scavenging; Self-sufficiency in food and generate surplus for exports; Achieve near full employment by the turn of the century. Budget Public outlay 4,341.0 Agriculture 628.7 Irrigation 265.5 Power 810.5 Village ,small industries 63.3 Organized industries, mining 751.0 Transport & communications 810.4 Other social services 1,011.6 Budgetary resources of which 3800.0 Additional taxation 350.1 Internal private savings 2,022.6 External assistance 287.0 Deficit financing 200.0 Private Investment 4,370.0 Ninth Plan (1997-02) Objectives  Priority to agriculture and rural development in view to general employment.  Accelerating the growth rate of economy with stable prices.  Ensuring food and nutritional security for all.  Provide basic amenities, safe drinking water, shelter, transport, etc..  Slow down in growth rate of population. Continued…  Ensuring environmental sustainability of the development process through social mobilization and participation of people at all levels.  Empowerment of women and socially disadvantaged groups such as SCs and STs etc..  Promoting and developing peoples participatory institutions like panchayati raj Features of Plan  More freedom to states.  Planning process decentralized.  Growth with social justice.  Promoting federalism.  Emphasis on family welfare and employment generation. Achievements Failures Reliance on own resources increased to 54.3%. This plan achieved 5.35 % annual growth rate for economy as a whole. Foreign assistance continued to remain low at 6.8% of total resources. Domestic capital receipts’ contribution was slated to fall to 38.8% of total resources. Tenth Plan (2002-07) Objectives Accelerated economic development through infrastructural development; Thrust on privatization ensuring high availability of funds to be allocated for priority areas; Accelerated agriculture development programmes and promote agricultural exports; Balanced regional growth; More effective social service package; Double per capita income within next ten years; Water to be treated as the important catalyst of development. DIFFERENTIAL STATISTICS Ninth Plan Tenth Plan Revenue receipts 9.1 10.2 Revenue expenditure 12.5 10.7 Revenue deficit 3.4 0.5 Total expenditure 15.4 14.0 (i) Plan expenditure 3.9 4.5 (ii) Non-plan expenditure 11.5 9.5 Non-debt Capital Receipts 0.8 1.2 Fiscal deficit 5.0 2.6 Eleventh five year (2007-12) Objectives Average GDP growth rate of 9% per year in the Eleventh Plan period. Agricultural GDP growth rate at 4% per year on the average. Generation of 58 million new work opportunities. Reduction of unemployment among the educated to less than 5%. 20% rise in the real wage rate of unskilled workers. Reduction in the head-count ratio of consumption To ensure electricity connection to all villages and BPL households by 2009 and reliable power by the end of the Plan. To ensure all-weather road connection to all habitations with population 1000 and above (500 and above in hilly and tribal areas) by 2009, and all significant habitations by 2015. To increase forest and tree cover by 5 percentage points. To attain WHO standards of air quality in all major cities by 2011–12. To treat all urban waste water by 2011–12 to clean river waters. To increase energy efficiency by 20% by 2016–17. Infant mortality rate (IMR) to be reduced to 28 and maternal mortality ratio (MMR) to 1 per 1000 live births by the end of the Eleventh Plan. Economy through five year Plans GDP growth rate : The pre-Independence stagnant economy started growing after Five Year Plans were launched. The growth rate in terms of GDP has been increasing with almost every Five Year Plan. Industrial growth rate : One of the major achievements of our planning process has been a commendable increase in our industrial production. Industrial production registered a major hike in Second and Third Plans. Literacy rate : Over the past four decades the country has made considerable progress in the sphere of education. Education for all has been the thrust of every Plan.