Evolution of Economic Planning in India

Economic Planning is the process in which the limited natural resources are used skilfully so as to achieve the desired goals. The concept of Economic Planning in India is derived from Russia (the then USSR). It is mainly focused on the welfare of citizens of india through the allocation of resources. The Constitution of India makes the provision of socio economic planning in the Concurrent list. The economic planning idea was first coined by Dadabhai Naoroji in his book ‘Poverty of India’ (1878).

Visvesvaraya Plan

M. Visvesvaraya is known as the 'Father of Indian Planning'. He is also known as the father of Indian Engineering. The era of economic planning in India started with Visvesvaraya’s ten-year Plan. In his book "Planned Economy in India," published in 1934, Sir M. Visvesvaraya proposed a plan to double the national income within ten years. In order to promote democratic capitalism (like that of the USA) with a focus on industrialization, he suggested moving labor from the agrarian set up to the industries. Although the British government did not implement this plan, it was successful in igniting the nation's educated citizens' desire for national planning.

National Planning Committee

National Planning Committee was the first attempt to develop a national plan for India. In 1938, the Indian National Congress formed the National Planning Committee. Its chairman was Jawaharlal Nehru and the general editor was K.T. Shah. Although the committee started functioning in 1938, the chairman Nehru was arrested by the British. However, the committee continued with its activities. The committee gave importance to the areas of agriculture, industry, employment and population, trade and finance, transport and communication, health and housing, education, etc. The National Planning Committee prepared a plan for the overall development of India. The papers finally came out after independence in 1948-49. In March 1950, the government appointed a Planning Commission. Nehru was its chairman. The Planning Commission prepares the Five Year Plans.

Gandhian Plan

In 1944, S.N.Agarwal formulated the Gandhian Plan. S.N.Agarwal is known as the father of Gandhian planning. The Gandhian Plan was formulated on the basis of Gandhian ideals. The plan aimed at economic decentralization and rural development through the promotion of cottage industries. Narayan Agarwal served as the Principal of Wardha College. The introduction to Gandhian Planning was written by Mahatma Gandhi. J.C.Kumarappa was one of the main proponents of Gandhian economics.

Bombay Plan

The Bombay Plan was a plan formulated and prepared in 1944 by 8 prominent industrialists of Bombay. J. R. D. Tata, Ghanshyam Das Birla, Ardeshir Dalal, Lala Shri Ram, Kasturbhai Lalbhai, Ardeshir Darabshaw Shroff, Sir Purshottamdas Thakurdas and John Mathai formulated the Bombay Plan. The original name of this plan was “A Brief Memorandum Outlining a Plan of Economic Development of India”. Ardeshir Dalal led this plan. Ardeshir Dalal was the chairman of the Planning and Development Department formed by the British Government of India in 1944. John Mathai was a Keralite who worked behind the Bombay Plan.

People’s Plan

The People’s Plan was formulated by M.N. Roy. This plan gave first priority to agriculture. It was based on ‘Marxist Socialism’. People’s plan was advocated by M.N Roy on behalf of the Post War Re-Construction Committee of the Indian Labour Federation in 1944. M.N. Roy brought the People’s plan in 1945. People’s plan is also known as the ‘Radical Plan’.

Sarvodaya Plan

The Sarvodaya Plan of 1950 was proposed by Jayaprakash Narayan. This plan was inspired by the Gandhian Plan and some of the ideas of Vinobha Bhava. It gave importance to agriculture as well as small scale and cotton industries.

Perspective Plan

In addition to the specific goals to be achieved in five years, India’s plan documents also specify what we need to achieve in 20 years. This long-term plan is called the Perspective Plan.

Planning Commission 

The Planning Commission of India came into existence on 15 March 1950. It is not a constitutional body. The Commission has the status of an advisory body. The Directive Principles are the constitutional part that led to the formation of the Planning Commission. The draft of the five-year plans prepared by the Planning Commission was finally approved by the National Development Council (established in August 1952). The Prime Minister of India is the chairman of the Planning Commission and the National Development Council. The National Development Council is the highest body authorized to take policy decisions after the Parliament. The Vice-Chairman and members of the Planning Commission were appointed by the Union Cabinet. The poverty line in India was determined by the Planning Commission. The Planning Commission submitted the draft of the Five-Year Plan to the Union Cabinet. The Commission was abolished in August 2014. The Planning Commission prepared plans worth 200 lakh crores during its 65-year period. Twelve Five-Year Plans were planned. The first Chairman of the Planning Commission was Jawaharlal Nehru. Gulzarilal Nanda was the first Vice-Chairman. Montek Singh Ahluwalia was the last Vice-Chairman. The Chief Minister is the Chairman of the State Planning Commission. NITI Aayog came into existence on January 1, 2015, replacing the Planning Commission.

National Development Council

The National Development Council (NDC) was constituted by the central government on 6th August 1952 to give final approval to the decisions of the Five Year Plan. It is a constitutional body. The Prime Minister of India is the Ex-officio Chairman and Secretary of Planning Commission is the Ex-officio Secretary of the National Development Council. Members of National Development Council are Chief Ministers of all the states and the members of Planning Commission. Its aim is to make co-operative environment for economic planning between states and Planning Commission. The National Development Council is the highest policy-making body after Parliament.

NITI Aayog

NITI Aayog (National Institution for Transforming India) is an institution that replaced the 65-year-old Planning Commission. It came into existence on 1 January 2015. The Prime Minister will head the NITI Aayog. Its objective is to promote a development model that emphasizes federal ideas. NITI Aayog is tasked with the role of formulating policies and direction for the government. Its governing council will comprise of the Chief Minister and the Lieutenant Governers of Union Territories. The Prime Minister will appoint the Vice Chairperson and Chief Executive Officer of NITI Aayog. The Aayog will recommend a national agenda including strategic and technical advice on elements of policy and economic matters. It will also develop mechanisms for village level plans and aggregate these progressively at higher levels of government.