Q.(a) Describe the performance of Five Year Plans in India.

(a) The Five Year Plans raised national income, built infrastructure and industry, and brought the Green Revolution, but could not fully solve poverty, unemployment and inequality. (b) Under perfect competition AR = MR (a horizontal line); under imperfect competition AR and MR both fall, with MR below AR and falling twice as fast.

(a) Performance of the Five Year Plans in India

India adopted economic planning through Five Year Plans, beginning in 1951, under the Planning Commission, with the broad goals of growth, self-reliance, modernisation, social justice and reduction of poverty and inequality.

Achievements:

1. Rise in national and per-capita income. National income and per-capita income grew steadily over the plan periods, though modest in the early decades.
2. Growth of infrastructure. Large investment created power projects, dams (multi-purpose river valley projects), roads, railways, communication and irrigation.
3. Industrial development. Establishment of heavy and basic industries and public-sector undertakings (steel, machinery, fertilizers) diversified the industrial base (Mahalanobis strategy in the Second Plan emphasised heavy industry).
4. Agricultural growth — the Green Revolution. New high-yielding seeds, irrigation and fertilizers greatly raised foodgrain output and made India self-sufficient in food.
5. Higher savings and capital formation and expansion of education, health and banking.

Failures / limitations:

1. Poverty not fully removed — a large section of the population remained below the poverty line.
2. Unemployment persisted, especially disguised and seasonal unemployment.
3. Inequalities of income and wealth widened, and regional imbalances remained.
4. Inflation, inefficiency in public-sector units and slow growth (the "Hindu rate of growth") in earlier decades.

Thus the Plans achieved substantial growth and structural change but fell short on the goals of removing poverty, unemployment and inequality.

(b) Relationship between AR and MR curves under various price conditions

Average Revenue (AR) is revenue per unit sold (which equals price), and Marginal Revenue (MR) is the addition to total revenue from selling one more unit. Their relationship depends on the market condition:

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