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GS Foundation 2025
Planning in India Batch D1D2D3 - #ECO0027
1. What is Planning:
- Process of achieving a desired goal.
- Economic Planning → Allocation of resources → based on availability +socio-economic
goals.
2. What was the need for Planning in India?
- Scarce Resources →Physical, financial, human;
- Colonial & Capitalistic Exploitation;
- Poor Infrastructure → Irrigation, Power, transport;
- Poor Socio-economic indicators;
- Fragile democracy and Partition;
3. Planning Objectives:
- Economic Growth;
- Modernisation;
- Self-reliance;
- Social Justice;
4. Types of Planning:
- Democratic →by elected representatives;
- Indicative → Mixed economy → both Public & Private sector; core industry
nationalised
- Imperative → Full control by State; target-based planning; no role for market
- Harrod- Domar Model→ High investment in heavy industries
- Normative Planning→ bottom-up planning; local customs respected while planning
- Perspective → long term implications of short/medium term policies considered
- Financial- resources allocated/ estimated in money terms
- Physical – resources allocated/ estimated in real terms e.g., labour force, capital stock
- Rolling Plan/ Continuous Planning: medium term plan is prepared and assessment of
previous plan
5. History of Planning:
- Global→ State Planning Committee (Gosplan)-USSR; First Five Year Plan in 1929
- India→ Visvesvaraya Plan (1934) → National Planning Committee (1938) →Bombay Plan
(1944) → Gandhian Plan
(1944) → People’s Plan (1945) →Sarvodaya Plan (1950).
6. Model of Planning followed in India:
- Fabian Socialism (Soviet Model with democratic aspect of capitalist society)
- Focus on → Mixed economy, democracy, Existence of Private property
7. Debates within India between:
- Nehruvian Model → Centralised Planning + Heavy industries + capital intensive
- Gandhian Model → Village level planning + cottage industries + labour intensive.
8. Planning Commission (1950):
- Vision → Resource exploitation + Increased Production + Increased Employment
- Rationale → Expert Body; No political Interference; Scarce resources; Safeguard
against Capitalist exploitation; Strong central Institution; Machinery for
implementation
- Issues → States ignored; weak inter-ministerial coordination; Failed in land reforms;
Rigid Plan; weak
implementation & monitoring.
9. Stages of Planning by Planning commission:
- Appraisal of needs 3 years prior —> Draft Memorandum (broad vision) → Detailed steps
to take → Discussion with states → Final document for Cabinet’s Approval
Forum Learning Centre:Delhi - 2nd Floor, IAPL House, 19 Pusa Road, Karol Bagh, New Delhi - 110005 | Patna - 2nd floor, AG Palace, E Boring Canal
Road, Patna, Bihar 800001 | Hyderabad - 1st & 2nd Floor, SM Plaza, RTC X Rd, Indira Park Road, Jawahar Nagar, Hyderabad, Telangana 500020
9311740400, 9311740900 | https://academy.forumias.com | [email protected] | [email protected]
Page 2 of 3
GS Foundation 2025
Planning in India Batch D1D2D3 - #ECO0027
10. Five Year Plans:
- First (1951-55) → Harrod Domar Model; Focus on Irrigation (Bhakra Nangal, Damodar,
Hirakund); Land Reforms; Higher Education.
- Second (1956-60) → Mahalanobis Strategy: heavy industry based (Durgapur, Bhilai,
Rourkela Steel Plants) + Financial and Technical assistance from USSR, UK, West
Germany.
- Third (1961-66) → Context: Indo-Pak War, Sino-India War, 2-year continuous drought,
30% fall in food grain, PL480 aid + Gadgil formula to allocate grants.
- Plan holidays (1966-69) → Included 3 Annual plans; Focus on increasing exports; New
Agriculture Strategy → HYV seeds + Irrigation.
- Fourth (1969-74) → Socialist tilt under Indira Gandhi; 14 Banks nationalised; Abolition
of Privy purses; Green revolution; Indo-pak war and Refugee crisis
- Fifth (1974-79) → Directed Anti-Poverty Programmes → 'Garibi Hatao'; Minimum
Needs Programme; Twenty-point programme; Backdrop of Emergency
- Rolling Plan (1978-79) → Appraisal of Plan Performance before next year plan; 1st Plan:
for the present year (annual budget) → 2nd Plan (3/4/5 years) →3rd Plan: perspective
long term plan (10/15/20 years)
- Sixth (1980-85) → Gradual Liberalisation; National Rural Employment Programme;
Integrated Rural
Development Programme; Shift from Heavy industrialisation to Infrastructure.
- Seventh (1985-90) → Outward Oriented Policy; Service Sector focus + Liberalisation
continued + Technological Reforms by Rajiv Gandhi government
- Two Annual Plans (1990-92) → Due to Political instability and Economic Crisis; 1991
Reforms were implemented.
- Eighth (1992-97) → After 1991 Economic Reforms; High GDP growth (1996- 13%); fiscal
deficit and CAD were very low; Jobless growth; Investment in infrastructure;
Restructuring subsidies; Decentralised planning.
- Ninth (1997-2002) → East Asian Crisis → export declined→ Foreign capital inflows
reduced; coalition
government; sanctions due to Pokhran Nuclear Test; Focus area → Population control
+ Generating employment + poverty Reduction + self-reliance in agriculture.
- Tenth (2002-07) → Focus Area: Doubling per capita income in 10 years + 'Governance'
and public service delivery + Agriculture as Prime Moving Force (PMF); Features:
Higher Foreign capital inflows + highest growth in services (savings and investment
rate crossed 30%)
- Eleventh (2007-12) → ‘Fast and inclusive growth’; 2008- global financial crisis;
Tendulkar Committee in Poverty Measurement; TFR (Total Fertility Rate) target of 2.1%
- Twelfth (2012-17) →'Faster, Sustainable and More Inclusive Growth'; 25 Core
Monitorable Targets.; GDP growth at 8% + Agriculture growth at 4% + Manufacturing
growth at 10%.
11. Achievement → India-6th largest economy; Infrastructure development; Green
Revolution; Nationalisation of Banks; Social development
12. Criticism → Poor balanced regional development; Highly centralised planning → ‘One
Size Fits All’; Capital
intensive and not labour intensive; Excessive emphasis on PSUs; Agriculture overshadowed
by Industries; Faulty
Industrial Location policy; Politicisation of Planning Process.
Forum Learning Centre:Delhi - 2nd Floor, IAPL House, 19 Pusa Road, Karol Bagh, New Delhi - 110005 | Patna - 2nd floor, AG Palace, E Boring Canal
Road, Patna, Bihar 800001 | Hyderabad - 1st & 2nd Floor, SM Plaza, RTC X Rd, Indira Park Road, Jawahar Nagar, Hyderabad, Telangana 500020
9311740400, 9311740900 | https://academy.forumias.com | [email protected] | [email protected]
Page 3 of 3
GS Foundation 2025
Planning in India Batch D1D2D3 - #ECO0027
13. NITI Aayog (Jan 1st, 2015):
- Replaced Planning Commission.
- Objective → Cooperative federalism (Shared vision of centre and states);
Decentralised Planning; National
security in economic policy; Design Short, Intermediate, long-term policies (3/7/15
year documents); Act as Think Tank; Inter departmental coordination; Technology
upgradation and capacity building.
- Composition:
Chairman Prime Minister
Vice Chairman Appointed by PM
Governing Council CM and Lt. Governor
Adhoc Membership 2 members from Research institutions
CEO Secretary level officer (IAS)
Special invitees Domain Level Experts
- Comparison: NITI Aayog vs. Planning Commission:
NITI Aayog Planning Commission
Cooperative Federalism (states are States subordinate to centre
equal partners)
‘Bottom-Up’ approach to Planning ‘Top-Down’ approach
Can’t impose policies Could impose policies
Organises seminars, workshops as A rigid bureaucratic body
Think Tank
3 Year Action Agenda 7 Year Strategy Five Year Plan
Document
Forum Learning Centre:Delhi - 2nd Floor, IAPL House, 19 Pusa Road, Karol Bagh, New Delhi - 110005 | Patna - 2nd floor, AG Palace, E Boring Canal
Road, Patna, Bihar 800001 | Hyderabad - 1st & 2nd Floor, SM Plaza, RTC X Rd, Indira Park Road, Jawahar Nagar, Hyderabad, Telangana 500020
9311740400, 9311740900 | https://academy.forumias.com | [email protected] | [email protected]
