Economic Planning in India -
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The Constitution came into force on 26 January 1950. Subsequently, Planning Commission was set up on 15 March 1950 and the plan era started from 1 April 1951 with the launching of the First Five Year Plan (1951-56).
Economic Planning In India – Five Year Plans
The term economic planning is used to describe the long term plans of the government of India to develop and coordinate the economy with efficient utilization of resources. Economic planning in India started after independence in the year 1950 when it was deemed necessary for economic growth and development of the nation.
List of Five Year Plans in India-
Long term objectives of Five Year Plans in India are
High Growth rate to improve the living standard of the residents of India.
• Economic stability for prosperity.
• Self-reliant economy.
• Social justice and reducing the inequalities.
• Modernization of the economy.
The idea of economic planning for five years was taken from the Soviet Union under the socialist influence of first Prime Minister Pt. Jawahar Lal Nehru.
The first eight five year plans in India emphasised on growing the public sector with huge investments in heavy and basic industries, but since the launch of Ninth five year plan in 1997, attention has shifted towards making government a growth facilitator.
Objectives of Economic Planning in India
The following were the original objectives of economic planning in India:
• Economic Development: This is the main objective of planning in India. Economic Development of India is measured by the increase in the Gross Domestic Product (GDP) of India and Per Capita Income
• Increased Levels of Employment: An important aim of economic planning in India is to better utilise the available human resources of the country by increasing the employment levels.
• Self Sufficiency: India aims to be self-sufficient in major commodities and also increase exports through economic planning. The Indian economy had reached the take-off stage of development during the third five-year plan in 1961-66.
• Economic Stability: Economic planning in India also aims at stable market conditions in addition to the economic growth of India. This means keeping inflation low while also making sure that deflation in prices does not happen. If the wholesale price index rises very high or very low, structural defects in the economy are created and economic planning aims to avoid this.
• Social Welfare and Provision of Efficient Social Services: The objectives of all the five year plans as well as plans suggested by the NITI Aayog aim to increase labour welfare, social welfare for all sections of the society. Development of social services in India, such as education, healthcare and emergency services have been part of planning in India.
• Regional Development: Economic planning in India aims to reduce regional disparities in development. For example, some states like Punjab, Haryana, Gujarat, Maharashtra and Tamil Nadu are relatively well developed economically while states like Uttar Pradesh, Bihar, Orissa, Assam and Nagaland are economically backward. Others like Karnataka and Andhra Pradesh have uneven development with world class economic centres in cities and a relatively less developed hinterland. Planning in India aims to study these disparities and suggest strategies to reduce them.
• Comprehensive and Sustainable Development: Development of all economic sectors such as agriculture, industry, and services is one of the major objectives of economic planning.
• Reduction in Economic Inequality: Measures to reduce inequality through progressive taxation, employment generation and reservation of jobs has been a central objective of Indian economic planning since independence.
• Social Justice: This objective of planning is related to all the other objectives and has been a central focus of planning in India. It aims to reduce the population of people living below the poverty line and provide them access to employment and social services.
• Increased Standard of Living: Increasing the standard of living by increasing the per capita income and equal distribution of income is one of the main aims of India’s economic planning.
History of Economic Planning In India
Economic planning in India dates back to pre-Independence period when leaders of the freedom movement and prominent industrialists and academics got together to discuss the future of India after Independence which was soon to come. Noted civil engineer and administrator M. Visvesvaraya is regarded as a pioneer of economic planning in India. His book “Planned Economy for India” published in 1934 suggested a ten year plan, with an outlay of Rs. 1000 crore and a planned increase of 600% in industrial output per annum based on economic conditions of the time.
The Industrial Policy Statement published just after independence in 1948 recommended setting up of a Planning Commission and following a mixed economic model. Here are the major milestones related to economic planning in India:
• Setting up of the Planning Commission: 15 March 1950
• First Five Year Plan: 9 July 1951
• Dissolution of the Planning Commission: 17 August 2014
• Setting up of NITI (National Institution for Transforming India) Aayog: 1 January 2015
Setting up the NITI Aayog was a major step away from the command economy structure adopted by India till 1991. The Planning Commission’s top down model of development had become redundant due to present economic conditions and NITI Aayog approaches economic planning in a consultative manner with input from various state governments and think tanks.
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