Planning and Economic Development | Economics Optional Notes for UPSC PDF Download

Introduction

Economic planning in India is one of the most important topics under the subject Indian Economy for various competitive exams. Efforts related to economic planning in India began as early as 1938 when the Indian National Congress set up the National Planning Committee under the leadership of Pandit Jawaharlal Nehru.

• For over two centuries, India was drained economically by the Britishers and they also exploited the resources for their own benefit. When the Britishers left India in 1947, there were several problems such as poverty, inflation, food shortages, lack of health care etc in the country. Leaders believed that economic planning would bring solutions to most of the issues which were then prevalent in the country.
• Prior to the independence of India, several plans such as the Bombay plan, Gandhian plan etc., were devised for the economic development of the country. However they remained only in the papers and were never implemented.
• After the formation of the National Planning Commission, India began the planned economic development by introducing the five year plan. The first five year plan was launched in 1951. However, in 2017 the five year plan was replaced by the 3 year action agenda of NITI Ayog.

Objectives Of Economic Planning In India

Some of the major objectives of economic planning in India are as follows:

• Economic growth: It is the first and foremost objective of economic planning in India. Economic growth of a country can be achieved by increasing the real national income and per capita income in the country. Economists argue that when both per capita income and national income grows in real terms, a higher standard of living of every individual as well as society as a whole can be achieved.
• Reduction in poverty: At the time of independence more than fifty percent of India’s population was poor. Lack of employment is a major cause of poverty. There are a lot of people in the country who are not even getting a square meal a day. Thus the planning commission decided to prepare an appropriate plan to remove poverty completely from the country.
• Modernization of the economy: Since the inception of economic planning, modernization of Indian economy has been the key objective of the planners. The structural and institutional changes in economic activities in three major sectors of economy i.e agriculture, industry and services will lead to a progressive and modern economy. It is also very essential to develop a diversified economy that produces a wide variety of goods.
• Increase in employment: Employment is one of the key factors involved in the production process of goods and services. Unemployment is the cause of various social problems such as poverty, crime etc. So the planners of Indian economy put the creation of employment as one of the major objectives of economic planning.
• Reduction in income inequality: In India, there is a diverse economic standard of its population and income disparity is one of the major concerns in the Indian society. A large section of the society falls under the lower income category while few are under the high income category. Main reason for this disparity is the unequal distribution of asset holding such as per capita land holding, possession movable and immovable property from inheritance etc. Thus the planners, while planning the economy of the country, aim to reduce this inequality.

NITI Aayog And Its Action Agenda

• In January 2015, the Government of India replaced the Planning Commission with an institution called NITI Aayog (National Institution for Transforming India) by passing a resolution.
• It is the premier think tank of the Government of India. It acts as the quintessential platform of the Government, as it brings the Indian states to act together in national interest.
• The initiatives of NITI Aayog includes:
  • Three year Action Agenda
  • Fifteen year vision and
  • Seven year strategy.
• Some key functions of NITI Aayog are designing policy and programme framework, fostering cooperative federalism, providing advice and encouraging partnerships between key stakeholders and various national and international institutions, designing strategic and long term policies and programme frameworks and monitoring their progress and efficacy.