PLANNING

PROCESS
UNIT 4
PLANNING COMMISSION

• Planning Commission, agency of the

government of India established in
1950 to oversee the country's economic
and social development, chiefly through
the formulation of five-year plans.
PLANNING COMMISION

• The Planning Commission, although no longer active (since it was replaced by the NITI
Aayog), was an important feature of policymaking and governance in India.
• Though it played a vital role in India’s emergence from a beaten country during the days of
the Raj to an independent nation with ambitious developmental goals, the Commission has
often been accused of being a soviet-styled bureaucratic body that stifled economic
growth.
• In 2012, the commission received flak for spending about Rs.35 lakhs for renovating two
toilets and then suggesting that the country’s citizens who spent more than Rs.27 per day
were not poor.
• In 2014, it was replaced by NITI Aayog, a more robust organisation. It is more like a think-
tank that works with stakeholders for developing the country.
 BACKGROUND

• Planning Commission of India was an organization in the Government of India,

which formulated India’s Five-Year Plans, among other functions. The planning
commission was charged with the service of the opportunities to all for
employment in the service of the community.
• The Planning Commission was reporting directly to the Prime Minister of India.
It was established on 15 March 1950, with Prime Minister Jawaharlal Nehru as
the chairman. The Planning Commission did not derive its creation from either
the Constitution or statute but was an arm of the Central/Union Government.
PLANNING COMMISSION DISSOLUTION

• Though it played a vital role in India’s emergence from a beaten country during
the days of the Raj to an independent nation with ambitious developmental
goals, the Commission has often been accused of being a soviet-styled
bureaucratic body that stifled economic growth. In 2012, the commission
received flak for spending about Rs.35 lakhs for renovating two toilets and then
suggesting that the country’s citizens who spent more than Rs.27 per day were
not poor.
• In 2014, it was replaced by NITI Aayog, a more robust organisation. It is more
like a think-tank that works with stakeholders for developing the country.
• The Planning Commission was set up by a Resolution of the Government of India in
March 1950. The prime objectives of the Government were to propel a rapid
increase in the living standard of Indians by the productive exploitation of the
country’s resources, raising production and securing opportunities for everyone for
employment in the service of society.
• The Planning Commission was assigned the responsibility of assessing all the
resources of the country, enhancing scarce resources, drafting plans for the most
productive and balanced usage of resources and ascertaining priorities. Pandit
Nehru was the first Chairman of the Planning Commission.
 FUNCTIONS-

• Make an evaluation of the capital, material and the human resources of the nation,
including technical personnel, and study the possibilities of enhancing these resources
for building up the nation;
• Draft a Plan for the most balanced and effective usage of the country’s resources;
• Define the stages in which the Plan should be implemented and put forward the
allocation of resources for the completion of every stage;
• Specify the factors that hamper economic development, and ascertain the conditions
which, in view of the prevailing social and political situation, should be set up for the
triumphant implementation of the Plan
• Determine the kind of machinery required for obtaining the successful execution
of each stage of the Plan in all its aspects;
• Regularly appraise the progress achieved in the implementation of all stages of
the Plan and propose the rectifications or recommendations of policy and
measures that such appraisal may deem necessary;
• Make such interim or ancillary recommendations either for enabling the
discharge of the duties assigned to it or on a consideration of the existing
economic conditions, current policies, measures and development programme
or on a study of such specific problems which the Central or State Governments
can refer to it.
MEMBERS-

• Chairman – Prime Minister; presided over the meetings of the Commission

• Deputy Chairman – de facto executive head (full-time functional head);
• Was responsible for the formulation and submission of the draft Five-Year Plan to
the Central cabinet.
• Was appointed by the Central cabinet for a fixed tenure and enjoyed the rank of a
cabinet minister.
• Could attend cabinet meetings without the right to vote.

• Part-time members – Some central ministers

• Ex-officio members – Finance Minister and Planning Minister
OBJECTIVES-

• Economic development: One of the main objectives of the five-year planning commission is to prepare
the five-year plan considering the country’s economic development. It is the GDP (Gross Domestic
Product) and Per Capita Income through which the nation’s economic development is measured.
• Increased level of employment: The vital aim of the five-year planning commission in India is to
better utilize the human workforce available in the country by increasing employment levels.
• Social Welfare and provision of adequate social services: The objective of the five-year planning
commission is to increase social welfare for different sections of society. In addition to this, developing the
social services of the country like education, healthcare, green spaces, and more are also a significant
part of five-year planning.
• Regional Development: Five-year planning aims to reduce the regional differences in the country. For
instance, some states in India are well developed and others aren’t economically developed. Five-year
plans are formulated in such a way that the non-developed areas are prioritized to eliminate regional
disparities.
• Comprehensive and Sustainable development: Development of all sectors-
agriculture, industrial, and services is one of the objectives of the five-year planning
commission so that the country can achieve comprehensive and sustainable
development.
• Reduction in economic and social inequality: The main focus of the five-year plans
is to reduce economic and social inequality by taking adequate measures like
employment generation, progressive taxation, reservation of jobs for backward sections,
etc.
• Increased standard of living: The five-year planning commission in
India formulates five-year plans focusing on improving the standard of living of the
citizens by increasing the per capita income and equal distribution of income.
PLANNING COMMISSION VS NITI AAYOG

• Planning commission • NITI Aayog

• 1. Full-time: 8 full-time members
• 1. Full-time: Fewer full-time members
• Part-time: No provision as such for part-time
members • Part-time: Depends on the need
• 2. Could allocate funds to ministries and state • 2. It is a think tank and advisory body.
governments
• 3. Consulting would be done while the
• 3. Policies were formed by the Commission
policy is being formulated.
after which states were consulted about fund
allocation • 4. no power to allocate funds.
• 4. Had the power to allocate funds
• 5. No power to impose policies
• 5. Imposed policies on states
 LIST OF FIVE-YEAR PLANS-

• First Five year Plan (1951-1956)

• The First Five-year Plan was launched in 1951 which mainly focused in the
development of the primary sector.
• The First Five-Year Plan was based on the Harrod–Domar model with few
modifications.
• Objective- The First Plan, therefore, had the objectives of rehabilitating refugees,
agricultural development, and self-sufficiency in food along with controlling
inflation.
• Targets and objectives more or less achieved. With an active role of the state in
all economic sectors. Five Indian Institutes of Technology (IITs) were started as
major technical institutions.
• Second Five Year Plan- (1956-61)
• The Second Five Year Plan revolved around the idea of developing the public sector and rapid
industrialisation.
• The plan followed the Mahalanobis model, an economic development model developed by the
Indian statistician Prasanta Chandra Mahalanobis in 1953.
• Objective- Rapid industrialisation with particular emphasis on the development of basic and heavy
industries Industrial Policy of 1956 accepted the establishment of a socialistic pattern of society as
the goal of economic policy.
• It could not be implemented fully due to the shortage of foreign exchange.
• Yet, Hydroelectric power projects and five steel mills at Bhilai, Durgapur, and Rourkela were
established.
• Third Five year Plan (1961-66)
• I. It was made for the duration of 1961 to 1966, under the leadership of Jawaharlal Nehru.

• II. This plan is also called ‘Gadgil Yojna’, after the Deputy Chairman of Planning Commission D.R. Gadgil.

• III. The main target of this plan was to make the economy independent. The stress was laid on agriculture and
the improvement in the production of wheat.

Objective- ‘establishment of a self-reliant and self-generating economy’.

*Failure. Wars and droughts.

Important points:

Yet, Panchayat elections were started.

State electricity boards and state secondary education boards were formed.

During the execution of this plan, India was engaged in two wars: (1) the Sino-India war of 1962 and (2) the Indo-
Pakistani war of 1965. These wars exposed the weakness in our economy and shifted the focus to the defence
industry, the Indian Army, and the stabilization of the price (India witnessed inflation).
• Plan Holidays (1966-1969)
• I. Due to the failure of the previous plan, the government announced three
annual plans called Plan Holidays from 1966 to 1969.
• II. The main reason behind the plan holidays was the Indo-Pakistani war and the
Sino-India war, leading to the failure of the third Five Year Plan.
• III. During this plan, annual plans were made and equal priority was given to
agriculture its allied sectors and the industry sector.
• Fourth Five year Plan (1969-1974)
• I. Its duration was from 1969 to 1974, under the leadership of Indira Gandhi.
• II. There were two main objectives of this plan i.e. growth with stability and progressive
achievement of self-reliance.
• III. During this time, 14 major Indian banks were nationalized and the Green Revolution was
started.
• Indo-Pakistani War of 1971 and the Bangladesh Liberation War took place.
• IV. Implementation of Family Planning Programmes was amongst major targets of the Plan
• V. This plan failed and could achieve a growth rate of 3.3% only against the target of 5.7%.
• Fifth Five Year Plan (1974-1978)-
• I. Its duration was 1974 to 1978.
• II. This plan focussed on Garibi Hatao, employment, justice, agricultural
production and defence.
• III. The Electricity Supply Act was amended in 1975, a Twenty-point program was
launched in 1975, the Minimum Needs Programme (MNP) and the Indian National
Highway System was introduced.
• IV. Overall this plan was successful which achieved a growth of 4.8% against the
target of 4.4%.
• V. This plan was terminated in 1978 by the newly elected Moraji Desai government.
• Rolling Plan-
• I. After the termination of the fifth Five Year Plan, the Rolling Plan came into effect
from 1978 to 1980.
• II. In 1980, Congress rejected the Rolling Plan and a new sixth Five Year Plan was
introduced.
• III. Three plans were introduced under the Rolling plan:
• (1) For the budget of the present year
• (2) this plan was for a fixed number of years-- 3,4 or 5
• (3) Perspective plan for long terms-- 10, 15 or 20 years.
• IV. The plan has several advantages as the targets could be mended and projects,
allocations, etc. were variable to the country's economy. This means that if the
targets can be amended each year, it would be difficult to achieve the targets and
will result in destabilization in the Indian economy.
• Sixth Five Year Plan:
• I. Its duration was from 1980 to 1985, under the leadership of Indira
Gandhi.
• Objective-‘direct attack on the problem of poverty by creating conditions of
an expanding economy’
• II. The basic objective of this plan was economic liberalization by eradicating
poverty and achieving technological self-reliance.
• III. It was based on investment Yojna, infrastructural changing, and trend to the
growth model.
• IV. Its growth target was 5.2% but it achieved a 5.7% growth.
• Seventh Five Year Plan:
• I. Its duration was from 1985 to 1990, under the leadership of Rajiv Gandhi.
• II. The objectives of this plan include the establishment of a self-sufficient economy, opportunities
for productive employment, and up-gradation of technology.
• III. The Plan aimed at accelerating food grain production, increasing employment opportunities & raising
productivity with a focus on ‘food, work & productivity
• IV. For the first time, the private sector got priority over the public sector.
• V. Its growth target was 5.0% but it achieved 6.01%.
• . Annual Plans:
• I. Eighth Five Year Plan could not take place due to the Two annual programmes were formed for the year
1990-91and 1991-92volatile political situation at the centre.
 EIGHTH FIVE YEAR PLAN:

• I. Its duration was from 1992 to 1997, under the leadership of P.V. Narasimha Rao.
• II. In this plan, the top priority was given to the development of human resources i.e.
employment, education, and public health.
• III. During this plan, Narasimha Rao Govt. launched the New Economic Policy in India.
• IV. Some of the main economic outcomes during the eighth plan period were rapid
economic growth (highest annual growth rate so far – 6.8 %), high growth of
agriculture and allied sector, and manufacturing sector, growth in exports and imports,
improvement in trade and current account deficit. A high growth rate was achieved even
though the share of the public sector in total investment had declined considerably to
about 34 %
• Objective- Rapid economic growth, high growth of
agriculture and allied sector, and the manufacturing
sector, growth in exports and imports, improvement
in trade and current account deficit. to undertake an
annual average growth of 5.6%.
• Partly success. An average annual growth rate of
6.78% against the target 5.6% was achieved.
• Ninth Five Year Plan:
• I. Its duration was from 1997 to 2002, under the leadership
of Atal Bihari Vajpayee.
• II. The main focus of this plan was “Growth with Social
Justice and Equality”.
• III. It was launched in the 50th year of independence of India.
• IV. This plan failed to achieve the growth target of 6.5% and
achieved a growth rate of 5.6%.
• Tenth Five Year Plan:
• I. Its duration was from 2002 to 2007, under the leadership
of Atal Bihari Vajpayee and Manmohan Singh.
• II. This plan aimed to double the Per Capita Income of India
in the next 10 years.
• III. It also aimed to reduce the poverty ratio to 15% by
2012.
• IV. Its growth target was 8.0% but it achieved only 7.6%.
• Eleventh Five Year Plan:
• I. Its duration was from 2007 to 2012, under the leadership of Manmohan Singh.
• II. It was prepared by the C. Rangarajan.
• III. Its main theme was “rapid and more inclusive growth”.
• IV. It achieved a growth rate of 8% against a target of 9% growth.
• Twelfth Five Year Plan:
• I. Its duration is from 2012 to 2017, under the leadership of Manmohan Singh.
• II. Its main theme is “Faster, More Inclusive and Sustainable Growth”.
• III. Its growth rate target was 8%.
 NITI AAYOG-

• The NITI Aayog full form is “National Institution for Transforming India” Aayog.
• NITI Aayog Chairman – Narendra Modi
• NITI Aayog Vice-Chairman – Shri Suman Bery (May 1, 2022 – present) is the current Vice Chairman
of the NITI Aayog.
• It is the country’s premier policy-making institution that is expected to bolster the economic growth of
the country.
• It aims to construct a strong state that will help to create a dynamic and strong nation. This helps India
to emerge as a major economy in the world. The NITI Aayog’s creation has two hubs called “Team
India Hub” and “Knowledge and Innovation Hub”.
• Team India: It leads to the participation of Indian states with the central government.
• The Knowledge and Innovation Hub: it builds the institution’s think tank capabilities.
 OBJECTIVES-

• The active participation of States in the light of national objectives and to provide a framework ‘national agenda’.
• To promote cooperative federalism through well-ordered support initiatives and mechanisms with the States on an
uninterrupted basis.
• To construct methods to formulate a reliable strategy at the village level and aggregate these gradually at higher levels
of government.
• An economic policy that incorporates national security interests.
• To pay special consideration to the sections of the society that may be at risk of not profiting satisfactorily from
economic progress.
• To propose strategic and long-term policy and programme frameworks and initiatives, and review their progress and
their effectiveness.
• To grant advice and encourage partnerships between important stakeholders and national-international Think Tanks, as
well as educational and policy research institutions.
• To generate knowledge, innovation, and entrepreneurial support system through a shared community of national and
international experts, etc.