70^th BPSC Mains

Approach Explain the meaning of economic planning. Highlight the successes of planning in the Indian economy. Conclude suitably.

Introduction

A planned economy refers to the system where major economic decisions are made by a central authority based on a comprehensive understanding of the economy. After independence, India adopted planned development through Five-Year Plans to ensure inclusive growth, industrialization, and social justice. The objective was to steer a newly independent nation towards self-reliance, poverty reduction, and balanced regional development.

Body

• Laid Foundation for Modern Economic Infrastructure:
  • Post-independence planning enabled the creation of core infrastructure, including dams, steel plants, roads, and institutions like IITs and CSIR labs.
  • Large-scale projects like Bhilai Steel Plant and Bhakra Nangal Dam symbolized India’s push towards modernization and self-reliant development
• Achieved Food Self-Sufficiency and Agricultural Reform:
  • Planning focused on agricultural productivity, especially during the Green Revolution initiated under the Third and Fourth Plans.
  • As a result, India moved from food scarcity to self-sufficiency in food grains, reducing dependence on imports.
• Development of Public Sector and Industrial Base:
  • The Second Five-Year Plan (Nehru-Mahalanobis model) prioritized heavy industries and public sector undertakings (PSUs).
  • PSUs such as HAL, BHEL, and SAIL became symbols of industrial self-reliance and employment generation.
• Promoted Regional and Social Equity:
  • Planning helped direct resources towards backward regions, reducing regional imbalances and ensuring inclusive development.
  • Schemes for Scheduled Castes, Scheduled Tribes, and women were embedded into plan priorities to reduce social inequality.
• Employment Generation and Poverty Reduction:
  • Programs like Integrated Rural Development Programme (IRDP), National Rural Employment Programme (NREP), MGNREGA (post-Planning Commission era) aimed at rural employment and poverty alleviation, benefiting millions.
  • Skilled and unskilled employment in agriculture, construction, and manufacturing were driven by plan-oriented investments.
• Welfare-Oriented Approach to Development:
  • Focus was laid on education, healthcare, and social security, with schemes like ICDS, Mid-Day Meal, and Rural Health Mission.
  • Literacy rates increased from 18.3% in 1951 to 74% by 2011, showcasing long-term social development outcomes.
• Successes of Early Plans with Notable Growth:
  • The First Five-Year Plan (1951–56) achieved 3.6% growth against a target of 2.1%, focusing on agriculture and irrigation.
  • The Seventh Plan (1985–90) witnessed rapid economic growth of over 6%, marking a shift towards modernization and productivity.
• Limitations and Criticisms:
  • Planning led to license raj, red-tapism, and the so-called Hindu growth rate (3–3.5% annually until 1980s).
  • Low private investment, inefficiency in PSU performance, and lack of accountability undermined some planning goals.
  • The centralised nature of planning made it inflexible and failed to address regional disparities adequately, resulting in uneven development across states and sectors.
  • Excessive emphasis on import substitution over export-oriented industrialisation limited India’s integration with global markets and constrained the potential for trade-led growth.
• Evolving Role Post-Liberalization:
  • With economic reforms in 1991, the command economy model gave way to market-oriented planning.
  • Institutions like NITI Aayog now focus on cooperative federalism, strategic planning, and sustainable development goals (SDGs).
  • Programs like National Infrastructure Pipeline (NIP) and Energy Transition Roadmap show the new-age approach to planning.

Conclusion

India’s planned economy played a crucial role in transforming a backward economy into a self-reliant and diversified one. Though it had limitations, it was instrumental in building institutions, infrastructure, and social security nets. In the post-liberalization era, the focus has shifted to flexible, outcome-based, and participatory planning, blending state guidance with market dynamics to achieve sustainable and inclusive growth.