Shree Medha Degree College, Ballari BASICS OF INDIAN ECONOMY

MODULE 3 : PLANING AND NITI AAYOG

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Dr. Vijayakumar Department of Commerce and Management
Shree Medha Degree College, Ballari BASICS OF INDIAN ECONOMY

INTRODUCTION:
Economies all across the globe are nothing but mixed economies. The two end factors of the
spectrum are Capitalism and Socialism. When the features of both these ends are combined, we
get a mixed economy. As denoted by the name, a mixed economy combines both the command
and market economy. Therefore, it follows the price mechanism alongside central economic
planning. The production means are decided by private and public ownership. However, it is the
market forces that set the price, demand and supply. The government intervenes to eliminate the
possibilities of monopolization and discrimination.A mixed economy represents an achievable
balance between individual initiative and social goals. Planning and market mechanisms are so
adjusted that each is used for realising the objectives of the 'economy to which it is most suited.
There is a commitment on the part of boththe sectors to national objectives and priorities.

Meaning of Mixed Economy:

A mixed economy definition exists to handle the cons of a capitalist or socialist economy. The
mixed economy system aims to come up with a unique solution. It supports the concept of liberty
towards private ownership. The mixed economy also notes the demerits of capitalism. It comes
up with proposals to the government to avoid any discrimination among the citizens.

It is a golden mixture of capitalism and socialism. Under this system there is freedom of
economic activities and government interferences for the social welfare. Hence it is a blend of
both the economies. The concept of mixed economy is of recent origin.

The developing countries like India have adopted mixed economy to accelerate the pace of
economic development. Even the developed countries like UK, USA, etc. have also adopted
‘Mixed Capitalist System’. According to Prof. Samuelson, “Mixed economy is that economy in
which both public and private sectors cooperate.” According to Murad, “Mixed economy is that
economy in which both government and private individuals exercise economic control.”

Main Features of Mixed Economy:

1.Co-existence of Private and Public Sector:

Under this system there is co-existence of public and private sectors. In public sector, industries
like defence, power, energy, basic industries etc., are set up. On the other hand, in private

sector all the consumer goods industries, agriculture, small-scale industries are developed. The
government encourages both the sectors to develop simultaneously.

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Dr. Vijayakumar Department of Commerce and Management
Shree Medha Degree College, Ballari BASICS OF INDIAN ECONOMY

(ii) Personal Freedom:

Under mixed economy, there is full freedom of choice of occupation, although consumer does
not get complete liberty but at the same time government can regulate prices in public interest
through public distribution system.

(iii) Private Property is allowed:

In mixed economy, private property is allowed. However, here it must be remembered that there
must be equal distribution of wealth and income. It must be ensured that the profit and property
may not concentrate in a few pockets.

(iv) Economic Planning:

In a mixed economy, government always tries to promote economic development of the country.
For this purpose, economic planning is adopted. Thus, economic planning is very essential under
this system.

(v) Price Mechanism and Controlled Price:

Under this system, price mechanism and regulated price operate simultaneously. In consumer
goods industries price mechanism is generally followed. However, at the time of big shortages
or during national emergencies prices are controlled and public distribution system has to be
made effective.

(vi) Profit Motive and Social Welfare:

In mixed economy system, there are both profit motive like capitalism and social welfare as in
socialist economy.

(vii) Check on Economic Inequalities:

In this system, government takes several measures to reduce the gap between rich and poor
through progressive taxation on income and wealth. The subsidies are given to the poor people
and also job opportunities are provided to them. Other steps like concessions, old age pension,
free medical facilities and free education are also taken to improve the standard of poor people.
Hence, all these helps to reduce economic inequalities.

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Dr. Vijayakumar Department of Commerce and Management
Shree Medha Degree College, Ballari BASICS OF INDIAN ECONOMY

(viii) Control of Monopoly Power:

Under this system, government takes huge initiatives to control monopoly practices among the
private entrepreneurs through effective legislative measures. Besides, government can also fake
over these services in the public interest.

Types of Mixed Economy:

The mixed economy may be classified in two categories:

Capitalistic Mixed Economy:

In this type of economy, ownership of various factors of production remains under private
control. Government does not interfere in any manner. The main responsibility of the
government in this system is to ensure rapid economic growth without allowing concentration
of economic power in the few hands.

Socialistic Mixed Economy:

Under this system, means of production are in the hands of state. The forces of demand and
supply are used for basic economic decisions. However, whenever and wherever demand is
necessary, government takes actions so that basic idea of economic growth is not hampered.

INTRODUCTION TO PLANNING
✦ Planning is defined as deciding in advance what to do in future. It is the process of thinking
before doing.
✦ Planning is the most basic of all managerial functions which involves establishing goals.

✦ Setting out objectives and defining the methods by which these goals and objectives are to
be attained.
✦ It is, therefore a rational approach to achieving pre-selected objectives.

Bombay plan:
The Bombay plan was a set of proposal of a small group of influential business leaders in
Bombay for the development of the post-independence economy of India. This plan was
published in two parts or volume- first in 1944 and second in 1945.

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Dr. Vijayakumar Department of Commerce and Management
Shree Medha Degree College, Ballari BASICS OF INDIAN ECONOMY

BOMBAY PLANN

✦ The Bombay plan of 1944was set up by a group of leading industrialists in india for the
economic development of country

✦ It proposed the importance of state intervention in the development of a nation especially

economically

✦ The basic objective were a doubling of the output of the agriculture sector and five-fold
growth in industrial sector

✦ Where in there was a strong endorsement of state economic.

Objectives of the Bombay Plan :

 The prime objectives of the plan were to achieve a balanced economy and to raise the
standard of living of the masses of the population rapidly by doubling the present per
capita income within a period of 15 years from the time the plan goes into operation.
 This plan envisages that the economy could not grow without government intervention
and regulation. In other words, the future government protects indigenous industries
against foreign competition in local markets.
 The Bombay Plan offers a comprehensive vision of mass education, including primary,
secondary and vocational and university schooling. It also made for adult education and
scientific training and research.
 The plan emphasizes the importance of basic industries, but also calls for the
development of consumption goods industries in the early years of the plan. Power
heads the list of basic industries which are to be developed, followed by mining and
metallurgy, engineering, chemicals, armaments, transport, cement and others.

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Dr. Vijayakumar Department of Commerce and Management
Shree Medha Degree College, Ballari BASICS OF INDIAN ECONOMY

Gandhian model:
The gandhian model is a partnership model that believes in inclusion and dignity where
everyone is treated as equals
✦ The gandhian plan of rural reconstruction was the meta-model of Indian development
✦ It emphasized three dimensions socio-economic development of localized need, village
participation for self-development and self-reliance and rural industrialization

The Gandhian model is the model of Development.

• Increase wealth of nation through Planned growth in agriculture and industry--emphasis on

centralized technologies
• The wealth would trickle down to masses thus alleviating poverty
• Help to village industries only a stop gap arrangement for ‘quick employment generation’.
Development should be holistic {economical, intellectual, emotional & spiritual} &
Nonexploitative, i.e. sustainable
• Possible only in “Self-sufficient Village Republics” : Gram-swaraj & Swadeshi
• Gandhiji: I do visualise electricity, ship building, iron works, machine making and the like
existing side by side with village handicrafts. But the order of dependence will be
reversed…..
• The mantra: rural industrialization -wealth generation in a distributed manner & not
redistribution of wealth generated centrally – the need for S ,T & M inputs

Gandhiji’s Critique of “Industrialism” based Development

• Crossing River on the basis of average depth! – Need for equity
• Based on Exploitation- of Man, Nature – Need for non-violence, concept of ahimsa
• Unhealthy dependence & vulnerability – Need for self-sufficiency in basic necessities,
concept of swadeshi
• Unnecessary mechanization – Need for appropriate technology –less capital requirement,
more employment, meaningful jobs
• Pampers baser instincts – Self-control is a virtue, concept of swaraj.

NITI AAYOG:

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Dr. Vijayakumar Department of Commerce and Management
Shree Medha Degree College, Ballari BASICS OF INDIAN ECONOMY

NITI Aayog (National Institution for Transforming India) is a policy think tank of the
Government of India, established with the aim to achieve sustainable development goals with
cooperative federalism by fostering the involvement of State Governments of India in the
economic policy-making process using a bottom-up approach.

 Its initiatives include "15-year road map", "7-year vision, strategy, and action plan",
AMRUT, Digital India, Atal Innovation Mission, Medical Education Reform,
Agriculture reforms, Swachh Bharat Abhiyan and so on…

 It was established in 2015, by the NDA government (National Development Agenda ),

to replace the Planning Commission which followed a top-down model.
 The NITI Aayog council comprises all the state Chief Ministers, along with the Chief
Ministers of Delhi and Pondicherry, the Lieutenant Governor of Andaman and Nicobar
and a vice-chairman nominated by the Prime Minister.
 In addition, temporary members are selected from leading universities and research
institutions.

History of NITI AAYOG

 29 May 2014 Independent Evaluation Office submitted an assessment report to Prime

Minister Narendra Modi with the recommendation to replace the Planning Commission
with a "control commission."
 On 13 August 2014, the Union Cabinet scrapped the Planning Commission, to be
replaced with a diluted version of the National Advisory Council (NAC) of India.
 On 1 January 2015, a Cabinet resolution was passed to replace the Planning Commission
with the newly formed NITI Aayog (National Institution for Transforming India). Union
Government of India announced the formation of NITI Aayog on 1 January 2015. The
first meeting of NITI Aayog was chaired by Narendra Modi on 8 February 2015.
 Finance Minister Arun Jaitley made the following observation on the necessity of
creating NITI Aayog, "The 65-year-old Planning Commission had become a redundant
organization. It was relevant in a command economy development.

Objectives:
• To evolve a shared vision of national development priorities, sectors, and strategies
with the active involvement of States in the light of national objectives.

• To foster cooperative federalism through structured support initiatives and mechanisms

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Dr. Vijayakumar Department of Commerce and Management
Shree Medha Degree College, Ballari BASICS OF INDIAN ECONOMY

with the States on a continuous basis, recognizing that strong States make a strong nation.
• To develop mechanisms to formulate credible plans at the village level and aggregate
these progressively at higher levels of government.

• To ensure, on areas that are specifically referred to it, that the interest of national
security are incorporated in economic strategy and policy.
• To pay special attention to the sections of our society that may be at risk of not6
benefiting adequately from economic progress.

• To design strategic and long-term policy and programme frameworks and initiatives,
and monitor their progress and their efficacy. The lessons learnt through monitoring and
feedback will be used for making innovative improvements, including necessary mid-
course corrections

 To provide advice and encourage partnerships between key stakeholders and national and
international like-minded Think tanks, as well as educational and policy research
institutions.

• To create a knowledge, innovation and entrepreneurial support system through a

collaborative community of national and international experts, practitioners and other
partners.

• To offer a platform for resolution of inter-sectoral and inter departmental issues in order
to accelerate the implementation of the development agenda. • To maintain a state-of-
the-art Resource Centre, be a repository of research on good governance and best
practices in sustainable and equitable development as well as help their dissemination to
stakeholders.

• To actively monitor and evaluate the implementation of programmes and initiatives,

including the identification of the needed resources so as to strengthen the probability of
success and scope of delivery.

• To focus on technology upgradation and capacity building for implementation of

programmes and initiatives.

• To undertake other activities as may be necessary in order to further the execution of

the national development agenda.
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Dr. Vijayakumar Department of Commerce and Management
Shree Medha Degree College, Ballari BASICS OF INDIAN ECONOMY

Features:

NITI Aayog is developing itself as a State-of-the-art Resource Centre, with the necessary
resources, knowledge and skills, that will enable it to act with speed, promote research
and innovation, provide strategic policy vision for the government, and deal with
contingent issues. NITI Aayog’s entire gamut of activities can be divided into four main
heads:

* Design Policy & Programme Framework

* Foster Cooperative Federalism

* Monitoring & Evaluation

* Think Tank and Knowledge & Innovation Hub

Functions of Niti Aayog

• Niti Aayog makes the future plan , initiatives and implementation, progress ,monitoring
to every plan for the development of nation.

• Niti Aayog coordinates with the state government for the implementation of the plan
and policy.

• Niti Aayog upgrades the all plans and programmes on the basis of need and
identification of the resources.

• Niti Aayog ensures the national security for every people of India.

• Niti Aayog works on economic policy too.

• Niti Aayog pays attention to the section of our society which are standing on any risk
and not having any benefit from economic progress.
• Niti Aayog provides advice and encouragement for partnerships between key
stakeholders and national and international Bodies (like- Think tanks, as well as
educational and policy research institutions).
• Niti Aayog creates a knowledge, innovation and entrepreneurial support system through
a collaborative community of national and international experts, practitioners and other
partners.
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Dr. Vijayakumar Department of Commerce and Management
Shree Medha Degree College, Ballari BASICS OF INDIAN ECONOMY

• Niti Aayog focuses on technology upgradation and capacity building for

implementation of programmes and initiatives.

• Niti Aayog works for SGDs, environmental development and disaster management too.
Structure of NITI AAYOG The NITI Aayog comprises the following:

• The Prime Minister as the Chairperson.

• A Governing Council composed of Chief Ministers of all the States and Union
territories wit.

Area covered By NITI AAYOG

The different verticals of NITI provide the requisite coordination and support framework

for NITI to carry out its mandate. The list of verticals is as below:

• Agriculture • Health • Women & Child Development • Governance & Research • HRD

• Skill Development & Employment • Rural Development • Sustainable Development

Goals • Energy • Managing Urbanization • Industry • Infrastructure • Financial Resources

• Natural Resources & Environment • Science & Technology • State Coordination &

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Dr. Vijayakumar Department of Commerce and Management
Shree Medha Degree College, Ballari BASICS OF INDIAN ECONOMY

Decentralized Planning (SC & DP) • Social Justice & Empowerment • Land & Water

Resources • Data management & Analysis • Public-Private Partnerships • Project

Appraisal and Management Division (PAMD) • Development Monitoring and

Evaluation Office • National Institute of Labour Economics Research and Development

(NILERD).

The most important area of Policy Commission is SGDs also. Policy Commission

coordinate and measured their target with the given parametre. The Sustainable

Development Goals (SDGs) are a collection of 17 global goals designed to be a

“Blueprint to achieve a better and more sustainable future for all". The SDGs set in 2015

by the United Nations General Assembly and intended to be achieved by the year 2030

are part of UN Resolution 70/1, the 2030 Agenda. The Sustainable Development Goals

are: • No Poverty • Zero Hunger • Good Health and Well-being • Quality Education •

Gender Equality • Clean Water and Sanitation • Affordable and Clean Energy • Decent

Work and Economic Growth • Industry, Innovation, and Infrastructure • Reducing

Inequality • Sustainable Cities and Communities • Responsible Consumption and

Production • Climate Action • Life Below Water • Life On Land • Peace, Justice, and

Strong Institutions • Partnerships for the Goal.

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Dr. Vijayakumar Department of Commerce and Management
Shree Medha Degree College, Ballari BASICS OF INDIAN ECONOMY

The goals are broad based and interdependent. The 17 sustainable development goals each has a

list of targets which are measured with indicators. In an effort to make the SDGs successful, data

on the 17 goals has been made available in an easily-understood form. A variety of tools exist to

track and visualize progress towards the goals. So Niti Aayog is the most important body of our

nation which is working for the development of India and determines the all plans and

programmes according to need base.

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Dr. Vijayakumar Department of Commerce and Management