Economic Planning in India

1. Planning in India
Prof. Mahendra K. Ghadoliya
www.ghadoliyaseconomics-mahendra.blogspot.in

2. Planning in India
• On 26 January 1950, the Constitution came into force. As a logical
sequence, the Planning Commission was set up on 15 March 1950
and the plan era started from 1 April 1951 with the launching of
the First Five Year Plan (1951-56).
• We have successfully completed twelve five year plans in the year
2017.
• Now the new government at centre has decided to abandon the
planning and have changed the structure of Planning Commission
now it will be known as NITI Aayog.

3. Brief History of Planning
• 1934
• It is rather surprising that blueprints for India’s planning first
came from an engineer-administrator, M. Visvervaraya. He is
regarded as the pioneer in talking about planning in India as a
mere economic exercise. His book ‘Planned Economy for India’
published in 1934 proposed a ten-year plan. He proposed capital
investment of Rs. 1,000 crore and a six-fold increase in industrial
output per annum.

4. 1938
• In 1938, the Indian National Congress headed by Subhash Chandra
Bose appointed the National Planning Committee (NPC) under the
chairmanship of Pandit J.L. Nehru to prepare a plan for economic
development. The NPC was given the task of formulating a com-
prehensive scheme of national planning as a means to solve the
problems of poverty and unemployment, of national defence, and
of economic regeneration in general. However, with the
declaration of the World War II in September 1939 and putting
leaders into prison, the NPC could not march ahead and the report
could not be prepared.

5. Bombay Plan- Gandhian plan and People’s plan
1944&1945 Sarvodaya Plan 1950
• The Bombay Plan was prepared by 8 leading industrialists of
Bombay in 1944, the People’s Plan given by M.N.Roy (1945)and
the Gandhian Plan given by S.N.Agrawal (1944):
• One of the most widely discussed plan during the 1940s was the
Bombay Plan prepared by the Indian capitalists. It was a plan for
economic development under considerable amount of government
intervention.
• It emphasised the industrial sector with an aim of trebling
national income and doubling of per capita income within a 15-
year period. Under this plan, planning and industrialisation were
synonymous.

6. • An alternative to the Bombay Plan was given by M. N. Roy in 1944.
His plan came to be known as People’s Plan. His idea of planning was
borrowed from the Soviet type planning. In this plan, priorities were
given to agriculture and small scale industries. This plan favoured a
socialist organisation of society.
• In the light of the basic principles of Gandhian economics, Shriman
Narayan Agarwal authored ‘The Gandhian Plan’ in 1944 in which he
put emphasis on the expansion of small unit production and
agriculture. Its fundamental feature was decentralisation of
economic structure with self-contained villages and cottage
industries.
• Sarvodaya plan was given by Jai Prakash Naraian.

7. Planning Commission:
• After independence, the Planning Commission was set up by the
Government of India in March 1950. The Commission was instructed to:
(a) make an assessment of the material capital and human resources of
the country, and formulate a plan for the most effective and balanced
utilisation of them;
(b) determine priorities, define the stages for carrying the plan and pro-
pose the allocation of resources for the due completion of each stage;
(c) To act as an advisory body to the Union Government;
(d) determine the conditions which (in view of the then current socio-
political conditions) should be established for the execution of the
plan.
(e) to advise the centre and the state governments.

8. National Development Council:
a) All the plans mase by planning commission have to be approved by
NDC first. It was constituted to build cooperation between States and
the Planning Commission.
b) Like Planning Commission NDC is also an extra constitutional body-
legal body.
c) It was set-up on 6th August 1952
State Planning Boards is the Apex Planning body at State Level with Chief
minister as Chairman, Finance and Planning Ministers of the state and
some technical members.
District Planning Committee is also there comprising both official and
non-official members

9. Timings of Five Year Plans
Plan Period
• First Plan 1951-56
• Second Plan 1956-61
• Third Plan 1961-66
• Three Annual Plans1966-69
• Fourth Plan 1969-74
• Fifth Plan 1974-78*
• Annual Plan 1979-80
Plan Period
• Sixth Plan 1980-85
• Seventh Plan 1985-90
• Annual Plan 1990-92
• Eighth Plan 1992-97
• Ninth Plan 1997-02
• Tenth Plan 2002-07
• Eleventh Plan 2007-12
• Twelfth Plan 2012-17

10. Characteristics of Indian Plans
• Five year Plans
• Developmental Planning
• Comprehensive Planning
• Indicative Planning
• Democratic Planning
• Decentralised Planning or
Planning from Below
• Objectives of Indian Plans:
• A higher rate of growth than was
being realised in the absence of the
plan;
• 2. A greater degree of economic
equality than was possible under
free enterprise;
• 3. Full employment opportunities
for the growing labour force of the
country;
• 4. Economic self-reliance; and
• 5. Modernisation.

11. Objectives of different plans and Development Strategy
• Phase-I Growth Oriented
Development Strategy:
• First plan- It was a repair Plan made
to take care of severe damage caused
by war, famine and partition.
• Second Plan – It was a import
substitution led long term growth
based on industrialisation.
• Third Plan- Public sector led growth,
reducing concentration of economic
power
• Phase-II Equity Oriented
Development strategy:
• Annual Plans:Adaptation of new
agricultural strategy.
• IV Plan:Growth with stability
• V Plan: Alleviation of poverty
• VI Plan: Target group approach
• VII Plan: Direct attack on the
problems of poverty

12. Objectives of different plans and Development Strategy
• Phase-III Post liberalisation
Development Strategy:
• Inward looking development
model was replaced by Export-
led growth strategy.
• Liberalisation, Globalisation,
Privatisation (LPG) Strategy
• IX & X Plans: Growth with social
justice
• XI Plan: Inclusive growth
• XII Plan: Faster sustainable and
more inclusive growth
• Development strategy
• Indicative Planning
• Growth with justice
• Resource allocation
• Advisor to States Skilling India
• Think tank
• Achieving growth targets
• Removal of corruption
• Good governance
• Democratic values to be
strengthened.