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Five-Year Plans (FYPs) are centralized and integrated national economic
programs. Joseph Stalin implemented the first Five Year Plan in the
Soviet Union in the late 1920s. Most communist states and several
capitalist countries subsequently have adopted them. China and India
both continue to use FYPs, although China renamed its Eleventh FYP, from
2006 to 2010, a guideline (guihua), rather than a plan (jihua), to
signify the central government’s more hands-off approach to development.
India launched its First FYP in 1951, immediately after independence
under socialist influence of first Prime Minister Jawaharlal Nehru.
The First Five-Year Plan was one of the most important because it had a
great role in the launching of Indian development after the
Independence. Thus, it strongly supported agriculture production and it
also launched the industrialization of the country (but less than the
Second Plan, which focused on heavy industries). It built a particular
system of mixed economy, with a great role for the public sector (with
an emerging welfare state), as well as a growing private sector
(represented by some personalities as those who published the Bombay
Plan).
The Third Five-year Plan stressed agriculture and improvement in the
production of wheat, but the brief Sino-Indian War of 1962 exposed
weaknesses in the economy and shifted the focus towards the defence
industry and the Indian Army. In 1965–1966, India fought a War with
Pakistan. There was also a severe drought in 1965. 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.
Many primary schools were started in rural areas. In an effort to bring
democracy to the grass-root level, Panchayat elections were started and
the states were given more development responsibilities.
State electricity boards and state secondary education boards were
formed. States were made responsible for secondary and higher education.
State road transportation corporations were formed and local road
building became a state responsibility.
The target growth rate was 5.6%, but the actual growth rate was 2.4%. Due
to miserable failure of the Third Plan the government was forced to
declare "plan holidays" (from 1966–67, 1967–68, and 1968–69). Three
annual plans were drawn during this intervening period. During 1966–67
there was again the problem of drought. Equal priority was given to
agriculture, its allied activities, and industrial sector. The
government of India declared "Devaluation of Rupee" to increase the
exports of the country. The main reasons for plan holidays were the war,
lack of resources, and increase in inflation after that plan holiday
was created.
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