Rao - Manmohan Model
Background
The Eighth Five Year Plan (1992–97) was launched under Prime Minister P.V. Narasimha Rao and Finance Minister Dr. Manmohan Singh. This plan was framed after the 1991 Balance of Payments crisis, when India faced severe economic instability. It marked a paradigm shift from the earlier state-led, heavy-planning model to a liberalisation-oriented, market-driven model. This shift is often described as the “Rao–Manmohan Model” of development.
Core Features of the Rao–Manmohan Model
Economic Reforms with Social Justice Aimed to combine structural reforms (liberalisation, privatisation, globalisation) with poverty alleviation and employment generation. The idea: growth alone is not enough; it must be inclusive. Role of the State vs. Market The state would not retreat completely, but its role shifted from direct producer to facilitator and regulator. Market forces were encouraged in trade, investment, and industries.
Structural Adjustments
De-licensing of industries (except a few strategic ones). Reduction of import tariffs, liberalised foreign investment. Focus on efficiency, competitiveness, and outward orientation. Priority Sectors Agriculture: Still seen as the backbone for employment and food security.
Infrastructure & Industry: Seen as engines of growth.
Human Development: Education, health, and skill-building were emphasized. Employment Generation Programmes like Integrated Rural Development Programme (IRDP), Employment Assurance Scheme (EAS), and Prime Minister’s Rozgar Yojana (PMRY) were launched. Poverty Alleviation Growth was expected to be “redistributive in nature”, reducing poverty through both trickle-down effects and direct programmes.
Achievements of the Eighth Plan (1992–97) Economic Growth: Achieved ~6.8% annual GDP growth, surpassing the target of 5.6%. Industrial & Service Boom: Liberalisation unleashed private sector dynamism. Poverty Reduction: Poverty ratio declined significantly during this period. Global Integration: India became more open to foreign investment and trade.
Limitations Growth was uneven across regions and sectors. Agriculture did not grow as fast as expected. Rising inequalities between urban–rural and skilled–unskilled workers. Dependence on external factors (foreign capital, global market conditions).
Essence of the Rao–Manmohan Model A blend of liberalisation and planning: Market-driven growth for efficiency and competitiveness. Government intervention for redistribution, welfare, and poverty alleviation. This balance was the hallmark of India’s post-1991 economic strategy.