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Economic Development in the First and Second Five Year Plans

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  • Last Updated : 20 Jun, 2022
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P. C. Mahalanobis thought of this concept to improve the possibility of a close and impartial financial institution. The federation grew to a large number, affected by Domer’s 512-month thought for the Soviet Union. The number one 512-month plan is called the Domer Mahalanobis model. Harrod Domar’s version said the expansion was structured by elements. First, a broader base of established funds, accounting for more than companies, and second, a low return on investment ratio, accounting for smarter assumptions and better price improvement. In September 1951 the Organizing Commission delivered the draft framework for provisional coverage of five seasons from April 1951 to March 1956. This was added to Parliament in December 1952 with payment from the Appearances Commission. 

India’s five-year plan has faced the problems of marginalized populations being flooded, severe food shortages, and rapid growth. Also, there was an imbalance within the financial system constantly created by the World War and the Section. The most conspicuous need was given to grass for the emergence of anti-fatigue nutrition and experimental growth. 

Goals of the first five-year plan

To be able to increase the production of food.  Able to deal with the imbalance within the financial apparatus constantly caused by the World War (1939-45) and part of India. Being able to examine inflationary tensions honestly.  Being able to meet economic expenses such as roads, railways, water equipment, electricity, etc.  Limit imbalances in wages and wealth. 

Normally the proposed total fee was Rs. 3,870 crore which is Rs.2,070 crore (later expanded to Rs. 2,378 crores) became the fare tag near the general public. The actual neighborhood cost of the network was Rs. 1960 crore.6% of the total costs of the open quarter flowed into construction work. Typically the private neighborhood assumption covered up to Rs.1,800 crore.

India’s first five-year plan was a bold attempt. In general, performance has been great in many areas and, in general, design goals have been exceeded. 

  • The increase was 18% from Rs. 8,850 crore, the population payment was expanded to Rs.10,480 crores towards the end of the main deal. Per capita payment increased by 11%. 
  • Food production boomed from 52.2 million tons in 195152 to 66.8 million loads in 195556, although the agreement’s target was only 61.6 million tons. Results for cotton, jute, sugar cane, and oilseeds were close to the target. 
  • Professional creation in the form of arrangement time extended. such as oil refining, travel construction, the airplane, and the railway line, were incorporated into the design.
  • During the planning period, the number of students attending primary schools increased by about 33%. The amount of Rs 101 million has been invested in charities and many medical clinics and pharmacies have been opened. 
  • During this period the rail network was paved.380 A long road of newer tracks was added 430 miles of track demolished during the next World War has been restored. The freeways were widened by 636 miles with 25 major widenings and 4,000 developments along existing sidewalks. 
  • The main run-off period has not created major inflationary stress in the economy. The reason for this was the expanded production, especially in the horticultural sector. The cost  of the  finish of the design was 13% lower than when they started.

Second Five Year Plans

That can put India on the streets of industrialization, was the moving spirit at the back of the second five-year plan was P. City. Mahalanobis. He gave the highest priority to strengthening the business base of the economy. It was absolutely in this light that the 1948 Professional Policy Resolution was revised and the new resolution of 1956 was followed. There is focus on the introduction of the arrest sector and business connected with a socialistic pattern of the world.


A substantial increase in community wages to raise living standards. (ii) Rapid industrialization of the country with special emphasis on modernization of major and important enterprises. (iii) A tremendous amount of valuable work creates new opportunities by creating concentrated work tasks and limited opportunity businesses. (iv) reduction in payment and distribution disparities. (v) have an annual development rate of 5%.


Instead of the key structure known as the Agriculture and Water Sources Scheme, this plan was dubbed the “Modern and Travel Plan.” Initially, the ensuing arrangement suggested a total open area cost of Rs. 4800 crores, but the actual cost was only Rs. 4672 crore. Agribusiness and local area enhancement received Rs. 560 crore, water system and power received Rs. 913 crore, industry and mining received Rs. 890 crore, transportation and messages received Rs. 1385 crore, social organisations received Rs. 945 crore, and the random class received Rs. 99 crore.


  • India’s communal pay increased by 8%, while per capita pay increased by 8%. As a direct outcome of the greater population rate, the rate of per family pay expansion was low. During the similar period of time at 1960-61 costs, the public pay rose from Rs. 14, 670 crore to Rs. 14, 150 crore, and the per capita pay rose from Rs. 299 to Rs. 326. During the arrangement period, the population growth rate was over 2% each year.
  • Food production increased by 15%, from 67 million tonnes (MT) to 75 million tonnes (MT) (MT). Organic cotton production increased by 23.5 percent, tea production increased by 9%, and sugarcane production increased by 22.5 percent. Having said that, there was a decrease in the introduction of Jute.
  • The second Prepare was essentially “an industry and travel plan,” with India initially sending enormous numbers of apparatus, machine devices for manufacturing, industry, and travel, as well as heavy electrical hardware and logical tools.

The creation of three steel manufacturing plants in the population region with a fundamental reduction of 10 lakh tonnes each at Durgapur (West Bengal), Rourkela (Orissa), and Bhilai was one of the significant stages toward developing a strong capital basis (Madhya Pradesh). The production limits of Tata Flat Iron and Steel Company, Indian Iron and Steel Company, Mysore Iron and Metallic Co. have been individually increased by 7,000 tons, 5,000 tons, and 75,000 tons.

Sample Questions 

Question 1: What is the significance of five-year plan?


The five term plans began in 1951 aided India ahead with the course of improvement. They additionally eased poverty, flourish agribusiness and modern areas, further develop instruction and create new energy sources. Subsequently the long term plans plays a significant part in the improvement of India and its economy.

Question 2: Which was the most underscored viewpoint in the Second Five Year Plan of India?


The second five-year plan laid accentuation on industry, especially weighty industry. Unmistakable from the First long term plan that laid impulse fundamentally on horticulture, the homegrown creation of modern items was upheld in the second arrangement, mainly in the improvement of public area.

Question 3: Distinction between initial long term plan and second long term plan


The First Five-Year Plan (1950-1956) tried to work on the nation’s economy and hence cared for further developing the agrarian area which included dams and water system. The Second Five-Year Plan (1956-1961) focused on the improvement of weighty ventures.

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