ECONOMIC  PLANNING

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ECONOMIC  PLANNING

  • Planning is an economic mechanism for resource allocation and decision making.
  • It is the process in which the limited natural resources are used skillfully to achieve the desired goals.
  • It refers to any directing or planning of economic activity outside the mechanisms of the market.
  • The economic planning has been going on great since independence.
  • It has played a major role in the development of the country and led India become self sufficient.
  • The concept of economic planning in India is derived from the USSR ( now Russia).
  • Five year plan were implanted in the soviet union (USSR) in the year 1920.
  • IN India, the objectives and social premises of planning is derived from the Directive Principle of State Policy (DPSP) enshrined in the constitution.
  • Father of Indian Planning:- M. Visvesvaraya
  • The proposal relating to economic planning came for first time in 1934, in the book of Vishveshwaraiya titled “planned economy for India”. After that All India congress committee demanded for the same in 1938.
  • In 1944 , under Bombay Plan effort were made by 8 industrialists.
  • In 1944 , Gandhian Plan was given by Shriman Narayan Agarwal.
  • In 1945, People’s Plan was presented by N Roy.
  • In 1950, Sarvodaya Plan was presented by P Narayan.
  • After independence in 1947, the committee on economic planning was setup under the chairmanship of Pandit Jawaharwal Nehru. On the recommendation of this committee , Planning commission was setup in March 1950 ( now Planning commission changed into NITI Aayog on 1january 2015.)and format of first five year plan was prepared in 1951.

Type of Planning:-

  1. Imperative Planning:-
  • It is mainly exercised in the socialist economies.
  • In this, the Central Planning authority decides upon every aspect of the economy and set the targets.
  1. Indicative Planning:-
  • In this, the state set broad parameters and goals of the economy.
  • Since the 8th five year plan India adopted this type of planning.
  1. Perspective Planning:-
  • This type of planning is used for long period of time generally 15 to 20 years.
  • It is operationalised through the five year & annual plan.

 

 

  1. Rolling Plan:-
  • When janata party came to power in 1977-78, it rejected the 5th five year plan and decided to introduced a new 6th five year plan (1978-80),called rolling plan. And this plan was again rejected by congress in 1980 and new 6th plan was made by congress government.
  • Rolling plan consisted of three different plan:
  • Current :- a plan for the current year which includes the annual budget.
  • Fixed :- a plan for the fixed number of years like 3-4-5 years. And it is revised according to need of economy.
  • Long term :- also called perspective plan and used for long period like 10- 15 -20 years.

The National Development Council (NDC):-

  • set up on August 6, 1952.
  • It gives final approval to plans in India.
  • Member– The Prime Minister (its chairman). And all the Chief Ministers of the States, Lt. Governors of Union Territories, all Union Cabinet Ministers and other Planning Commission members (now NITI Aayog) are its members.

 

 

 

 

Plans Year Remarks/Objectives Target Growth rate Actual Growth
Ist 1951-

1956

Based on Harrod-Domar Model, Focus on Agriculture development, price stability, power and transport. Community Development Programme (CDP) and Family Planning Programme (FPP) were launched in 1952,National Extension Service (NES) was launched in 1953.Important multipurpose projects in India like Bhakra Nangal, Hirakud and Damodar Valley projects werealso launched.

 

 

 

 

2.1% 3.6%
 

2nd

 

1956-

1961

 

Based on Mahalanobis model(propounded by the      famous Prasanta Chandra Mahalanobis ). Focus on public sector & heavy & basic industries, Industrial policy 1956.The three important steel plants of India were built during this Plan period. They are Durgapur (West Bengal) with British help, Bhilai (Chhattisgarh) with Russian help and Rourkela (Orissa) with German help.

 

 

4.5%

 

 

4.3%

3rd 1961-

1966

to make India a ‘self-reliant’ and’self-generating’ economy, agriculture was given top priority to support the exports and industry , Plan failed because India-china war in 1962, Drought in 1965, war with Pakistan in 1965-66 5.6% 2.8%
Three Annual Plans 1966-

67,

1967-

68,

1968-69

Due to miserable failure of the Third Plan the government was forced to declare plan holidays, Green Revolution
4th 1969-

1974

Indira Gandhi-PM, Nationalization of banks,India- Pak war in 1971, Nuclear test in 1974, Gadgil formula 5.7% 3.3%
5th 1974-

1979

Prepared by DP Dhar, High inflation, Removal of poverty (Garibi Hatao), Self Reliance, Emergency in 4.4% 4.8%

 

 

 

1975. In 1978 Janata Party Govt-Morarji Desai-PM rejected the 5th plan
Rolling plan 1978-

1980

Focus on employment. This plan was again rejected by the Congress Government in 1980
6th 1980-

1985

focus on  Increase in national income, modernization of technology, ensuring continuous decrease in poverty and unemployment,Population control 5.2% 5.7%
7th 1985-

1990

aimed at accelerating food grain production, increasing employment opportunities & raising productivity with focus on ‘food, work & productivity’.        . 5% 6%
Annual plans 1990-

1992

Crisis of foreign exchange, Beginning of  liberalization ,privatization and globalization` in India.
8th 1992-

1997

Worsening balance of payment position,rising debts, widening budget deficit, recession in industry, India became member of WTO in 1995, high growth of agriculture and allied sector,and manufacturing sector, growth in exports and imports 5.6% 6.8%
9th 1997-

2002

Started on completion of 50 years of independence, focus on “Growth With Social Justice & Equality, Focus on 7 basic minimum services 6.5% 5.4%
10th 2002-

2007

Employment generation. 5 crores Jobs creation target, States role in planning was increased with greater involvement of Panchayati Raj Institutions 8% 7.6%
11th 2007-

2012

Objective: Faster & More Inclusive Growth 9% 8%
12th 2012-

2017

Objective: Faster, Sustainable, and More Inclusive Growth 9%

 

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