POLITICAL SCIENCE

PROJECT

Topic: PLANNED ECONOMIC

DEVELOPMENT

By: Jiyanshi and siddhi, 12th F

 INTRODUCTION
What is economic development?
Economic development as development of land and buildings for activities that
generate wealth, jobs and incomes. Economic land uses include the traditional
employment land uses (offices, research and development, industry and
warehousing), as well as uses such as retail, tourism, and public services. The
construction and energy sectors are also important to the economy and are
sensitive to planning policies.’
The planning system must provide for ‘the needs of the entire economy’, not
just some selective classes, which are traditionally called ‘employment uses. In
effect, the new definition upgrades the status of the non-B economic land
uses. Its central message is that planners should treat all economic land uses as
important and valuable, not just the traditional employment uses.

How was planning for economic development done?

Planning is changing in nature as it involves a number of variables that keep on
changing. Such variables are known as POSDCORB which coined by Luther
Gulick. POSDCORB contain First letter of seven administrative functions,
namely Planning, Organizing, Staffing, Directing, Coordinating, Reporting, and
Budgeting, beyond POSDCORB, politics, especially the compulsion of electoral
politics and the change of government(s) do count. Efforts have been made to
understand two variables planning at different levels and change of
governments at the Centre.
The planning system should support economic and employment growth
alongside social and environmental considerations within the context of
sustainable development. To this end, the planning system, including planning
policies, should aim to ensure that the growth of output and employment in
Wales as a whole is not constrained by a shortage of land for economic uses.
PRINCIPLES:
-It would be wrong to assume that economic objectives are necessarily in
conflict with social and environmental ones. Often these different dimensions
point in the same direction. Planning should positively and imaginatively seek
such ‘win-win’ outcomes, where development contributes to all three
dimensions of sustainability.
-Where economic development would cause environmental or social harm
which cannot be fully mitigated. PPW does not imply that the economy should
always, or even often, take precedence. There will of course be occasions
when social and environmental considerations will outweigh economic benefit.
The right decision in each case will depend on the circumstances and the
planning authority’s priorities.
- It is a central objective of the planning system to steer development to
sustainable locations. Therefore, where a proposed development would cause
significant environmental or social harm, demand should be steered to
alternative locations, unless the harm is outweighed by the additional benefit
of development at the site originally proposed. Such alternative locations will
not necessarily be in the same local authority area.
PLANNED ECONOMIC DEVELOPMENT IN INDIA

After independence planning commission established by advised of National

Planning Committee (1949). In March 15, 1950 Planning Commission was set
up by the government by Cabinet Resolution. The Planning Commission
ordinate for assessment of materials capital and human resources planning
achieved growth and social justice. It was an extra-constitutional i.e., non-
constitutional and non-statutory body though planning originates from the
Constitution there is no reference to the Planning Commission in it. An
advisory body to the Government of India on an array of issues of economic
development a 'think tank' on economic development with the Prime Minister
as its ex-officio Chairman and with the provision or a Deputy Chairman. The
function of the Deputy Chairman is to co-ordinate the work of the Commission.

Objectives of Indian Plans:

In LDCs like India, the paramount objective of an economic plan is

to bring into new forms of productive capital, which will raise the
overall productivity of the economy and, thus, raise people’s income
by providing them adequate employment opportunities and,
thereby, remove the twin problems of destitution and mass poverty.
Each FYP had short term as well as long term objectives.
1. Higher economic growth
Through development of the economy, the country aims at
increasing national and per capita incomes. Thus, poverty will
be removed and the standard of living will be improved.
National income in the First Plan increased by 18 p.c. against
the targeted growth rate of 11 p.c.

2. Full employment level

Removal of unemployment is considered another important
objective of India’s Five Year Plans. But, unfortunately, it
 never received the priority it deserved. In the Sixth Plan (1978-
83) of the Janata Government, employment was accorded a
pride of place for the first time. However, the Seventh Plan
treated employment as a direct focal point of policy. As a
result, the employment generation programme in India
received a rude shock and the problem of unemployment is
mounting up plan after plan.

3. Economic equality
A rise in national income with concentration of economic
power in the hands of a few people is not desirable. In India’s
socio-political set-up, vast inequalities exist. Indian plans aim
at reducing such inequalities, so that the benefits of economic
development percolate down to the lower strata of the society.

4. Social justice
The objective of removal of poverty got its clear-cut
enunciation only in the Fifth Plan for the first time. Due to the
defective planning approach, income inequality widened and
poverty became rampant. The incidence of poverty was on the
rise.

5. Self-reliance
 it means zero foreign aid. India is typically a dependent
economy. She is used to import huge food grains, fertilizers,
raw materials and industrial machinery and equipments. But
this objective could not be concertised before the launching of
the Fourth Plan.

6. Modernization
The important component of modernisation is the develop-
ment of a diversified economy that produces a variety of
goods. This requires the setting up of a variety of industries. It
also refers to an advancement of technology. No doubt certain
technological advances have taken place in agriculture, energy,
etc. But there is a real danger of this objective in the present
context.
Features of India’s Five-Year Plans:
Development planning mainly concentrates on laying the foundation for
achieving the general goal of increasing per capita incomes. These efforts
include establishing a set of economic and social statistics and providing the
appropriate economic infrastructure such as road networks, power facilities,
educational institutions and goal of industrialization.

 1950 Planning Commission:

After independence, the Planning Commission was set up by the
Government of India in March 1950. The Commission was
instructed to
(a) make an assessment of the material capital and human
resources of the country, and formulate a plan for the most effective
and balanced utilisation of them;
(b) determine priorities, define the stages for carrying the plan and
propose the allocation of resources for the due completion of each
stage;
(c) identify the factors which tend to retard economic development;
and
(d) determine the conditions which (in view of the then current
socio-political conditions) should be established for the execution of
the plan.

The Timing of These Eleven Plans are Given here in a

Tabular Form:
Five Year Planning:

Though India’s plans are of a 5-year period, such planning is linked

with a long-term view. Sino-India War (1962), Indo-Pak War
(1965), and the unprecedented drought in the mid-60s forced to
adopt the approach of ‘plan holiday’ from the Fourth Five Year Plan.
Instead of a regular Five-Year Plan, planning was discontinued
through three ad hoc Annual Plans during the period 1966-69.

THE major plans:

Since its inception, the Planning Commission has
prepared 11 five-year plans, each focusing on different
objectives as under:
1. First Five-Year Plan (1951-56):
In this plan top priority was given to agriculture and irrigation.

2. Second Five-Year Plan (1956-61):

It was concentrated on relatively underprivileged sections of society
and gave importance to heavy industrial development.

3. Third Five-Year Plan (1961-66):

It emphasized on securing self-sustained growth.

Plan Holiday (1966-69):

To rectify the ills of the bad economy that had crippled in the
planning process and to finish the unfinished tasks of the Third
Plan.

4. Fourth Five-Year Plan (1969-74):

It aimed at creating economic stability, reducing inequalities and to
increase national income by 5.5 per cent.

5. Fifth Five-Year Plan (1974-79):

Its main objective was to remove poverty, increase employment
opportunities and attainment of self-reliance.

6. Sixth Five-Year Plan (1980-85):

In this plan too the main stress was on the removal of poverty,
elimination of unemployment, strengthening the public distribution
system, control of increasing population and to achieve economic
growth.

7. Seventh Five-Year Plan (1985-90):

It emphasized on increasing food, work and productivity with
improvement in the quality of life of the poor. Top priority was
given to human development as the core of all development efforts
in this plan.

Yearly Plans—1990-91 and 1991-92.

8. Eighth Five-Year Plan (1992-97):

Its main emphasis was on employment generation.

9. Ninth Five-Year Plan (1997-2002):

It was the most ambitious and growth-oriented plan. It revived the
First Plan objectives, i.e., agriculture and irrigation, and were given
top priority. Along with agriculture, employment generation,
poverty removal and infrastructure development were the main
planks of this plan. It is also known as ‘delivery oriented’ plan.

10. Tenth Five-Year Plan (2002-07):

In this plan, social sector was given priority. Many schemes of social
welfare, such as elementary education, primary health care,
nutrition, water supply and programmes of development for women
and children, were launched. The major emphasis in this plan was
on Green Revolution.

:
11. Eleventh Five-Year Plan (2007-12):
It aims to achieve improved quality of life for the citizens of the
state and contribute to the larger national goals of socio-economic
development. It envisages an average of 9 per cent GDP growth. But
the plan achieved 8.2 per cent growth.

12. Twelfth Five-Year Plan (2012-17):

Its main theme is ‘faster, sustainable and more inclusive growth’.
The growth target of the plan is 8-9 per cent. Thus, notwithstanding
the primary aim of all the successive five-year plans being economic
development (mainly increased productivity and provision of
adequate income) along with social justice, due importance was
given to social aims, i.e., provision of education, social security and
social welfare schemes.

While up to the Eighth Plan, all plans were concentrated either on

agriculture or industrial development, but since the adoption of the
policy of liberalization in 1991, the priorities and the structure of the
Ninth and Tenth Plans have gone major sea change.

Except the First and the Sixth Plans, no other plan attained the
target. In spite of so much emphasis on different issues such as
agriculture and industrial growth and social justice, etc., poverty
and unemployment have increased.
Indian Economy under Five Year
Plan Period: Achievements and
Failure

Achievements of Planning:

1. A Higher Growth Rate:

Economic planning in India aims at bringing about a rapid
economic development in all sectors.

That is to say, it aims at a higher growth rate. India’s

macroeconomic performance has been only moderately good in
terms of GDP growth rates.

The overall rate of growth stands at 4.8 per cent for the whole
planning period (1950-2007) Compared with India’s own past
(1900- 1920) when she was caught in a low level equilibrium trap,
growth acceleration during the last 60 years has been impressive
indeed.

2. Growth of Economic Infrastructure:

India’s performance in building up the necessary economic
infrastructure is really praiseworthy. At the inception of economic
planning, road kilometer was 4 lakh kms. India has now more than
3 million km of road network, making it one of the largest in the
world.

Railway route length increased from 53,596 kms in 1951 to nearly

63,500 kms in 2005- 06. Today, the Indian railway system is the
largest in Asia and the fourth largest in the world. Similarly, other
modes of transport like shipping, civil aviation, etc., have also
expanded phenomenally.

3. Development of Basic and Capital Goods Industries:

Another major area of success of Indian planning is the growth of
basic and capital goods industries. With the adoption of the
Mahalanobis Strategy of development during the Second Plan
period, some basic and capital goods industries like iron and steel
witnessed spectacular growth.

4. Higher Growth of Agriculture:

The most significant aspect of India’s Five Year Plans is that the
overall rate of growth of food production has now exceeded the rate
of growth of population. Though in the early years of planning,
agricultural performance was miserable resulting in the emergence
of food crisis.

But now, due to the impact of bio-chemical revolution in Indian

agriculture, food crisis seems to be a thing of the past. She has
attained self-sufficiency in food grains.

5. Savings and Investment:

The rise in the domestic savings rate from 10 p.c. of GDP at the
initial stages of planning to around 19 p.c. in 1980-81 is definitely
impressive. However, this rate increased to 34.8 p.c. by the end of
March 2007. Similarly, India’s record in gross domestic capital
formation rose from 20.3 p.c. in 1980-81 to 22.8 p.c. of GDP in
2001- 02. But it rose to 36 p.c. in 2006-07.

Major Failures of Planning:

1. Inadequate Growth Rate:
In quantitative terms, the growth rate of the Indian economy may
be good but not satisfactory by any standards. Except the First and
Sixth Five Year Plans, the actual growth rate remained below the
targeted growth rates of GNP and per capita income.

Only in recent plans (both Ninth and Tenth plan), actual growth
rate has exceeded the plan targets. In terms of per capita income,
India is one of the poorest nations of the world even after more than
58 years of democratic planning.

2. Whither India’s Socialistic Society:

Indian planning aims at building up a ‘socialistic pattern of society’,
in an otherwise capitalistic framework, through various socialistic
measures. We have not yet made any significant progress towards
the goal of attaining a socialistic pattern of society even after nearly
58 years of planning.

The concept of socialistic pattern of building a society has been

altogether discarded when we introduced new economic policy
measures in mid-1991. Instead, Indian economy very much moves
on the capitalistic path.

3. Economic Inequality and Social Injustice:

The twin aspects of social justice involves on the one hand, the
reduction in economic inequalities, and, on the other, the reduction
of poverty. A rise in national income with concentration of
economic power in the hands of a few people is not desirable.

In an otherwise capitalist framework, inequality in the distribution

of income and wealth is inevitable. In India’s socio-political set-up,
vast inequalities exist. Indian plans aim at reducing such
inequalities, so that the benefits of economic development percolate
down to the lower group of the society.

The objective of removal of poverty got its clear-cut enunciation

only in the Fifth Plan for the first time. Due to the defective
planning approach, income inequality widened and poverty became
rampant. The incidence of poverty was on the rise. It is now nearly
28 p.c. (2004-05).

4. Unemployment:
Removal of unemployment is considered to be another important
objective of India’s Five Year Plans. But, unfortunately, it never
received the priority it deserved. In the Sixth Plan (1978-83) of the
Janata Government, employment was accorded a pride of place for
the first time.

On the last day of 2014, curtains came down on the last relic of the
Nehruvian socialist economy with the Union Government replacing
the Planning Commission (Yojna Aayog) with another Aayog, the
National Institution for Transforming India, known as NITI Aayog.

NITI AAYOG
National Institution for Transforming India, also known as NITI Aayog, was
formed via a resolution of the Union Cabinet on 1 January 2015. NITI Aayog is
the premier policy think tank of the Government of India, providing directional
and policy inputs. Apart from designing strategic and long-term policies and
programmes for the Government of India, NITI Aayog also provides relevant
technical advice to the Centre, states and union territories (UTs). NITI Aayog
acts as the quintessential platform for the Government of India to bring states
to act together in national interest, and thereby fosters cooperative
federalism. On 6 June 2019, the Prime Minister approved the reconstitution of
NITI Aayog.

The NITI Aayog will comprise the following:

1. Prime Minister of India is the Chairperson

2. Governing Council consists of the Chief Ministers of all the States and Lt.
Governors of Union Territories in India.
3. Regional Councils will be created to address particular issues and
possibilities affecting more than one state. These will be formed for a
fixed term. It will be summoned by the Prime Minister. It will consist of
the Chief Ministers of States and Lt. Governors of Union Territories.
These will be chaired by the Chairperson of the NITI Aayog or his
nominee.
 4. Special invitees: Eminent experts, specialists with relevant domain
knowledge, which will be nominated by the Prime Minister.
5. The full-time organizational framework will include, in addition to the
Prime Minister as the Chairperson:
1. Vice-Chairperson (appointed by the Prime Minister)
2. Members:

 Full-time
 Part-time members: Maximum of 2 members from
foremost universities, leading research organizations, and
other innovative organizations in an ex-officio capacity.
Part-time members will be on a rotational basis.
3. Ex Officio members: Maximum of 4 members of the Council of
Ministers which is to be nominated by the Prime Minister.
4. Chief Executive Officer: CEO will be appointed by the Prime
Minister for a fixed tenure. He will be in the rank of Secretary to
the Government of India

The NITI Aayog is based on the 7 pillars of effective Governance. They are:

1. Pro-people: it fulfils the aspirations of society as well as individuals

2. Pro-activity: in anticipation of and response to citizen needs
3. Participation: involvement of the citizenry
4. Empowering: Empowering, especially women in all aspects
5. Inclusion of all: inclusion of all people irrespective of caste, creed, and
gender
6. Equality: Providing equal opportunity to all especially for youth
7. Transparency: Making the government visible and responsive

What is the Importance of NITI Aayog?

 The 65 year-old Planning Commission had become a
redundant organization. It was relevant in a command
economy structure, but not any longer.
 India is a diversified country and its states are in various
phases of economic development along with their own
strengths and weaknesses.
  In this context, a ‘one size fits all’ approach to economic
planning is obsolete. It cannot make India competitive in
today’s global economy.

NITI Aayog Planning Commission

It serves as an advisory Think Tank. It served as extra-constitutional body.

It draws membership from a wider expertise. It had limited expertise.

It serves in spirit of Cooperative Federalism as States participated as spectators in annual plan

states are equal partners. meetings.

Secretaries to be known as CEO appointed by

Prime- Minister. Recently, Parmeswaran Iyer Secretaries were appointed through usual process.
became the CEO of NITI Aayog. 

It focuses upon ‘Bottom-Up’ approach of Planning. It followed a ‘Top-Down’ approach.

Imposed policies on states and tied allocation of

It does not possess mandate to impose policies.
funds with projects it approved.

It does not have powers to allocate funds, which are It had powers to allocate funds to ministries and state
vested in Finance Minister. governments.
 NDC- NATIONAL DEVELOPMENT COUNCIL
The National Development Council (NDC) or Rashtriya Vikas Parishad
is the apex body for decision creating and deliberations on
development matters in India, presided over by the Prime Minister.
first ndc meeting was held by jawaharlal nehru
National Development Council was set up on August 6, 1952, to
strengthen and mobilize the effort and resources of the nation in
support of the Plan, to promote common economic policies in all
vital spheres, and to ensure the balanced and rapid development of
all parts of the country.
National Development Council was set up in the year 1952
composition of ndc
The Council comprises the Prime Minister, the Union Cabinet
Ministers, Chief Ministers of all States or their substitutes,
representatives of the Union Territories and the members of the NITI
Aayog
OBJECTIVES OF NDC
to prescribe guidelines for the formulation of the National Plan,
including the assessment of resources for the Plan;
to consider the National Plan as formulated by the NITI Aayog;
to make an assessment of the resources that are required for
implementing the Plan and to suggest measures for augmenting
them.
To consider important questions of social and economic policy
affecting national development; and
to review the working of the Plan from time to time and to
recommend such measures as are necessary for achieving the aims
and targets set out in the National Plan.
To recommend measures for achievement of the aims and targets
set out in the national Plan.
CRITICISM
NDC (National Development Council) has been proposed to be
abolished. But till date no resolution has been passed to abolish it.
Since the inception of NITI Aayog's Governing Council (which has
almost the same composition and roles as NDC), the NDC has had no
work assigned to it nor did it have any meetings. During the tenure of
former Prime Ministers Atal Bihari Vajpayee and Manmohan Singh it
was felt that Planning Commission has outlived its life and needs
some reform. In 2014, Prime Minister Narendra Modi announced
Planning Commission's abolition and created NITI Aayog through an
executive resolution. It is neither a constitutional body nor a
statutory body..
CONCLUSION-

The Indian economy provides a revealing contrast between how individuals react under a
government-controlled environment and how they respond to a market-based environment.
The evidence presented here suggests that recent market reforms encouraging individual
enterprise have led to higher economic growth in that country. The reasoning here is not new,
although it is refreshing to discover that this “tried-and-true” reasoning applies to developing
as well as to developed nations. Specifically, reliance upon a free market, with its emphasis
upon individual self-interest in survival and wealth accumulation, can yield a wide range of
economic benefits. In India those benefits have included, among other things, increased
economic growth, reduced inflation, a smaller fiscal deficit, and higher inflows of the foreign
capital needed for investment

Decentralized Planning:

Restructure the planning process into a bottom-up model, empowering States,

and guiding them to further empower local governments; in developing
mechanisms to formulate credible plans at the village level, which are
progressively aggregated up the higher levels of government.

Vision & Scenario Planning:

Design medium and long-term strategic frameworks of the big picture vision
of India’s future - across schemes, sectors, regions and time; factoring in all
possible alternative assumptions and counterfactuals. These would be the
drivers of the national reforms agenda, especially focused on identifying critical
gaps and harnessing untapped potentialities. The same would need to be
intrinsically dynamic with their progress and efficacy constantly monitored for
necessary midcourse recalibration; and the overall environment (domestic and
global) continuously scanned for incorporating evolving trends and addressing
emerging challenges.
REFERENCES:

 book journal12_2.pdf (unescap.org)

 Indian Economy under Five Year Plan Period: Achievements and Failure
(economicsdiscussion.net)
 India's Economic Plans: History, Characteristics and Objectives
(economicsdiscussion.net)
 [Burning Issue] Niti Ayog - A critical Analysis - Civilsdaily
 Economic Planning in India: Achievements and Failures (economicsdiscussion.net)