What is Economic Planning?
Economic planning means that the government makes important economic decisions about how resources should be used. The main aim is to improve the welfare of all people by properly using resources like land, labor, and capital.
In India, economic planning is included in the Concurrent List (Entry No. 20) of the Constitution, which means both the central and state governments can make laws on it.
The idea of planning in India started long ago. Dadabhai Naoroji first talked about it in his book Poverty of India (1878). Later, in 1931, the Congress passed a resolution on economic policy during the Karachi session.
Beginning of Economic Planning in India
Visvesvaraya Plan (1934)
The first serious step towards planning was taken by Sir M. Visvesvaraya. He wrote a book Planned Economy in India in 1934.
He suggested:
- Doubling national income in 10 years
- Moving workers from agriculture to industries
- Promoting industrial growth like the USA
However, the British government did not implement this plan. Still, it created awareness about planning in India.
National Planning Committee (1938)
In 1938, the first official effort was made to create a national plan through the National Planning Committee (NPC) under Jawaharlal Nehru.
- It was formed during the Haripura session of Congress
- Meghnad Saha suggested using the Russian planning model
But due to World War II, the work was delayed, and reports were published only after independence (1948–49).
Bombay Plan (1944)
In 1944, eight industrialists prepared a plan called the Bombay Plan.
Main features:
- Double agricultural production
- Increase industrial output by 5 times in 15 years
- Strong role of government in economy
Even though it was not officially accepted, its ideas influenced future plans.
People’s Plan (1944)
This plan was made by M. N. Roy, a communist leader.
Key points:
- Based on Marxist socialism
- Focus on agriculture
- Support for nationalization of agriculture and industries
Gandhian Plan (1944)
Prepared by S. N. Aggarwal, this plan was based on Gandhian ideas.
Main ideas:
- Decentralized economy
- Self-sufficient villages
- Focus on agriculture and small industries
- Promotion of cottage industries
Sarvodaya Plan (1950)
This plan was prepared by Jai Prakash Narayan.
Features:
- Inspired by Gandhian ideas and Vinoba Bhave
- Focus on agriculture and small industries
- Aim of self-reliance
- Reduce use of foreign technology
- Support land reforms and decentralized planning
Planning Commission (1950)
After independence:
- The Economic Programme Committee was formed
- It recommended creating the Planning Commission in 1948
The Planning Commission:
- Was set up on 15 March 1950
- Worked under the Prime Minister
- Prepared Five-Year Plans
The First Five-Year Plan started on 1 April 1951.
National Development Council (1952)
To include states in planning, the National Development Council (NDC) was created in 1952.
It:
- Was headed by the Prime Minister
- Included Chief Ministers of all states
- Approved Five-Year Plans
- Acted as the top body for development decisions
End of Planning Commission & NITI Aayog
- The Planning Commission was abolished on 1 January 2015
- It was replaced by NITI Aayog, a policy think tank
- Arvind Panagariya became the first Vice-Chairman (2015)
- The Five-Year Plans system ended in 2017 (last was 12th Plan)