Planning in India

Definition of Planning

Economic planning is a sort of conceiving, initiating, regulating and controlling economic activity by the State according to set priorities with a view to achieving well defined objectives within a given time span.

History of Planning in India

As India was among the first colonial countries in Asia to become independent, it had no experience to draw upon except its own. The nationalist leadership was very much aware of the need for industrialisation to modernise the economy and was convinced that without Government support and involvement this was impossible. The rapid industrialisation of the Soviet Union was widely acknowledged as a great achievement and Jawaharlal Nehru was fascinated by what he saw when he visited the U.S.S.R. in 1927.

The regeneration of the Indian economy became a pronounced aim of the freedom struggle with planning as the effective way of achieving it. In 1934 Sir M. Visvesvaraya�published his own suggestions for a ten-year plan for India in a book named �Planned Economy for India�. This was the first attempt at economic planning in India. The Congress Party established a National Planning Committee under the Chairmanship of Jawaharlal Nehru in 1938. Indian businessmen prepared a national plan in 1944, known as Bombay Plan, which had no objection to the central role of the state in the process of industrialisation. In 1944, the Indian Government set up a separate department called �The Planning and Development Department� and appointed Sir Ardishar Dalal as its acting member�.

Inspired by the thinking of Mahatma Gandhi, Shriman Narayan Agarwal drafted a Plan in 1944. This Plan, which came to be known as �Gandhian Plan� stressed on the decentralised development through rejuvenation of rural economy via development of handicrafts and cottage industries. M. N. Roy drafted a �People�s Plan� in 1944 on behalf of the Indian Labour Federation. This Plan argued for 10-year plan period, with priority to agricultural sector. Its 7 point programme laid stress on rapid increase in our agricultural output and welfare of agriculturists. It also advocated for nationalisation. Jai Prakash Narayan designed a Plan, called �Sarvodaya Plan� in 1950. Sarvodaya represents a synthesis of Gandhian and socialist philosophy. It is opposed to capitalism and stands for decentralization of the forces of production.

Planning Commission

Government of India established the Planning Commission in March 1950 under the Chairmanship of the Prime Minister. This was followed by the establishment of the National Development Council (NDC). NDC consists of all Chief Ministers of the states and members of the Union Cabinet and full-time members of the Planning Commission, and chaired by the Prime Minister. NDC acts as a forum that allows state governments to be consulted on the process of formulating plan objectives and strategies.

Different Types of Planning

(i) Planning by Direction Planning by direction is an integral part of a socialist society, in which there is one central authority which plans, directs and orders the execution of the plan in accordance with predetermined targets and priorities. Such planning is comprehensive and encompasses the entire economy.

(ii) Planning by Inducement Planning by inducement is democratic planning. It means planning by manipulating the market. People are induced to act in a certain way through various monetary and fiscal measures.

(iii) Indicative Planning Indicative planning is peculiar to the mixed economy. In a mixed economy, the public and private sectors work together. In indicative planning the private sector is neither rigidly controlled nor directed to fulfil the targets and priorities of the plan. The state provides all types of facilities to the private sector but does not direct it, rather indicates the areas in which it can help in implementing the plan.

(iv) Imperative Planning Under imperative planning all economic activities and resources of the economy operate under the direction of the state. There is complete control over the factors of production by the state. There is no consumers sovereignty in such planning.

(v) Democratic Planning In democratic planning, the philosophy of democratic government is accepted as the ideological basis. People are associated at every step in the formulation and implementation of the plan. India is a unique experimentation in democratic planning.

Functions of Planning Commission

  1. To assess the material, capital and human resources of the country, including technical personnel, and to investigate the possibilities of augmenting such of these resources as are found to be deficient in relation to the nation�s requirements;
  2. To formulate a Plan for the most effective and balanced utilisation of the country�s resources;
  3. To define the stages in which the Plan should be carried out and propose the allocation of resources for the due completion of each stage;
  4. To indicate the factors which are tending to retard economic development, and determine the conditions which, in view of the current social and political situation, should be established for the successful execution of the Plan;
  5. To determine the nature of the machinery which will be necessary for securing the successful implementation of each stage of the Plan in all its aspects;
  6. To appraise from time to time the progress achieved in the execution of each stage of the Plan and recommend the adjustments of policy and measures that such appraisal may show to be necessary.

Written by princy

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