Are 5 year plans still relevant..?

The economic character of the world community has become increasingly capitalistic in recent decades whereby markets rather than governments decide the pace of growth of a particular sector.The capital flows to that part of the economy which generates maximum returns for the stake holders and the presence of large number of market participants ensures that the market remains rational in the long term. The problem with planned economies is that its difficult to decide the amount of capital required for the development of an industry and in most cases the absence of appropriate technological support may make such investments go down the drain. As a result, planned economies generally achieve low growth rates.

However, the role of government is very important when it comes to providing basic facilities to its citizens like drinking water, education and health services. The market has little incentive in undertaking such tasks as they require huge investments and returns are not attractive. It requires a detailed planning with regard to the expenditure of scarce resources in an optimum manner.So, 5 year plans have a very important role to play in a developing country like India.