B K Reddy sir --Rau’s IAS

PLANNING IN INDIA
SALIENT FEATURES OF FIVE YEAR PLANS
FIVE FOCUS/ OBJECTIVE
YEAR
PLAN
 Influx of refugees, severe food shortage & mounting inflation
confronted the country at the onset of the first five-year Plan
First FYP  Focused on agriculture- Land Reforms and Irrigation Projects (Bhakra
(1951-56) Nangal, Damodar Valley Corporation etc.); Community development
Programme (1952)
 Based on Harold- Domar Model
 Mahalanobis Plan Focussed on (a) rapid industrialization- heavy &
Second basic industries (b) Import Substitution
FYP (1956- 
Iron and Steel Plants set up with support of foreign technology at
Rourkela, Durgapur and Bhilai
61)
 Industrial Policy 1956 was based on establishment of a socialistic
pattern of society as the goal of economic policy.
 B K REDDY SIR

 Objective: ‘Self-reliant' and ‘Self-generating' economy. Agriculture

Third FYP sector was given top priority.
 Unsuccessful: Chinese aggression (1962), Indo-Pak war (1965), severe
(1961-66)
drought 1965-66
 Failure of Third Plan led to Devaluation of Rupee.
Three
Annual  Failure of third Five year Plan led to the declaration of “Plan Holiday”;
Plans  Initiation of Green Revolution
(1966-69)
Fourth
Five Year  Need for Identification and development of Backward Areas-
Plan Programmes such as Drought Prone Area Programme (DPAP), Desert
Development Prog (DDP) etc.
(1969-  Nationalisation of 14 Banks in 1969;
1974)
 Objective: ‘Removal of poverty' (Garibi Hatao) and ‘Attainment of self
Fifth FYP reliance'
 Promulgation of emergency in 1975; Implementation of Prime
(1974-78)
Ministers 20 Point Programme
 The plan was terminated in 1978 by the Janata Party.
Rolling  Two Sixth Plans: Rolling Plan by Janata Party (1978-80) and Sixth
Plans FYP by Indira Gandhi Government (1980-85)
(1978-80)  Formulated by the Janata Party. Focused on Employment Creation
 Increase in national income, modernization of technology, ensuring
Sixth Five continuous decrease in poverty and unemployment
Year Plan  Programmes: Integrated Rural Development Programme (IRDP),
Training of Rural Youth for Self-employment (TRYSEM), National
(1980-85) Rural Employment Programme (NREP) etc.
 Nationalisation of 6 Banks
Seventh
Five Year  Focus on ‘food, work & productivity’
Plan  Economy recorded 6% growth rate against the targeted 5% and thus
struggled out of
(1985-
 The “Hindu Rate of Growth”.
1990)
Eighth  Worsening Balance of Payment position, rising debt burden , widening
budget deficits, recession in industry and inflation were the key issues
FYP (1992-
during the launch of the plan.
97)
 Introduction of LPG Reforms
B K REDDY SIR
B K REDDY SIR
 B K REDDY SIR

With the Prime Minister as the Chairperson, presently NITI Aayog consists
of:(30/07/2022)

Vice Chairperson: Suman Bery

Ex-Officio Members: Amit Shah, Rajnath Singh, Nirmala Sitaraman and Narendra
Singh Tomar

Special Invitees: Nitin Gadkari, Piyush Goyal, Virendra Kumar, Ashwini Vaishnaw
and Rao Inderjit Singh

Full-time Members: V. K. Saraswat (former DRDO Chief), Ramesh Chand

(Agriculture Expert) and Dr. V. K. Paul (Public Health expert)

Chief Executive Officer (CEO): Parameswaran Iyer

Governing Council: All Chief Ministers of States (and Delhi and Puducherry),
Lieutenant Governor of Andaman & Nicobar Islands, and Special Invites
B K REDDY SIR
 B K REDDY SIR

DIFFERENCE BETWEEN PLANNING COMMISSION AND NITI AAYOG

CRITERIA PLANNING COMMISSION NITI AAYOG
Governing Council:
 PM: Chairperson
 PM: Chairperson
 Vice Chairperson
 Deputy Chairperson: De- CMs of all the States

facto Executive Head
Composition  CMs of UTs - Delhi and Puducherry
 Finance Minister and Minister
for Planning  Lt. Governor of A&N Islands
 4 Union Ministers as Ex-officio
 Ministers nominated by PM
Members
 Union Ministers as Special Invitees
Indicative Planning
Imperative Planning
Nature of Planning 15 Year Vision; 7 Year Strategy; 3 Year
Five Year Plans
Action Agenda
Power of allocation
Yes No
of Finances
Limited to the approval of Plans
Role of States More enhanced Role.
as part of NDC
Enhanced Role N/A Think Tank; Systems Reform Commission
B K REDDY SIR
 B K REDDY SIR

For clear view type in google

https://images.livemint.com/r/LiveMint/Period1/2013/03/15/Photos/g_planning_web
.jpg

IMPORTANT INITIATIVES OF NITI AAYOG

 Sustainable Action for Transforming Human Capital (SATH): Aimed at initiating
transformation in two key social sectors—education and health, by hand-holding States
 Ek Bharat Shrestha Bharat: It was conceptualized to make our country united, strong
and promote excellence in all walks of life by means of long-term inter-state
engagements through cultural exchanges and education.
 Aspirational Districts Programme: Special initiative to rapidly transform 115
identified districts that have shown relatively lesser progress in key social areas and have
emerged as pockets of under-development, thereby posing a challenge to ensure
balanced regional development. The broad contours of the programme are Convergence
(of Central & State Schemes), Collaboration (of Central, State level ‘Prabhari’ Officers
& District Collectors), and Competition among districts driven by a mass Movement.
 NITI Forum for North East: It is the first ever regional forum constituted by NITI
Aayog with representation from all the NE States and the concerned Central
Ministries/Departments.
 Island Development Agency (IDA): The IDA was set up in June 2017 under the
Chairmanship of the Home Minister of India, with the CEO, NITI Aayog as the
Convener. It undertakes reviews on the progress relating to holistic development of
identified islands.
 ‘SAMAVESH’, - a major initiative aimed at networking and partnership with
knowledge and research institutions using a hub and spoke model was launched.
 Atal Innovation Mission: Promote innovation and entrepreneurship in the country.
 Important Indices: NITI Aayog has developed the ‘Healthy States, Progressive India’
Report also known as the ‘Health Index’ in February 2018. The Composite Water
Management Index was also launched in June 2018. The ‘School Education Quality
Index (SEQI)’, ‘SDG India Index’ and the ‘Digital Transformation Index’ (DTI) are
other important initiatives of NITI Aayog.
 B K REDDY SIR

STRENGTHENING FISCAL FEDERALISM---- MAINS QS

Recently, leading Indian Economist, Vijay Kelkar has argued for strengthening
Fiscal Federalism in India wherein he has highlighted the need to empower NITI
Aayog to transfer funds to the states so as to promote balanced regional
development. On the other hand, some of the economists have pitched for
granting permanent status to the Finance Commission under Art 280.
UNDERSTANDING FISCAL FEDERALISM
The Fiscal federalism is economic counterpart of Political Federalism. The Fiscal
Federalism essentially consists of 2 aspects:
 Assignment of functions to different levels of Governments

 Allocation of financial powers

NEED TO HAVE PERMANENT FINANCE COMMISSION

 Over a period of time, Finance Commissions have adopted different approaches

with regard to principles of tax devolution, grants to be given to states and fiscal
consolidation issues.
 Even though, there has to be a framework for fresh and innovative thinking by

every Finance Commission; at another level, there is a need to ensure broad

consistency between Finance Commissions so that there is some degree of
certainty in the flow of funds to the states.
 (For example, 14th Finance Commission has provided for tax devolution of

42% as compared to 32% provided by 13th Finance Commission. Further, the

14th Finance Commission has added the parameters of Area under Forests and
Demographic Change (2011 census) for the horizontal tax devolution. The
fiscal discipline parameter used by 13th Finance Commission has been done
away with by 14th Finance commission.)

NEED TO STRENGTHEN NITI AAYOG

Vijay Kelkar is of opinion that the present mechanism of setting up of Finance
Commission every 5 years is working perfectly fine. However, there is a need to
strengthen fiscal Federalism by empowering the NITI Aayog with transfer of
finances.
Rationale
 The Planning Commission was involved with transfer of finances to the states

which to a certain extent were able to reduce the regional imbalances existing
 B K REDDY SIR

among the different states in India. However, the Planning Commission was
replaced by NITI Aayog, which acts more like a think tank without the power
of transferring finances.
 Two problems have arisen with respect to this. Firstly, India’s Fiscal
Federalism stands only on one pillar, viz., Union Finance Commission. This
is a serious weakness of our present Fiscal Federalism and needs to be quickly
corrected.
 Secondly, India has been experiencing the process of “Conditional
Convergence” amongst the different States wherein the poorer states have been
growing more rapidly than richer states leading to reduction in income
inequality. Such conditional convergence has been possible on account of
transfer of finances by the Planning Commission.
 Thus, there is a strong analytical case for strengthening the role of NITI Aayog
with powers of allocating finances to states.
 In order to make the new NITI Aayog more effective, it is essential to ensure
that the institution is at the “High Table” of decision making of the
Government. This means the Vice Chairman of the new NITI Aayog will need
to be a permanent invitee of the Cabinet Committee on Economic Affairs.
Thus, the new NITI Aayog will make available to the highest level of policy
making the knowledge-based advice and provide the national and long term
perspective on the policy proposals.
B K REDDY SIR
B K REDDY SIR