Economic planning in India was not a post-1947 phenomenon but a result of decade-long deliberations by nationalist leaders who viewed state-led intervention as the only cure for colonial stagnation.
- Visvesvaraya Plan (1934): Sir M. Visvesvaraya, in his book Planned Economy for India, proposed a 10-year plan with the target of doubling the national income.
- National Planning Committee (1938): Established by Subhash Chandra Bose with Jawaharlal Nehru as Chairman; it laid the groundwork for the public sector’s dominant role.
- Bombay Plan (1944): Authored by eight leading industrialists (including J.R.D. Tata and G.D. Birla), it advocated for massive public investment in infrastructure and heavy industries.
- Gandhian Plan (1944): Drafted by S.N. Agarwal, focusing on agricultural development and cottage industries.
- People’s Plan (1945): Drafted by M.N. Roy, emphasizing consumer goods and nationalization of land.
- Sarvodaya Plan (1950): Drafted by Jaiprakash Narayan, inspired by Gandhian principles and Vinoba Bhave’s ideas.
The Planning Commission and Constitutional Status
The Planning Commission was established on March 15, 1950, via an executive resolution of the Government of India, making it a non-constitutional and non-statutory body.
- Composition: The Prime Minister served as the ex-officio Chairman. The Deputy Chairman enjoyed the rank of a Cabinet Minister and was the functional head.
- National Development Council (NDC): Established in August 1952, it served as the highest decision-making body for planning, ensuring the participation of State Chief Ministers to promote “Cooperative Federalism.”
- Functions: Its primary mandate was to assess resources, formulate Five-Year Plans (FYPs), and determine priorities for resource allocation between the Union and the States.
Evolution of the Five-Year Plans (1951–2017)
The planning process in India transitioned through various ideological phases, from Harrod-Domar growth models to liberalization and inclusive growth.
| Plan | Period | Model/Focus | Key Achievements/Notes |
| 1st FYP | 1951–56 | Harrod-Domar Model | Focused on Agriculture, Price Stability, and Power. Growth rate: 3.6% (Target 2.1%). |
| 2nd FYP | 1956–61 | Mahalanobis Model | Focused on Heavy Industrialization (Public Sector). Established Bhilai, Durgapur, and Rourkela Steel Plants. |
| 3rd FYP | 1961–66 | Gadgil Yojana | Aimed at “Self-reliant and self-generating economy.” Failed due to Indo-China (1962) and Indo-Pak (1965) wars. |
| Plan Holidays | 1966–69 | Annual Plans | Shifted focus to the Green Revolution due to drought and devaluation of the Rupee. |
| 4th FYP | 1969–74 | Gadgil Formula | Focused on “Growth with Stability.” Nationalization of 14 banks (1969) and Pokhran-I (1974). |
| 5th FYP | 1974–79 | D.P. Dhar Model | Slogan: Garibi Hatao. Terminated early by the Morarji Desai government. |
| Rolling Plan | 1978–80 | Janata Government | Introduced by the Janata Party; focused on employment and rural development. |
| 6th FYP | 1980–85 | Investment Model | Focus on poverty eradication and technological self-reliance. NABARD established (1982). |
| 7th FYP | 1985–90 | Social Justice | Emphasis on food grain production and employment (Jawahar Rozgar Yojana). |
| 8th FYP | 1992–97 | John W. Miller | Launched post-LPG reforms. Focused on Human Resource Development and infrastructure. |
| 9th FYP | 1997–02 | Quality of Life | “Growth with Social Justice and Equality.” Coincided with the 50th year of Independence. |
| 10th FYP | 2002–07 | State-level targets | Aimed to double per capita income in 10 years and reduce poverty by 5%. |
| 11th FYP | 2007–12 | Inclusive Growth | Focus on “Faster and More Inclusive Growth.” Prepared by C. Rangarajan. |
| 12th FYP | 2012–17 | Sustainable Growth | Theme: “Faster, More Inclusive and Sustainable Growth.” This was the final Five-Year Plan. |
Specific Planning Strategies and Models
The Mahalanobis Strategy (1956)
Named after P.C. Mahalanobis, this strategy emphasized the development of “capital goods” industries (iron, steel, heavy chemicals) over consumer goods. The logic was that a strong industrial base would automatically lead to long-term self-reliance, though it led to a neglect of the consumer sector and agriculture in the short term.
Indicative vs. Imperative Planning
- Imperative Planning (Pre-1991): The state-directed resources through a command-and-control mechanism (License-Permit Raj).
- Indicative Planning (Post-1991): From the 8th Plan onwards, the government moved toward being a facilitator. The market determined resource allocation, while the government provided a policy framework and infrastructure.
Shift to NITI Aayog (2015)
On January 1, 2015, the Planning Commission was replaced by the NITI Aayog (National Institution for Transforming India) to reflect the changing realities of the Indian economy.
- Bottom-Up Approach: Unlike the top-down approach of the Planning Commission, NITI Aayog emphasizes state participation and decentralization.
- Long-term Framework: NITI Aayog moved away from five-year cycles to a three-tier framework:
- 3-Year Action Agenda
- 7-Year Medium-term Strategy
- 15-Year Long-term Vision
Fact-File for Competitive Excellence
- Father of Indian Planning: Sir M. Visvesvaraya.
- Year of Great Divide (Planning): 1966–1969 (Plan Holidays), which marked a shift from heavy industry back to agriculture and food security.
- Hindu Rate of Growth: A term coined by Raj Krishna to describe the slow growth rate (approx. 3.5%) of the Indian economy from the 1950s to the 1980s under the command system.
- Target vs. Achievement: The 1st, 5th, 6th, 7th, and 8th plans were highly successful as they exceeded their growth targets, whereas the 3rd, 4th, and 9th plans missed their targets significantly.