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Home / IAS Preparation / Five Year Economic Planning In India

What is Five Year Plan? Its Launch Date, Aims & List of Plans [UPSC]

Last Updated on Apr 21, 2025
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Five Year Plan in India is a process of formulating and implementing a centralized and integrated national economic program for a period of five years. The five year plans however, have been replaced by NITI Aoyog in 2015. The planning process involves a wide range of stakeholders. This includes the government, the private sector, civil society, and the public. The first five year plan was launched in 1951. Since then, India has implemented 12 five year plans. 

The concept of Five year plans is straightforward: the Government of India formulates a document outlining its income and expenditure for a Five year period. Both the central government and state governments divide their budgets into two categories: non-plan budget and plan budget. The non-plan budget is allocated annually for routine expenditures, while the plan budget is distributed over a Five year span based on priorities set by the plan.

GS Paper

General Studies Paper III

Topics for UPSC Prelims

Economic Planning in India, Planning Commission, NITI Aayog, Role of Five-Year Plans, Green Revolution, Liberalization of Indian Economy, Differences Between Planning Commission and NITI Aayog

Topics for UPSC Mains

Evolution of Economic Planning in India, Impact of Five-Year Plans on Indian Economy, Role and Functions of NITI Aayog

Five Year Economic planning in India UPSC notes is most important under the subject Indian Economy for the UPSC IAS Examination. 

In this article on the Indian Economy and issues relating to planning UPSC notes, we shall discuss the history, objectives, achievements, and failures of economic planning in India and also the 12 Five year Plans for UPSC.

Also, check out the article on Economic Survey here.

History of Five-Year Plan in India

The concept of economic planning was not completely new in India. In 1934, Sir Visvesvaraya published a book entitled “Planned Economy For India.” He was the first person in the country to advocate economic planning for India. Towards the end of 1938, the National Planning Committee, under the chairmanship of Pandit Jawaharlal Nehru, was established by then President of INC, Netaji Subhash Chandra Bose. The main objective of the Congress to set up the committee was to provide ways and means for the establishment of new industries and also for the development of the existing ones. Following this, few historically significant economic plans were made, most of which remained only in the papers.

Know more about Regional Planning!

About Five-Year Plans

Five-year plans are documents that the Government of India prepares. This shows the income and expenses of the government for the next five years. 

  • The budget of the central government and all the state governments is divided into two parts: 
    • non-plan budget, spent on routine items every year
    • plan budget, spent on a Five year basis according to the priorities fixed by the plan
  • The Indian economy was based on the concept of planning based on five year plans from 1951 to 2017. 
  • The Five Year Plans were formulated, implemented, and regulated by a body known as the Planning Commission. 
  • The Planning Commission was replaced by a think tank called NITI AAYOG in 2015. The NITI Aayog has come out with three documents:
    • 3-year action agenda
    • 7-year medium-term strategy paper
    • 15-year vision document

Know more about the Planning for sustainable development!

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List of Five-Year Plans in India

We shall discuss the objectives and achievements of the economic planning in India:

List of Five Year Plans in India

Five Year Plan

Period

Growth Rate

Salient Features

First Five Year Plan

1951-1956

Actual Growth: 3.6% against Targeted Growth: 2.1%

Based on the Harrod-Domar model

Focused on increasing agricultural production, full employment, and removal of economic inequalities 

Achieved objectives like food self-sufficiency and establishment of Indian Institutes of Technology (IITs)

Second Five Year Plan

1956-1961

Actual Growth: 4.3% against Targeted Growth: 4.5%

Developed based on the Harrod-Domar model 

Authored by P C Mahalanobis

Emphasized rapid industrialization, but was not fully implemented due to foreign exchange shortages

Introduced the Industrial Policy 1956 for a socialist society

Third Five Year Plan

1961-1966

Actual Growth: 2.8% against Targeted Growth: 5.6%

Initially aimed at self-reliance, shifted focus to defense 

Promoted medium and small-scale industries 

Borrowed from IMF for the first time

Affected by events like the 1962 Chinese aggression and Indo-Pak war

Plan Holidays (Annual Plans)

1966-1969

-

Declared due to the failure of the Third Plan 

Three yearly plans from 1966 to 1969

Fourth Five Year Plan

1969-1974

Actual Growth: 3.3% against Targeted Growth: 5.6%

Aimed for growth with stability and self-reliance, especially in defense

Introduced family planning programs 

Faced challenges due to the influx of Bangladeshi refugees

Nationalized 14 major Indian banks and Green Revolution

Fifth Five year Plan

1974-1979

Actual Growth: 4.8% against Targeted Growth: 4.4%

Focused on poverty removal and self-reliance 

Introduced the Electricity Supply Act

The first plan with poverty removal as a prime objective

Rolling Plan (1979-1980)

-

-

Proposed by the Janata government, removed by the Congress government in 1980

Sixth Five Year Plan

1980-1985

Actual Growth: 5.7% against Targeted Growth: 5.2%

Aimed at poverty removal, higher growth, and modernization

Successfully achieved most targets

Emphasized family planning

Seventh Five Year Plan

1985-1990

Actual Growth: 6% against Targeted Growth: 5%

Focused on food grain production and employment 

Recorded high agricultural and overall growth 

Followed by planned holidays from 1990 to 1992

Plan Holidays (1990-1992)

-

-

Declared due to the failure of the Seventh Plan 

Annual plans in 1990-91 and 1991-92

Eighth Five Year Plan

1992-1997

Actual Growth: 6.8% against Targeted Growth: 5.6%

Introduced reforms to combat economic issues 

Emphasis on universal education and eradication of illiteracy

Increased private sector investment and improved current account deficit

Ninth Five Year Plan

1997-2002

Actual Growth: 5.4% against Targeted Growth: 6.5%

Focused on growth with social justice and equality 

Prioritized agriculture and rural development 

Aimed to provide safe drinking water, education, and shelter

Ensured food and nutritional security

Tenth Five Year Plan

2002-2007

Actual Growth: 7.6% against Targeted Growth: 8%

Targeted GDP growth, access to basic services, poverty reduction, gender gap reduction, and more

Focused on various key indicators of development

Eleventh Five Year Plan

2007-2012

Actual Growth: 8% against Targeted Growth: 9%

Introduced the concept of inclusive growth 

Addressed agriculture, infrastructure, and education 

Set detailed national targets

Twelfth Five year Plan

2012-2017

Actual Growth: 5.1% (2012-13), 6.9% (2013-14), 7.2% (2014-15), 7.6% (2015-16), 7.1% (2016-17)

Focused on inclusive growth

Set 25 core monitorable targets, including GDP growth, manufacturing growth, education, poverty reduction, renewable energy, infrastructure, and more.

Also, check out the article on Multi level planning in India here.

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Post the Era of Five-Year Plan

India has abolished the Five-Year Plans, a system initiated as early as 1951 to guide the country's economic policies and resource allocation. This shift from this system marks the most significant paradigm change from a stifling and unimaginative kind of economic planning or model of development. It replaced the Planning Commission with the National Institution for Transforming India, that is, NITI Aayog. The new institution develops bottom-up planning from the concepts of cooperative federalism and more active participation of states. Policies incorporating sustainability, innovation, and inclusion have been given proper attention in conjunction with other global economies. The post-Five-Year Plans period is characterised by industry-specific strategies, the longer-term visions that the Indian government has set forth now with the "Strategy for New India @ 75," and utilising real-time data to drive policy-making shows that governance is more adaptive and responsive than it used to be in the past.

Key Takeaways for UPSC Aspirants

  • Foundational Years: India's Five-Year Plans initiated in 1951 with the Soviet model, where economic development was offered through controlled planning and state interference.
  • Economic Objectives: Every plan raised targeted objectives like poverty removal, employment generation, growth of industry, and modernization of agriculture.
  • Institutional Framework: The Planning Commission was instituted to plan and monitor these five year plans in order to ensure resource allocation characterized by reason.
  • Mixed Results: Some plans achieved satisfactory output in respect of attaining the desired outcomes, like the Third and Fourth Plans did in the case of the Green Revolution, while others lagged well behind the schedule because of operational problems and external economic pressures.
  • Liberalization: Towards the end of the 1980s and into the early 1990s, there was an indication that India had begun its process of economic liberalization-this was a full circle turn from the extensively planned economy model.
  • Changes after Liberalization: It continued to emphasize market-driven economic policies, and enhanced the involvement of the private sector and globalization.
  • Repeal of Five-Year Plans: The Five-Year Plans were rescinded in 2017 and replaced with a new, more flexible framework led by NITI Aayog to reflect the new shift towards cooperative federalism, real-time data-driven policy-making.
  • Current Focus: The new approach of economic planning emphasizes sustainability, innovation, the digital economy, social welfare, and inclusive growth against the challenges of the 21st century.

You can check the UPSC Civil Service prelims analysis from the linked article. Testbook is one of the most preferred platforms by aspirants for competitive exams. It Provides UPSC mock tests, quizzes, sectional tests, live coaching, and current affairs sessions covering a wide range of competitive exams. Ace your preparation by downloading our app. Download the Testbook App now!

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Five Year Plan - FAQs

Economic growth, poverty reduction, modernization of the economy, increase in employment, and reduction in income inequality were the main objectives of economic planning in India.

There are 12 five-year plans in India. The first plan was effective from 1951 to 1956 and the twelfth plan was from 2012 to 2017.

S.N.Agarwal, then principal of Wardha Commercial college introduced the Gandhian plan in 1944.

The eighth Plan is known as the Rao and Manmohan plan. This plan mainly focused on attaining universal education and eradication of illiteracy in the age group of 15 to 35 years.

The first Five-year plan which was made on the basis of the Harrod-Domar model was launched in 1951. The main objective of the plan was to increase agricultural production in the country.
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