Economic Planning in India - Ch05

Economic Planning — Basics

Constitutional StatusSubject in the Concurrent List

First Started (World)1928, USSR, by Joseph Stalin

India's Planning Inspired ByRussia (Soviet Union)

Major Plans / Proposals Before Independence

Year	Plan/Proposal	Key Details
1934	Book "Planned Economy for India"	Published by M. Visvesvaraya
1938	National Planning Committee	Chairman: Pt. Jawaharlal Nehru
1944	Bombay Plan	By eight leading industrialists (led by Ardeshir Dalal)
1944	Gandhian Plan	By Sriman Narayan Agarwal
1945	People's Plan	By M.N. Roy
1950	Sarvodaya Plan	By Jayaprakash Narayan

⚠ EXAM TRAP

Four different pre-Plan proposals (Bombay, Gandhian, People's, Sarvodaya) each have a distinct author — a favorite matching-type question.

Planning Commission

Established15th March, 1950 (K.C. Neogy Committee)

ChairmanPrime Minister (Ex-Officio)

First ChairmanJawaharlal Nehru

First Deputy ChairmanGulzarilal Nanda

Last Deputy ChairmanMontek Singh Ahluwalia (2004–14)

Replaced ByNITI Aayog, from 1st January 2015

National Development Council (NDC)

Established6th August, 1952

RoleApproval of recommendations of the Planning Commission

NITI Aayog

Established1st January, 2015

Full FormNational Institution for Transforming India

RoleThink tank of the Government of India

Structure

Chairman: Prime Minister (Ex-Officio)
Vice-Chairman (appointed by PM): Suman K. Bery (current)
Governing Council: Chief Ministers of all states/UTs with legislatures + Lt. Governors
Full-Time Members: 5
Ex-officio Members: 4
CEO: B.V.R. Subrahmanyam (current)

Objectives of Five-Year Plans: Development, Modernisation, Self-reliance, Equality

⚡ QUICK RECALL

Planning Commission (1950–2014) → replaced by NITI Aayog (2015–present). NDC still exists separately for approving major recommendations.

1st Plan (1951–56)

PMJawaharlal Nehru

Model / FocusHarrod-Domar Model; Agriculture development

Community Development Programme (1952)
National Extension Service (1953)
Projects: Bhakra Nangal Dam, Damodar Valley, Hirakund Multipurpose Project
Family Planning Programme launched (1952)

Target / AchievementT=2.1%, A=3.6% → Successful

2nd Plan (1956–61)

PMJawaharlal Nehru

Model / FocusP.C. Mahalanobis Model; Basic and heavy industries; Establishment of Socialist Society

Steel Plants: Rourkela (Odisha, with Germany's help), Bhilai (MP/now Chhattisgarh, USSR), Durgapur (West Bengal, UK)
Second Industrial Policy (1956) started

Target / AchievementT=4.5%, A=4.3%

3rd Plan (1961–66)

PMJawaharlal Nehru

ModelsJ. Sandy, Sukhamay Chakravarty, and Mahalanobis Model

Establishment of self-reliant economy; main focus: Agriculture and Industry; Bokaro Plant, Jharkhand (1964, USSR) — establishment of iron and steel industry; Development theory from 1st–3rd plans: Trickle-Down Theory

Events: Indo-China War (1962), Indo-Pak War (1965)
Outcome: Plan failed, rupee devalued (2nd time)
Institutions established in 1964: UTI, IDBI
1965: Food Corporation of India (FCI), Agricultural Prices Commission

Target / AchievementT=5.6%, A=2.8%

Plan Holiday (1966–69)

3 years; New Agricultural Planning; Green Revolution occurred worldwide (Father: Norman Borlaug; Father in India: M.S. Swaminathan)

Key EventLead Bank Scheme (1969, Nariman Committee)

4th Plan (1969–74)

PMIndira Gandhi

Model / FocusAshok Rudra, Alan S. Manne / D.R. Gadgil Model; Economic growth with stability, self-reliance

Nationalisation of 14 Banks
First Nuclear Test, 1974 (Smiling Buddha)
Drought Prone Area Programme (DPAP)
Family Planning Programme
White Revolution (Operation Flood)
Indo-Pak War (1971)

Target / AchievementT=5.7%, A=3.3% → Failed

5th Plan (1974–79)

PMIndira Gandhi

Model / FocusD.P. Dhar Model; Poverty eradication and self-reliance; Hill Area Development Programme (HADP)

Minimum Needs Programme (1974)
20 Point Programme (1975)
Food for Work Programme (1977–78)
Establishment of Regional Rural Bank (2nd October, 1975)
Terminated 1 year before schedule

Target / AchievementT=4.4%, A=4.8%

Rolling Plan (1978–80)

PMMorarji Desai (Janata Party)

Concept by Gunnar Myrdal (Book: Asian Drama); TRYSEM (Training of Rural Youth for Self-Employment Programme) 1979 — later merged into Swarn Jayanti Gram Swarozgar Yojana (1999); Implemented in India by Prof. D.T. Lakdawala; Gandhian approach followed during the plan

⚠ EXAM TRAP

The 3rd Plan is famous for FAILURE due to wars and rupee devaluation — don't confuse it with the 1st Plan, which was the most successful early plan.

6th Plan (1980–85)

PMIndira Gandhi

FocusPoverty alleviation and employment; increase in national income; modernisation of technology

IRDP, NERP, DWACRA, RLEAP
6 banks nationalised (1980)
Establishment of NABARD (12th July, 1982)
Establishment of EXIM Bank (1982)

Target / AchievementT=5.2%, A=5.7%

7th Plan (1985–90)

PMRajiv Gandhi

FocusGrowth, modernisation, self-reliance, social justice; food grain output, productivity, employment

Attention on Jawahar Rozgar Yojana
Started Speed Post System

Target / AchievementT=5.0%, A=6.0%

Annual Plans (1990–92)

Political instability and Balance of Payments (BOP) crisis

IMF conditional assistance
Small Industries Development Bank of India (SIDBI), 1990
1991: Economic reforms announced — LPG (Liberalisation, Privatisation, Globalisation)

PMNarasimha Rao

Finance MinisterDr. Manmohan Singh

8th Plan (1992–97)

PMP.V. Narasimha Rao

FocusEmphasis on Human Resource Development

Prime Minister Rozgar Yojana (1993)
National Women's Fund (1993)
Introduction of Infrastructural Planning

Target / AchievementT=5.6%, A=6.8% — Most successful plan so far

9th Plan (1997–2002)

PMAtal Bihari Vajpayee

FocusSocial justice and economic development with equity

Four Areas of Emphasis: Quality of life, Employment generation, Self-reliance, Regional balance

Target / AchievementT=6.5%, A=5.4%

10th Plan (2002–07)

PMAtal Bihari Vajpayee + Dr. Manmohan Singh (from 2004)

FocusEconomic development with social justice and equality

Key initiative: National Horticulture Mission

Target / AchievementT=8.0%, A=7.6%

11th Plan (2007–12)

PMDr. Manmohan Singh

FocusFaster and more inclusive growth

Impacted by the global financial crisis

Target / AchievementT=9.0%, A=8.0%

12th Plan (2012–17)

PMDr. Manmohan Singh + Narendra Modi

FocusFaster, sustainable, and more inclusive growth

Sectoral targets: Agriculture = 4%, Industry = 10%, Services = 9%

Last Five-Year Plan; replaced by NITI Aayog's approach

Target / AchievementT=9%, A≈7.1%

⚡ QUICK RECALL

12th Plan (2012–17) is India's LAST Five-Year Plan — after this, NITI Aayog took over strategic planning without formal Five-Year Plans.

Quick Reference Summary

Topic	Key Fact
Economic Planning	Subject in Concurrent List
First Started (World)	1928, USSR by Joseph Stalin
India Inspired By	Russia
"Planned Economy for India"	M. Visvesvaraya (1934)
National Planning Committee	1938; Chairman: Pt. Jawaharlal Nehru
Bombay Plan	1944; Led by Ardeshir Dalal; 8 industrialists
Gandhian Plan	1944; Sriman Narayan Agarwal
People's Plan	1945; M.N. Roy
Sarvodaya Plan	1950; Jayaprakash Narayan
Planning Commission	Est. 15 March 1950; Chairman: PM (Ex-Officio)
First Chairman (Planning Commission)	Jawaharlal Nehru
Last Deputy Chairman	Montek Singh Ahluwalia (2004–14)
NDC	Established 6th August 1952
NITI Aayog	Est. 1 January 2015; replaced Planning Commission
NITI CEO (Current)	B.V.R. Subrahmanyam
NITI Vice-Chairman (Current)	Suman K. Bery
1st Plan Model	Harrod-Domar; Agriculture focus; T=2.1%, A=3.6%
2nd Plan Model	P.C. Mahalanobis; Heavy industry; T=4.5%, A=4.3%
3rd Plan	Failed; Rupee devalued 2nd time; T=5.6%, A=2.8%
Plan Holiday	1966–69; Green Revolution; Lead Bank Scheme 1969
Green Revolution (India)	M.S. Swaminathan; Father (World): Norman Borlaug
4th Plan	14 banks nationalised; First Nuclear Test (Smiling Buddha) 1974
5th Plan	Terminated 1 year early; Regional Rural Banks (2 Oct 1975)
NABARD	Established 12 July 1982 (during 6th Plan)
EXIM Bank	Established 1982 (during 6th Plan)
LPG Reforms	1991; PM: Narasimha Rao; FM: Dr. Manmohan Singh
8th Plan	Most successful; T=5.6%, A=6.8%
12th Plan	Last Five-Year Plan (2012–17); T=9%, A≈7.1%