SU→3.

Planning in India
RELEVENCE HPAS MAINS MAINS UPSC

TOPIC PLANNING

LECTURE NO. 2019-2020

LECTURE NO. 2021-2022 7

RELATIONSHIP WITH GS 3

SOURCES SANJEEV VERMA, YB

VAJIRAM FACULTY SHOBIT UNIYAL

PLANNING IN INDIA(7→00:00)
After we independence India adopted socialistic model of economy and the architecture of
indian planning was pandit jawHar lal nehru and he was highly influenced by the Russian
model of economy where all the means productioin owened by the government . but we
adopted a mixed model of economy . He used planning as a tool for economic and social
development , and planning involves planned economy in which the state may owened some
or all the means production (factories , land ) and they(government) direct the economy in
centralised manner and private sector may be given some or large role.

1. Planning in India is centralized , which provides a macro framework of developmental

and investment needs , mobilization of resources to achieve desired levels of growth.

2. For this planning commission was establish in 1951 and1st plan launched in 1951 .
PLAN is document spells out how the resoures of the nation will be put to use , it has
some goals and some objective .

3. In India we adoptd 5 year plans and also the plans also made for longer duration called
as perspective plans(15-20 years).

4. In the independent India the architect of Indian planning was Pandit Jawahar Lal Nehru
he concieved planning as a tool of economic and social development

5. A planned economy is one in which the state may owned , partly or wholly , the means
of production and direct the economy in a centralised manner .

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 6. The state sets priorities for growth . The private sector given a role, large or small
depending upon its capability.

7. While the plannig model of soviet Russia was the basis of planning , there was a
realization that development of Indian economy could not be left alone to the
governemtn and public sector hence planniing model adopted in india was that of mixed
economy in which both public sector and private sector work in hand in hand.

8. The planning commission set up in 1950 and in 1951 first five year plan was formulated
.

WHAT IS PLAN?

1. Plan spells out how the resources of nation should be put to use it has a some general
goals as well as some specific objective which are to achieved with in specific period of
time . In India plans were of 5 year duration and were called 5 year plans.

2. Our plan document not only specifies the objective to be attained in 5 years plans but
also what is to be achieved over a period of 20 years this long term plan is called
perspective plan.

GOALS OF OUR 5 YEAR PLANS

1. Growth ⇒ It refers to the Increase in production of goods and services (GDP) in the
economy. Growth is neccaasary to achieved objectives like employment generation,
poverty aleviation, improving stansard of living, etc.

⇒
2. Modernization To achieve growth ie. increase in the production of goods and
services prouctivity/efficiency should also increase and to increase productivity adoption
of new technology is required. Adoption of new technology is known as modernization.
To promote modernization innovation and investment in research and development is
required. In broader context modernization does not refer to only to the use of new
technology but also to changes in social/modern/mental outlook like adoption of
scientific temprament, modern way of thinking . eg production can be increased by two
ways by increasing area under cultivation or increasing productivity like in green
revolution we use HYV seeds, fertilizer, chemical ,

⇒
3. Self reliance means avoiding imports of those goods which could be produce in the
coultry itself (import sustitution policy) . First seven 5 years plans gave impotance to
self reliance (after that economy opened up) . Thia was considered as a neccasity in order
to reduce our dependence on foreign countries specially for food . It was feared that
depedent on imported goods foerign technology and foreign capital may make India's
sovereneihty vulnerable to foreign interference in our policy

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 4. Equity ⇒ meand reduction in inequality and that benefis of growth modernization and
self reliance reaches to all segments of the society specially the poors.

PLANNING AND MARKET ECONOMY

1. As the planning get market oriented ,the role of planning gets diluted as decisions get
taken efficiently by the markets. This is actually an incorrect way of looking at planning
and market economy as substitutes.

2. Both have different sets of objective.

3. Planning gives a direction to the economy and market economy gives efficiency in use of
resources, investments and production in an economy.

VARIOUS 5 YEAR PLANS (only 12 after replace by NITI aayog)

(7→00:45)
1. 1st FIVE YEAR PLANS ⇒ (1951-1956)
a. Target growth→2.1% and actual growth witnessed→3.6%

b. Main focus of this plan was development of primary sector ie. agriculture means
largely the resource allocation was made in such a way that it should promote
agriculture like developmene of canals, dams,

c. when this plan was launched there was acute shortage of food resources in the
country, keeping high inflation under check.

d. It was based on Harold Dommor modal.

e. It was succsfull plan

2. 2nd FIVE YEAR PLAN ⇒ (1956-1961)

a. The targeted growth was →4.5% and actual growth was 4.3%.

b. The 2nd Five year plan was based on MAHALONOBIS MODEL.

c. The main focus in this plan was on achieving self reliance and also ability to meet
the basic need of the economy.

i. Development of public sector

ii. Rapid industrialization.

iii. Import substitution.

iv. Closed economy, only import of capital goods.

v. Stress on Heavy and Basic industry.

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 d. This model was criticesed for giving agricultural and consumer goods a low priority.

e. This model was relied on trickle down effect which means benefits of growth will
flows to all sections of society in due course of time.

3. 3rd FIVE YEAR PLAN ⇒(1961-1966)

a. Target growth→5.6% and Actual growth→2.8% .

b. The focus was on agriculture along with industry.

c. The aim was to make India a self reliant and self generating economy.

d. During this time period there was war with china in 1962 and pakistan in 1962, It
led to inflation .

e. There was severe drought in 1965.

f. For the first time india borrowed from IMF , and rupee was also devalued for the
first time in 1966.

4. PLAN HOLIDAY ⇒ (1966-1969)

a. For these 3 years only annual plans were made and the forth plan could not be starts
because of the following problem

i. Miserable failure of the third plan.

ii. In 1966-1977 there was again a big drought.

iii. There was wars 1962-1965.

iv. Inflation was very high.

v. Forex crisis.

vi. political instabilty→ death of Nehru and Shastri.

b. 1966-1967.

c. 1967-1968.

d. 1968-1969.

5. 4th FIVE YEAR PLAN ⇒(1969-1974)

a. Targeted growth 5.77% and Actual growth →3.3%

b. In this plan main focus was on growth with stability and self reliance especially in
defence.

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 c. Special focus was also given on the improving the condition of under privelieged
and weaker sections .

d. Bank nationalization was done.

e. Green revolution which focus on increasing the production and productivity of

agriculture.

f. INDO-PAK war or liberation of banlgadesh.

6. 5th FIVE YEAR PLAN ⇒ (1974-1979)

a. Target growth→ 4.4% and Actual growth→4.8% .

b. In this plan main focus was given on poverty alleviation, and there was very popular
slogan 'greebi hatoa'.

c. Justice delivery made strong.

d. Self reliance especially in defence and agriculture.

e. In 1978 the newly elected janta party government under the prime ministership of
Morarji desai discontinued the plan.

7. ROLLING PLAN (1978-1980)

a. Janta party rejected the 5th five year plan and introduced a new 6th five year plan .
This was again rejected by INC in 1980 and a new 6th five year plan was launched.

b. Rolling plan is a flexible plan in which targets can be changed according to the
prevailing economic conditions.

8. 6th FIVE YEAR PLAN (1980-1985)

a. Target growth→ 5.3% and Actual growth→ 5.7% .

b. In this plan main focuss was on

i. Plan made frontal attack on poverty

ii. family planning and

iii. it also beggining of economic liberlization such as price control were

eliminated, rations shops were closed, etc

iv. It marks the transformation from allocating scarce resources in the economy, to
welfare orientation with focus on specific programes for poverty alleviation.
These were not new schemes ho;wever all different schemes were combined as
one schemes IRDP .

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 v. It was 1st plan focus on Gender issues, Women empowerment , and growing
inequalities among states and also intra-regional imbalances.

9. 7th FIVE YEAR PLAN (1985-1990)

a. Target growth→ 5% and Actual growth→ 6% .

b. In this plan main focuss was on

i. Improving the productivity levels of industries by the upgration of technology.

ii. Accelrating the food graind production .

iii. Liberlization of economy.

iv. For the first time 3 year Export-Import policy was announced.

v. For the 1st time problem of imports outstripping exports resulting in BOP crisis.

10. PLAN HOLIDAYS ⇒ (1990-1992)

11. 8th FIVE YEAR PLAN⇒ (1992-1997)

a. Target growth→5.6% and Actual growth→ 6.8% .

b. In 1990 there was economic crisis , external uncertainity→ gulf war, oil prices went
up, SOVIET fall, political instabilty,

c. so again there was plan holiday for 2 years

d. 8th five year plan came in the backdrop of BOP crisis and LPG reforms or new
economic policy hence it is considered as watershed plan.

e. First plan to have universal elementary education and eradication of illiteracy in the
age group of 15-35 years as a major objective.

f. For the 1st time brought need for strenghening infrastructure especially in the ares f
energy, transport, communication and energy.

g. 8th five year plan saw transition from imparitive and directive planning to indicative
planning

i. impartive planning means stronger govenment role

⇒
ii. indicative planning after LPG reforms indicaitve planning became inevitable
(from 8th five year plan) in this the state aquire the role of facilitator rather than
a controller and regulator (imparitive and directive planning).

iii. In indiacative planning government creates the rights policy climate to help the
corporate sector to grow .

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 iv. The trade and industry is increasingly freed from the government control.

12. 9th FIVE YEAR PLAN ⇒ (1997-2002)

a. Target growth→ 6.5% and Actual growth→ 5.4% .

i. There was political instabilty

ii. East asian financial crisis

iii. There was Kargil war ,

iv. Nuclear bomb testing

b. This plan was prepared by united front government , It was just extension of
previous plan.

c. Focus of this plan was on growth with social justice with equality

d. Private sector was promoted .

e. FDI and foreign investment was promoted.

13. 10th FIVE YEAR PLAN ⇒ (2002-2007)

a. Target growth→8% and Actual growth→7.6%.

b. To attain 8% GDP growth per year .

c. Gave time frame to poverty rate by 5% by 2007, elementary education, literacy and
other issues.

d. Gainfull and high qaulity employment .

14. 11th FIVE YEAR PLAN ⇒ (2007-2012)

a. Targeted growth →9% and Actual growth→8% .

b. In this plan main focuss was on

i. Toward faster and more inclusive growth→punch line

ii. Inclusive means that the benefits of growth should goes to every one in the
economy, poverty reduction, bring down inequality, empowering people
through financial inclusion, skill development, education .

iii. Recognize growing divide across the economy and draw specofic attention
toward NORTH EAST

c. Saw lowest ever public outlay of 25 % with a private sector outlay of 75% against
60% in previous plan

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 d. Gave thrust on PPP in infrastructure

15. 12th FIVE YEAR PLAN (2007-2017)

a. Target growth→8% and Actual growth→6.5% .

b. Faster, sustainable and more inclusive growth.

c. After this planning commission disbanded/decommissioned in 2015 and NITI aayog

was established.

d. Now NITI aayog has taken up the role of planning.

16. Average growth till 1991 was around 3.5% , after we open up we have seen good
growth
Till 7th plan self reliance was dominating feature of our plans but after reform self
reliance took back seat when we become WTO member in 1995 and we now like to
project ourself as economy a country which engages in free trade and openness of
economy, attracting the foreign investor, etc.

17. NITI AAYOG (2017 ONWARD) (7→2:07)→ refer yellow book

a. It was set up in 2015.

b. It is largely a think tank has domain expert of various field.

c. It will advice canter and state on various strategic matters on various technical
matters.

d. It will bring centre and sate together on platform so that achievement of one state
can be shared with the other state.

e. It help in better coordination between center and states and in between defferent
ministries.

f. No work of finance allocation/distribution .

g. PM is the chair person .

h. There is a governing council which has representation form CM and LG of all

states and UTs, and special invitees will also be there, hence it is more inclusive
then PC .

i. There are certain full time meber also like vice chairman, and certain part time
member → maximum 2.

ii. and these 2 part time member are from leading universities or research
organizations or technical organizations.

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 iii. Ex-officio member→ maximum 4 they can be any 4 cabinet minister which
are nominated by the PM .

iv. There can be Special invitees of depending upon the technical domain
knowledge.

v. CEO which is nominated by the PM.

i. Promote cooperative federalism means states are also part of the policy making.

PROBLEM WITH PLANNING COMMISSION

1. It was a centralise body/ insitution means all the decision were taken up by the
commission and states were not part of the policy making and decision of the center
were imposed on the states also , so states were not taken up in confidence.

2. No consultation, representation, of states.

3. There was problem of one size fits all approach, there was so much disparity among
the different states which require different approach according to their own need it
was against the spirit of cooperative fedralism, also PC was top heavy organization,
with lower number of work on ground and its clout/standing was very high it was
considered as a super cabinet means it use too overlap the functioning of the ministry
like finance, agriculture, and even finance commission though finance commission
was a constitutional body and planning commission was just a executive body. FC,
which is entrusted with the jobs of allocation of central funds to states but this job
was also done by planning commission.

4. And when we adopted the policy like LPG , other in such scenario plannig
commission was not a conducive body where we are trying to open up, liberalise,
cooperative federalism, engaging the states in decision making and policy making so
in this situation NITI aayog was not a conducive body.

DISCUSSION (7→2:22)

INITIATIVES TAKEN BY GOVERNMENT TO BOOST

EXPORTS(7→2:27)
1. Trade Facilitation
With an aim to reduce trade barriers caused by inefficient and overly burdensome
regulatory administrative procedures, the Trade Facilitation Agreement (TFA),

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 negotiated at WTO, came into force on 22nd February 2017.

A National Committee on Trade Facilitation (NCTF) was, accordingly, constituted in

India in August 2016 with the Cabinet Secretary as the Chair.

A National Trade Facilitation Action Plan (NTFAP) for 2017-2020 containing specific
activities to further ease out the bottlenecks to trade was prepared. For the period 2020 to
2023, a new NTFAP is under preparation, to take additional reforms to bolster trade
facilitation efforts and transform the cross border clearance eco-system through efficient,
transparent, risk based, coordinated, digital, seamless and technology driven procedures.

Many of the commitments, which are otherwise due by 2022, have already been notified
to WTO as implemented viz. Establishment of a Single Window, Risk Management for
clearance of goods etc.

2. Remission of Duties and Taxes on Exported Products (RoDTEP)

India's various export promotion schemes including Merchandise Exports from India
Scheme (MEIS), were challenged by the United States in WTO in early 2018. The final
report of the WTO panel observed that MEIS is a "prohibited subsidy" and needs to be
withdrawn, against which an appeal has been filed by India.
In order to continue supporting the industry and to eliminate any uncertainty amongst the
exporting community, Government has rolled out a new WTO compliant scheme,
namely Remission of Duties and Taxes on Exported Products (RoDTEP), for all export
goods with effect from 1st January, 2021.
Under this Scheme, duties and taxes levied at the Central, State and local levels, such as
electricity duties and VAT on fuel used for transportation, which are not getting
exempted or refunded under any other existing mechanism will be refunded to exporters
in their ledger account with Customs.

The credits can be used to pay basic customs duty on imported goods or transferred to
other importers – facilitating ease of transactions for exports.

Government believes that taxes should not be exported along with the goods.

3. Production-Linked Incentive (PLI) Scheme

In order to boost domestic manufacturing and exports, the Production-Linked Incentive

(PLI) scheme has been introduced under Atmanirbhar Bharat initiative.
This Scheme aims to give incentive to companies on incremental sales from products
manufactured in domestic units.

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 this scheme aim to increase export by incentiwising incremental production
so it is ouput based scheme not input based , the more you produced more you get

domestic units means any company working in india it is also for foreign company who
are cominig and setting up their plants in india, SO it invites foreign investment also.

2021-22 budget announced an outlay of Rs 1.97 lakh crore for the Production-Linked
Incentive (PLI) scheme for 13 identified sectors.

1. Advance Chemistry Cell (ACC) Battery→ prelims based information

2. Textile Products: MMF(man made fiber some are natural fiber and some are
manufactured like jute, polyester, cotton silk , nylon, wood made cellulose made
organic fiber ) segment and technical textiles are those which have functional utility
not asethetic functions like car seats cover , conveyor belts, PPT kit , sar seats cover
, parashoots ,etc. → prelims scicience tach questions

3. Mobile Manufacturing and Specified Electronic Components

4. Electronic/Technology Products`

5. Food Products

6. Critical Key Starting materials/Drug Intermediaries and Active Pharmaceutical

Ingredients

7. Automobiles & Auto Components

8. High Efficiency Solar PV Modules

9. Manufacturing of Medical Devices.

10. Pharmaceuticals drugs

11. White Goods (ACs & LED)

12. Telecom & Networking Products

13. Speciality Steel→ high grade steel, which is used in space equipments, nuclear tech,
defence equipments, etc.

The scheme is expected to make Indian manufacturers in these sectors globally

competitive, attract investment in the areas of core competency and cutting-edge
technology; ensure efficiencies; create economies of scale; establish backward linkages
with MSMEs; enhance exports and make India an integral part of the global supply
chain.

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 It also incentivizes global, capital-rich companies to set up capacities in India. Growth in
production and exports of industrial goods will greatly expose the Indian industry to
foreign competition and ideas, which will help in improving its capabilities to innovate
further.

This will lead to overall growth in the economy and create huge employment
opportunities.

4. Trade Related Logistics

LOGISTICS INDUSTRY means how you take goods from their point of origin to their
point of destination eg. overall infrastructure involved in that come under logistic sector
eg. Roads , railway, waterways, warehouses, cold storages, transportation system, etc.
The Logistics Performance Index (LPI), released by the World Bank, assesses relative
logistics efficiency of countries. On this index, India was ranked 44 out of 160 countries
in 2018 vis-à-vis rank of 54 in 2014.
India’s rank has improved significantly in trading across borders parameter of ‘Ease of
Doing Business’ index from 146 in 2018 to 68 in 2020. The parameter assesses the time
and cost associated with the logistical process of exporting and importing goods.

Some process related reforms which have contributed towards improving logistics
efficiency are:

Reduction in waiting time for inter-state border crossing due to GST.

Revision in axle load norms for heavy vehicles leading to better carrying
capacity.

Introduction of paperless EXIM trade process through E-Sanchit.

Faceless assessment by ‘Turant Customs’ by Central Board of Indirect Taxes

and Customs (CBIC).

Installation of scanners at major ports.

Implementation of Port Community System 1X at all important ports.

Radio Frequency Identification (RFID) tagging of all EXIM containers for track
and trace.

Mandatory electronic toll collection system (FASTag) for reducing time loss at
time toll plaza.

Some Infrastructure Initiatives which are at various stages of implementation are:

Bharatmala Pariyojana is a new umbrella program for the highways sector that
envisages building more than 80,000 Km of roads, highways, greenfield

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 expressways, bridges with an investment of around US$ 107 billion.

Sagarmala aims at Port Modernization & New Port Development, Port

Connectivity Enhancement, Port-linked Industrialization, Coastal Community
Development and giving impetus to Coastal Shipping. 508 projects have been
identified and 111 waterways have been declared National waterways, for which
the work is ongoing in phases.

Multi-Modal Logistics Parks shall act as hubs for freight movement enabling
freight aggregation, distribution and multi-modal transportation. They would
provide modern mechanized warehousing space and value-added services such
as customs clearance with bonded storage yards, warehousing management
services, etc.

Dedicated Freight Corridors (DFCs) aims at reduction in unit cost of

transportation with higher speed of freight trains and better turnaround of
wagons. Around 70 per cent of freight is expected to shift to DFC, freeing up
capacity on Indian Railways.

Trade Infrastructure for Export Scheme (TIES) aims to assist creation of

appropriate infrastructure for growth of exports from the States.

Some Digital/Technological Initiatives that are under development are:

Logistics Planning and Performance Monitoring Tool (LPPT) shall allow real-
time monitoring of operational performance and asset utilization of various
logistics infrastructure such as ports, airports, various corridors comprising
national and state highways etc.

India Logistics Platform (iLOG) is a comprehensive platform that is being

developed for integrating all logistics related digital portals.

PRELIMS AND MAINS PYQ

Topic: Planning
2018 How are the principles followed by NITI Aayog different from those followed by
the erstwhile planning commission in India? 250 15
2012 “There is an urgent need for the Planning Commission to revise the chapter on
health in the 12th Plan document.” Comment. 250 15
2002 Define the concept of ‘growth centres’ and evaluate its relevance in regional
planning in India. 150 10

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 1998 The past 50 years of development in India were characterised by planning but the
next 50 years of development would be led by the market. Comment. 250 15
1996 Comment on the view that economic planning can raise the rate of capital
formation appreciably above the rate attainable under a system of private saving and
investment. 250 15

1994 Differentiate between indicative and target planning. Where the Eighth Five Year
Plan should be placed? 250 15

1991 Discuss the measures taken in the Five-Year Plans to mitigate rural poverty. 250 15
1990 What is the rationale for decentralized planning in India? Discuss the obstacles that
have stood in the way of such planning? 250 15
1990 What measures have been taken under the Five Year Plans increase employment
opportunities in rural areas? 150 10

1989 What are the main components of the non-Plan expenditure of the Government of
India? Discuss the recent trends in the growth of this expenditure. 150 10

1986 In course of planned economic development India’s actual growth has mostly been
lower than theprojected growth. How would you explain this shortfall? 15010

1982 Attainment of self-reliance has been a major objective of planning in India.

Analyse the implication ofthis policy. Asses the progress made so far in this regard 250
15
1982 In their emphasis policy planners on the primacy of the rate of economic growth,
some attention hasbeen paid to structural and ideological objective of planning in India.
Critically examine the statement. 150 10
1981 Health care for all by 2000 A. D is an important objective of the Sixth Five Year
Plan. What stepsare being taken for the supply of safe drinking water and provide
adequate nutritionalsafeguards, particularly to the vulnerable sections of the community?
What is the present statusof preventive medical facilities in our country? 250 15
1981 Removal of Poverty’ was a principal objective of the Fifth plan has been reiterated
in the Sixth Plan.Analyse the problem and the impediments involved. How is this
objective likely to be realised during theSixth Plan? 250 15

1979 Briefly review our achievements in industrial development over the plan
periods.What roles have been assigned to the Public Sector and the Small- Scale
Industries in our industrial development plans and programmes 250 15

PYQ PRELIMS OF ECONOMY-2020 CHAPTER 2 PLANNING

Q A

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SU→3. Planning in India 15
 Topic: Planning
2018 How are the principles followed by NITI Aayog different from those followed by
the erstwhile planning commission in India? 250 15
2012 “There is an urgent need for the Planning Commission to revise the chapter on
health in the 12th Plan document.” Comment. 250 15

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 2002 Define the concept of ‘growth centres’ and evaluate its relevance in regional
planning in India. 150 10

1998 The past 50 years of development in India were characterised by planning but the
next 50 years of development would be led by the market. Comment. 250 15
1996 Comment on the view that economic planning can raise the rate of capital
formation appreciably above the rate attainable under a system of private saving and
investment. 250 15
1994 Differentiate between indicative and target planning. Where the Eighth Five Year
Plan should be placed? 250 15

1991 Discuss the measures taken in the Five-Year Plans to mitigate rural poverty. 250 15
1990 What is the rationale for decentralized planning in India? Discuss the obstacles that
have stood in the way of such planning? 250 15
1990 What measures have been taken under the Five Year Plans increase employment
opportunities in rural areas? 150 10
1989 What are the main components of the non-Plan expenditure of the Government of
India? Discuss the recent trends in the growth of this expenditure. 150 10

1986 In course of planned economic development India’s actual growth has mostly been
lower than theprojected growth. How would you explain this shortfall? 15010

1982 Attainment of self-reliance has been a major objective of planning in India.

Analyse the implication ofthis policy. Asses the progress made so far in this regard 250
15
1982 In their emphasis policy planners on the primacy of the rate of economic growth,
some attention hasbeen paid to structural and ideological objective of planning in India.
Critically examine the statement. 150 10
1981 Health care for all by 2000 A. D is an important objective of the Sixth Five Year
Plan. What stepsare being taken for the supply of safe drinking water and provide
adequate nutritionalsafeguards, particularly to the vulnerable sections of the community?
What is the present statusof preventive medical facilities in our country? 250 15
1981 Removal of Poverty’ was a principal objective of the Fifth plan has been reiterated
in the Sixth Plan.Analyse the problem and the impediments involved. How is this
objective likely to be realised during theSixth Plan? 250 15

1979 Briefly review our achievements in industrial development over the plan
periods.What roles have been assigned to the Public Sector and the Small- Scale
Industries in our industrial development plans and programmes 250 15

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 PYQ PRELIMS OF ECONOMY-2020 CHAPTER 2 PLANNING
Q

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 A

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