Economic Planning in India: A Complete Overview | PAPER I – INDIAN ECONOMY & INDIAN FINANCIAL SYSTEM | MODULE A: INDIAN ECONOMIC ARCHITECTURE
Economic Planning in India: A Complete Overview
What is Economic Planning?
Economic Planning refers to the strategic allocation of a country’s resources to achieve defined goals like growth, equity, and modernization. In India, it involved the government creating five-year plans to guide investments and policy decisions across key sectors.
History of Economic Planning in India
- Started in 1951 with the First Five-Year Plan.
- Led by the Planning Commission, focusing initially on agriculture and public sector enterprises.
- Shifted towards liberalization and market reforms in the 1990s.
- In 2015, the Planning Commission was replaced by NITI Aayog, emphasizing a bottom-up and cooperative planning approach with states.
Objectives of Economic Planning
- Economic Growth – Boost national income and productivity.
- Poverty Eradication – Provide employment and improve living standards.
- Self-Reliance – Reduce dependence on foreign goods and aid.
- Balanced Regional Development – Bridge the rural-urban and state-wise development gaps.
- Employment Generation – Tackle unemployment, especially among youth.
- Modernization – Encourage use of modern technology and infrastructure.
Types of Economic Planning in India
- Indicative Planning: Provides guidelines without binding targets.
- Directive Planning: Involves government control and mandatory targets.
- Perspective Planning: Long-term (15–20 years), focuses on vision-based goals.
- Rolling Plans: Flexible plans updated annually.
- Five-Year Plans: Medium-term development strategies used from 1951 to 2017.
Achievements of Economic Planning
- Green Revolution: Boosted agricultural output and food security.
- Industrial Development: Set up core sectors like steel, power, and heavy industries.
- Infrastructure Growth: Expansion in transportation, power, and telecom.
- Social Development: Increased literacy, healthcare access, and life expectancy.
- Poverty Reduction: Millions lifted out of poverty, especially post-1991 reforms.
Financial Resources for Five-Year Plans
- Budgetary Support – Government’s plan expenditure.
- Public Sector Savings – Profits from public enterprises.
- Market Borrowings – Loans through bonds and securities.
- External Aid – Loans and grants from foreign countries and institutions.
- Deficit Financing – Controlled money printing to meet fund shortages.
Conclusion
Economic planning has been central to India’s development since independence. While five-year plans are now a part of history, the spirit of planning continues under NITI Aayog. Understanding economic planning helps us appreciate India’s progress and the policy shifts that have shaped it.
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