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Economic Planning in India Planning Commission To Niti Ayog (2089)

The Planning Commission was established in 1950 to formulate centralized five-year plans for socio-economic development in India. It aimed to rapidly increase standards of living and production. Over time, its role shifted to be more indicative as India liberalized its economy. In 2015, the Planning Commission was replaced by the Niti Aayog to foster cooperative federalism and involve states more in the planning process. The Niti Aayog also aims to serve as a think tank, monitor implementation of programs, and leverage human capital and technology for development.

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185 views3 pages

Economic Planning in India Planning Commission To Niti Ayog (2089)

The Planning Commission was established in 1950 to formulate centralized five-year plans for socio-economic development in India. It aimed to rapidly increase standards of living and production. Over time, its role shifted to be more indicative as India liberalized its economy. In 2015, the Planning Commission was replaced by the Niti Aayog to foster cooperative federalism and involve states more in the planning process. The Niti Aayog also aims to serve as a think tank, monitor implementation of programs, and leverage human capital and technology for development.

Uploaded by

Hitisha agrawal
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© © All Rights Reserved
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Economic Planning In India – Planning Commission to Niti Aayog

At the time of independence of India, there was a large proportion of impoverished people
in the country. Poverty alleviation and improvement of life standards of people were the
major considerations of the government. Indian economy needed a direction, which was
crippled by foreign subjugation. India was still a geographic expression and a nation in
making. Other than the spirit of the freedom struggle, factors required for binding the
people were few. So the then politicians and think tanks opted for a planned economy and a
centralized planning body to formulate a plan for socio-economic development. Thus,
planning commission came into existence in March 1950 through a cabinet resolution which
became a permanent body of experts.

About Planning Commission

The Planning Commission of India was set up by a Resolution of the Government of India in
March 1950. Objectives of the government while starting PC were the following:

 Promote a rapid rise in the standard of living of the people by efficient exploitation
of the resources of the country.
 Increase production.
 Offer opportunities to all for employment in the service of the community.

Planning Commission of India (PC)

 Prime minister was the ex officio chairman of the planning commission assisted by a
deputy chairman. It included 6 union cabinet ministers as its ex officio members.
There was also a member secretary.
 The planning commission was an autonomous body, which worked closely with
union and state cabinets and had full knowledge of their policies. Institutionally it
was a part of the cabinet organization and the ‘demands for grants’ for the PC was
included in the budget for the cabinet secretariat.

Functions and Responsibilities of the Planning Commission

 Make assessment of all resources of the country


 Augment deficient resources
 Formulate plans [Five Year Plans (FYP)] for the most effective and balanced
utilization of resources and determining priorities.
 Determine the stages of plan implementation
 Determine the nature of machinery required.
 Indicate the factors which tend to retard economic developments.
 Monitor and evaluate.
Evolution of Indian Planning

The first Five-year Plan was launched in 1951 and two subsequent five-year plans were
formulated till 1965, when there was a break because of the Indo-Pakistan Conflict. Two
successive years of drought, devaluation of the currency, a general rise in prices and erosion
of resources disrupted the planning process and after three Annual Plans between 1966 and
1969, the fourth Five-year plan was started in 1969.

The Eighth Plan could not take off in 1990 due to the fast changing political situation at the
Centre and the years 1990-91 and 1991-92 were treated as Annual Plans. The Eighth Plan
was finally launched in 1992 after the initiation of structural adjustment policies.

For the first eight Plans the emphasis was on a growing public sector with massive
investments in basic and heavy industries, but since the launch of the Ninth Plan in 1997,
the emphasis on the public sector has become less pronounced and the current thinking on
planning in the country, in general, is that it should increasingly be of an indicative nature.

Planning Commission: Positives and Achievements

 PC laid emphasis on infrastructure developments and capacity building. As a result,


huge investments were made in education, energy, industry, railways and irrigation.
 India became self-sufficient in agriculture and made great progress in capital sector
goods and consumer sector goods.
 PC introduced many remarkable concepts like nationalisation, green revolution etc
and transformed itself to align with new concepts like liberalisation, privatisation and
inclusion.
 Planning commission made great emphasis on social justice, governance,
employment generation, poverty alleviation, health and skill development.
 The transformation of India from a poor to an emerging economic power is credited
to the orderly and phased manner in which planning was implemented.

Planning Commission: Negatives and Problems

There were many issues with planning methods followed in India. The drawbacks of the
planning adopted via PC includes:

 No structural mechanism for regular engagement with states.


 Ineffective forum for the resolution of centre-state and inter-ministerial issues.
 Inadequate capacity expertise and domain knowledge; weak networks with think
tanks and lack of access to expertise outside government.
 Failed to implement land reforms.
 It was a toothless body, was not able to make union/states/UTs answerable for not
achieving the targets.
 Designed plans with ‘one size fit for all’ approach. Hence, many plans failed to show
tangible results.
 Weak implementation, monitoring and evaluation.
The NITI Aayog

The Prime Minister appoints a CEO and a Vice-Chairperson of the NITI Aayog. Further, it has
some full-time as well as part-time members along with four Union Ministers serving as ex-
officio members. It also has a governing council which includes all State Chief Ministers and
Lt. Governers of the Union Territories.

Aims of the NITI Aayog

1. Provide a critical directional and strategic input to the development process of India.
2. Serve as a think tank of the Government both at the Center and State-level. Also,
provide relevant strategic and technical advice on key policy matters.
3. Try to replace the center-to-state, one-way flow of policy with an amicably settled
policy which a genuine and continued partnership of state frames.
4. Seek to put an end to the slow and tardy implementation of the policy. This is
possible through better Inter-Ministry and state-to-state coordination.
5. Further, it help to evolve a shared vision of national development priorities and
foster cooperative federalism. Work with the view that strong states = a strong
nation.
6. Develop mechanisms to formulate credible plans at the village level. Further,
aggregate these plans progressively at the higher levels of the Government. In other
words, ensure that special attention is paid to the sections of the society which carry
the risk of not benefitting from the overall economic progress of the country.
7. Create a Knowledge, Innovation, and Entrepreneurial system through a collaborative
community of national and international experts and practitioners. Offer a platform
for the resolution of inter-sectoral and inter-departmental issues to accelerate the
implementation of the development agenda.
8. Monitor and evaluate the implementation of programs and also focus on upgrading
technology and building capacity.

The NITI Aayog tries to accomplish the following objectives and opportunities:

 Creating an effective administration paradigm in which the Government is an


enabler rather than a provider of the first and last resort.
 Attaining progress from food security. Focusing on a mix of agricultural production
and the actual returns that farmers get from their produce.
 Ensuring that India is an active participant in global debates and deliberations.
 Ensuring that the economically vibrant middle-class is actively engaged and utilized
to its full potential.
 Leveraging India’s pool of entrepreneurial, scientific, and intellectual human capital.
 Incorporating the geo-economic and geopolitical strength of the NRI Community.
 Using urbanization as an opportunity to creating a secure habitat via modern
technology.
 Using technology to reduce opacity and potential for misadventures in governance.

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