Eighth Plan

The Eighth Plan (1992–97) was launched in a typically new economic environment. The economic reforms were already started (in July 1991) with the initiation of the structural adjustment and macro-stabilisation policies necessitated by the worsening balance of payments, higher fiscal deficit and unsustainable rate of inflation.

This was the first plan which went on for an introspection of the macro- economic policies which the country had been pursuing for many decades. The major concerns and pathbreaking suggestions80 which this Plan articulated may be summarised as follows:

(i) an immediate re-definition of the state’s role in the economy was suggested;

(ii) ‘market-based’ development advised in areas which could afford it, i.e., a greater role for the private sector in the economy;81

(iii) more investment in the infrastructure sector, especially in the laggard states as the ongoing emphasis on greater private sector investment could not be attracted towards these states;

(iv) rising non-plan expenditure and fiscal deficits need to be checked;

(v) subsidies need restructuring and refocussing;

(vi) planning immediately needs to be ‘decentralised’;

(vii) special emphasis on ‘co-operative federalism’ suggested;

(viii) greater focus on ‘agriculture’ and other ‘rural activities’ was suggested for which the Plan cited empirical evidences as they encourage the economy to achieve enhanced standard of living for its people and to promote the cause of balanced growth—a shift in the mindset of planning.

As the economy moved towards liberalisation, criticism came from every quarter against the move. The process of planning was also criticised on the following counts:

(i) As economy moves towards the market economy, the planning becomes ‘irrelevant’;

(ii) When the state is ‘rolling back’, planning makes no sense;

(iii) The planning process should be ‘re-structured’ in the era of liberalisation; and

(iv) There should be increased thrust on the ‘social sector’ (i.e., education, healthcare, etc.)