Read the passage and answer the question:

As in the USSR, the Planning Commission of India opted for five year plans (FYP). The idea is very simple: the Government of India prepares a document that has a plan for all its income and expenditure for the next five years. Accordingly the budget of the central and all the State governments is divided into two parts: ‘non-plan’ budget that is spent on routine items on a yearly basis and ‘plan’ budget that is spent on a five year basis as per the priorities fixed by the plan. A five year plan has the advantage of permitting the government to focus on the larger picture and make long-term intervention in the economy.

The draft of the First Five Year Plan and then the actual Plan Document, released in December 1951, generated a lot of excitement in the country. People from all walks of life – academics, journalists, government and private sector employees, industrialists, farmers, politicians etc. – discussed and debated the documents extensively. The excitement with planning reached its peak with the launching of the Second Five Year Plan in 1956 and continued somewhat till the Third Five Year Plan in 1961. The Fourth Plan was due to start in 1966. By this time, the novelty of planning had declined considerably, and moreover, India was facing acute economic crisis. The government decided to take a ‘plan holiday’.

What is the purpose of the five-year plans adopted by the Planning Commission of India?

To allocate the budget for the next five years based on fixed priorities

The correct answer is Option 2 - To allocate the budget for the next five years based on fixed priorities

As per the passage:

As in the USSR, the Planning Commission of India opted for five year plans (FYP). The idea is very simple: the Government of India prepares a document that has a plan for all its income and expenditure for the next five years. Accordingly the budget of the central and all the State governments is divided into two parts: ‘non-plan’ budget that is spent on routine items on a yearly basis and ‘plan’ budget that is spent on a five year basis as per the priorities fixed by the plan.