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Question

Difficulty: EasyEconomic Planning History, NITI Aayog, and Structural Reforms

In the history of economic planning in India, indicative planning—marking a shift from imperative planning following the 1991 structural reforms—was officially adopted starting with which of the following Five-Year Plans?

  1. Eighth Five-Year Plan (1992–1997)Answer
  2. B
    Second Five-Year Plan (1956–1961)
  3. C
    Fifth Five-Year Plan (1974–1978)
  4. D
    Tenth Five-Year Plan (2002–2007)

Answer

Eighth Five-Year Plan (1992–1997)
With the introduction of structural economic reforms in 1991, India moved away from rigid command-style economic planning. The Eighth Five-Year Plan (1992–1997) formally recognized this change by adopting 'indicative planning', where the state sets broad developmental targets and creates enabling infrastructure while leaving market forces to allocate resources in most productive sectors.

Step-by-Step Solution

1
Analyze the policy transition caused by the 1991 LPG (Liberalization, Privatization, and Globalization) reforms.
The 1991 reforms reduced direct state intervention, requiring a change in the philosophy of national planning.
Economic opening required market mechanisms to guide resource allocation while the state assumed a supportive role.
2
Identify the Five-Year Plan launched immediately after the 1991 reforms.
The Eighth Five-Year Plan covered the period 1992 to 1997.
The Plan explicitly defined the government's role as indicative and catalytic rather than directive.

Key Concept

Transition from Imperative to Indicative Planning in India
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Topics

Economic Planning History, NITI Aayog, and Structural Reforms