Indian Economy
General Knowledge

Economic Planning

Economic Planning

» Economic Planning is the process in which the limited natural resources are used skilfully so as to achieve the desired goals. The concept of Economic Planning in India, is derived from Russia (the then USSR).
» 'Planning' in India derives its objectives and social premises from the Directive Principles of State Policy enshrined in the Constitution.
» In the year 1934, the proposal relating to economic planning came for the first time in the book of Vishveshwaraiya titled "Planned Economy for India". Thereafter in 1938, the All India Congress Committee demanded for the same. In 1944 efforts were made by 8 industrialists under "Bombay Plan".
» Thereafter, in the same year, 'Gandhian Plan' by Mr. Mannarayan, in April, 1944 the 'People's Plan' by labour leader M.N. Roy and in January 30,1950 the 'Sarvodaya Plan' by Mr. Jai Prakash Narayan were presented.
» After independence, in 1947, the committee on economic planning was constituted under the chairmanship of Jawaharlal Nehru. Thereafter, on the recommendation of this committee, Planning Commission was constituted in March, 1950 and the format of first Five Year Plan was prepared in 1951.
» The Planning Commission was constituted in India in 1950 as a non constitutional and advisory corporation. The Indian Constitution did not provide for the formation of Planning Commission.
» The basic aim of economic planning in India is to bring about rapid economic growth through development of agriculture, industry, power, transport and communications and all other sectors of the economy.
» In India, more than 11 Five Year-Plans have been implemented so far.

The target and achievements of these plans are given in the following table

Five-year Plan Period Target growth rate of GDP (In % age) Achievement (In % age) Model
First Plan 1951-56 2.1 3.6 Harrod-Domar Model
Second Plan 1956-61 4.5 4.1 Prof. P.C. Mahalanobis
Third Plan 1961-66 5.6 2.8 Sukhmoy Chakraborty and Prof. Saddy
Fourth Plan 1969-74 5.7 3.3 Ashok Rudra and Alon S. Manney
Fifth Plan 1974-79 4.4 4.8 Alike Fourth Five-Year Plan, which is called “Investment Model of Planning Commission".
Sixth Plan 1980-85 5.2 5.7 Based on Investment Yojana, Infrastructural changing and trend to growth model
Seventh Plan 1985-90 5.0 6.0 Alike Sixth Five-Year plan prepared © Pranav Mukherjee)
Eighth Plan 1992-97 5.6 6.8 John W. Miller Model
Ninth Plan 1997-02 6.5 5.4 Created by 'Planning Commission.'
Tenth Plan 2002-07 8.0 7.2 Created by 'Planning Commission.'
Eleventh Plan 2007-12 9.0 - Prepared by Prof. C Rangarajan
Twelfth Plan 2012–2017 9.0 8.0 -

» In addition to this, six yearly plans were also made. These yearly plans were made for the years 1966-67 to 1968-69, 1978-1980 and from 1990-91 to 1991-92. The plan for the year 1978-79 was continuously implemented.