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Economic Planning in India changed into a hard mission for our country wide leaders, they have been going through a massive problem, the way to construct the economic system, 20% of humans had been controlling 80% of assets, so the factor turned into the way to make Independence meaningful to the hundreds due to the fact until and until the monetary empowerment, all  empowerment is incomprehensible or shallow.

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Economic Planning in India

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E c o n o m i c

P l a n n i n g i n

I n d i a

B Y   J A B O R E J O B

economic planning in india


Planning in India

Economic Planning in India Started After the

Independence in 1947

Economic Planning in India was a tough challenge for

our national leaders, they were facing a big problem, how

to construct the economy, 20% of people were controlling

80% of resources, so the point was how to make

Independence meaningful to the masses because unless

and until the financial empowerment, all empowerment is

meaningless or shallow.

furthermore the main challenge

Furthermore, the main challenge was how to reconstruct

economy, how to equalize the distribution of resources

among people, at the time of Independence all sectors

were shattered, none of the sectors were in shape, the

problem was with an adaptation of model for Economic

Planning in India, then our National leaders look at

various models, like there were so many countries earlier

were colonies like USA under British, but earlier in 1947

these countries were developed, In the meanwhile our

National leaders thought that if it is possible to implement

a model which has implemented in these countries so that

we can ensure better lifestyle and can eradicate poverty,

unemployment from our country.

So then we started looking various models compared to

and then we were agreed that no 2 models ever be the

same, plans are designed to specific requirements of the


There were several models across the globe which can

be divided into 2 categories such as

Capitalistic Plan Model

Capitalistic plan model is where economic decisions are

taken by market forces like what to produce, where to

produce, whom, when, etc., according to the demand and

supply. This plan was also a success, as for example

America, Australia was poor Nations, but this plan

successfully contributed in bringing these Nations from

poor to rich.

so the leaders in india were decided to implement

So the leaders in India were decided to implement same

but the problem was with capital, we had landlords, but

we had not disposable capital that we can invest, demand

and supply cannot be created since 80% of people were

poor and lack of technology and capital. However, this

model was ignoring social considerations, and its only

goal is to make profits, so again decided not to implement

then we turn to another method Socialistic model.

Socialistic Plan Model

Under Socialistic plan model, the economic decisions are

taken by the Government and it was successful in USSR

and East European countries. This model was close to

the heart of leaders because it was working towards

down-up strategy and most of our people were poor.

Then planned to adopt this model to implement because

it was close to our Ideology, it works to eliminate poverty.

But the problem was with landlords we cannot overrule

them and princely states this was the only problem they


Because if we see the history we find that the reason

behind the failure of 1857 revolt was because of landlords

and capitalist they did not co-operate with our freedom

fighters, they supported Britishers hence, that is why

freedom struggle failed. In the mean, while India itself

was a result of communal problems forcing separation

from India, that’s why we gave special rules for princely

states and right to property in our constitution to decrease

the fear of landlords and building confidence to the

princely states.

moreover there are problems to implement both

Moreover, there are problems to implement both the

models that are why the economic planners decided to

combine both Capitalistic and Socialistic model and

finally adopted Mixed Economy to achieve better growth

in all aspects and leaders contributed their knowledge to

our Economic Planning in India.

Features of Economic Planning in India

Economic Planning in India was not so easy therefore

we had no previous experience of politics because

before British came to India kings and queens were

ruling, but it was necessary to make an Economic plan in


* Definite Objective

The most important features of economic planning

should possess definite objectives. Planning means

conscious and purposeful undertaking for a definite

objective. For instance, economic planning has the

objective to increase the rate of growth, elimination of

trade cycles, bringing the stability and a attain full

employment in the economy.

* Central Planning Authority

The existence of central planning authority is another

feature of economic planning. The central planning

authority is responsible to prepare different central

schemes of development and coordinating the various

activities in short the central authority takes

activities. In short, the central authority takes all decisions

relating to production and consumption in an economy.

* Democratic Character

Another discover feature is its Democratic nature. No

doubt, despite the various plans are prepared by experts

but at the same time, adequate opportunities are provided

to the people to actively participate at various levels.

Being federal structure of Indian constitution, the Union

Government only uses its fiscal monetary and physical

controls to guide and give direction in relevance to the five

-year plan subsequently.

* Only An Advisory Role of Planning Commission

In the decentralized set-up of the planning commission is

the apex body. It provides the necessary perspective,

guidance, and coordination. Furthermore, it serves as a

close link between agencies so that functioning may be

smooth in this regard, the planning commission is an

advisory character.

* Feasible Policies and Targets

A good planning is based on the initial resources of the

country to achieve the feasible goals and policies. In this

way, domestic resources are planned for attaining

economic stability.

planning for consumption

* Planning for Consumption

In a centrally planned economy it should not be

confined to production alone but the same time, it

must cover the distribution and consumption also.

In other words, the planning authority should not

decide what and how to produce but it must keep in

mind and decide accordingly among whom it is to

be distributed.

Importance of Economic Planning In India

Economic Planning is a resource allocation

planning that is compared with the market

mechanism. As a coordinating mechanism for

socialism, economic planning substitutes factor

markets and is defined as a direct allocation of

resources, contrasted with the indirect allocation

mechanism of the market.

* Rapid Economic Development

Before Independence, the long period of British

rule and exploitation had made India one of the

poorest nations in the world. The main task before

the National Government was to undertake some

positive development

measures to initiate a process of development

measures to initiate a process of development, which can

be done effectively only through the instrument of


* Quick Improvement in the Standard of Living

In an Unplanned economy, the country’s resources and

materials cannot be employed for increasing the people’s

welfare as the private capitalists in such an economy

direct their activities in increasing their own profits. The

path of planning has been chosen to promote a rapid rise

in the standard of living of the people by efficient

exploitation of resources.

* Removal of Poverty

Economic Planning In India is necessary for the early

removal of abject poverty of the people, This can be done


a) Planned for an increase in the employment

opportunities of the people.

b) Planned for production of mass consumption goods and

their planned distribution among the people.

c) Fulfillment of minimum needs program by providing

essential facilities like roads, water, etc.

d) Planned to increase the consumption of the poorest

section of the people.

rational allocation and efficient utilization

* Rational Allocation and Efficient Utilization of


India is rich in natural resources but these resources are

not fully exploited to get maximum benefits. The

resources tend to engage in the production of goods and

services which make more profits only this will be

concentrated in an unplanned economy, as a result,

rational allocation of resources is not possible, so India

planned for the pattern of Investment of resources and


* Increasing the Rate of Capital Formation

Planning can also raise the rate of capital formation in the

low-level countries like India. The surplus of public

enterprises as found in the planned economy can be

utilized for Investment and capital formation. In India, the

Government has been increasing, the rate of capital

formation through planned Investment like roads,

manufacturing machines, etc.

* Reduction in Unequal Distribution of Income and


In absence of Economic Planning In India, inequality

tends to increase due to growing concentration of Eco-

resources at the hands of few capitalists. planning can

change this trend with proper guidance and control of

production distribution investment

production, distribution, investment, etc. The development

works established an increase in Income and


* Reorganization of Foreign Trade

The Foreign trade structure may be the direction of the

primary producing economy to the Industrialized

economy. Through proper controls of import and effective

promotion of export of Industrial goods, the development

plans can reorganize the foreign trade structure. Thus

owing to such development the trade structure is not like

colonial as it was before.

* Regional Balanced Development

Proper development programs may be taken for the all-

round development of background areas, as a result, that

all the regions are sufficiently developed. More Industries

are to be set up in the less developed regions and plan

should provide dispersal of Industries.

For the most part, these are the few reasons for thinking

towards Economic Planning In India.

Read: Importance of Agricultural

Marketing in India and

Government Steps