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December 15, 2016

Planning in India - From Independence till Now

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Planning in India 

  • Planning as an important aspect for economy. 
  • History of planning in India. 
  • Planning Commission in India and its major functions. 
  • Five Year Plans-First Five Year Plan to Twelfth Five Year Plan.
  • Other planned initiatives taken by the Government of India
  • Introduction of NITI Aayog and its main objective.
Planning is a very important aspect for the economy of a country. It provides a blueprint for the growth and development of the economy. A plan document presents the state of every sector of an economy and the way forward for expenditure to be done by the government in the coming years. India started its planning process in 1961. The concept of Five Years Plan was premised on the idea of Joseph Stalin. Soviet Union started the planning process from the 1920s. As the politicians of our country after independence were influenced by the socialist model of the Soviet Union so this became the source of our economic planning process.

History of Planning in India

The history of planning in India, however dates back to 1930s. This process too was influenced by the socialist model of USSR. 'Planned Economy in India', a book published by M Visvesvaraya, in 1934 was the first attempt to present a draft for the planning process in India. Later on, in 1938 National Planning Committee was set-up under the presidentship of Jawaharlal Nehru. However, due to certain unforeseen circumstances the report of the committee could not be prepared and it met a premature end.

Later on in 1944, Bombay Plan was made by eight industrialists of Bombay, namely; JRD Tata. GD Birla, John Mathai, Purushottarndas Thakurdas, Kasturbhai Lalbhai, Lala Shriram, AD Shroff and Ardeshir Dalal. It was a plan for the next 15 years for tripling the national income and doubling the per capita income in this period. In 1944, MN Roy a political theorist also made an attempt towards planning. Envisaged for next ten years, it suggested nationalisation of all agriculture and production. The draft was based on Marxist idea of socialism. At the same time, 'Gandhian plan' was drafted by Shriman Narayan. The emphasis of the plan was economic decentralisation and giving priority to rural development. In this quest, it was suggested to support the cottage industry in India. Just before the Five Year Planning process was to start, in 1950, Jaiprakash Narayan drafted the Sarvodaya Plan. The idea of Sarvodaya was given by Acharya Vinoba Bhave which implied rise of all. The Planning Commission on Indian economy started its first step immediately after independence. Economic programme committee set under the chairmanship of Jawaharlal Nehru suggested setting of Planning Commission. In pursuance of the above recommendation, Planning Commission as a specialised institution to oversee economic planning of India was set-up in 1950 by an Executive Resolution. As it did not have the sanction of the Parliament so it was called a non-statutory, extra-constitutional body. However, to give the process of economic planning a constitutional backing, National Development Council was set-up in 1952.

Planning Commission as a body was headed by the Prime Minister as its ex-officio chairman. However, the major work was done by the Deputy Chairman. The Deputy Chairperson was given the rank of Cabinet Minister. Other fulltime members were to be experts in the field of economics, industry, science and general administration. The major functions of Planning Commission were to make assessment of capital and human resources and suggest ways of augmenting them; propose allocation of resources; identify factors that tend to retard economic development; to oversee successful implementation of plan process etc among other functions.

Five Year Plans

The First Five Year Plan started from 1951 and continued till 1956. Plan accorded high priority to agriculture, aimed to bring equilibrium in the economy and carry out 360 degree development. Although, the First Five Year Plan could not achieve the growth rate target of 5-7% but the 3.6% rate achieved could not be termed as a failure. The Second Five Year Plan (1956-1961) was based on the Nehru Mahalanobis model.

It was based on the trickle down theory where the fruits of development would reach the lowest rungs of society. The stated objective was rapid industrialisation. The growth achieved in this period was close to the intended target. The Third Five Year Plan (1961-66) was aimed at self reliance. However, as India went to war with China (1962) and Pakistan in 1965 the Plan failed miserably in meeting its intended objectives. Due to acute food crisis and economic stress the period of 1966-69 was declared a Plan holiday. But annual plans were rolled out in this period.

It was a struggle phase for the economy as it went on to absorb the shocks of the Third Five Year Plan. The Fourth Five Year Plan started from 1969 till 1974. The major emphasis areas were growth of agriculture, social, justice and employment. But again, the 1971 war became an impediment in achieving the intended objectives. The Fifth Five Year Plan t (1974-79) had aimed to reduce poverty and achieve self-reliance. This Plan in  ▪ period can be said to be the most successful one as it met many targets. - The Sixth and Seventh Five Year Plan in 1980s were a prelude to a LC) brewing storm in our economy. The economy of India was focused inwardly and was not open to the outside world. But the financial crisis of 1991 oetio pushed us towards LPG reforms (Liberalisation, Privatisation, Globalisation).

India became an open economy and we allowed foreign investments in many sectors. The Eighth Five Year Plan period (1992-97) had its goals set towards investment and correcting imbalances in different sectors. The Ninth Five Year Plan (1997-2002) aimed towards generation of employment, self-reliance and regional balance. To an extent, this Plan period was able to achieve these goals. Tenth Five Year Plan (2002-07) aimed to achieve 8% growth as the world economy was booming. The emphasis areas were, poverty, education, gender parity, literacy etc. Due to high paced growth the Plan was very successful.

Riding on the tide of high growth rate of the previous Plan period, the Eleventh Five Year Plan targeted for 8-10% growth rate. But the 2008 world economic melt down affected every country across the globe. The loss of our planning period began in 2012-2017. As the change of government at the centre took place, the Central Government expressed its concern towards ending the Five Year Plan process. Therefore, in 2017 the Five Year Plan process will come to an end.

One of the major reasons for ending the Five Year Plan process is to end the distinction between 'plan' expenditure and 'non-plan' expenditure. The union budget classifies them under the above two heads. The amount of money that goes into spending for the Five Year Plan is called plan expenditure and the rest which goes towards maintaining the routine functioning of the government is called as non-plan expenditure. According to the C Rangarajan Panel (2011) the phasing out of this distinction will help in better public expenditure management. Therefore, the main idea behind any economic planning process should be just and rational expenditure of tax-payer's money.

Other Planned Initiatives

The current government has started many planned activities and initiatives with an objective of making progress in every sector.
  • Pradhan Mantri Krishi Sinchai Yojana (PMKSY) This scheme aims to provide irrigation to all the land under cultivation (Har Khet Ko-Pani) through water harvesting and recycling along with increased water application efficiency (per drop more crop). 
  • Soil Health Card This initiative aims to assess the soil fertility status of farmlands at 3 year intervals. 
  • Digital India Programme The 'Digital India' programme was launched with an objective to transform India into a digitalised economy. It is being coordinated by the Department of Electronics and IT and is an umbrella programme covering many areas. 
  • Swacch Bharat Mission The `Swacch Bharat' mission aims to provide sanitation to the entire urban population of the country. It also aims to promote cleanliness in the community and society at large through effective solid waste management projects.
  • Smart Cities Initiative The government aims to develop 100 Smart Cities with clean air, safe drinking water, improved infrastructure, complete sanitation, litter free streets. It also aims to involve citizens in decision making, creation of employment, improvement of disaster management facilities, development of public spaces and elimination of poverty. 
  • Make in India Initiative The 'Make in India' initiative is aimed at attracting foreign investors for starting manufacturing operations in India. The government is planning to reduce imports and increase exports through this initiative. 

NITI Aayog

The Planning Commission carried out its task with both successes and failures till it was terminated in 2014. NITI Aayog (National Institution for Transforming India) was set-up as a replacement for the Planning Commission. It came into existence by a government resolution on 1st January, 2015. The main objective of NITI Aayog is to usher in an era of democratic decentralisation of planning process. It aims to adopt a bottom-up approach in contrast with the top-down process of the Planning Commission. The Planning Commission for its approach, has often been criticised as having an ivory tower mentality and an armed chair approach (unaware of ground realities). The NITI Aayog, on the other hand, will bring amicable centre-states relationship.

The NITI Aayog has Prime Minister as the chairperson, ex-officio; Vice Chairperson (Arvind Panagariya); CEO (Amitabh Kant) and 3 full time members. The NITI Aayog released its first initiative, the 'Report India's Renewable Electricity Roadmap 2030— Towards Accelerated Renewable Electricity Deployment' at Renewable Energy Global Investors Meet and Expo (Re-Invest) 2015 and is currently actively working on it.

Planning process of India has been a mixed bag of successes and failures. However, a plan and an outlay for the same. provides a defined path for growth and development. But in the planning process the main idea should be incorporating the views of all the stake holders. The bottom up approach to planning is the best way forward. Perhaps the NITI Aayog and other planned initiatives will provide us with the essence of planning. 

Difficult Words with Meanings :
  • Blueprint a plan which shows what can be achieved and how it can be achieved
  • Unforeseen unexpected
  • Envisaged to imagine what will happen in the future
  • Augmenting increasing the amount, value, size etc of something
  • Accorded to give something authority, status or a particular type of treatment
  • Impediment something that delays or stops the progress of something
  • Prelude an event that happens before another more important event and forms an introduction to it
  • Parity equality, the state of being equal
  • Amicable done or achieved in a polite or friendly way and without arguing
  • Outlay the money that you have to spend in order to start a new project. 
shared by Nisheeta Mirchandani
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