1. Meaning of Economic Planning

Economic Planning is a systematic process where the government identifies economic problems, prioritizes them, sets targets, mobilizes resources, and implements policies to achieve development goals.

Steps involved

1. Identify problems in the economy.
2. Arrange in priority (urgent → long-term issues).
3. Classify problems into short-run and long-run
4. Set targets
   • Time target
   • Quantitative target (e.g., production levels).
5. Estimate resources
   • Financial, human, physical.
6. Mobilize resources
   • Government: taxation, budget
   • Private: loans, manpower, infrastructure
7. Implement the plan
8. Periodic review to correct deviations & adjust strategy.

2. Objectives of Economic Planning in India

Core Objectives

1. Economic Development
   • ↑ GDP, ↑ Per Capita Income
2. Full & Productive Employment
   • Optimal use of human resources
3. Self-Sufficiency
   • Agriculture, key industries
   • India reached the take-off stage during the Third Five-Year Plan (1961–66)
4. Economic Stability
   • Control inflation/deflation, stable prices
5. Social Welfare
   • Education, health, and social services
6. Regional Development
   • Reduce regional imbalance (Punjab/Gujarat vs Bihar/UP)
7. Comprehensive & Sustainable Development
   • Agriculture + Industry + Services
   • Environmental considerations
8. Reduction of Inequalities
   • Progressive taxation, employment, and reservation policies
9. Social Justice
   • Poverty reduction, inclusive access to welfare
10. Higher Standard of Living
    • Equal distribution of income and higher purchasing power

3. Historical Evolution of Planning in India (Pre-1950)

Early thinkers

• Dadabhai Naoroji, C. Ranade, and R.G. Dutt wrote on India’s economic backwardness, poverty, and need for industrialisation.
• The Great Depression (1930s) highlighted Soviet-style planning success.

A. Visvesvaraya’s Plan (1934)

• Work: Planned Economy for India
• 10-year plan
• Emphasis: Industrialization, doubling national income
• First systematic attempt at planning by an Indian.

B. National Planning Committee (1938)

• Initiated by Subhash Chandra Bose
• Chaired by Jawaharlal Nehru
• First institutional attempt
• Produced detailed reports on all sectors
• Stressed: National independence is required for planning

C. Bombay Plan (1944)

• By industrialists: R.D. Tata, Purshottamdas Thakurdas, etc.
• 15-year plan, aim = double per capita income
• Outlay: ₹10,000 crore
• Emphasis: Heavy industry
• Criticism: Favoured capitalist structure, weak focus on agriculture.

D. People’s Plan (1945) – M.N. Roy

• 10-year plan
• Focus:
  • Collectivization
  • Consumer goods
  • Agriculture
  • Nationalization of land
• Criticism: Impractical due to resource constraints.

E. Gandhian Plan – Sriman Narayan

• Emphasis:
  • Decentralization
  • Rural self-sufficiency
  • Cottage industries

F. Sarvodaya Plan (1950) – Jaiprakash Narayan

• Inspired by Gandhian ideas, Vinoba Bhave
• Focus:
  • Agriculture
  • Small & cottage industries
  • Decentralised planning
  • Freedom from foreign technology

G. Post-War Reconstruction (1941–46)

• Reconstruction Committee of Cabinet (1941)
• Planning & Development Department (1944)
• Focus: man-power training, technical development
• Abolished in 1946 after completion of its work.

H. Advisory Planning Board (1946)

• Recommendations:
  • Need for a national plan
  • Control over energy, minerals
  • State acquisition of mineral rights

4. Establishment of Planning Commission (1950)

• Context: Post-war challenges, Partition, economic instability
• Supported by the Directive Principles of State Policy
• Established: 15 March 1950
• Task: Formulate Five-Year Plans to guide national development.