With reference to India’s Five-Year Plans, which of the following statements is/are correct?

1. From the Second Five-Year Plan, there was a determined thrust towards substitution of basic and capital good industries.
2. The Fourth Five-Year Plan adopted the objective of correcting the earlier trend of increased concentration of wealth and economic power.
3. In the Fifth Five-Year Plan, for the first time, the financial sector was included as an integral part of the Plan.

Select the correct answer using the code given below.

1. 1 and 2 only
2. 2 only
3. 3 only
4. 1, 2 and 3

Explanation

Statement 1 is correct

• The Second Five-Year Plan (1956-61) was built on a strategy of long-term development of the economy.
• Major objective:
  • Rapid Industrialisation
  • It was based on the Mahalanobis Model. The emphasis of the Mahalanobis model was on achieving self-reliance, and also to meet the needs of our domestic economy

• The rationale for such a strategy was that in an industrially backward economy with low productivity, the agricultural sector could not provide more employment. It was argued that the development of the industrial sector is a precondition for the development of the agricultural and other sectors. Hence, during this phase of planning, capital goods industries such as iron and steel, heavy engineering, machine tools, and heavy chemicals were given high priority. Secondly, it was visualised that heavy industries would spur the development of small-scale industries, and that growth would ‘trickle down’.
• In other words, as a result of the growth in heavy industries, growth will percolate below.
• The 12th Five-Year Plan of the Government of India (2012–17) was India’s last Five-Year Plan. The Twelfth Five-Year Plan lasted from 2012 to 2017.

Statement 2 is correct

• Fourth Plan (1969-74) major objectives were:
  • Growth with stability and progress towards self-reliance
  • Emphasis on growth with distributive justice.

Statement 3 is incorrect

• Fifth plan (1974-79) proposed to achieve two main objectives: ‘removal of poverty’ (Garibi Hatao) and ‘attainment of self-reliance’. Promotion of a high growth rate, better income distribution, and significant growth in the domestic savings rate were seen as key instruments.
• The 8^th plan undertook drastic policy measures to combat the bad economic situation and to undertake an annual average growth of 5.6% through the introduction of fiscal & economic reforms, including liberalisation under the Prime Ministership of Shri P V Narasimha Rao.

Answer: (a) 1 and 2 only; Difficulty Level: Hard