On January 26, 1950, the Constitution came into force. Following that, the planning in India began on March 15, 1950, with the establishment of the Planning Commission, and the plan era began on April 1, 1951, with the launch of the First Five-Year Plan (1951-56). In this article, we will study Planning in India in detail, which is important for UPSC Examination.

Planning in India – Introduction

• As a developing country, India must improve employment and incomes, revive investments and growth, untangle the financial sector, manage muddled international trade, and address the recurrent issues of inadequate education and health, as well as the mounting issues of pollution and water shortages.
• When there are few resources and a large amount of welfare to be provided, the function of planning becomes essential. The Planning Commission was in charge of planning efforts in India until 2014 when it was replaced by NITI Aayog, a policy think tank with the goal of making planning more inclusive and bottom-up.
• NITI Aayog's charter defines it as a body tasked with acting as a catalyst for change in India's federal and complex socio-economic structure.
• Experts, on the other hand, have expressed worries about NITI Aayog's independence in guiding the government and becoming a spokesperson for the administration as well as a project implementer.

Planning in India – Objectives

The original goals of economic planning in India were as follows:

• Economic Development: Economic development is the primary goal of Indian planning. Increases in India's Gross Domestic Product (GDP) and Per Capita Income are used to measure the country's economic development.
• Increased Employment: An essential goal of Indian economic planning is to better utilize the country's abundant people resources by raising employment levels.
• Self-sufficiency: India aspires to be self-sufficient in major commodities while simultaneously increasing exports. During the third five-year plan, from 1961 to 1966, the Indian economy had reached a critical stage of development.
• Economic Stability: In addition to India's economic growth, India's economic planning aims for stable market conditions. This entails maintaining a modest rate of inflation but simultaneously avoiding price deflation. The creation of structural faults in the economy occurs when the wholesale price index rises very high or very low, and economic planning seeks to avoid this.
• Social Welfare and Efficient Social Service Provision: All five-year plans, as well as plans proposed by the NITI Aayog, aim to improve labor welfare and social welfare for all sections of society. India has planned for the development of social services such as education, healthcare, and emergency services.
• Regional Development: India's economic strategy tries to decrease regional development discrepancies. Some states, such as Punjab, Haryana, Gujarat, Maharashtra, and Tamil Nadu, are economically developed, whereas others, such as Uttar Pradesh, Bihar, Orissa, Assam, and Nagaland, are not. Others, such as Karnataka and Andhra Pradesh, have had unequal development, with world-class economic hubs in cities and a less developed countryside. In India, planning aims to investigate these inequities and propose methods to address them.
• Comprehensive and sustainable development: One of the key goals of economic planning is to develop all economic sectors, such as agriculture, industry, and services.
• Economic Inequality Reduction: Since independence, reducing inequality through progressive taxation, job creation, and job reservation has been a fundamental goal of Indian economic planning.
• Social Justice: This planning goal is linked with all the other objectives, and it has long been a focal point of planning in India. Its goal is to lower the number of individuals living in poverty by providing them with employment and social services.
• Increased Standard of Life: One of the key goals of India's economic planning is to raise the standard of living by raising per capita income and ensuring equal distribution of income.

Types of Planning

The majority of economies in today's world are mixed economies. There are different types of planning that are discussed below:

Indicative planning

• It proposes/indicates a set of broad principles and recommendations for achieving a set of objectives. Indicative planning is unique to France's mixed economy. However, this is not the same as the planning that exists in other mixed economies.
• The term "mixed economy" refers to the simultaneous operation of the public and private sectors. The state exercised control over the private sector in a variety of ways, including quotas, prices, licenses, and so on.
• However, under suggestive planning, the private sector is not strictly supervised in order to meet the plan's aims and priorities. The government provides full support to the private sector but does not have control over it. Rather, it directs the private sector to implement the plan in particular areas.

Comprehensive / Imperative Planning:

• This refers to centralized planning and implementation, as well as resource allocation. It is utilized by socialist countries, where the state has complete control over all aspects of planning.
• The state makes the best use of its resources in order to meet the plan's objectives. Under this type of planning, consumer sovereignty is surrendered. Consumers receive fixed volumes at fixed costs. The government's policies are rigid and difficult to change. Any change might have a negative impact on the economy.

History of Planning in India

• First and mainly, the concept of a planned economy emerged in the 1930s when our national leaders were influenced by socialist theory. The tremendous progress made by the USSR through five-year plans impacted India's five-year plans greatly.
• Sir M. Visvesvaraya wrote "Planned Economy in India" in 1934, in which he proposed a positive plan for India's growth over the next ten years. His main goal was to devise a strategy for shifting labor from farm to industry and doubling the national GDP in ten years. This was the first substantial scholarly work in the field of planning. Between the 1931 Karachi session of the Indian National Congress and the 1936 Faizpur session of the India National Congress, the economic viewpoint of India's freedom movement was developed.
• National Planning Committee: In 1938, the first attempt was made to develop a national plan for India. In that year, Congress President Subhash Chandra Bose established a National Planning Committee, which was chaired by Jawaharlal Nehru. However, the committee's findings were unable to be written, and only a few papers were published for the first time in 1948-49.
• Bombay Plan: Mr JRD Tata, GD Birla, Purshottamdas Thakurdas, Lala Shriram, Kasturbhai Lalbhai, AD Shroff, Ardeshir Dalal, and John Mathai, eight Bombay industrialists, worked on "A Brief Memorandum Outlining a Plan of Economic Development for India" in 1944. This is referred to as the "Bombay Plan." This strategy called for doubling per capita income in 15 years and tripling national income in the same time frame. Despite the fact that Nehru did not officially adopt the plan, many of its principles were incorporated into later designs.
• People's Plan: MN Roy drafted the People's Plan. This strategy covered a ten-year span and gave agriculture top attention. The fundamental feature of this plan was the nationalization of all agriculture and production. M N Roy, on behalf of the Indian federation of Lahore, created this proposal based on Marxist socialism.
• Gandhian Plan: Sriman Nayaran, the principal of Wardha Commercial College, created the Gandhian Plan. It prioritized economic decentralization with a focus on rural development through the development of cottage enterprises.
• Sarvodaya Plan: Jaiprakash Narayan designed the Sarvodaya Plan in 1950. This plan was influenced by Vinoba Bhave's Sarvodaya Idea and Gandhian Plan. Agriculture and small and cottage enterprises were highlighted in this plan. It also emphasized land reforms and decentralized participatory planning as well as freedom from foreign technologies.
• Planning and Development Department: The British Indian government established the "Planning and Development Department" in August 1944, under the leadership of Ardeshir Dalal. However, in 1946, this section was abolished.
• Planning Advisory Board: The Interim Government established a planning advisory board in October 1946 to assess plans and future projects and make recommendations.

Economic Planning In India – Five Year Plans

• Post-independence, India began a Five-Year Plan program to make the most use of the country's resources and achieve rapid economic development.
• In India, development plans were designed and implemented within the mixed economy framework.
• Economic planning was implemented in India in the form of Five Year Plans and was viewed as a development tool for a variety of reasons.
• In light of India's constrained resources, judicious mobilization and allocation of resources in the context of overall development programs.
• Since the year 2012, when the 12th Five Year Plan (2012-2017) was adopted by the NDC on December 27, 2012, 12th Five Year Plans have been formulated.

The following are the long-term goals of India's Five-Year Plans:

• To raise the living standards of India's citizens, a high growth rate is required.
• For prosperity, there must be economic stability.
• An economy that is self-sufficient.
• Reducing inequality and promoting social justice
• The economy is being modernized.

Under the socialist influence of first Prime Minister Pt. Jawahar Lal Nehru, the idea of five-year economic planning was borrowed from the Soviet Union.

The first eight Indian five-year plans focused on expanding the public sector through massive investments in heavy and basic sectors, but since the start of the Ninth five-year plan in 1997, the focus has moved to make the government a growth facilitator.

The following is a list of all Five Year Plans that have been executed in India:

The shortcoming in the planning process: Why was the planning Commission abolished?

The planning process in India had become irregular, particularly following liberalization, for a variety of reasons, including

• It was mostly concerned with theoretical tools such as complex mathematical models. Many times, these models did not operate on the ground because they were built on very aggregative input/output factors. The reason for this was primarily due to data issues.
• By creating parallel departments inside the planning commission, most planning documents resulted in duplication of work for central ministries and states.
• During each plan period, the targeted goals were undermined in the most arbitrary way possible. This was primarily due to poor budgeting, which resulted in the absence of a yearly breakdown of the plan's goals.
• Our country's multi-year budgeting has its own set of issues. Because different programs have varying time spans, multi-year planning makes sense. Bharat Nirman, for example, ran for four years from 2005 to 2009, whereas JNNURM began in 2006 and ran for seven years.
• However, five years is an excessively long time, and practically every scheme began to dwindle almost shortly after its inception. It might be more sensible to establish a strategy for the next three years, with the fourth and fifth years designated as preliminary plans.
• In addition, the five-year plans did not correspond to the annual budgeting process. In the lack of a budgeting mechanism that allows a five-year plan to be implemented on a yearly basis, five-year planning has remained at best an academic exercise.
• The divide between plan and non-plan government spending had lost its utility and needed to be eliminated.
• The system of annual plan approval with the states had lost its significance due to dwindling central assistance for state plans and the center's termination of on-lending to the states, and it needed to be abolished.
• The transfer system from the center needed to be improved.

NITI Aayog

• The National Institution for Transforming India (NITI Aayog) was founded by a Union Cabinet decision on January 1, 2015, as the Union Government's top policy think tank. It's a non-statutory, extra-constitutional advisory council.
• The National Institution for Transforming India (NITI Ayog) does not have the authority to impose policies. The government aims to act as an "enabler" by establishing NITI Ayog and giving it the responsibility of providing a forum for cooperative federalism.
• Aims and Objectives of NITI Aayog
  • Working as an advisory body, providing directional and strategic suggestions to the Union government and, on request, state governments.
  • To use a bottom-up development approach instead of a top-down development approach. It would devise processes for developing credible plans at the village level, which would then be aggregated at higher levels of government.
  • To promote cooperative federalism by forming a shared vision of national development priorities based on the premise of "strong states, strong nations."
  • Encourage inter-ministry, inter-state, and center-state coordination to put an end to the policy's slow and tardy implementation.
• The Prime Minister of India serves as the Chairperson of the NITI Aayog.
• The Governing Council is made up of the Chief Ministers of all the states as well as the Lieutenant Governors of the Union Territories.
• Regional Councils will be established to address specific concerns and situations that affect many states or regions. These will be formed for a set amount of time. They will be called by the Prime Minister and will include the region's Chief Ministers and Lieutenant Governors of Union Territories. The Chairperson of the NITI Aayog or his nominee will preside over these meetings.
• As special invitees, the Prime Minister nominates experts, professionals, and practitioners with appropriate domain knowledge.
• NITI Aayog Hubs:
  • The Team India Hub serves as a link between the states and the central government.
  • The Knowledge and Innovation Hub helps NITI Aayog develop its think-tank capabilities.

• Initiatives by NITI Aayog:
  • “15-year road map”,
  • “7-year vision, strategy, and action plan”,
  • Digital India and Atal Innovation Mission etc.

Conclusion

Any plans of economic activity that aim to attain certain social and economic results are referred to as economic planning. The phrase "economic planning" refers to the Indian government's long-term plans to expand and coordinate the economy while making efficient use of resources. With the foundation of the Planning Commission on March 15, 1950, India's planning began, and the plan era began on April 1, 1951, with the launch of the First Five-Year Plan (1951-56). In 2015, the government abolished the Planning Commission and replaced it with the NITI Aayog.