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Introduction

The Second Five-Year Plan (1956-1961) of India marked a significant phase in the nation’s economic development after independence. Following the first plan, which laid the groundwork for industrialization and infrastructure development, the second plan aimed at achieving accelerated growth through a more focused approach on heavy industries and self-sufficiency.

Objectives of the Second Five-Year Plan

The primary objectives of the Second Five-Year Plan were:

1. Industrialization: To shift from an agrarian economy to an industrial one, emphasizing the development of heavy industries, including steel, machinery, and chemicals.
2. Self-Reliance: To reduce dependency on foreign aid and imports by fostering domestic production capabilities.
3. Balanced Regional Development: To promote industrial development in various regions of the country, reducing regional disparities.
4. Employment Generation: To create job opportunities in the industrial sector, thereby addressing unemployment.
5. Social Justice: To ensure equitable distribution of wealth and encourage social welfare programs.

Key Features of the Second Five-Year Plan

1. Focus on Heavy Industries:
   • The plan allocated significant resources towards the establishment of heavy industries, including steel plants, power generation, and machinery production. The establishment of the Bhilai Steel Plant, the Durgapur Steel Plant, and the Rourkela Steel Plant exemplified this focus.
2. Investment and Funding:
   • The total outlay for the Second Five-Year Plan was approximately ₹4,600 crore, with a substantial portion allocated for public sector investments. The government aimed to mobilize financial resources through taxation, loans, and foreign assistance.
3. Public Sector Dominance:
   • A key characteristic of the plan was the emphasis on the public sector as the main engine of industrial growth. The government took direct control of several key industries, including coal, steel, and electricity.
4. Agricultural Development:
   • While the primary focus was on industrialization, the plan also acknowledged the importance of agriculture. Initiatives such as irrigation projects and agricultural research were included to boost agricultural productivity.
5. Regional Development:
   • The plan sought to address regional imbalances by promoting industrial development in less developed areas. This included initiatives to set up industries in states like Bihar and Orissa.

Implementation and Achievements

The implementation of the Second Five-Year Plan witnessed several achievements:

1. Industrial Growth:
   • The industrial sector experienced significant growth, with the Index of Industrial Production (IIP) showing an increase of approximately 7.5% annually during this period. The manufacturing sector expanded, contributing to GDP growth.
2. Power Generation:
   • The plan led to a considerable increase in power generation capacity, facilitating industrial growth. By the end of the plan, installed capacity had increased significantly, supporting both industrial and agricultural needs.
3. Transport Infrastructure:
   • Development of transport infrastructure, including roads, railways, and ports, was prioritized to support industrial activities and improve connectivity. The establishment of the Indian Railways as a key logistics provider was crucial for industrial transport.
4. Social Welfare Programs:
   • The plan also laid the foundation for social welfare initiatives, including education and health programs, which aimed to uplift the living standards of the population.

Challenges Faced

Despite its achievements, the Second Five-Year Plan faced several challenges:

1. Resource Constraints:
   • The ambitious targets set in the plan often clashed with the available resources, leading to delays in project execution. Economic constraints and rising inflation posed significant challenges.
2. Bureaucratic Hurdles:
   • The implementation of the plan was hampered by bureaucratic inefficiencies, which slowed down decision-making processes and project approvals.
3. Global Economic Environment:
   • The global economic climate, including fluctuations in commodity prices and geopolitical tensions, affected the availability of resources and foreign aid.
4. Agricultural Output:
   • While industrial growth was notable, agricultural productivity did not see proportional improvements, leading to concerns about food security.

Long-term Impact of the Second Five-Year Plan

The long-term impacts of the Second Five-Year Plan can be observed in various facets of India’s economic development:

1. Foundation for Industrialization:
   • The plan laid a robust foundation for India’s industrial sector, establishing key industries that continue to contribute significantly to the economy. The public sector became a critical player in industrial growth.
2. Economic Self-Reliance:
   • The emphasis on self-reliance reduced dependency on foreign entities. India gradually developed its capabilities in essential sectors, including defense, technology, and manufacturing.
3. Regional Balance:
   • The investments in less developed regions initiated a gradual process of regional balance. States that previously lagged in industrial development began to attract investments and develop their local economies.
4. Policy Framework:
   • The experiences and lessons learned from the Second Five-Year Plan influenced subsequent economic policies and planning frameworks in India. The focus on industrialization, self-reliance, and regional development became integral to future plans.
5. Human Capital Development:
   • The plan’s emphasis on social welfare and education contributed to the gradual improvement of human capital in India. Investments in education and health laid the groundwork for a more skilled workforce, which became crucial for the country’s continued economic growth.
6. Infrastructure Development:
   • Investments in infrastructure, including transport and energy, catalyzed further economic activities. Improved infrastructure facilitated trade and commerce, which were essential for the burgeoning industrial sector.
7. Agricultural Policy Evolution:
   • Although agricultural productivity did not see significant gains during the Second Five-Year Plan, it set the stage for future agricultural policies. The need for improved agricultural practices and technologies became evident, leading to subsequent initiatives like the Green Revolution in the late 1960s.
8. Economic Planning Culture:
   • The Second Five-Year Plan contributed to the establishment of a culture of economic planning in India. It reinforced the importance of systematic planning in achieving national objectives and inspired a series of subsequent plans aimed at addressing various socio-economic challenges.

Data & Statistics

1. Total Outlay and Resources

• Total Outlay: The Second Five-Year Plan had an estimated outlay of ₹4,600 crore (approximately $1.1 billion at the time).
• Public Sector Investment: About 75% of the total outlay was allocated to the public sector, emphasizing the government’s role in driving industrialization.

2. Industrial Growth

• Annual Growth Rate: The Index of Industrial Production (IIP) grew at an average annual rate of approximately 7.5% during the plan period.
• Sector Contributions:
  • Manufacturing Sector: Contributed around 15% to GDP by the end of the plan.
  • Heavy Industries: Key industries established included steel, coal, and electricity generation.

3. Power Generation

• Installed Capacity Increase: The installed power generation capacity increased from approximately 2,900 MW in 1956 to around 5,400 MW by 1961.
• Hydroelectric Projects: Major hydroelectric projects initiated during this period included the Bhakra Nangal Dam, which significantly contributed to power generation.

4. Steel Production

• Steel Production: By the end of the plan, steel production reached around 2.5 million tons per year, compared to about 1.2 million tons in 1955.
• New Steel Plants: Establishment of major steel plants such as:
  • Bhilai Steel Plant (1955)
  • Durgapur Steel Plant (1960)
  • Rourkela Steel Plant (1959)

5. Agricultural Development

• Irrigation Projects: The plan allocated resources for irrigation projects, leading to an increase in irrigated area from about 18 million hectares in 1955 to over 24 million hectares by 1961.
• Food Grain Production: Food grain production rose from approximately 50 million tons in 1956 to around 55 million tons by 1961.

6. Employment Generation

• Job Creation: The establishment of public sector enterprises created around 1.5 million jobs during the plan period.
• Unemployment Rate: The unemployment rate remained a concern, with estimates suggesting it was above 7% during the late 1950s, highlighting the need for more job creation initiatives.

7. Regional Development

• Investment Distribution: The plan aimed to distribute investments across various states, with specific allocations for less developed regions such as Bihar, Orissa, and Assam.
• Growth of Industries in Less Developed Areas: The establishment of industries in these regions helped reduce economic disparities, although challenges remained.

8. Social Welfare Initiatives

• Education and Health: Increased allocations for education and health services were made, contributing to improvements in literacy rates and healthcare access.
• Literacy Rate: The literacy rate improved from approximately 40% in 1951 to around 45% by 1961, reflecting the emphasis on education.

Conclusion

The Second Five-Year Plan was a pivotal moment in India’s post-independence economic journey. While it faced several challenges, its achievements had lasting impacts on the nation’s industrial landscape, economic policies, and social fabric. By prioritizing industrialization and self-reliance, the plan set the stage for India to navigate the complexities of a developing economy.

The lessons learned from this plan continue to resonate in contemporary policy-making, reminding us of the importance of balanced growth, regional equity, and sustainable development. As India moves forward, the foundational principles established during the Second Five-Year Plan remain relevant in addressing today’s challenges and seizing future opportunities for growth and development.