In the first 30 years of planning, the trend rate of growth of national income was 3.5 percent. Eminent economist Raj Krishna called it the Hindu rate of growth. Agricultural production increased at an average rate of 2.7 percent and industrial production at 6.1 percent. And per capita income increased at the trend rate of 1.3 percent. Though these rates appear rather small, we must remember that throughout the British period, for almost a century, there was stagnation in the Indian economy. For example, in the undivided India from 1901 - 46, the trend growth rate of the national income was only 1.2 percent. So one of the achievements of planning in Indian economy is that it has overcome stagnation and we have had a slow but steady economic growth.
Growth Rates of National Income (in percentage)
S.No. Plan Target Actuals
1. First Plan 2.1 3.6
2. Second Plan 4.5 4.0
3. Third Plan 5.6 2.2
4. Fourth Plan 5.7 3.3
5. Fifth Plan 4.4 5.2
6. Sixth Plan 5.2 5.2
7. Seventh Plan 5.0 5.8
8. Eighth Plan 5.6 6.7
9. Ninth Plan 6.5 5.4
10. Tenth Plan 8.0
Sources : Various Five Year Plans and Tenth Plan (2002 - 2007) Approach paper.
The growth performance of the economy during different plan periods is given in Table 5.1. From the Table, it can be seen that there are shortfalls in the growth targets during early plan periods except the First Five Year Plan. During the Ninth Plan period, the GDP growth rate was 5.4 percent as against the target of 6.5 percent.
The term 'modernization' refers to a number of structural changes in the economy. Under planning, Indian economy got transformed from a colonial economy to an independent and modern economy. There has been a change in the composition of national income. For example, now agriculture contributes less and service sector contributes more. In agriculture, after the Green Revolution, there has been a change in the technology of agriculture.
During the early phase of our planning, we depended on external assistance for many things - food, technology and foreign exchange. But since the Fifth Five Year Plan, self-reliance has become one of the major goals of our planning.
By social justice, we mean equal opportunities for all. That means, improving the standard of living of the poorest groups and reduction in inequalities in income and wealth.