Planning Commission of India – Five Year Plans

Planning Commission of India
  • The Soviet Union explored and adopted national planning for the 1st time in the world.
  • 1st Soviet Plan started in 1928 for a period of 5 years by Joseph Stalin.
  • Independent India was thus destined to be a planned economy.
  • The economic history of India is nothing but the history of planning.


Planning Commission of India


Proposed Plans before NPC

Visvesvaraya Plan

  • Popular civil engineer and the ex-Dewan of Mysore state M. Visvesvaraya gave the 1st blueprint of Indian planning.
  • M. Visvesvaraya’s book “The Planned Economy for India“, was published in 1934.
  • His ideas of state planning were an exercise in democratic capitalism, similar to the USA.
  • He proposed a 10 years plan with an emphasis on industrialization and individual initiatives.


FICCI Proposal

Congress Plan

  • On the initiative of the INC president Subhash C. Bose, the National Planning Committee (NPC) was set up in 1938.
  • Chairman was J. L. Nehru.
  • It published its report in 1949.


Bombay Plan

  • The Bombay Plan was the popular title of ‘A Plan of Economic Development for India’.
  • It was prepared by India’s leading capitalists like Purshotamdas Takurdas, J.R.D. Tata, G.D. Birla and some other.
  • The plan was published in 1944-45.
  • It proposed a doubling of per capita income within 15 years by priorities industrialization.
  • The main focus is on the production of power and capital goods.


Gandhian Plan

  • Shriman Narayan Agarwal formulated the Gandhian Plan in 1944.
  • This plan laid more emphasis on agriculture, cottage and village-level industries.


People’s Plan

  • In 1945, this plan was formulated by M.N. Roy, Chairman of the Post-War Reconstruction Committee of the Indian Trade Union.
  • He advocated the need of providing people with the ‘necessities of life’.
  • Agricultural and industrial sectors, both were equally highlighted by the plan.
  • Common minimum programme of the United Front Govt. of the mid-1990, MGNREGA of UPA 2004 and economic reforms of 1991 also may inspired from this plan.


Sarvodaya Plan

  • Jayaprakash Narayan published it in 1950.
  • It drew major inspiration from the Gandhian techniques of constructive works by the community and trusteeship.
  • It was also inspired by the Sarvodaya concept of Acharya Vinoba Bhave.



Planning Commission of India

  • On 15th March 1950, the Planning Commission of India was set up by the government by a Cabinet Resolution.
  • It was an advisory body to the Government of India on an array of issues of economic development.
  • A ‘think tank’ on economic development with the Prime Minister as its ex-officio Chairman.
  • The Planning Commission of India was dissolved on 17 Aug 2014.


National Development Council

  • National Development Council was set up on 6 Aug 1952 by a Resolution issued by the Cabinet Secretariat.
  • The main function was to consider the proposals formulated for Plans at all critical stages and accept them and review the working of the Plans from time to time.


Programme Evaluation Organisation (PEO)

  • It was established in 1952, as an independent organisation, under the guidance and direction of the NPC.
  • Functions of the PEO include undertaking an evaluation of selected schemes under implementation.
  • Programme Evaluation Organisation has a three-tier structure.


Planning Commission of India

Five Year Plans of India in Details

1st Plan
T – 2.1%
A – 3.6%
Bhakra-Nangal, and Hirakud were started
5 Indian Institutes of Technology (IIT) were also started
Community Development Projects was started, 2 Oct 1952
Irrigation projects started –
Mettur Dam
Hirakud Dam
Bhakra Dam
T – 4.5%
A – 4.27%
Domestic production of industrial products and rapid industrialization.
Steel plants at –
RourkelaWest Germany
T – 5.6%
A – 2.4%
Wars with China in 1962
War with Pakistan in 1965 
Green Revolution was initiated in 1966
Scientific research, technical education, family planning & rural water supply became central features.
Plan Holiday
3 annual plans were made
Equal priority to agriculture, its allied activities, and industrial sector
T – 5.6%
A – 3.3%
Smiling Buddhanuclear test in Pokhran, Rajasthan, 18 May 1974
T – 4.4%
A – 4.8%
Garibi Hatao – poverty alleviation – 1971
Self-reliance in agricultural and defense
20-Point programme was launched in 1975 
Integrated Urban Development Programme
Plan was prepared by D. P. Dhar
Rolling Plan
Janata Party govt. rejected the 5th five-year plan
It consists of 3 kinds of plan
1 annual plan
Plan for 3, 4 or 5 years
Long term plan 10, 15 or 20 years
Rolling plan concept was coined by Gunnar Myrdal
T – 5.2%
A – 5.4%
Beginning of Economic Liberalisation
Price controls were eliminated
NABARD – 12 July 1982
Family planning
only Five-Year Plan which was done twice
T – 5%
A – 6.1%
Growth, modernisation, self-reliance and social justice
1st time private sector got priority over the public sector
Jawahar Rozgar Yojana – 1989
Delineation of 15 agro-climatic zones
Introduction of Decentralized Planning
Annual Plans
Balance of Payment Crisis
T – 5.6%
A – 6.8%
Lower emphasis on heavy industries and more on infrastructure
Objectives were modernization of industries and employment generation
Member of Parliament Local Area Development Scheme (MPLADS)
T – 7%
A – 5.6%
Priority to agriculture and rural development
Concept of Growth with Justice & Equity
Ensuring food and nutritional security for all
Focus on reduction in the revenue deficit
T – 8%
A – 7.2%
Doubling per capita income in 10 years
Agricultural sector declared as the prime moving force (PMF) of economy
Reduction in gender gaps in literacy
Mahatma Gandhi National Rural Employment Guarantee Act2005
T – 8.1%
A – 7.9%
Plan targets a growth rate of 10%
Emphasizes the idea of ‘inclusive growth’
Increase forest and tree cover
higher inflation was main problem
T – 9%
A – 8%
Focuses on Growth – Faster, Inclusive and Sustainable
Aadhar based Direct Cash Transfer Scheme


Planning Commission of India

Critical Evaluation

Lack of ‘Perspective’ in Planning

  • Planning should be evaluation-based, and ‘Long-term’ goals should be followed up, where NPC was not following.
  • Succeeding plans have always been commenced without the full evaluation of the preceding Plan.
  • The reason was the lack of a nodal body responsible for data collection at the national level and the Federal nature of polity made data collection delays.


Failure in Promoting a Balanced Growth & Development

  • NPC is blamed for failing the objective of regionally balanced growth and development.
  • NPC was not taken a ‘Differential development strategy’ to decrease regional imbalance in the country until the 10th Plan.
  • Because of better infrastructure developed regions attracted most private investment which accelerate the process of imbalanced growth.
Planning Commission of India

Highly Centralised Nature of Planning

  • After Nehru, with every Plan, we see a greater tendency of centralisation in the planning process.
  • Setting up of the NDC and promoting multi-level planning (MLP) did not serve many purposes in this direction.
  • Finally, the 73rd and 74th constitutional amendments promoted the cause of decentralised planning.
Planning Commission of India

Lop-side Employment Strategy

  • Planning was heavily in favour of ‘capital intensive’ industries public sector industries.
  • PSUs were not labour-intensive and unable to generate enough employment.
  • Agri-industries, village industries, and self-employment were not promoted.


Excessive Emphasis on PSUs

  • NPC emphasised PSUs for the right reasons but in the wrong way.
  • State monopolies in certain areas continued over such a long period that leads to a demand-supply gap in the major goods and services.
Planning Commission of India

Agriculture Overshadowed by the Industry

  • Promoting the cause of faster industrialisation, the agriculture sector got badly overshadowed.
  • Who depended upon agriculture, could never increase their purchasing power.
  • 10th Plan recognises agriculture as the ‘core element’ of development.

Faulty Industrial Location Policy

  • NPC never consider the nearness of raw materials, market, cheaper labour, better transportation and communication.
  • Plans always prioritised the setting up of new industrial units in the backward regions.


Wrong Financial Strategy

  • Mobilising resources to support the highly capital-intensive Plans has always been a challenge for the government.
  • To support the Plans, govt. went for a highly complex and liberal tax structure, nationalising the banks, etc.
  • It leads to tax evasion, a parallel economy and lesser and lesser capital for the private sector.
  • More subsidies, salaries and the interest burden gave an upward push to the non-plan expenditure.
Planning Commission of India

Politicization of the Planning Process

  • Almost every issue of socio-political importance is influenced by the political interests of the Centre.
  • From oil subsidies to tax reforms, FDI in retail and free movement of food grains.
  • Almost everyone outside the government blamed it for policy paralysis.


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