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Five-year plans: the Planning Commission, the twelve plans and NITI Aayog

By TNPSC Guide editorial team · Last updated:

Key numbers

The twelve plans at a glance

First1951-1956; Harrod-Domar; agriculture; 3.6% (above target)
Second1956-1961; Mahalanobis; industry; 4.1%
Third1961-1966; Gadgil Plan; self-reliance; missed 5.6%
Plan holiday1966-1969; annual plans
Fourth1969-1974; target 5.7%, achieved 3.3%
Fifth1974-1979; target 4.4%, achieved 4.8%; dropped in 1978
Rolling Plan1978-79
Sixth1980-1985; poverty removal; target 5.2%, achieved 5.7%
Seventh1985-1990; private sector first; target 5.0%, achieved 6.0%
Annual plans1990-91, 1991-92
Eighth1992-1997; human resources; target 5.6%, achieved 6.8%
Ninth1997-2002; growth with social justice; target 7%, achieved 5.6%
Tenth2002-2007; aim of cutting poverty to 15% by 2012; 8.0% target, 7.2%
Eleventh2007-2012; inclusive growth; target 8.1%, achieved 7.9%
Twelfth2012-2017; sustainable too; target 8%

Key years

Visvesvaraya's planning book1934 (class 12, page 284)
Planning Commission; first plan begins15 March 1950; 1 April 1951 (class 12, page 284)
Monnet Plan (France)1947-1950 (class 12, page 290)
Plan holiday1966-1969 (class 11, page 215)
Rolling Plan1978-79 (class 11, page 216)
Bank nationalisation1969 (14 banks); 1980 (6 banks) (class 11, pages 213-214)
NITI decision; formation13 August 2014; 1 January 2015 (class 12, page 291)
Last five-year planthe Twelfth, 2012-2017 (class 11, page 215)

Easy to confuse

First / Second PlanHarrod-Domar, agriculture; Mahalanobis, industry
Plan holiday / Rolling Plan1966-1969; 1978-79
Above target / missed targetFirst, Fifth, Sixth, Seventh, Eighth; Third, Fourth, Ninth, Tenth, Eleventh
Planning Commission / NITI Aayog15 March 1950, first chairman Nehru; 1 January 2015, chaired by the PM, first vice-chairman Arvind Panagariya
From above / from belowcentralised; decentralised
Indicative / imperative planningFrance (Monnet Plan); China, Russia
Nationalisation 1969 / 198014 banks, above 50 crore; 6 banks, above 200 crore
The full note

Beginnings of planning

Sir M. Visvesvaraya laid the foundation of planning in India (1934), describing a ten-year plan in Planned Economy for India. Other pre-independence plans: S.N. Agarwal's Gandhian Plan (1944), M.N. Roy's People's Plan (1945) and Jayaprakash Narayan's Sarvodaya Plan (1950). The 1948 industrial policy recommended a central planning body and a mixed economy. The Planning Commission was set up on 15 March 1950 with Jawaharlal Nehru as first chairman; the first plan period began on 1 April 1951. The main aim of planning is social welfare.

Kinds of planning

Centralised planning is planning from above; decentralised planning by local bodies is planning from below. France ran indicative planning as the Monnet Plan from 1947 to 1950; China and Russia follow imperative planning. By length: one year is short-term, three to seven years medium-term (usually five), ten to thirty years long-term perspective planning. Hayek, in The Road to Serfdom, said central planning curbs people's economic freedom.

The first three plans and the plan holiday

The First Plan (1951-1956), on the Harrod-Domar model, aimed at agriculture and beat its target with 3.6% growth. The Second (1956-1961), on Prof. P.C. Mahalanobis's model, aimed at industry: 4.1%. The Third (1961-1966), the Gadgil Plan, aimed at a self-reliant economy and missed its 5.6% target because of the China-India war. The India-Pakistan war and the Third Plan's failure led to the plan holiday of 1966-1969, with annual plans.

The Fourth to the Seventh Plan

Fourth (1969-1974): stable growth and self-reliance; failed with 3.3% against 5.7%. Fifth (1974-1979): agriculture, industry and mining; 4.8% against 4.4%; drafted by D.P. Dhar, dropped a year early in 1978, followed by the Rolling Plan of 1978-79. Sixth (1980-1985): poverty removal and industrial self-reliance; 5.7% against 5.2%. Seventh (1985-1990): first to put the private sector above the public; 6.0% against 5.0%. Two annual plans followed (1990-91, 1991-92).

The Eighth to the Twelfth Plan

Eighth (1992-1997): human resource development, the new economic policy; 6.8% against 5.6%. Ninth (1997-2002): growth with social justice; 5.6% against 7%. Tenth (2002-2007): aimed to cut poverty to 15% by 2012; 7.2% against 8.0%. Eleventh (2007-2012): faster, more inclusive growth; 7.9% against 8.1%. Twelfth (2012-2017): faster, more inclusive and sustainable growth; target 8%; the last plan.

NITI Aayog

The government decided on 13 August 2014 to set up NITI Aayog (National Institution for Transforming India) in place of the Planning Commission; it was created by a cabinet resolution on 1 January 2015. The Prime Minister is chairman; the vice-chairman is the executive head; the first vice-chairman was Arvind Panagariya. It fosters cooperative and competitive federalism and bottom-up planning, monitors and evaluates schemes, ranks states, and works as the government's think tank.

Bank nationalisation

In 1969 the government nationalised 14 large commercial banks with deposits above 50 crore, and in 1980 six banks with deposits above 200 crore. The main aim was social welfare: more credit for agriculture, small and cottage industry, and banking in villages.

Source: பொருளியல், மேல்நிலை முதலாம் ஆண்டு, தமிழ் வழி (Economics, Standard XI, Tamil medium; Samacheer Kalvi) (11ஆம் வகுப்புப் பொருளியல், இயல் 8 (இந்தியப் பொருளாதாரம் விடுதலைக்கு முன்னரும் பின்னரும்), பக்கம் 213-217; 12ஆம் வகுப்புப் பொருளியல், இயல் 11 (பொருளாதார மேம்பாடும் திட்டமிடலும்), பக்கம் 284-293)

PYQ (2012-2025 papers)

Provisional key: until TNPSC publishes the final key; the answer may change.

Free questions

  1. Question 1

    Assertion [A]: NITI Aayog was set up on 1 January 2015. Reason [R]: NITI Aayog fosters competitive federalism by ranking states.

    1. A. [A] is true but [R] is false
    2. B. Both [A] and [R] are true but [R] is not the correct explanation of [A]
    3. C. [A] is false but [R] is true
    4. D. Both [A] and [R] are true and [R] is the correct explanation of [A]
    Answer and explanation

    Correct answer: B. Both [A] and [R] are true but [R] is not the correct explanation of [A]

    Both are true per the textbook, but ranking states does not explain the date NITI Aayog was set up.

    Source: பொருளியல், மேல்நிலை இரண்டாம் ஆண்டு, தமிழ் வழி (Economics, Standard XII, Tamil medium; Samacheer Kalvi) (இயல் 11 பொருளாதார மேம்பாடும் திட்டமிடலும், p. 291 (PDF p. 297))

  2. Question 2

    When was the Planning Commission of India set up?

    1. A. 6 April 1948
    2. B. 1 January 2015
    3. C. 1 April 1951
    4. D. 15 March 1950
    Answer and explanation

    Correct answer: D. 15 March 1950

    The 1948 industrial policy recommended a central planning body; the Planning Commission was set up on 15 March 1950 and the first plan began on 1 April 1951.

    Source: பொருளியல், மேல்நிலை இரண்டாம் ஆண்டு, தமிழ் வழி (Economics, Standard XII, Tamil medium; Samacheer Kalvi) (இயல் 11 பொருளாதார மேம்பாடும் திட்டமிடலும், p. 284 (PDF p. 290))

  3. Question 3

    When did India's first plan period begin?

    1. A. 15 March 1950
    2. B. 1 April 1951
    3. C. 1 April 1956
    4. D. 15 August 1947
    Answer and explanation

    Correct answer: B. 1 April 1951

    The Planning Commission was set up on 15 March 1950 and the first plan began on 1 April 1951.

    Source: பொருளியல், மேல்நிலை இரண்டாம் ஆண்டு, தமிழ் வழி (Economics, Standard XII, Tamil medium; Samacheer Kalvi) (இயல் 11 பொருளாதார மேம்பாடும் திட்டமிடலும், p. 284 (PDF p. 290))

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