Previous Year Question
With reference to India’s Five Year Plans, which of the following statements is/are correct?
From the Second Five Year Plan, there was a determined thrust towards substitution of basic and capital goods industries.
The Fourth Five Year Plan adopted the objective of correcting the earlier trend of increased concentration of wealth and economic power.
In the Fifth Five Year Plan, for the first time, the financial sector was included as an integral part of the Plan.
Select the correct answer using the code given below:
1 and 2 only
2 only
3 only
1, 2 and 3
Correct Answer: A
Detailed Solution
Statement 1 is correct. The Second Five Year Plan covered the period from 1956 to 1961. It was substantially based on the development strategy formulated by P. C. Mahalanobis and placed special emphasis on rapid industrialisation, heavy industries and capital-goods industries.
The strategy involved increasing the domestic production of machinery, steel, heavy engineering equipment and other capital goods. Its objective was to reduce India’s dependence on imported machinery and industrial products and develop an independent industrial base. This strategy is generally associated with import-substitution industrialisation.
Public-sector steel plants at Bhilai, Rourkela and Durgapur were established during this period. Public investment was also expanded in heavy machinery, coal, electricity, engineering and infrastructure.
Statement 2 is correct. The Fourth Five Year Plan covered the period from 1969 to 1974. Its major objectives were growth with stability and the progressive achievement of self-reliance.
The Plan recognised that the previous development process had produced tendencies towards concentration of income, wealth and economic power. Consequently, a more equitable distribution of the benefits of development, social justice and control over the concentration of economic power formed part of its objectives.
Fourteen major commercial banks were nationalised in July 1969 during the Fourth Plan period. The objective was to extend banking services beyond large industrial houses to priority sectors such as agriculture, small industries, exports and weaker sections.
Statement 3 is incorrect. The Fifth Five Year Plan was not the first Plan to include the financial sector as an integral component of planning. Earlier Plans had already considered the mobilisation of financial resources, banking, institutional credit and the role of public investment. In particular, following bank nationalisation during the Fourth Plan, the financial system was linked more explicitly with developmental and social objectives.
The Fifth Five Year Plan was prepared for the period from 1974 to 1979. Its principal objectives included Garibi Hatao—removal of poverty and the attainment of self-reliance. Therefore, the expression “for the first time” makes statement 3 incorrect.