Planning Commission


  • 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
 

Visvesvaraya Plan

  • Popular civil engineer and the exDewan of Mysore state M. Visvesvaraya gave the 1st blueprint of Indian planning
  • His book The Planned Economy of India, published in 1934
  • His ideas of state planning were an exercise in democratic capitalism (similar to the USA)
 

FICCI Proposal

  • In 1934, a serious need of national planning was recommended by the Federation of Indian  Chambers of Commerce and Industry (FICCI)
  • Its President N.R. Sarkar  called for a high powered ‘National Planning Commission’ to coordinate the whole process of planning
 

Congress Plan

  • On the initiative of the INC president Subhash C. Bose the National Planning Committee (NPC) was set up in 1938 under the chairmanship of 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
  • Plan was published in 1944-45
 

Gandhian Plan

  • Sriman Narayan Agarwal formulated the Gaudhian 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 Indian Trade Union
  • He advocated the need of providing the people with the ‘basic necessities of life
  • Agricultural and industrial sectors, both were equally highlighted by the plan
  • Common minimum programs of the United Front Government of the mid-1990, MGNREGA of UPA, 2004 and economic reforms started in the early 1990s also may inspired from this plan

 

Sarvodaya Plan

  • Jayaprakash Narayan published it in 1950
  • It drew its major inspirations from the Gandhian techniques of constructive works by the community and trusteeship as well as the Sarvodaya concept of Acharya Vinoba Bave
 

Planning Commission

  • In 1950 the Planning Commission (PC) was set up by the government by a Cabinet Resolution
  • 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
 

National Development Council

  • set up in 1952 by a Resolution issued from the Cabinet Secretariat
  • Main function was to consider the proposals formulated for Plans at all important stages and accept them and to review the working of the Plans from time to time
 

Programme Evaluation Organisation (PEO)

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

Five years Plans details

1st Plan
1951-56
T – 2.1%
A – 3.6%
Harrod-Domar model
Bhakra-Nangal, Hirakud and Mettur dam were started
5 Indian Institutes of Technology (IIT) were also started
Community Development Projects was started
2nd
1956-61
T – 4.5%
A – 4.27%
Mahalanobis model
domestic production of industrial products and rapid industrialization.
Steel plants at –
BhilaiUSSR
DurgapurUK
RourkelaWest Germany
3rd
1961-66
T – 5.6%
A – 2.4%
Gadgil Yojana
Wars with China in 1962
War with Pakistan in 1965
Plan Holiday
1966-69
 
Three annual plans were made
Equal priority to agriculture, its allied activities, and industrial sector
4th
1969-74
T – 5.6%
A – 3.3%
Green Revolution
14 major banks were nationalized in 1969
Smiling Buddha underground nuclear test (Pokhran-1) in Rajasthan, 1974
5th
1974-78
T – 4.4%
A – 4.8%
Focused on poverty alleviation and  self-reliance in agricultural and defense
National highway system
Minimum Needs Programme
20point programme was launched in 1975
Plan was prepared by the D.P. Dhar
Rolling Plan
1978-80
 
Janata Party government rejected the fifth five-year plan
Rolling plan concept was coined by Gunnar Myrdal
6th
1980-85
T – 5.2%
A – 5.4%
Garibi Hatao
Beginning of economic Liberalisation
Price controls were eliminated
NABARD – 1982
Family planning
only Five-Year Plan which was done twice
National Rural Employment Programme – 1980
7th
1985-90
T – 5%
A – 6.1%
growth, modernisation, self-reliance and social justice
1st time private sector got priority over public sector
Jawahar Rozgar Yojana – 1989
Annual Plans
1990-91
1991-92
 
Balance of Payment Crisis
LPG reform
8th
1992-97
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)
9th
1997-2002
T – 7%
A – 5.6%
Basic Minimum Services (BMS)
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
Decentralisation of planning
10th
2002-07
T – 8%
A – 7.2%
Doubling per capita income in 10 years
Agriculture sector declared as the prime moving force (PMF) of economy
Reduction in gender gaps in literacy
Mahatma Gandhi National Rural Employment Guarantee Act2005
11th
2007-12
T – 8.1%
A – 7.9%
Plan targets a growth rate of 10%
emphasizes the idea of ‘inclusive growth
Increase forest and tree cover
A higher inflation was main problem
12th
2012-17
T – 9%
A – 8%
focuses on Growth – Faster, Inclusive and Sustainable
Aadhar based Direct Cash Transfer Scheme
 

Critical Evaluation

Lack of ‘Perspective’ in Planning

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

Failure in Promoting A Balanced Growth & Development

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

Highly Centralised Nature of Planning

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

Lop-side Employment Strategy

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

Excessive Emphasis on PSUs

  • NPC emphasised on PSUs for the right reasons, but in the wrong way
  • State’s monopolies in certain areas continued over such a long period that leads to a demand-supply gap in the major goods and services
 

Agriculture Overshadowed by the Industry

  • Promoting the cause of faster industrialisation, 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 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, 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
 

Politicisation of the Planning Process

  • Almost every issue of socio-political importance is influenced by political interests of the Centre
  • From oil subsidy 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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