Eighth Five Year Plan (1992-1997)
The Seventh Plan completed its term on March 31, 1990. Hence the Eighth Plan should have logically commenced from April 1, 1990. However, due to political uncertainties at the Central and severe economic crisis in the country needing immediate attention, this schedule could not be kept and the Eighth Plan was delayed by two years. Thus it could commence only on April 1, 1992. The intervening two years between the Seventh and Eighth Plans were years of Plan Holiday (although annual Plans were implemented in these years).
On April 1, 1992, when the Eighth Plan commenced 41 years of economic planning were over and in this period seven Five Years Plans were completed. Over these four decades of economic planning, a largely agrarian economy had been transformed into one based on a developed and diversified infrastructure with considerable potential for industrialisation. India had a resilient agricultural economy with almost self-sufficiency in food production.
The industrial base of the economy was both strong and diversified. Unlike many other underdeveloped countries, India had skilled manpower and entrepreneurial capabilities in abundance. Although the rate of saving was not high, yet it was sufficient for future economic growth. Hence the country could take advantage of these positive factors for further growth, provided the government did not create a fiscal mess by pursuing wrong policies. During the 1980s: the growth performance of the economy was quite impressive.
At the same time in this period, the wrong policies of the government led the economy to the brink of disaster. The fiscal deficit of the central government which was 14.1 per cent of GDP in 1975-76 rose to 8.2 per cent during the Seventh Plan period and * remained stuck at 8.4 per cent in 1990-91. The country at this juncture had almost fallen into the internal debt trap.
In 1991 there was a deepening of the balance of payments crisis resulting in the sudden depletion of foreign exchange reserves. The risk of default in meeting external debt obligations was very much real. This was the time when the inflation rate also rose to the high level of 16.7 per cent.
These developments put severe strains on the economy leading to very low growth in 1991-92, which happened to be the base year of the Eighth Plan. However, the government nevertheless had to be very careful about the critical imbalances which had emerged sharply during the 1980s.
These were :
Increasing fiscal and budgetary deficits, mounting public debt and severe constraints on the resources of the Government and the public sector to undertake the essential screen activities. A critical imbalance in the balance of payments, and A high rate of inflation.
Apart from the problems arising from the critical imbalances referred to above at the threshold of the Eighth Plan, there was a high backlog in the provision of social consumption needs of the people, particularly the underprivileged and the poor. There was also an unacceptably high level of poverty and hunger in the country with a high concentration in some regions. Illiteracy, particularly among the rural poor and women, high incidence of infant mortality and the widening gap between the growth of labour force and growth of employment due to decreasing employment elasticities in almost all sectors were some major challenges before the Eighth Plan. The imperatives of growth in the face of these challenges required an innovative approach to economic development.
While earlier Plans had placed heavy emphasis on growth, the Seventh Plan paid particular attention to providing productive employment. The Eighth Plan also proposed to follow the lines adopted by the Seventh Plan. It accordingly considered the generation of adequate employment opportunities as the most important objective. The list of objectives, however, was quite long and included the following: • Generation of adequate employment to achieve near full employment level by the turn of the century. Containment of population growth through active people’s cooperation and an effective scheme of incentives and disincentives.
Universalization of elementary education and complete eradication of illiteracy among the people in the age group of 15 to 35 years. Provision of safe drinking water and primary health care facilities, including immunisation, accessible to all the villages and the entire population, and complete elimination of scavenging. Growth and diversification of agriculture to achieve self-sufficiency in food and generate surplus for exports and Strengthening the infrastructure ( energy, communication, irrigation ) to support the growth process on a sustainable basis.
The above list of objectives shows that the main concern of the Eights Plan was with human – development. The objectives listed to achieve this goal were employment generation, population control, literacy and education, provision of health facilities and drinking water, and provision of adequate food and basic infrastructure. It is surprising to note that economic growth did not appear at all in the above list of objectives stated in the Eighth Plan document. However, the targeted rate of growth in the Eighth Plan was kept at 5.6 per cent per annum which was higher than the trend rate of growth achieved by the Indian economy in the entire planning period and was almost the same as the growth. the rate actually achieved under the Seventh Plan. This shows that economic growth continued to occupy an important place in the overall scheme of things in the Eighth Five Year Plan.
Check out these notes on Ninth Five Year Plan (1997-2002).