Planning and Issues related to it

Mains Marks Booster     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:

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

Achievements of NITI Aayog                            Issues with 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.
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