Planning and Issues related to it

Free PDF's 4th August 2023

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Planning refers to the process of generating long term vision and strategy for the overall economic growth and development.

Economic Planning in India

India adopted a system of five yearly planning to address its various socio-economic problems in 1951.
Some of the great architects of Indian planning include Jawaharlal Nehru, P.C Mahalanobis, V.R Gadgil, V.K.R.V Rao.
After becoming the first prime minister of independent India, Nehru established the Planning Commission in 1950.
The major function of the Planning Commission was to formulate plans keeping in view the resources of the country and suggesting the best methods to utilize them effectively and in a balanced manner.
Planning commission prepared the first five-year plan (FYP) for the period 1951-1956. By 2014, India has already experienced more than sixty years of planning and 12th 5-year plan ended in 2017 after the formation of NITI Aayog.

Achievements of planning in India:

1. Achievements in Economic Growth: To achieve growth it is necessary to achieve an increase in national income and per capita income as well as increase in production of agricultural and industry sectors.

Achieved above the target growth rate-First five-year plan was a success as it achieved a growth rate of 3.6 per cent against a target of 2.1 percent growth rate in national income.
Agricultural development: Food grain production increased from 51 million tonnes in the first plan to 257.4 million tonnes in 2011-12.
Industrial development: a major achievement has been the diversification of Indian industries., expansion of transport and communications, growth in generation and distribution of electricity etc

2. Creation of Infrastructure- India has achieved a great deal in the area of creation of infrastructure.

large expansion roads and railway networks, domestic air travel has increased significantly.
Expansion of irrigation and hydro-electric projects has given a boost to agricultural production.
Increase in urban infrastructure-There has been growth in establishment of towns and cities due to increase in urban infrastructure.
Communication networks: in the form of mobile telephony, internet has expanded tremendously.

3. Development in Education

Gross enrolment rate has been increased to over 98%.
Literacy rate has increased from 18% in 1950s to 74.04 per cent as per the Census 2011.

4. Development of Science and Technology -

Increase in technical and skilled manpower.
Pioneering Space research like Chandrayaan, Mars Orbiter Mission, private sector taking roots in the space sector.
Impetus to nuclear and other renewable energy-it is now able to send technical experts to many foreign countries in the middle east, Africa etc.

5. Expansion of Foreign Trade-

Due to industrialization in the country, India’s dependence on import of capital goods has declined.
India’s overall export crossed $750bn from being negligible at the time of independence.

Drawbacks of planning in India:

Besides the achievements as told above, there are many unfulfilled tasks which the planning in India is yet to achieve completely.

1. Failure to Remove Poverty and Inequality completely: 21. 9 % population under poverty in 2011 as per last official estimates. Just 5 per cent of Indians own more than 60 per cent of the country’s wealth (OXFAM 2023 report).
2. Problem of Unemployment Persists:

Huge backlog of unemployment: lack of creation of required number of jobs every year.
Lack of skillful population: Only around 5% of the workforce
Female labour force participation was just around 25.1% in 2020-21

3. Sluggish Industrial development:

Despite major focus on industrialisation in the 5-year plans, contribution of industry to the GDP is less than 25%
Lack of development of labour-intensive sector due to strict labour laws leading to unemployment and poverty.

4. Failure to Curtail Corruption and Black Money:

Rampant corruption and red tapism. Corruption perception index- 85/180.
Black money in the system is around 50% of the GDP, according to the IMF, which is also the root cause of inequality in distribution of income.

Planning Commission of India

Planning commission was a non-constitutional and non- statutory organization set up by government resolution on 15th March 1950 which was given the authority to formulate the five-year plans for economic growth.

It had the following functions

Assessing capital, material, and human resources for growth.
Investigate resource enhancement options.
Draft a plan for effective utilization of resources
Allocate resources for every step of plan implementation
Review progress and propose changes as needed.
Make suggestions for its duties, policies, and economic issues.

Achievements of the planning commission

Invested in infrastructure and capital to grow. Heavy industry ex-investment
Brought out new concepts for growth. Ex- green revolution.
Helped India achieve agricultural self-sufficiency, reducing imports and preserving foreign policy.
Made great emphasis on social justice, poverty alleviation, health etc.
LPG reforms opened the economy, creating a sustainable foreign reserve and private sector competition.

Issues with the Planning commission

Plans formed usually had a “one size fits all” approach.
Overcentralized decision-making, ignoring local governance
Lack of regular state engagement in planning.
Weak implementation, monitoring and evaluation of money spent and the outcome achieved.
Land reforms were not properly implemented.
After the LPG reforms, people were more unequal.
Weak think tank and expert network for creative problem-solving.

NITI Aayog

NITI Aayog (National Institute for Transforming India) was established as a successor of the Planning Commission as an extra-constitutional body created by an executive resolution. It has been created as a premier policy think tank of the government providing both directional and policy inputs.

Achievements of NITI Aayog

Strategy and vision depicted under action agenda beyond 12th five-year plan- 7-year strategy document and 3-year action agenda.
Reforms in agriculture-
Through Model land leasing act 2016 to recognise rights of tenant and safeguard interest of landowners
Agricultural Marketing and Farmer Friendly Index—to sensitise states to market reforms, land lease, forestry, etc.
Reforming Medical education- Recommended scrapping the Medical Council of India and proposed National Medical Commission making it more representative and accountable.
Digital Payment Movement- To promote financial inclusion:
Recommended cashback and referral bonuses through BHIM UPI.
Launched Digi Dhan Vyapar Yojana to promote digital payments.
Promoting innovation- Atal Tinkering Labs and Incubation Centres launched to foster youth innovation and entrepreneurship.
Indices Measuring states’ performances in health, education and water management- to foster competitive federalism like Healthy states, progressive India index

Way forward:

The NITI Aayog need to function as an independent think tank without any political interference.

It needs to be empowered with adequate financial powers.
Making the NITI Aayog answerable to the Parliament would make it more accountable.
The NITI Aayog need to focus and strengthen the aspects of decentralized planning and development.