Planning in India


Planning is the process of setting up objectives to achieve desired goals. Planning Commission in India was established as a non-constitutional and non-statutory body in 1950.

Economic planning involves allocation of resources based on the availability and socio-economic goals.

Planning: Need

  • Physical, financial and human resources are scarce in nature.
  • History of colonial exploitation has resulted in centuries of drain of wealth.
  • In 1950s, there was a looming threat of capitalism being exploitative in nature too.
  • Physical infrastructure in terms of irrigation, power, transport, roads were at a bare minimum.
  • Socio-economic indicators such as health, education, sanitation which determined the quality of life of people were poor.
  • India being a young democracy was fragile due to the consequences of Partition.

Planning: Objectives

  • To ensure wholistic economic growth in terms of increasing GDP and Per capita income.
  • To modernize India in terms of physical infrastructure by adopting right machinery.
  • To be self-reliant by utilizing the available resources efficiently.
  • To ensure social justice through equitable distribution of wealth and resources.

 Planning: Types

  • Democratic planning where the plan is formulated by elected representatives.
  • Indicative planning where both public and private sector participate in planning but the core industries remain nationalised. It is usually followed in mixed economies such as India.
  • Imperative planning where full control is exercised by the State in making the plan. It is a target-based planning where there is no role for market.
  • Normative Planning involves bottom-up planning where the local inputs are considered while planning.
  • Perspective planning where long term implications of short/medium term policies are considered. It is a kind of vision document.
  • Financial planning where the resources allocated/ estimated in monetary terms reflecting the financial situation better.
  • Physical planning where resources allocated/ estimated in real terms. For e.g., labour force, capital stock
  • Rolling Plan/ Continuous Planning is a process where medium term plan is prepared and assessment of previous plan is included too.

Planning Commission: India’s Five year plans

First Five Year Plan: 1951-1955
  • Harrod Domar Model which led to high investment in heavy industries
  • Focus areas were Irrigation (Bhakra Nangal, Damodar, Hirakund); Land Reforms; Higher Education
Second Five Year Plan: 1956-1960
  • Mahalanobis Strategy emphasized on strengthening  heavy industry based (Durgapur, Bhilai, Rourkela Steel Plants)
  • Financial and Technical assistance boost from USSR, UK, West Germany.
Third Five Year Plan:1961-1966
  • In the backdrop of Indo-Pak War, Sino-India War, a 2-year continuous drought and 30% fall in food grain
  • PL480 aid  from USA and followed Gadgil formula to allocate grants.
Plan holidays: 1966-1969
  • Included 3 Annual plans; Focus on increasing exports
  • New Agriculture Strategy with HYV seeds and Irrigation
Fourth Five Year Plan:1969-1974
  • Socialist tilt under Indira Gandhi; 14 Banks nationalised; Abolition of Privy purses
  • Green revolution; Indo-Pak war and Refugee crisis from Bangladesh
Fifth Five Year Plan:1974-1979
  • Focused on Poverty Alleviation Programme; Slogan was ‘Garibi Hatao’
  • Launched Minimum Needs Programme and Twenty-point programme
  • Carried out in the  backdrop of Emergency
Rolling Plan:1978-1979
  • Appraisal of Plan Performance before next year plan
Sixth Five Year Plan:1980-1985
  • Gradual Liberalisation of the economy; National Rural Employment Programme; Integrated Rural Development Programme; Shift from Heavy industrialisation to Infrastructure
Seventh Five Year Plan:1985-1990
  • Focus on Service Sector and liberalisation continued
  • Technological Reforms by Rajiv Gandhi government
Two Annual Plans:1990-1992
  • In the backdrop of political instability and economic crisis
  • 1991 Reforms were implemented
Eighth Five Year Plan:1992-1997
  • First plan after LPG reforms, High GDP growth-13%; fiscal deficit and CAD were very low; Investment in infrastructure; Restructuring subsidies; Decentralised planning; Problem of Jobless growth
Ninth Five Year Plan:1997-2002
  • Exports declined due to East Asian Crisis and  foreign capital inflows reduced
  • Coalition government created political instability
  • Sanctions were imposed due to Pokhran Nuclear Test
  • Focus areas of the plan: Population control; Generating employment; poverty reduction ; self-reliance in agriculture.
Tenth Five Year Plan:2002-2007
  • Focus areas of the plan: Doubling per capita income in 10 years; Ensuring proper ‘Governance’ and public service delivery;  Agriculture as Prime Moving Force (PMF)
  • Features: Higher Foreign capital inflows and highest growth in services (savings and investment rate crossed 30%)
Eleventh Five Year Plan:2007-2012
  • ‘Fast and inclusive growth’ 2008 Global financial crisis
  • Tendulkar Committee on Poverty Measurement
  • TFR (Total Fertility Rate) target of 2.1%
Twelfth Five Year Plan:2012-2017
  • ‘Faster, Sustainable and More Inclusive Growth’
  • 25 Core monitorable targets
  • GDP growth at 8%; Agriculture growth at 4% and Manufacturing growth at 10%.


Planning Commission: Achievements

  • India is the fifth largest economy by Gross Domestic Product and third largest economy by Purchasing Power Parity.
  • Percentage of people below poverty line reduced from 45% in 1994 to 22% in 2023.
  • All the social indicators such as literacy rate, infant mortality rate, maternal mortality rate, sanitation facilities have immensely improved.
  • Many steps such nationalization of banks, green revolution, poverty alleviation and self-employment generation programmes have bettered the socio-economic structure of the economy.
  • Transformative public infrastructure investment in railways, ports, airports, roads has created integrated ecosystem for several industries.

Planning Commission: Issues

  • The five year plans could not ensure balanced regional development which was the main drawback.
  • It adopted a one-size fits all approach because of highly centralized and top down planning mechanism.
  • Excessive emphasize on heavy industries which had long gestation period and as a result investment in social capital has taken a backseat.
  • Political interference in the planning process which deviated the set objectives for short term gains.

As a result, Planning Commission was dissolved in 2014 and NITI Aayog was established to transform the planning process in India.


Print Friendly and PDF