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Planning and NITI Aayog

1. Visvesvaraya Plan

● The era of economic planning in India started with Visvesvaraya’s ten-year Plan.
● Sir M. Visvesvaraya published a book titled “Planned Economy for India” in 1934
wherein he presented a draft to double the national income in a decade.
● He proposed to shift the labour from the agrarian set up to the industries thereby
advocating for democratic capitalism (similar to the USA) with emphasis on
industrialization. However, there was no follow up of this plan in British
Government, it successfully stirred an urge for national planning among the
educated citizens of the country.

2. National Planning Committee (NPC)

● It was the first attempt to develop a national plan for India emanated in 1938 with
the set-up of NPC under the chairmanship of Jawahar Lal Nehru.
● However, because of the commencement of World War II, the reports of the
committee could not be prepared. The papers finally came out after independence
in 1948-49.

3. Bombay Plan

● Eight leading industrialists and technocrats formulated a draft titled “A Brief

Memorandum Outlining a Plan of Economic Development for India” under the
editorship of Purushottamdas Thakurdas in 1944.
● This draft is known as ‘Bombay Plan’.
● The basic objectives of the plan were a doubling of the output of the agricultural
sector and a five-fold growth in the industrial sector in 15 years.
● A key principle of the Bombay Plan was that the economy could not grow without
government intervention and regulation.
● Officially the plan was never accepted, however, its ideas were replicated in future
economic plans.

4. People’s Plan

● People’s plan was drafted by M. N. Roy, the communist leader, on behalf of the Post-
War Re-Construction Committee of the Indian Federation of Lahore in 1944.
● It was based on ‘Marxist Socialism’ and gave primacy to agriculture. It advocated for
the nationalization of agriculture and all production activities.

5. Gandhian Plan
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● Gandhian Plan was drafted by S. N. Aggarwal, the principal of Wardha Commercial

College in 1944.
● The plan articulated a ‘decentralized economic structure’ for India with ‘self-
contained villages’.
● Unlike NPC and Bombay Plan, the plan laid more emphasis on agriculture.
● And wherever industrialization was talked about, it stressed upon promoting cottage
and village level industries.

6. Sarvodaya Plan

● This plan by drafted by Jai Prakash Narayan in 1950.

● It was inspired by Gandhi Plan and Vinoba Bhave’s principles of self-reliance.
● It laid stressed upon agriculture as well as small and cotton industries.
● It advocated self-sufficiency by curtailing the use of foreign technology and
implementing land reforms and decentralized participatory planning.

7. Planning Commission

● After independence, the Economic Programme Committee (EPC) was formed by the
All India Congress Committee.
● Pandit J.L. Nehru was its chairman.
● In 1948, this committee recommended the formation of the planning commission.
● It was an extra-constitutional body, charged with the responsibility of formulating
five-year plans.

8. National Development Council (NDC)

● It was founded on August 6, 1952. It was presided over by the Prime Minister.
● It acted as the apex body for decision making and deliberations on development
matters in India.
● It used to give the final approval to the Five-Year Plan of India.
● Since the inception of NITI Aayog's Governing Council (which has almost the same
composition and roles as NDC), the NDC has had no work assigned to it nor did it
have any meetings.

9. Rolling Plan

● It was adopted in India in 1962, in the aftermath of the Chinese attack on India.
Professor Gunnar Myrdal (author of Asian Drama) recommended it for developing
countries in his book Indian Economic Planning in Its Broader Setting.
● In the rolling plan model, even as annual and multi-year goals are set, they are not
rigidly followed as ground-level conditions may not be conducive, and so, they are
liable to be reset according to the circumstances.
● A rolling plan becomes necessary in an economic situation that is fluid. The main
advantage of the rolling plans is that they are flexible and can overcome the rigidity
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of fixed five-year plans by resetting targets, projections and allocations as per the
changing conditions in the country’s economy.
● The main disadvantage of this plan is that if the targets are revised each year, it
becomes very difficult to achieve them. Frequent revisions result in the instability of
the economy.

Summary of First three Five-year plans

Plans Time frame Objective and Remarks

· Focus: agriculture, price stability, and

First Plan infrastructure.

(Target growth: 2.1% 1951-1956 · It was based on the Harrod Domar model
(growth rate of the economy depends upon
Actual growth: 3.6%) investment rate and productivity of capital
in a positive manner).

· Focus: Rapid industrialization

· It was also known as Mahalanobis Plan

Second Plan (advocated planning shift from agriculture
to industries).
(Target growth: 4.5% 1956-1961
· It laid emphasis on heavy and basic
Actual growth: 4.3%) industries.

· Also advocated import substitution; export

pessimism and overvalue exchanges.

· Focus: 'self-reliant' and 'self-generating'

economy
Third Plan
Based on the experience of first two plans,
agriculture was given top priority to support
(Target growth: 5.6% 1961-1966
the exports and industry.
Actual growth: 2.84%)
· Due to two wars- war with China, 1962 and
war with Pakistan, 1965 and the severe
drought of 1965-66; it failed on many fronts.

● 1966-67, 1967-68 and 1968-69 were annual plans. Discontinuation of five-year

planning for three consecutive years is regarded as a plan holiday.
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● Due to the prevailing food crisis, annual plans were primarily focused on agriculture.
● During these plans, the foundation of the green revolution was laid down which
included widespread use of HYV (high yielding varieties) seeds, chemical fertilizers
and extensive exploitation of irrigation potentials. During these years, the shocks of
a third-year plan were absorbed and five-year planning system was resumed from
1969.

Summary of IV to XII FYPs

Plans Time Frame Objective and Remarks

· Focus: Growth with stability and

progressive achievement of self-reliance
Fourth Plan
· Objective was to improve domestic food
production.
(Target Growth: 5.7% 1969-1974
· It was aimed at saying no to foreign aid.
Actual Growth: 3.30%)
· First oil shock of 1973, made remittances a
major source of foreign exchange reserve.

· Focus: ‘removal of poverty’ and ‘attainment

Fifth Plan of self-reliance’.

(Target Growth: 4.4% · It was drafted and launched by D. D. Dhar.

1974-1979
Actual Growth: 4.8%) · This plan was terminated in the year 1978.

· There were rolling plans for the year 1978-

1979 and 1979-1980.

· Focus: Poverty eradication and productivity

enhancement
Sixth Plan
· Stressed upon modernization of technology.
(Target Growth: 5.2% 1980-1985
· For the first time, the frontal attack was
Actual Growth: 5.7%) made on poverty by adopting ambitious
poverty eradication programmes (trickle-
down strategy was discarded).

Seventh Plan · Focus: Food, work & productivity, i.e.

employment generation.
(Target Growth: 5.0% 1985-1990
· For the first time, the private sector got
Actual Growth: 6.01%) priority over the public sector.
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· Due to volatile political situations at the

center, two annual plans were commenced
for the year 1990-1991 and 1991-1992.

· Focus: ‘Plan with a human face’ i.e. human

resource development.
Eighth Plan
· During this plan, a new economic policy was
(Target Growth: 5.6% 1992-1997 launched with LPG (Liberalization,
Privatization, and Globalization).
Actual Growth: 6.8%)
· It gave primacy to human capital and the
private sector.

· Focus: ‘Growth with Social Justice and

Ninth Plan
Equity’
(Target Growth: 6.5% 1997-2002
· It stressed upon four dimensions: quality of
life; generation of productive employment;
Actual Growth: 5.4%)
regional balance and self-reliance.

Tenth Plan It was aimed to double the per capita income

of India in the next 10 years.
(Target Growth: 8% 2002-2007
And to reduce the poverty ratio by 15% by
Actual Growth: 7.6%) 2012.

Eleventh Plan

(Target Growth: 9% 2007-2012 Focus: Faster and more inclusive growth.

Actual Growth: 8%)

Twelfth Plan
Focus: Rapid, more inclusive and sustainable
2012-2017
growth.
(Target Growth: 8%)

NITI Aayog

● NITI Aayog, the National Institution for Transforming India, is a policy think tank of
the Government of India established in 2015.
● It replaced the Planning Commission.
● It has a dual objective of achieving sustainable development goals and enhancing
cooperative federalism with a ‘bottom to top’ approach. Its initiatives include:
(a) Action Plan- 3 Years
(b) Strategy Plan- 7 Years
(c) Vision Plan- 15
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Planning Commission NITI Aayog

Enjoyed the powers to allocate funds It is truly an advisory body, or a think-
to ministries and state governments. tank. The powers to allocate funds is
vested in the finance ministry.
States' role was limited to the State governments are expected to play a
National Development Council and more significant role than they did in the
annual interaction during Plan Planning Commission.
meetings.
Secretaries or member secretaries Secretaries to be known as the CEO and
were appointed through the usual to be appointed by the Prime Minister.
process
Planning Commission had no Aayog has a number of part-time
provision for part-time members. members, depending on the need from
time to time.
The commission reported to National Governing Council has state chief
Development Council that had state ministers and lieutenant governors.
chief ministers and lieutenant
governors.
Had deputy chairperson, a member New posts of CEO, secretary rank, and
secretary and full-time members Vice-Chairperson. Will also have five full-
time members and two part-time
members. Four cabinet ministers will
serve as ex-officio members.
Top-Down Approach: Policy was Bottom-Up Approach: Consulting states
formed by the commission and states while making policy and deciding on
were then consulted about the funds allocation.
allocation of funds.
Imposed policies on states and tied NITI is a think-tank and does not have
allocation of funds with projects it the power to impose policies.
approved.

Composition of NITI Aayog

● Chairperson – The Prime Minister

● Governing Council – Chief Ministers of the States and Lieutenant Governors of Union
Territories
● Regional Council – Formed based on need as and when required and comprises of
CMs of States and Lieutenant Governors of Union Territories
● Full-Part time members – Four full-time members and two part-time members
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● Ex-officio members – Four Cabinet Ministers appointed by the Prime Minister

● Special invitees – Specialists and experts in relevant fields
● Chief Executive Officer – Appointed by the Prime Minister for a fixed tenure of the
rank of Secretary

Specialized Wings of NITI Aayog

● Research Wing – Its aim is to develop in-house sectoral expertise so as make it a

think tank with specialized and expert knowledge.
● Consultancy Wing – Its aim is to provide a marketplace of expertise and provide
necessary funding wherever required.
● Team India Wing – It comprises the representatives of every State and Ministry. Its
aim, to serve as a platform for national collaboration.

Objectives of NITI Aayog

● Enhancing cooperative federalism with active support and involvement of states.

● Bringing deprived and marginal sections of society into mainstream economic and
social activities for the overall development of the country.
● Formulation of village-level plans and their aggregation at higher levels of the
government.
● Creates a mechanism that can provide innovative solutions.
● Formulation of economic policy which can incorporate national security interests.
● Creation of a knowledge database with innovation and entrepreneurial support
system.
● Creating a State-of-the-Art resource centre that can provide research on good
governance.
● Technology up-gradation at regular intervals and capacity building.
● To give act and advise like a think tank on national and international issues.
● To provide better inter-ministry cooperation and coordination for taking urgent
policy decisions.
● To help in resolving inter-departmental and inter-sectoral issues so as to focus more
on the development agenda.
● Suggest strategic and long-term policy initiatives and review their progress from time
to time.

Aim of NITI Aayog

● To make a shift in the paradigm in which government is thought to be a ‘provider of

first and last resort’ to that of an ‘enabler’.
● Eliminate poverty and provide every Indian with a dignified and respectful life.
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● Educate and train the young population of this country and make them a useful
human resource.
● Integration of village-level institutions into the developmental process of the
country.
● To provide all possible policy support to small and medium enterprises so as to
create new employment opportunities.
● Keep our environment and ecology safe and usable for the next generation.

Pillars of Effective Governance

NITI Aayog’s vision is based on the seven pillars of effective Governance. They are:

1. Pro-people: It aims to keep and fulfil the aspirations of every individual of the society
2. Pro-active: Every concern of the citizen is to be solved pro-actively.
3. Participation: It wants to involve every stratum of society.
4. Empowering: Empowering lower and marginalized sections of society including
women in all aspects
5. Inclusion of all: All needs to be cared for and include all irrespective of caste, creed,
and gender.
6. Equality: Providing equal opportunity for all.
7. Transparency: Make every department responsive and transparent.

Way forward

● NITI Aayog functions in close cooperation and coordination with the States and other
Ministries for effective planning and execution of assigned tasks. This needs to be
effectively implemented, and close coordination is always taken into consideration
while making plans in future.
● NITI Aayog makes recommendations on various issues to the Central and State
Governments. The Central and State governments need to give priority in the
implementation of the reports submitted by the NITI Aayog.
● A more decentralized approach to planning is required within the five-year plan
format.
● While suggesting the reforms, NITI Aayog should also spell the required strategy for
implementation of those reforms.
● NITI Aayog should act as an agent of change and support the government’s agenda
of the overall development of the country.