Stages of Planning

Evolution of Planning in India

There have been changes in the nature of planning and role of Planning Commission in India. In earlier decades, planning used to fix quantitative targets for individual sectors derived from multi-sectoral planning models. The government used to apply a variety of instruments of control to ensure that targets were achieved. In subsequent decades, planning became much more indicative. It was largely recognised that investment should respond to market forces. The entrepreneurs should be given more freedom to determine expansion plans, and technology choices. While the practice of preparing Five-Year Plans continued, the Plans increasingly focused on broad national targets for growth, poverty alleviation, and social-sector development. Sectoral investment decisions were left largely to the private sector. However, the investment requirements of critical infrastructure sectors such as energy received special attention.

Since these sectors were dominated by public sector enterprises, the role of public investment in these sectors remained important. Since January 1, 2015, NITI Aayog (National Institution for Transforming India), came into existence as replacement for the Planning Commission.

Features of Indian Planning

(a) Democratic Planning; (b) Indicative Planning; (c) Decentralised Planning; (d) Comprehensive Planning; (e) Development-oriented Planning

Objectives of Indian Planning

Four long-term objectives were set out by the planners in India. They were:

(a) to increase production to the maximum possible extent so as to achieve higher level of national and per capita income;

(b) to achieve full employment;

(c) to reduce inequities of income and wealth;

(d) to set up a socialist society based on equality and justice and absence of exploitation.

Change of objectives in different

Plans I: 1950-1965 Growth-objective: Capital First Strategy or Mahalanobis Strategy

Phase II : 1965'1974 Plan Holiday and Agriculture First Strategy

Phase III: 1974 ' 1980 Growth with Redistribution

Phase IV : 1980-1990 Modernization and Outward looking Strategy

Phase V: 1991 onwards Economic Liberalization, Social and Human Development

Sources of Finance

The Five Year Plans are implemented year by year through the annual budgets of the central government and the budgets of the governments of states and union territories. The Planning Commission negotiates with the Finance Ministry and decides the total volume of financial resources to be provided in the central budget to support plan programmes of the central government and transfers to the state governments. Once the budgetary provision is finalized, the Planning Commission divides this total between the centre and the states. The Commission also divides the central share among the central ministries.

The Commission also holds discussions annually with the states, when it reviews states' performance and approves the level and sectoral composition of state Plans. The main sources of funds for plan financing in India are:

(i) Balance from current revenue of the government;

(ii) Surpluses of public enterprises;

(iii) Borrowings;

(iv) Additional resources mobilization;

(v) External assistance; and

(vi) Deficit financing.

Critique of Indian Planning Indian

Plans may be good on paper but are rarely good in implementation. This is because:

(i) Inefficiency in gathering information;

(ii) Time lag in implementation;

(iii) Lacking implementational capacity;

(iv) Non-coherence between physical and financial planning;

(v) Development strategies often ignored spatial implication of planning;

(vi) Absence of proper employment strategy;

(vii) Excessive stress on investment growth;

(viii) Corrupt practices;

(ix) Ineffective decentralization;