ECONOMIC PLANNING IN INDIA
The credit for conceptualising the idea of planning goes to M. Visvesvarayya through his book ‘Planned Economy’ for Indiain 1936.The first attempt to develop a national plan for India came up in 1938. In the same year Congress party president Subhash Chandra Bose had set up a National Planning Committee with Jawarharlal Nehru asthe president.
Bombay Plan(1944) :Eight industrialists of Bombay, viz. J.R.D. Tata, G. D. Birla. Purshottamdas Thakurdas, Lala Shriram, Kasturbhai Lalbhai, A.D. Shroff, Ardeshir Dalal and John Mathai working together prepared Brief Memorandum Outlining a Plan of Economic Development for India’,called the Bombay Plan.
Gandhian plan(1944) : It was drafted by Sriman Nayaran. This plan emphasised the economic decentralisation with primary to rural development by developing the cottageindustries.
People’s Plan(1945) : It was drafted by M. N. Roy for a 10 year period with greater priority given to agriculture Nationalisation of all agriculture related productions was the main feature.
Planning Advisory Board(1946) : It was set up by interim the government of the time to review plans and future projects, and make recommendations upon them.
Economie Programme Committee (EPC)1947: This was formed by All India Congress committee to make a plan to balance private and public partnership and urban and rural economies. This committee recommended from the Planning Commission.
Sarvodaya plan(1950) : It was drafted by Jaiprakash Narayan. This plan emphasised on agriculture and small &cottage industries. It suggested freedom from foreign technology and stressed upon land reforms.
Planning Commission(1950) : With Jawarharlal Nehru being the first chairman of Planning Commission, this commission was charged with the responsibility of making assessment of all resources of the country, increasing the deficient resources, formulating plans for the most effective and balanced utilisation of resources.
Five-Year Plans Long-term Objectives :
1.A high rate of growth with a view to improvement in standard of living.
3.Modernisation of economy
Strategies Of Planning :
1. Harrod-Domar Strategy :The first five year plan was based on this strategy. It emphasise on the role of capital accumulation’s dual character, i.e.:
(a) It increases the national income.
(b) It also increases the production capacity.
Now it depends on planners to determine at what rate the net investment should increase so as to balance and demand and supply side for the achievement of full employment equilibrium in the long run.
2. Nehru Mahalanobis Strategy – This strategy was based on a two-sector model, i.e. consumer goods sector and capital goods sector. The strategy emphasised investment in heavy industries to achieve industrialisation for rapid economic development based on the Russian strategy.The objective of the strategy was to become selfreliant and overcome capital constraint.The strategy was adopted in the 2nd Five Year plan and continued till 5th Five Year Plan. It is a long term strategy.
Gandhian Strategy : It was coined by Acharya Sriman Narayan Agarwal in 1944.The basic objectives of the ‘Gandhian modelwere to raise material as well as cultural level of masses to provide a basic minimum standard of life. The strategy emphasise on scientific development on agriculture and rapid growth of cottage and village industries Hence, this strategy focussed on employment oriented planning rather than the production oriented planning of Nehru-Mahalanobis strategy.
4. LPG(Liberalisation Privatisation and
This was coined by Rao-Singh [P.V. Narsimha Rao and Manmohan Singh)This strategy ended the Licence Permit Raj. It encourages privatisation and allowsforeign direct investment (FDI)This model changed the nature of planning from centralised to indicative planning.
5. PURA [Providing Urban Amenities in Rural Areas] strategy:
This was a brainchild of A. P. J. Abdul Kalam This strategy focus on providing four types of connectivity to rural areas,
(i) Physical connectivity (roads, railways,
(ii) Electric connectivity
(iii) Knowledge connectivity
(iv) Economic connectivity
The objective of this strategy was to enhance the prosperity of cluster of villages in rural areas. New Gandhian strategy is also known as PURA. Presently, a new concept of PURA has been formulated by the name PURA 2.0 which focuses on census towns with three criteria:
(a) Population of 5,000
(b) Density 400 persons per square km
(c) At least, 75% of male work engaged in nonagricultural activities.
Planning Commission: Soon after Independence, the Government of India constituted Planning Commission on 15th March 1950 for assessment of the country’s needs of material capital and human resources and to make economic plans for this more balanced and efficient utilisation.Planning Commission was established in accordance with the Directive Principles of the Indian Constitution, but there is no provision for Planning Commission in the Constitution of India.
Functions of Planning Commission
1.The Commission estimated the physical capital and human resources
2.The Commission prepared plan for maximum effective and fair use of national resources.
3.It determines the steps of planning and distribution of resources on priority basis. The Commission suggests solutions to overcome obstacles in the economic development.
4.The Commission makes critical analysis of each step and gives reformative suggestions To determine priorities and define stages in which the plan should be divided and propose the allocation of resources. Final clearance to planning is given by National Development Council.
National Development Council (NDC):It was constituted on 6th August 1952 with Prime Minister of Ex-officio Chairman and the secretary of the Planning Commission as the Ex-officio Secretary of the NDC. All members of Planning Commission and ministers of all the states are the members of NDC. Its aim is to make a co-operative environment for economic planning between the states and the Planning Commission.NDC is a constitutional body.
Function of NDC:
(i) To make co-operative environment for economic planning between states and the Planning Commission.
(ii) To analyse the policies that affects the development.
(iii) To evaluate the management of plans time to time
(iv) To give final shape to the plans by giving final approval to the Five Year plans.
(v) It also gives suggestions to achieve the fixed objectives in the plan.
Five-Year Plans in India:
The Five-Year Plan in India is framed, executed and monitored by the Planning Commission of India.Jawaharlal Nehru was the chairman of the first Planning Commission of India.The prime minister of India acts as the chairman of Planning Commission.