History of Economic Planning in India

In 1934, Bharat Ratna Sir M. Vishveshvaraiah published a book titled “Planned Economy in India”, in which he presented a constructive draft of the development of India in the next ten years. The central idea envisaged by Sir M.Vishveshvaraiah was to lay out a plan to shift labour from agriculture to industries and double up National income in ten years. This was the first concrete scholarly work towards planning.

The first attempt to develop a national plan for India came up in 1938. In that year, Congress President Subhash Chandra Bose had set up a National Planning Committee with Jawaharlal Nehru as its president. The report could not be finalized; however, some of the papers related to the report came out in 1948-49.

In 1944, the group of eight Industrialists of Bombay viz. Mr. JRD Tata, GD Birla, Purshottamdas Thakurdas, Lala Shriram, Kasturbhai Lalbhai, AD Shroff, Ardeshir Dalal, & John Mathai prepared “A Brief Memorandum Outlining a Plan of Economic Development for India”. This memorandum is known as the “Bombay Plan”.  This plan predicted doubling the per capita income in 15 years and tripling the national income during this period. Despite Pandit Nehru not being very keen on full agreement with the plan, many of the ideas of the plan were instilled in five-year plans which came later.

In August 1944, The British colonial government also set up the “Planning and Development Department” under the charge of Ardeshir Dalal. But this department was abolished in 1946.

After independence, in 1950 Economic planning in India started. The Government of India thought it was deemed necessary for the economic growth and development of the nation and established Economic planning in India. The objective of India’s development strategy has been to establish a socialistic pattern of society through economic growth with self-reliance, social justice, and alleviation of poverty. These objectives were to be achieved within a democratic political framework using the mechanism of a mixed economy where both public and private sectors co-exist. India initiated planning for national economic development with the establishment of the Planning Commission.

To learn more read: Evolution of Indian Economy

Establishment of Planning Commission:

The Planning Commission of India was established In March 1950, to achieve the government resolution to improve the standard of living for Indians by effectively utilizing the nation’s resources, boosting production, and offering employment opportunities to all sections of India. Jawaharlal Nehru was the first Chairman of the Planning Commission.

Implementation of five-year plans:

Five-Year Plans (FYPs) were centralised economic and social growth programs. Joseph Stalin, president of the erstwhile USSR, implemented the first Five-Year Plan in the late 1920s. India too followed the socialist path but here the planning was not as comprehensive since the country had both public and private sectors. The planning in India was only about the public sector. The first Five-Year Plan was launched in 1951. The idea was to plan public spending for equitable growth rather than leaving expenditure to the market forces.

The idea of five-year plans is simple-

• The Government of India prepares a document with all its income and expenditure for five years.
• The budget of the central government and all the state governments is divided into two parts: non-plan budget and plan budget.
• The non-plan budget is spent on routine items yearly. The planned budget is spent on a five-year basis as per the priorities fixed by the plan.

Five-year Plan model which is often considered as the Nehruvian-Socialist economic approach ended with the 12th five-year plan in 2017 (1951-2017).

Establishment of NITI Aayog:

The Planning Commission was replaced by a think tank called NITI AAYOG in 2015. The Niti Aayog has come out with three documents — a 3-year action agenda, a 7-year medium-term strategy paper, and a 15-year vision document.

Related Posts: