Role of Planning Strategy in Removing Poverty and Unemployment in India

‘The Fifth FYP (1974-79) was introduced at a time when India was in deep economic crisis due to global hike in crude oil prices. Since the planners were interested in the slogan of ‘garibi hatao’ and attainment of self-reliance it was envisaged to achieve these objectives through better distribution of income, higher rates of growth and by direct attack on the problem of unemployment, underemployment and acute poverty.

The Fifth Plan was terminated by the new Janata Party government one year before its completion and the Sixth FYP was adopted. In fact, India had two Sixth FYPs practically (1978-83 and 1980- 85). The Sixth FYP adopted by the Janata Party (1978- 83) was discarded in 1980 with the change in government at the centre.

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The Sixth Plan (1978-83) admired the achievements of earlier Plans in India but criticised the Nehru-Mahalanobis growth strategy holding if responsible for unemployment, growing poverty, concentration of economic power in the hands of few and widening of income and wealth inequalities.

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The focus of the Sixth Plan (1978-83) was increasing the employment potential in agriculture and allied activities. When the new Sixth FYP (1980-85) was introduced by the Congress government, planners rejected the approach of Janata Party and brought back the earlier model of growth.

In order to tackle the problem of poverty there was direct attack on poverty by adopting programmes like Integrated Rural Development Programme (IRDP) and National Rural Employment Programme (NREP).

On the whole, the Sixth Plan undermined the role of public sector by reducing its share in total investment. This Plan was criticised on account of appeasing the pressure groups like farmers by giving unsustainable increase in agricultural prices and industrialists by relaxing licensing system and control. More open door policy was followed towards foreign capital and multinational corporations.


Hence by this period the policies were already swinging away and market started taking domination over the state. The Seventh FYP (1985-1990) was introduced with a change in the development strategy. It was envisaged to bring down the rate of population growth because the gains of growth often got neutralised by fairly high growth rates of population.

There were four basic elements that signify a change in the strategy in this Plan. First, it gave importance to higher agricultural production by relying more on new technology. Second, it undermined the role of public sector and induced promotion of private sector through industrial deregulation. Third, with liberalisation of imports, it aimed at raising efficiency in the manufacturing sector. Fourth, necessary changes in industrial and export-import policies were made so that the role of the state changes from a regulatory to facilitatory authorities.

In totality this strategy was as John W. Mellor defines a strategy of Agricultural Development-led Growth (ADLG). It was expected to show better results due to: (i) strong domestic links between agriculture and industry, (ii) less import intensity of investment in agriculture, (iii) greater employment potential in agriculture. ADLG strategy however did not lead to favourable results and hence there was call for a strategy of balanced growth between agriculture and industry.

During the late 1980s until 1990-91, the country faced severe financial crisis and the year 1991 turned out to be a difficult time for the economy. India had to face serious foreign exchange problem and the government responded to the crisis in two ways: (i) short term stabilisation measures, and (ii) long term structural measures. The former measures were to restore the confidence of the government to manage balance of payment problem.


The latter were, however, long term measures where government decided to introduce substantial economic reforms to bring dynamism to the economy. It took four major policy initiatives, viz., (i) macroeconomic stabilisation, (ii) trade policy reforms, (iii) industrial policy reforms, and (iv) public sectors reforms.

Since 1990-91, two annual plans (1990-91 and 1991- 92) and four FYPs have been adopted so far, FYPs i.e., the Eighth (1992-97), Ninth (1997-02), Tenth (2002-07) and Eleventh (2007-12) FYPs. The philosophy, approach and strategy have been the same for eighth, ninth and tenth the three FYPs which are guided by the measures of improving the performance and increasing the efficiency of the economy.

The focus in these FYPs is different compared to earlier Plans, where people are not mere beneficiaries of develop­ment; they are active participants in the development process. Unlike earlier Plans where a centralised approach is followed, the Plans after 1990 have stressed more on decentralised and participatory approach of development.


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