On January 26, 1950, the Constitution came into force.
Following that, the planning in India
began on March 15, 1950, with the establishment of the Planning Commission, and the plan era began
on April 1, 1951, with the launch of the First Five-Year Plan (1951-56).
India adopted scio-economic planning after independence due to following reason;
There was no significant private sector in the country
Soviet experience with planning for economic development attract our leaders
Planning held superior benefits by way of balanced regional development and distribution of
wealth
British colonialism through the east india company was severely resented by the people
Jawaharlal Nehru was attracted by the benefits of democratic socialism.
Planning in India – 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.
Planning in India – Objectives
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.
The shortcoming in the planning process: Why was
the planning Commission abolished?
The planning process in India had become irregular, particularly following liberalization, for a variety of
reasons, including
It was mostly concerned with theoretical tools such as complex mathematical models. Many
times, these models did not operate on the ground because they were built on very aggregative
input/output factors. The reason for this was primarily due to data issues.
By creating parallel departments inside the planning commission, most planning documents
resulted in duplication of work for central ministries and states.
During each plan period, the targeted goals were undermined in the most arbitrary way
possible. This was primarily due to poor budgeting, which resulted in the absence of a yearly
breakdown of the plan's goals.
Our country's multi-year budgeting has its own set of issues. Because different programs have
varying time spans, multi-year planning makes sense. Bharat Nirman, for example, ran for four
years from 2005 to 2009, whereas JNNURM began in 2006 and ran for seven years.
However, five years is an excessively long time, and practically every scheme began to dwindle
almost shortly after its inception. It might be more sensible to establish a strategy for the next
three years, with the fourth and fifth years designated as preliminary plans.
In addition, the five-year plans did not correspond to the annual budgeting process. In the
lack of a budgeting mechanism that allows a five-year plan to be implemented on a yearly basis,
five-year planning has remained at best an academic exercise.
The divide between plan and non-plan government spending had lost its utility and needed to
be eliminated.
The system of annual plan approval with the states had lost its significance due to dwindling
central assistance for state plans and the center's termination of on-lending to the states, and it
needed to be abolished.
The transfer system from the center needed to be improved.
NITI Aayog
NITI Aayog
The National Institution for Transforming India (NITI Aayog) was founded by a Union
Cabinet decision on January 1, 2015, as the Union Government's top policy think tank. It's a
non-statutory, extra-constitutional advisory council.
The National Institution for Transforming India (NITI Ayog) does not have the authority to impose
policies. The government aims to act as an "enabler" by establishing NITI Ayog and giving it the
responsibility of providing a forum for cooperative federalism.
Aims and Objectives of NITI Aayog
o Working as an advisory body, providing directional and strategic suggestions to the Union
government and, on request, state governments.
o To use a bottom-up development approach instead of a top-down development
approach. It would devise processes for developing credible plans at the village level,
which would then be aggregated at higher levels of government.
o To promote cooperative federalism by forming a shared vision of national development
priorities based on the premise of "strong states, strong nations."
o Encourage inter-ministry, inter-state, and center-state coordination to put an end to the
policy's slow and tardy implementation.
The Prime Minister of India serves as the Chairperson of the NITI Aayog.
The Governing Council is made up of the Chief Ministers of all the states as well as
the Lieutenant Governors of the Union Territories.
Regional Councils will be established to address specific concerns and situations that affect
many states or regions. These will be formed for a set amount of time. They will be called by the
Prime Minister and will include the region's Chief Ministers and Lieutenant Governors of Union
Territories. The Chairperson of the NITI Aayog or his nominee will preside over these meetings.
As special invitees, the Prime Minister nominates experts, professionals, and practitioners
with appropriate domain knowledge.
NITI Aayog Hubs:
o The Team India Hub serves as a link between the states and the central government.
o The Knowledge and Innovation Hub helps NITI Aayog develop its think-tank capabilities.
Initiatives by NITI Aayog:
o “15-year road map”,
o “7-year vision, strategy, and action plan”,
o Digital India and Atal Innovation Mission etc.