Planning in India/5 Year Plans/Niti Aayog

Planning in India Five Year Plans Niti Aayog

Planning in India

Planning is programming for action for a particular period for achieving certain specific progressive developmental goals. In other words, it is a method of achieving economic prosperity by the optimum utilization of the resources of an organization. It is a tool to bridge the gap between reality and objectives of an organization. Also, it is an effort towards attaining self-sufficiency and narrowing the intra and inter-regional disparities and preparing ideal conditions for the development.

The first almost rudimentary idea of economic planning as part of republican justice in India started in 1938 when he was Congress President, Netaji Subhas Bose, with the collaboration of the physicist and mathematician, Meghnad Saha, gave us a glimpse of all that planning for the long term, by an independent and transparent apex, could do for an India of the future. In his presidential address at the Haripura session of the Congress in February 1938, Netaji envisaged “the first task of the Government of Free India” as being the setting up of a “National Planning Commission” in order to address the task of fighting poverty. He created what was, in effect, the nucleus for the future Union Planning Commission in the National Planning Committee under the aegis of the Indian National Congress, with Jawaharlal Nehru as the first Chairman of the Committee.


Socio-economic planning has been one of the most noteworthy inventions of the 20th century. Starting with the Soviet experiment in 1928, planning gradually swept over almost two-thirds of the entire world.

1. For developing countries, whether belonging to a democratic or an authoritarian political culture, planning has been considered a prerequisite for balanced socio-economic development and a strategy for making the best possible use of a available natural manpower, and financial as well as infrastructural resources. There are continuing pressures on developing countries to accelerate the speed of development so that the gap between the standard of living of their people and that of the developed countries is reduced at the fastest possible pace and consequently, they also emerge as dignified members of the international community.

2. Even in the developed countries of the west, planning in one form or another, has remained an integral part of their economic system. Only, it is termed “indicative” planning for it is expected to indicate the direction of growth and not to dictate it. Developing countries like China (in late 1970s) and India (in 1990s) started using indicative planning also.


Indian planning, ever since its inception, has attempted to meet the following objectives of multi-faceted development:

• Securing an increase in national income.

• Accelerating the planned rate of investment to enhance the proportion of actual investment to national income.

• Mitigating the inequalities of income and wealth and regulating the concentration of economic power.

• Increasing the quantum of employment for the maximum possible utilization of manpower.

• Promoting development in agricultural, industrial and other sectors and striving to achieve inter-sectoral development

• Speeding up the development of relatively backward regions and promoting balanced regional development.

• Reducing, in a progressive manner, incidence of poverty by providing food, work and productivity to the people below the poverty-line.

• Modernization of the economy through effecting shifts, in the sectoral composition of production diversification of activities, advancement in technology and institutional innovation.


There have been several experiments in planning in India. The different types of planning that one come across while talking about planning in India are discussed below.

• Indicative Planning

Indicative planning was adopted since 8th five year plan which is driven by liberalization of the Indian economy and the private sector being given a role on par with or more than that of the government in quantitative terms. State would turn its role into a facilitator from that of a controller and regulator.

It was decided that trade and industry would be increasingly freed from government control and that planning in India should become more and more indicative and supportive in nature. In other words, the remodeling of economic growth necessitated recasting the planning model from imperative and directive (‘hard’) to indicative (soft) planning. Since the Government did not contribute the majority of the financial allocation, it had to indicate the policy direction to the corporate sector and encourage them to contribute to plan targets. Government should create the right policy climate – predictable, irreversible and transparent – to help the corporate sector contribute resources for the plan.

Indicative planning is to assist the private sector with information that is essential for its operations regarding priorities and plan targets. Here, the Government and the corporate sector are more or less equal partners and together are responsible for the accomplishment of planning goals. Government, unlike earlier, contributes less than 50% of the financial resources. Government provides the right type of policies and crates the right type of milieu for the private sector-including the foreign sector to contribute to the results.

Indicative planning gives the Government an opportunity to give the private sector encouragement to achieve growth in areas where the country has inherent strengths. It is known to have brought Japan results in shifting towards microelectronics. In France, too indicative planning was in vogue.

Planning Commission would work on building a long-term strategic vision of the future. The concentration would be on anticipating future trends and evolving strategies for competitive international standards. Planning will largely be indicative and the public sector would be gradually withdrawn from areas where no public purpose is served by its presence. The new approach to development will be based on “a re-examination and re-orientation of the role of the government”. The state has to play more of a facilitating role. This point is particularly stressed in the development strategy of the Tenth Five Year Plant (2002-2007).

• Rolling Plan

It was adopted in India in 1962, in the aftermath of Chinese attack on India, in the Defence Ministry in India. Professor Gunnar Mrydal (author of the more famous book ‘Asian Drama’) recommended it for developing countries in his book Indian Economic Planning in Its Broader Setting.

In this type, every year three new plans are made and implemented – annual plan that includes annual budget; three-four-five plan that is changed every year in response to the economic demands; and perspective plan for 10 or 15 years into which the other two plans are dovetailed annually. Rolling plan becomes necessary in circumstances that are fluid.

• Financial Planning

Here, physical targets are set in line with the available financial resources. Mobilization and setting expenditure pattern of financial resources is the focus in this type of planning.

• Physical planning

Here, the output targets are prioritized with inter-sect oral balance. Having set output targets, the finances are raised.

5 Year Plans

Niti Aayog

India has undergone a paradigm shift over the past six decades – politically, economically, socially, technologically as well as demographically. The role of Government in national development has seen a parallel evolution. Keeping with these changing times, the Government of India has decided to set up NITI Aayog (National Institution for Transforming India), in place of the erstwhile Planning Commission, as a means to better serve the needs and aspirations of the people of India. The new institution will be a catalyst to the developmental process; nurturing an overall enabling environment, through a holistic approach to development going beyond the limited sphere of the Public Sector and Government of India.

The NITI Aayog will comprise the following:

a. Prime Minister of India as the Chairperson
b. Governing Council comprising the Chief Ministers of all the States and Lt. Governors of Union Territories
c. Regional Councils will be formed to address specific issues and contingencies impacting more than one state or a region. These will be formed for a specified tenure. The Regional Councils will be convened by the Prime Minister and will comprise of the Chief Ministers of States and Lt. Governors of Union Territories in the region. These will be chaired by the Chairperson of the NITI Aayog or his nominee.
d. Experts, specialists and practitioners with relevant domain knowledge as special invitees nominated by the Prime Minister
e. The full-time organizational framework will comprise of, in addition to the Prime Minister as the Chairperson:

i. Vice-Chairperson: To be appointed by the Prime Minister

ii. Members: Full-time

iii. Part-time members: Maximum of 2 from leading universities research
organizations and other relevant institutions in an ex-officio capacity. Part time members will be on a rotational basis.

iv. Ex Officio members: Maximum of 4 members of the Union Council of Ministers to be nominated by the Prime Minister.

v. Chief Executive Officer: To be appointed by the Prime Minister for a fixed tenure, in the rank of Secretary to the Government of India.

vi. Secretariat as deemed necessary.

The NITI Aayog will aim to accomplish the following objectives and opportunities:

• An administration paradigm in which the Government is an “enabler” rather than a “provider of first and last resort.”

• Progress from “food security” to focus on a mix of agricultural production, as well as actual returns that farmers get from their produce.

• Ensure that India is an active player in the debates and deliberations on the global commons.

• Ensure that the economically vibrant middle-class remains engaged, and its potential is fully realized.

• Leverage India’s pool of entrepreneurial, scientific and intellectual human capital.

• Incorporate the significant geo-economic and geo-political strength of the Non-Resident Indian Community.

• Use urbanization as an opportunity to create a wholesome and secure habitat through the use of modern technology.

• Use technology to reduce opacity and potential for misadventures in governance.

The NITI Aayog aims to enable India to better face complex challenges, through the following:

• Leveraging of India’s demographic dividend, and realization of the potential of youth, men and women, through education, skill development, elimination of gender bias, and employment.

• Elimination of poverty, and the chance for every Indian to live a life of dignity and self-respect.

• Reddressal of inequalities based on gender bias, caste and economic disparities.

• Integrate villages institutionally into the development process.

• Policy support to more than 50 million small businesses, which are a major source of employment creation.

• Safeguarding of our environmental and ecological assets.