MODULE 3

IDENTIFY VARIOUS ECONOMIC POLICIES IN INDIA.

Contents
Economic planning in India – planning commission v/s NITI Aayog – five - year plans –
objectives - monetary policy in India - fiscal policy in India - Finance commission in India
– Liberalisation – features – privatization – features – Globalisation - features and effects.
Economic planning in India
Economic planning in India refers to the process of creating a long-term vision and strategy for
the country’s economic development. Economic planning in India started in 1951 with the
adoption of the First Five-Year Plan, which was designed to promote economic growth, reduce
poverty and unemployment, and improve the standard of living of the people. The main objective
of economic planning in India is to achieve balanced and sustainable economic growth that
benefits all sections of society. The process involves the allocation of resources, the formulation
of policies, and the implementation of programs to achieve the desired economic outcomes.
The concept of Economic planning was first introduced by P. V. Narasimha Rao who was a great
politician and also considered as the father of the concept of Economic planning. The prime
minister Jawaharlal Nehru introduced a five-year plan to the Indian parliament to make the Indian
economy stronger and better. In the year 1951, the parliament focused on the development of the
primary sector.
Some of the great architects of Indian planning include Jawaharlal Nehru, P.C Mahalonobis, 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 with eleventh five year plans being completed are twelfth FYP
continuing.
OBJECTIVES OF PLANNING IN INDIA
The various objectives of economic planning in India are drawn keeping in view its socio-
economic problems. Accordingly the objectives as follows:
1. Economic growth
2. Increase in employment
3. Reduction in inequality of income
4. Reduction in poverty
5. Modernization of the economy
6. Ensuring social justice and equality
What was the Planning Commission ?
The Planning Commission was founded in 1950 by the Indian government to manage the country’s
economic and social growth, primarily via the preparation of five-year plans. The commission’s
initial objective was to improve the standard of life of ordinary Indians by more effectively
utilising the country’s material and human resources, increasing productivity, and providing
opportunities for all. It is now in charge of reviewing the country’s resources on a regular basis,
establishing five-year plans and strategies for executing them, monitoring the plans’
implementation, and suggesting policy changes as needed. In 1951, the country’s first five-year
plan was implemented.
The commission is led by India’s prime minister and consists of many full-time members as well
as a deputy chairman. A senior officer leads each of the commission’s several departments, which
relate to various areas of the national economy and society. Education, health, infrastructure,
science, financial resources, industry, social welfare, rural development, and water resources are
some of the divisions.
What is NITI Aayog ?
The National Institution for Transforming India, or NITI Aayog, is an Indian government policy
think tank that gives feedback on the government’s many programmes and policies. The NITI
Aayog provides appropriate advice to the federal government, state governments, and union
territories.
The Honourable Prime Minister of India and the Chief Ministers of all states and Union territory,
as well as the legislatures and Lt. Governors of other Union Territories, chair this institution, which
was established in 2015 by a resolution of the Union cabinet.
The NITI Aayog is a key player in developing plans for the Indian government’s long-term policies
and programmes. The planning commission, which was established in 1950, was succeeded by
this organisation. The Indian government wanted to provide a single platform for all states to come
together and act in the national interest while also better addressing the needs of the people by
taking this move. NITI Aayog is a ground-breaking organisation that promotes cooperative
federalism.
Difference Between NITI Aayog and Planning Commission
NITI Aayog Planning Commission
The NITI Aayog does not have the ability or mission The Planning Commission had the
to impose policies on states. The National Institution
ability to impose policies on
for Transforming India (NITI Aayog) is a think tank governments as well as approve
and advisory body. projects.
The Planning Commission had the
ability to provide financing for a
The NITI Aayog has not been given the power to number of national and state-level
distribute cash. The Finance Ministry is in charge. programmes and projects to state
governments and various central
government departments.
State governments had nothing to do
The state governments are more involved in the NITI
with the process other than attend
Aayog.
meetings. The only body in which the
 state government had a say was the
National Development Council.
The charter of the Planning
Part-time members of the NITI Aayog are appointed
Commission did not allow for the
according to the needs.
nomination of part-time members.
The National Development Council
was made up of Lieutenant Governors
The NITI Aayog Governing Council is made up of
and State Chief Ministers. The
Lieutenant Governors of Union Territories and State
National Development Commission
Chief Ministers.
demanded a report from the Planning
Commission.
The CEO of NITI Aayog is appointed by the Prime The Planning Commission’s
Minister. Chief Executive Officer is the title given to secretaries were appointed in
the person in charge of a company. accordance with regular procedure.
The NITI Aayog board of directors may have fewer The former Planning Commission had
full-time members than the Planning Commission. eight full-time members.
Within the NITI Aayog organisation structure, new
positions such as CEO and Vice-Chairperson have The Planning Commission’s
been created. The CEO’s role is similar to that of a organisational structure consisted of
secretary. Four Cabinet members would serve as ex- full-time members, a member
officio members. The NITI Aayog is made up of two secretary, and a Deputy Chairperson.
part-time members and five full-time members.
The Planning Commission developed
The ultimate policy would bear fruit at NITI Aayog policies first, and subsequently, state
following adequate consultations with state governments were consulted on
governments throughout the policy formation stage. It funding allocations for programs and
follows a bottom-up approach. projects. It follows a top-down
approach.