Introduction
Economic
Planning in India is one of the most important topics in the Indian Economy for
competitive exams like UPSC, SSC, Railway, and Banking.
It refers to a systematic
process where the government makes decisions on how to use the country’s resources
efficiently to achieve growth, development, and social justice.
The
concept of economic planning was adopted from the Soviet Union (USSR) model after independence.
India started its planning journey in 1951 with the First Five-Year Plan, aiming to build a balanced economy
and remove poverty.
Today, economic planning is coordinated by NITI Aayog (National Institution for Transforming India), which replaced the Planning Commission in 2015
Table of Contents
- Introduction
- What is Economic Planning?
- Why did India Adopt Planning?
- Objectives of Economic Planning
- Features of Economic Planning in India
- History of Economic Planning in India
- Types of Economic Planning
- Planning Commission
- NITI Aayog
- Five Year Plans
- Plan Holidays and Rolling Plans
- FAQs
- Attempt MCQ Quiz
What is Economic Planning?
Economic Planning is a process where a central authority (usually the government) sets specific economic and social goals for a defined period and designs strategies to achieve them. It involves conscious and deliberate control and direction of the economy by a central body.
In Simple Words: Think of it as a roadmap for a country's development. Just like you plan your career—what to study, which job to take, where to invest—the government plans for the country's growth, poverty reduction, infrastructure building, etc., for the next 5, 10, or 15 years.
Why did India Adopt Planning?
After independence in 1947, India was a poor, backward, and primarily agricultural economy. The leaders needed a systematic way to:
· Lift the masses out of poverty.
· Rapidly industrialize the nation.
· Achieve self-sufficiency in food production.
· Build a strong social and economic infrastructure (like roads, power, education).
Inspired by the success of planning in the Soviet Union, India decided to adopt a mixed economy model with a strong role for planning.
Cabinet Committees of India: Functions, Members & Importance | Complete Guide.
Objectives of
Economic Planning
|
Objective |
Description |
Example |
|
1. Economic Growth |
Increase in the country’s income and production levels. |
Developing industries like steel, power, and transport. |
|
2. Employment Generation |
Providing job opportunities to reduce unemployment. |
MGNREGA launched for rural employment. |
|
3. Poverty Reduction |
Raising living standards and reducing inequality. |
Five-Year Plans focused on poverty alleviation. |
|
4. Self-Reliance |
Reducing dependency on foreign goods. |
“Make in India” initiative. |
|
5. Balanced Regional Development |
Equal development of all states and regions. |
Special focus on North-East development. |
|
6. Modernization of Economy |
Adopting new technology and innovation. |
Digital India and Startup India programs. |
|
7. Social Justice |
Fair distribution of wealth and opportunities. |
Reservation policies and welfare schemes. |
Features of Economic Planning in India
· Centralized planning under government control.
· Five-year time periods to measure progress.
· Mixed economy: India has both private and public sectors.
· Flexibility: Plans can be adjusted as per changing needs.
· Focus on socio-economic goals, not just industrial growth.
History of Economic
Planning in India
|
Year |
Event / Plan |
Description |
|
1934 |
M. Visvesvaraya Plan |
First idea of planning in India (book: Planned Economy for India) |
|
1938 |
National Planning Committee |
Setup under Jawaharlal Nehru (by INC) |
|
1950 |
Planning Commission |
Established by the Government of India |
|
1951 |
First Five-Year Plan |
Official start of economic planning |
|
2015 |
NITI Aayog |
Replaced Planning Commission |
Types of Economic Planning
|
Type |
Description |
Example |
|
1. Perspective Planning |
Long-term (15–20 years) vision for growth. |
India Vision 2020 by A.P.J. Abdul Kalam. |
|
2. Five-Year Planning |
Short-term (5 years) structured plans. |
1st to 12th Five-Year Plans. |
|
3. Annual Planning |
Implementing short-term goals annually. |
Annual budgets by the Finance Ministry. |
|
4. Rolling Planning |
Plans updated every year based on performance. |
Introduced after the 5th Plan. |
|
5. Indicative Planning |
Guidance-based planning, not mandatory. |
NITI Aayog’s flexible policy planning. |
The Institutional Framework
The Planning Commission (1950-2014)
· Establishment: The Planning Commission was set up in March 1950 by a resolution of the Government of India.
· Chairperson: The Prime Minister of India.
· Headquarters: New Delhi (in the same building now occupied by NITI Aayog - NITI Bhavan).
Key Functions of the Planning Commission:
1. Formulate Five-Year Plans: Assess the country's resources and formulate plans for their most effective utilization.
2. Allocate Resources: Decide the allocation of resources (money) to different sectors (like agriculture, industry, health) and to the states.
3. Appraise Progress: Monitor the implementation of plans and evaluate their progress.
4. Advisory Role: Act as the central advisory body for economic and social development.
NITI Aayog (2015 - Present)
The Planning Commission was replaced by a new institution on January 1, 2015.
· Full Form: National Institution for Transforming India.
· Chairperson: The Prime Minister of India.
· Governing Council: Comprises all State Chief Ministers and Lt. Governors of Union Territories.
Why was the Planning Commission Replaced?
The government felt the Planning Commission had become outdated. Key reasons for its replacement:
· Top-Down Approach: It was seen as imposing a "one-size-fits-all" model from the center, not considering the needs of individual states.
· Inefficiency: It had become a bureaucratic, non-responsive body.
· Changing Economy: With the 1991 Economic Reforms, India moved towards a more market-based economy, reducing the need for a centralized planning body.
Key Functions of NITI Aayog:
1. Policy Formulation: Design strategic and long-term policies and programmes for the Government of India.
2. Cooperative Federalism: Foster cooperative federalism through structured support initiatives with the states on a continuous basis.
3. Think Tank: Act as a knowledge and innovation hub, providing research and best practices.
4. Monitoring & Evaluation: Monitor and evaluate the implementation of programmes and initiatives.
Five-Year Plans of India (1951–2017)
🧠What is a Five-Year Plan?
A Five-Year Plan is a long-term government strategy to
achieve specific economic, social, and industrial goals within five years.
It is prepared, implemented, and monitored by the Planning
Commission of India
(now replaced by NITI Aayog in 2015).
Each plan aimed to increase national income, reduce poverty, develop industries, improve agriculture, and promote overall economic growth.
Background
· India adopted the concept of Five-Year Plans from the Soviet Union (USSR model).
· The Planning Commission was set up in 1950, and the First Five-Year Plan began in 1951.
· The main objective was to bring planned development to a newly independent India.
Major Five-Year Plans at a Glance
List of
All Five-Year Plans of India
|
Plan |
Period |
Main Objective |
Key Features / Achievements |
|
First Five-Year Plan |
1951–1956 |
Focus on Agriculture, Irrigation, and Power |
Based on
the Harold Domar Model. Major
projects: Bhakra Nangal, Hirakud, Damodar Valley. |
|
Second Five-Year Plan |
1956–1961 |
Focus on Industrialization (especially heavy industries) |
Based on the Mahalanobis Model. Establishment of steel plants at Bhilai by USSR, Rourkela by Germany, Durgapur by Britain. India opted for Mixed Economy. |
|
Third Five-Year Plan |
1961–1966 |
Focus on Self-reliance and Agriculture |
Due to wars (1962 & 1965) and droughts, plan failed. Introduced Green Revolution later. Establishment of Bokaro steel plant at Jharkhand by USSR. Also called Gadgil Yojana. |
|
Plan Holiday |
1966–1969 |
Short-term Annual Plans |
Introduced due to economic crisis after wars and droughts. Focus on stabilization. |
|
Fourth Five-Year Plan |
1969–1974 |
Growth with Stability and Self-Reliance |
Launched programs like Family Planning, Nationalization of 14 banks (1969). Established ISRO in 1969. |
|
Fifth Five-Year Plan |
1974–1979 |
Removal of Poverty (Garibi Hatao) and Self-reliance |
20-Point Program launched. Terminated one year earlier by Janata government. |
|
Rolling Plan |
1978–1980 |
Introduced by Janata Government |
Replaced the fifth plan. Concept of rolling targets each year. |
|
Sixth Five-Year Plan |
1980–1985 |
Poverty Alleviation and Technological Self-reliance |
Focus on modernization, employment generation. Programs: IRDP, NREP. |
|
Seventh Five-Year Plan |
1985–1990 |
Food, Work & Productivity |
Based on John W. Miller model. Focus on social justice, modernization. Programs like Jawahar Rozgar Yojana started. |
|
Eighth Five-Year Plan |
1992–1997 |
Human Resource Development |
Launched after 1991 LPG reforms. Focus on education, employment, health. |
|
Ninth Five-Year Plan |
1997–2002 |
Growth with Justice and Equity |
Based on Input-Output Model. Focus on rural development, employment, and poverty eradication. |
|
Tenth Five-Year Plan |
2002–2007 |
Reduction of Poverty by 5% per year |
Targeted 8% GDP growth, emphasis on employment and education. |
|
Eleventh Five-Year Plan |
2007–2012 |
Inclusive Growth |
“Faster and More Inclusive Growth”. Focus on infrastructure, health, and education. |
|
Twelfth Five-Year Plan |
2012–2017 |
Faster, More Inclusive and Sustainable Growth |
GDP target: 8%. Focus on environment, women empowerment, and skill development. |
Atomic structure: Definitions, Models, Quantum Numbers and Electronic Configuration Explained.
Plan Holidays and Rolling Plans
Plan Holidays (1966-69, 1978-80): These were periods where no Five-Year Plan was in operation due to wars, droughts, or political instability. Annual plans were implemented instead.
Rolling Plan (1978-80): Proposed by the Janata Party government, it involved planning for a fixed period (e.g., one year) that would be extended by another year as it is completed, making it a continuously rolling plan. It was abandoned after the government changed.
❓ FAQs
Q1.
Who started economic planning in India?
Economic planning began in 1951 with the First Five-Year Plan, introduced by Pandit Jawaharlal Nehru.
Q2.
What is the main objective of economic planning?
To promote economic growth,
employment, and social justice
by efficient use of resources.
Q3.
What replaced the Planning Commission?
In 2015, NITI Aayog
replaced the Planning
Commission.
Q4.
Which was the most successful Five-Year Plan?
The Third Five-Year Plan and Eighth Five-Year Plan
are considered the most successful.
Q5.
Why was planning discontinued after 2017?
To move towards flexible,
vision-based development
instead of rigid five-year targets.
Attempt MCQ Quiz:
|
Attempt Quiz 1 |
|
|
Attempt Quiz 2 |
Did this post help you understand
better? Share your feedback in the comments!
Share this
blog with your friends preparing for government exams and bookmark it for
revision. For more such easy notes, explore our other sections.
Remember, consistency is your greatest weapon in this journey. Keep revising,
keep practicing. Your hard work will definitely pay off. All the best.
No comments:
Post a Comment