Module 3 ( Indian Economic Policies & Reforms )

Explain Economic Planning ?

Economic planning is the process through which we can take the decisions of what and how it is to
be produced through controlling and managing the economic activity.

Planning is a continuous process that involves choices and decision making about allocation of
available resources with the objective of achieving effective and efficient utilisation and growth of
these resources. In India, planning is done both at the central as well as the state level.

Objectives of Economic Planning

Economic Growth & Development - The most important and primary objective of Indian five year
plan is to achieve high economic growth rate. The high growth rate is determined by the growth of
the national and per capita income.

Employment - Another major objective of Indian economic planning is to create gainful employment
opportunity for the growing labour force of the country.

Industrialization - Every five year plan has been providing a high priority to industrialization. This is
because development of industries help in raising agricultural productivity and GDP (Gross Domestic
Product) of the country.

Social Justice - Every 5 year plan has been emphasizing the objective of planned growth with social
justice. It attempts to minimise the number of individuals living in poverty and provide them with
access to work and social services.

Social Welfare and Services - The goal of the five-year plan has been to promote labour welfare,
economic development of the underprivileged, and social welfare for the poor. The development of
social services such as education, health, technical education, scientific advancement, and so on has
also been a goal of the Plans.

Modernisation - It refers to a shift in the composition of output, innovation and advancement in

Modernisation helps an economy to advance at a faster pace and compete with the developed
nations of the world.

Explain Economic Planning In India – Five Year Plans

The term economic planning is used to describe the long term plans of the government of India to
develop and coordinate the economy with efficient utilization of resources. Economic planning in
India started after independence in the year 1950 when it was deemed necessary for economic
growth and development of the nation.

Independence came to India with the partition of the country on 15 August 1947. In 1948, an
Industrial Policy Statement was announced.
It suggested the setting up of a National Planning Commission and framing the policy of a mixed
economic system.

On 26 January 1950, the Constitution came into force. The Planning Commission was set up on 15
March 1950 and the plan era started from 1 April 1951 with the launching of the First Five Year Plan
(1951-56).

List of Five Year Plans in India:

• High Growth rate to improve the living standard of the residents of India.

• Economic stability for prosperity.

• Self-reliant economy.

• Social justice and reducing the inequalities.

• Modernization of the economy.

An Overview of the Five year plans in India:

First Five-year plan ( 1951 - 1956 )

The first five-year plan was presented and implemented by Jawaharlal Nehru, India’s first Prime
Minister. It was launched in 1951, and its objective was to uplift the economic condition of India by
mainly focusing on improving the standard of the primary sector. By India’s primary sector, we mainly
mean agriculture, as it has been the most powerful source of the country’s income.

Second Five Year Plan (1956 – 1961)

The Second Five Year Plan revolved around the idea of developing the public sector and rapid
industrialisation. The plan was allocated nearly 50 billion rupees in various fields to achieve targets.
New technology and efficient investments were made to make sure that India’s annual national
income grew to 4.5%.

Third Five year plan (1961–1966)

The Third Five-year Plan stressed agriculture and improvement in the production of wheat, but the
brief Sino-Indian War of 1962 exposed weaknesses in the economy and shifted the focus towards the
defence industry and the Indian Army.

Forth Five year plan (1969-1974)

The fourth five-year plan proposed in the year 1969 was implemented to focus on the development
of the agricultural sector to facilitate the small and medium farms. The duration of this economic
plan was for 5 years where the achievement of the plan was only 3.3%. This plan was adopted under
the governance of Indira Gandhi. However, the project of this plan failed to achieve the target growth
rate of 5.7%.

Fifth Five year plan (1974–1978)

The main objective of this Fifth Five-year plan is to eliminate poverty and provide employment
opportunities and justice. It has also focused on self-reliance in terms of Agricultural and defence
requirements.

Sixth Five year plan (1980-1985)

The fundamental objective of the Sixth Year Plan was to put India’s economy on the right path. It was
implemented to fulfil all the objectives such as reducing the poverty rate, higher income of all the
states of India, Putting down social, regional, and economical inequalities with the help of effective
plans for the upliftment of backward classes.

Seventh Five year plan (1985-1990)

The seventh five-year plan was one of the most impactful facts that have ever happened in Indian
economic history. It had taken place under the rule of Rajiv Gandhi. The plan called for increased
agricultural production, as well as improved economic efficiency. On the other hand, to develop the
industrial sectors, the seventh five-year plan was so impactful.

Eight Five year plan (1992 – 1997)

The Eighth Five Year Plan led its primary focus on human resources such as education, employment
and public health. During the Eighth Five Year Plan, the New Economic Policy of India was launched.
The basic objective of this period was the modernization of the industrial sector. This plan focused on
technical development.

Ninth Five year plan (1997-2002)

The ninth five year plan was launched on the 50th year of independence. The Ninth Five-Year Plan
focused on the relationship between the rapid economic growth and the quality of life for the people
of the country. The ninth five-year plan also ensured that India could be moved toward the concept
of environmental protection.

Tenth Five year plan (2002-2007)

The main objectives of the Tenth Five-Year Plan: Attain 8% GDP growth per year. Reduction of poverty
rate by 5% by 2007. Providing gainful and high-quality employment at least to the addition to the
labour force.
Eleventh Five year plan (2007-2012)

It was in the period of Manmohan Singh as the prime minister. The objectives of the Eleventh Five
Year Plan are to eradicate poverty, provide employment opportunities, promote education and
health care, and increase agricultural productivity. The main aim of the 11th fiveyear plan is to
achieve faster, sustainable and more inclusive growth.

Twelfth Five year plan (2012-2017)

The aim of the 12th Five Year plan is to achieve "faster, sustainable and more inclusive growth". For
this purpose it seeks to achieve 4% growth in agriculture sector and 10% in manufacturing sector.
The total budget of 12th Five Year plan has been estimated at Rs 47.7 lakh crore.

Some of the major achievements of planning in India are as follows:

1. Economic Growth

2. Progress in Agriculture

3. Industrial Growth

4. Public Sector

5. Education & Health care

6. Growth of service sector

7. Savings & Investments

8. Science & Technology

9. Foreign Trade

Explain Multi-Level Structure Planning

The Panchayat Raj System involves a three tier structure: village level, block level and district level.
The first tier at village level is commonly known as Gram Panchayat (village assembly), the second
tier at block level as Panchayat Samiti and the third tier at district level as Zila Parishad.

1. National Level Planning

 Planning Commission

Prime minister Nehru set up the Planning commission in 1950 to assess the country's needs of
material, capital and human resources and to formulate economic plans for their more balanced and
economic utilization. The Planning Commission is the technical body for facilitating the planning
process in India.
 National Development Council

National Development Council was set up to strengthen and mobilize the effort and resources of the
nation in support of the Plan, to promote common economic policies in all vital spheres, and to
ensure the balanced and rapid development of all parts of the country. The Commission formulates
three types of plans: (a) Perspective plans for 15-25 years, (b) Five year plans, and (c) Annual plans
within the framework of Five Year Plan.

 NITI Aayog

The NITI Aayog initiative on the blockchain system will enforce contracts quicker, prevent fraudulent
transactions, and help farmers through the efficient measures m.

2. State Level Planning

At state level the mechanism of the planning is almost same of the national level. The state Planning
Board acts like national planning Commission and coordinates the development plans of different
ministries and the districts. It also has the responsibility of the formulation, implementation and
monitoring of state plan.

3. District Level Planning

The concept of the district-level planning is based on the principle of local level planning. It also
assumes that success of the planning needs greater mobilization and utilization of local resources.

The District Board consists of elected representatives.

Its formulation and implementation are looked after by the District Planning Officer (DPO) or the
District Magistrate.

4. Block Level Planning

Block is an important unit of micro-level planning. Whereas for a national plan the needs of various
sectors will be taken into account at a micro level.

These development blocks were created to supervise the implementation of development plans
under the Community Development Programme initiated during the First Five Year Plan. Each district
was divided into a number of blocks and each block comprised about 100 villages, with a population
of about 60,000.

5. Panchayat Level-village planning or Local Level Planning

The implementation of the plan at the Panchayat-level is the responsibility of the village
development officer (VDO) and the secretary and is supervised by the Gram Sabha which is headed
by the Gram Pradhan.
Explain Finance Commission?

The Finance Commission is a constitutional body Under Article 280, that determines the method and
formula for distributing the tax proceeds between the Centre and states.

the President of India is required to constitute a Finance Commission at an interval of five years or
earlier.

The Finance Commission has a chairman and four members appointed by the President. The
government of India provides necessary support and manpower including a secretary to the
commission to facilitate its work.

The Finance Commission has the following functions or duties:

 The Commission makes recommendations to the President of India on the distribution of tax
proceeds between the Union and the States and the share of each state.

 The President of India can also refer any other matter to the Finance Commission in the interest
of building a sound financial system.

Explain NITI AAYOG ?

NITI Aayog is a policy committee of the Indian Government. The term NITI stands for the'National
Institution for Transforming India'. The organization was formed on January 1, 2015, in the capital
city, New Delhi. The organization was a replacement and transformation of the 65- year old Planning
Commission the 'Yojana Aayog.'

NITI Aayog provides technical and strategic advice at state and union levels. Those will be escalated
to center and policies will be designed accordingly.

NITI Aayog devises and makes a plan for different fields including Health, Agriculture, Financial
resources, Industry, Science and Technology, etc.

The organization is headed by a CEO and is assisted by a Vice- Chairperson, both appointed by the
Prime Minister.

This organization has no power to allocate government funds.

It will only provide ideas for economic growth depending on the needs of different states and union
territories.

Aims & Objectives of NITI Aayog

• To provide a critical directional and strategic input into the development process.

• A genuine and continuing partnership of states

• To provide relevant strategic and technical advice to governments.

• Develop mechanisms to formulate credible plans to the villages

• Create a knowledge, innovation and entrepreneurial support system