Planning Commission of India

• The Planning Commission of India was formed on 15 March 1950. It formulated the Five-Year Plans of
India. On 17 August 2014, it was dissolved and replaced by the NITI Aayog.
• The Five-Year Plans were the plans crafted for the Indian economy. The idea was inspired by Joseph
Stalin’s Five Year Plan in the USSR which was implemented in the late 1920s.
• Even before independence, a National Planning Committee was established by Subhas Chandra Bose in
1938. He was convinced by scientist Meghnad Saha to set up one
• The British government had also formed an Advisory Planning Board headed by K C Neogy. It
functioned for two years from 1944 to 1946
• The chairman of the Planning Commission was the Prime Minister ex-officio. The Deputy
Chairman had the rank of a cabinet minister.
• Other fulltime members were experts from various fields like economics, science, agriculture,
industry, commerce, administration, etc.
• Other members of the Commission also included ministers of finance, chemicals, home,
agriculture, fertilizers, law, information technology, etc.
• The Commission assessed the resources of the country, material, human and capital. Then, it
generated policies for the balanced utilization of the resources.
 First Five Year Plan

➢ It was launched for the duration of 1951 to 1956, under the leadership of Jawaharlal Nehru.

➢ first five years (1951 – 1956) plan was drafted by the economist K.N Raj (Kakkadan Nandanath Rajan) and was based on the Harrod-
Domar model – a Keynesian model of an economic plan. The plan was to save more of India’s capital for bigger future investments and
low capital investment in the meantime with a more efficient growth rate and income

➢ India’s first five-year plan, launched in 1951, focused on agriculture and irrigation to boost farm output as India was losing precious
foreign reserves on foodgrain imports.

➢ Therefore it sought to boost economic growth through higher savings and investments.

➢ The plan was a success, with the economy growing at an annualized 3.6%, beating the target of 2.1%.
1. The plan aimed to save as much capital as possible for bigger projects in future.
2. To increase per capita income.
3. To improve the primary sectors’ overall efficiency.
4. To produce more.
5. To lessen the dependency on foreign exchanges.
6. To provide employment.
7. To render shelters and food supplies for the refugees.
8. To control output investments and focus on generating inward capital.
9. To rehabilitate the landless farmers.
10. To control inflation
 Second Five Year Plan 1956-1961
• It was made for the duration of 1956 to 1961, under the leadership of Jawaharlal Nehru.
• It was based on the P.C. Mahalanobis Model made in the year 1953. (This plan gave priority to investment goods, as
they were crucial for the further economic growth of India. The plan explores the allocation of investment between the
different sectors of the economy.)
• The Second Five Year Plan revolved around the idea of developing the public sector and rapid industrialization ( iron
and steel and heavy engineering and also to strengthen the oil exploration and coal.)
• The plan was allocated nearly 50 billion rupees in various fields to achieve targets.
• The scale of production and the production method was given a push for good.
• New technology and efficient investments were made to make sure that India’s annual national income grew to 4.5%.
• The resolution set out as national objective the establishment of a socialist pattern of society.
• Prasanta Chandra Mahalanobis was perhaps the single most important individual in directing Indian development
planning. He was the chief adviser to the commission from 1955, founded the Indian Statistical Institute, and is
considered the father of modern statistics in India
Conclusion
• India achieved only 4.27% income growth against the target of 4.5% set
• India faced a payment crisis on the external level in 1957
The sum of money allotted to the plan did not end up being enough and widened the unemployment problem, which was
relevant back then and still a big issue. Other than this, the currency of India had to be devalued 2 times, and a lot of
external payments suffered, bringing India into a poor financial condition.
 Third Year Plan

• The Third Five Year Plan (1961-1966) was introduced to stress agricultural development and improvement of wheat plantation
and production in India.
• This plan majorly focused on improving the agricultural production along with the industrial sector of India to enhance the self-
sufficiency of food grains which was important to meet the exporting needs of industry.
• The Third Five Year Plan (1961-1966) of the Economic Development of India is also popularly called “Gadgil Yojna”.
• This economic planning was established to increase the income level of the Indian population by 100 percent taking into
consideration the estimated population growth in the next 15 years. (2 percent)
• During the execution of this plan, India was engaged in two wars: (1) the Sino-India war of 1962 and (2) the Indo-Pakistani war
of 1965.
• These wars exposed the weakness in our economy and shifted the focus to the defence industry, the Indian Army, and the
stabilization of the price (India witnessed inflation).
The plan was a flop due to wars and drought.
The target growth was 5.6% while the achieved growth was 2.4%
• Plan Holidays:
• Due to the failure of the previous plan, the government announced three annual plans called Plan Holidays from 1966 to 1969.
• The main reason behind the plan holidays was the Indo-Pakistani war and the Sino-India war, leading to the failure of the third Five Year Plan.
• III. During this plan, annual plans were made and equal priority was given to agriculture its allied sectors and the industry sector.
• V. In a bid to increase the exports in the country, the government declared devaluation of the rupee.
 Fourth Five year Plan
• Its duration was from 1969 to 1974, under the leadership of Indira Gandhi.
• There were two main objectives of this plan i.e. growth with stability and progressive achievement of self-reliance.
• During this time, 14 major Indian banks were nationalized and the Green Revolution was started. Indo-Pakistani
War of 1971 and the Bangladesh Liberation War took place.
• Implementation of Family Planning Programmes was amongst major targets of the Plan
• The Green Revolution in India advanced agriculture, and the Indira Gandhi administration nationalized 14 major
Indian banks.
• To defeat the involvement and help of foreign aid and being independent by directly promoting the potential
growth rate in the industrial and agricultural sector.
• Maintaining the price stability and building unified economic policies in respect to the mixed Indian economy.
• To prioritize the rural population and the food supply sector by enlarging the income and accelerating the
production system with extra effort.
• To facilitate all related industries with self-reliance such as transport, machinery, mines, power, and chemicals to
accelerate the growth to maintain the existing momentum.
• The plan is also aimed to fulfill the basic requirements of the country for the upcoming five years.
• To develop the human resources, especially in the rural area by implementing additional facilities.
• This plan failed and could achieve a growth rate of 3.3% only against the target of 5.7%.
• “Garibi Hatao” slogan was given by the late Prime Minister Indira Gandhi of that time.
 Fifth Plan (1974–1978)
• The Fifth Five-Year Plan laid stress on employment, poverty alleviation (Garibi Hatao), and justice.
The plan also focused on self-reliance in agricultural production and defense.
• This plan focused on Garibi Hatao, employment, justice, agricultural production and defense.
• The Electricity Supply Act was amended in 1975, a Twenty-point program was launched in 1975,
the Minimum Needs Programme (MNP) and the Indian National Highway System was introduced.
• Overall this plan was successful which achieved a growth of 4.8% against the target of 4.4%.
• This plan was terminated in 1978 by the newly elected Moraji Desai government.
• The economy grew at an annual rate of about six per cent.
• Inflation was brought under control.
• The balance of payments position improved.
• The rate of investment increased.
• Agricultural production registered healthy growth.
• Industry expanded at a rapid pace.
• Employment opportunities increased.
• The standard of living of the people improved.
• Social justice was promoted.
 Rolling Plan

• After the termination of the fifth Five Year Plan, the Rolling Plan came into
effect from 1978 to 1990.
• In 1980, Congress rejected the Rolling Plan and a new sixth Five Year Plan was
introduced.
 • The Sixth Five-Year Plan
• Its duration was from 1980 to 1985, under the leadership of Indira Gandhi
• The Sixth Five-Year Plan was the onset of the economic liberation of India.
• It was the first step of India towards a Model State.
• The fundamental objective of the Sixth Year Plan was to put India’s economy on the right path
• . It was implemented to fulfil all the objectives such as reducing the poverty rate, higher income of all the states of
India, Putting down social, regional, and economical inequalities with the help of effective plans for the upliftment
of backward classes, and trampled sections
• Its duration was from 1980 to 1985, under the leadership of Indira Gandhi.
• The basic objective of this plan was economic liberalization by eradicating poverty and achieving technological
self-reliance.
• It was based on investment Yojna, infrastructural changing, and trend to the growth model.
• Its growth target was 5.2% but it achieved a 5.7% growth.
• For the first time, India’s national highway system was established, and several roads were extended to
accommodate increased traffic and improve the country’s traffic infrastructure.
• The tourism industry grew.
• The percentage of people living in poverty fell from 48.3% in 1977-78 to 36.90% in 1984-85.
 The seventh five-year plan
• The seventh five-year plan was one of the most impactful facts that have ever happened in Indian economic history.
It had taken place under the rule of Rajiv Gandhi. The seventh five-year economic plan had happened in between
1985 to 1990. There were many reasons behind the seventh five-year economic plan. One of the most important
facts was to boost up the growth of the economic productivity of the areas. On the other hand, to develop the
industrial sectors, the seventh five-year plan was so impactful.
• The objectives of this plan include the establishment of a self-sufficient economy, opportunities for productive
employment, and up-gradation of technology.
• The Plan aimed at accelerating food grain production, increasing employment opportunities & raising productivity
with a focus on ‘food, work & productivity
• For the first time, the private sector got priority over the public sector.
• Its growth target was 5.0% but it achieved 6.01%.
• 10. Annual Plans:
• I. Eighth Five Year Plan could not take place due to the volatile political situation at the centre.
• II. Two annual programmes were formed for the year 1990-91& 1991-92.
 8th Five Year Plan

• Its duration was from 1992 to 1997, under the leadership of P.V. Narasimha Rao.
• . The basic objective of this period was the modernization of the industrial sector.
• This plan focused on technical development
• India became a member of the World Trade Organization on 1 January 1995.
• The goals were to control population growth, reduce poverty, generate employment, strengthen the development of
infrastructure, manage tourism, focus on human resource development etc.
• In this plan, the top priority was given to the development of human resources i.e. employment, education, and
public health.
• Some of the main economic outcomes during the eighth plan period were rapid economic growth (highest annual
growth rate so far – 6.8 %), high growth of agriculture and allied sector, and manufacturing sector, growth in
exports and imports, improvement in trade and current account deficit.
• A high growth rate was achieved even though the share of the public sector in total investment had declined
considerably to about 34 %
• This plan was successful and got an annual growth rate of 6.8% against the target of 5.6%.
 Nineth Five year plan
Its duration was from 1997 to 2002, under the leadership of Atal Bihari Vajpayee.
Just like its predecessor, this too was focused on poverty alleviation and employment generation. However, the target set for reducing
poverty during this period.
The main focus of this plan was “Growth with Social Justice and Equality”.
It was launched in the 50th year of independence of India.
• The objectives of the Ninth Five Year Plan are
• Quality of Life
• The main intent of the Ninth Five Year Plan was to enhance the quality of life of nationals by delivering basic comforts and services.
• Education
• The target was to increase the Gross Enrolment Ratio (GER) in higher education to 15 per cent.
• Employment
• The target was to create nearly 50 million new employment opportunities.
• Poverty Alleviation
• The target was to reduce the incidence of poverty by half.
• Self-Reliance
• The target was to make the economy self-reliant by ensuring food security and
• developing infrastructure.
• However, the Ninth Five Year Plan failed to achieve its targets. The main reason for the failure was the global economic crisis in 1997-
98.
• This plan failed to achieve the growth target of 6.5% and achieved a growth rate of 5.6%
 10Th Five year Plan
• Its duration was from 2002 to 2007, under the leadership of Atal Bihari Vajpayee and Manmohan Singh.

• The main objectives of the 10th five-year plan regarding education are universalization of elementary education,
improvement in quality and access to education, expansion in higher education, and promotion of research and
development.

• The 10th five-year plan also focused on improving the GDP rate to 8% p.a, providing qualitative

• The Tenth Five Year was an eventful one and saw many changes in India’s socio-economic landscape.

• The country achieved an average annual growth rate of over 7 per cent per year.

• This plan aimed to double the Per Capita Income of India in the next 10 years.

• It also aimed to reduce the poverty ratio to 15% by 2012.

• Its growth target was 8.0% but it achieved only 7.6%.

 The Eleventh Five Year Plan
• Its duration was from 2007 to 2012, under the leadership of Manmohan Singh.
• It was prepared by the C. Rangarajan
• The Eleventh Five Year Plan is an important document in the socioeconomic development of our country. The main aim of this plan is to achieve sustainable and inclusive
growth by promoting reforms in various sectors. The objectives of the Eleventh Five Year Plan are to eradicate poverty, provide employment opportunities, promote education
and health care, and increase agricultural productivity.
• To create employment opportunities for an additional 70 million people by 2012: The Eleventh Plan proposes to create nearly 58 million jobs that aim to reduce unemployment
by 5 per cent by the time the eleventh fie year plans come to an end
• It achieved a growth rate of 8% against a target of 9% growth.
• To improve the quality of life of all citizens, with a special focus on women and children. The Plan proposes to raise the rate of economic growth to an
average of about eight per cent per year during the Eleventh Plan period.
• To reduce the incidence of poverty by at least ten percentage points. The Plan sets the poverty alleviation target of reducing the headcount ratio of people
living below the poverty line.
• To reduce regional imbalances in income and development. The Plan seeks to correct the regional imbalances by providing for the accelerated and more
equitable development of backward States and regions.
• To make India a global knowledge economy. The Eleventh Plan proposes to raise the level of investment in education and research and development
(R&D) to at least six per cent of GDP.
• To provide the infrastructure that is at par with international standards. The Plan proposes an investment of over Rs 24 lakh crore, which is near twice the
investment made during the Tenth Plan.
• To build a clean and energyefficient economy. The Plan proposes to increase the share of renewable energy in the total energy mix.
• To ensure environmental sustainability. The Plan proposes to increase forest and tree cover, and also to take steps to improve the quality of air and water.
• To ensure inclusive growth. The Plan proposes to focus on the development of Scheduled Tribes, Scheduled Castes, Other Backward Classes, minority
communities and women.
• To make India a global economic power.
• To develop worldclass infrastructure. The Eleventh Five Year Plan is also committed to achieving the Millennium Development Goals.
 12th Five Year plan
• The Government of India’s 12th Five-Year Plan (2012–17) was the country’s most recent Five-Year Plan.
• The Deputy Chairman of the Planning Commission, Mr Montek Singh Ahluwalia, has stated that achieving an average growth rate of 8% in the next five
years is not possible due to the deteriorating global scenario.
• The plan was approved at the National Development Council (NDC) meeting in New Delhi, and the final growth target was set at 8%. It is mostly
concerned with health.
• During the 12th Five-Year Plan, the government aims to reduce poverty by 10%. “We want to lower poverty estimates by 2% annually on a sustained
basis during the Plan period,” Mr Ahluwalia said.
• The real GDP is increasing at a rate of 8% each year.
• Agriculture is expanding at a rate of 4%.
• Manufacturing is expanding at a 10% annual rate.
• Employment and Poverty:
• In comparison to the end of the 11th plan, the poverty rate will be reduced by 10%.
• There are 5 million new job vacancies and skill certifications in the non-farm sector.
• Education:
• The average number of school years will increase to seven.
• For each age group, there are 20 lakh seats available in higher education.
• End school enrollment discrepancies based on gender and social status.
• Health:
• Reduce the IMR to 25 and the MMR to 1 to increase the Child Sex Ratio to 950.
• Reduce child malnutrition in the 0-3 age range to half of the NFHS-3 level by lowering the total fertility rate (TFR) to 2.1.
• Environment and long-term viability:
• Increase green cover by 1 million hectares every year.
• 30,000 MW of renewable energy will be created during a five-year period.
• By 2020, the GDP emission intensity will be 20-25 percent lower than it was in 2005.
Planning Commission NITI Aayog
The Planning Commission had the power to impose NITI Aayog has not been given the mandate or powers to impose
policies on States and for the projects approved by the policies on States. NITI Aayog is basically a think-tank or an
Planning Commission. advisory body.

The Planning Commission had the power to allocate The powers for the allocation of funds have not been given to the
funds to the State Governments and various Central NITI Aayog. The powers are with the Finance Ministry
Government Ministries for various programmes and
projects at the National and State Levels.

State Governments did not have much role to play apart In NITI Aayog, State Governments have to play a more proactive
from taking part in the meetings. The State role.
Government’s role was confined to the National
Development Council.

The Planning Commission did not have any provisions Based on the requirements, there are part-time members appointed
for the appointment of part-time members. in NITI Aayog.

Planning Commission secretaries were appointed through The CEO of NITI Aayog is appointed by the Prime Minister.
the usual process Secretaries are known as CEO.