Planning in India | Indian Economy for UPSC CSE PDF Download

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.

Objectives of Planning in India

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:

NITI Aayog