How planning is done by Indian Government

The Planning Commission was[2]an institution in the Government of India, which formulated India‘s Five-Year Plans, among other functions. It is located at Yojana Bhawan, Sansad Marg, New Delhi. It was established in accordance with article 39 of the constitution which is a part of directive principles of state policy.

Quick facts: Agency overview, Formed …

Planning Commission
योजना आयोगAgency overviewFormed15 March 1950Dissolved2014HeadquartersYojana Bhawan, Sansad Marg, New Delhi – 110001Agency executives

ex officio chairmanVacant after resignation of Montek Singh Ahluwalia, Deputy chairman Commission has been replaced by new institution NITI Aayog.[1]


In his first Independence Day speech in 2014, Prime Minister Narendra Modiannounced scrapping of Planning Commission. It has been replaced by an Institution named NITI Aayog.[3]


See also: Five-year plans of India

Rudimentary economic planning, deriving from the sovereign authority of the state, was first initiated in India in 1938 by Congress President Netaji Subhash Chandra Bose, who had been persuaded by Meghnad Saha to set up a National Planning Committee.[4] TheBritish Raj also formally established a planning board that functioned from 1944 to 1946. Industrialists and economists independently formulated at least three development plans in 1944. Some scholars have argued that the introduction of planning as an instrument was intended to transcend the ideological divisions between Gandhi and Nehru.[5] Other scholars have argued that the Planning Commission as a central agency in the context of plural democracy in India needs to carry out more functions than rudimentary economic planning.[6]

After India gained independence, a formal model of planning was adopted, and accordingly the Planning Commission, reporting directly to thePrime Minister of India was established on 15 March 1950, with Prime MinisterJawaharlal Nehru as the Chairman. Authority for creation of the Planning Commission was not derived from theConstitution of India or statute; it is an arm of the central Government of India.

The first Five-Year Plan was launched in 1951, focusing mainly on development of the agricultural sector. Two subsequent Five-Year Plans were formulated before 1965, when there was a break because of the Indo-Pakistan conflict. Two successive years of drought, devaluation of the currency, a general rise in prices and erosion of resources disrupted the planning process and after three Annual Plans between 1966 and 1969, the fourth Five-Year Plan was started in 1969.

The Eighth Plan could not take off in 1990 due to the fast changing political situation at the Center, and the years 1990–91 and 1991–92 were treated as Annual Plans. The Eighth Plan was finally launched in 1992 after the initiation of structural adjustment policies.

For the first eight Plans the emphasis was on a growing public sector with massive investments in basic and heavy industries, but since the launch of the Ninth Plan in 1997, the emphasis on the public sector has become less pronounced and the current thinking on planning in the country, in general, is that it should increasingly be of an indicative nature.

In 2014, the Central Government led by Prime Minister Narendra Modi decided to wind down the Planning Commission. It was proposed to replace it with a more dynamic organisation that is more popular and connected to the times. There have been various perspectives discussed across the spectrum of the Indian intelligentsia about this move. It has been chiefly viewed as a cultivation of Modi’s extreme hatrednes towards Nehru and his socialism. Prime Minister Modi has launched a discussion board on Twitter to solicit opinions from the people of the country on what should replace the Planning Commission.


The composition of the Commission has undergone considerable changes since its initiation. With the Prime Minister as the ex officio Chairman, the committee has a nominated Deputy Chairman, who is given the rank of a full Cabinet Minister. Presently the post of vice Chairman is Arvind Panagariya. Cabinet Ministers with certain important portfolios act as ex officio members of the Commission, while the full-time members are experts of various fields like economics, industry, science and general administration.

Present ex officio members of the Commission, are the Finance Minister, Agriculture Minister, Home Minister, Health Minister, Chemicals and Fertilisers Minister, Information Technology Minister, Law Minister, HRD Minister and Minister of State for Planning.[7]

The Commission works through its various divisions, of which there are two kinds:

General Planning DivisionsProgramme Administration Divisions

The majority of the experts in the Commission are economists, making the Commission the biggest employer of theIndian Economic Service.


The Indian Planning Commission’s functions as outlined by the Government’s 1950 resolution are following:

To make an assessment of the material, capital and human resources of the country, including technical personnel, and investigate the possibilities of augmenting those are related resources which are found to be deficient in relation to the nation’s requirement.To formulate a plan for the most effective and balanced utilisation of country’s resources.To define the stages, on the basis of priority, in which the plan should be carried out and propose the allocation of resources for the due completion of each stage.To indicate the factors that tend to retard economic development.To determine the conditions which need to be established for the successful execution of the plan within the incumbent socio-political situation of the country.To determine the nature of the machinery required for securing the successful implementation of each stage of the plan in all its aspects.To appraise from time to time the progress achieved in the execution of each stage of the plan and also recommend the adjustments of policy and measures which are deemed important vis-a-vis a successful implementation of the plan.To make necessary recommendations from time to time regarding those things which are deemed necessary for facilitating the execution of these functions. Such recommendations can be related to the prevailing economic conditions, current policies, measures or development programmes. They can even be given out in response to some specific problems referred to the commission by the central or the state governments.

From a highly centralised planning system, the Indian economy is gradually moving towards indicative planning where the Planning Commission concerns itself with the building of a long-term strategic vision of the future and decide on priorities of nation. It works out sectoral targets and provides promotional stimulus to the economy to grow in the desired direction. It also plays an integrative role in the development of a holistic approach to the policy formulation in critical areas of human and economic development. In the social sector, schemes that require co-ordination and synthesis like rural health, drinking water, rural energy needs, literacy and environment protection have yet to be subjected to coordinated policy formulation. It has led to multiplicity of agencies. The commission has now been trying to formulate an integrated approach to deal with this issue. The Planning Commission has asked the States to hike the power tariff to save the ailing power sector. It also called upon the States to utilise the power subsidy for improvement to essential services like drinking water supply, education and health for promoting inclusive growth.[8]

Social media

In March 2013, Planning Commission launched a massive social media campaign for spreading Awareness about 12th Five Year Plan. It was followed by series of Google+ Hangoutsand a Plan Hackathon. By September 2013, it had made a considerable presence on Social Media with over 1 lakh Twitter followers and a considerable size on Facebook,YouTube and SlideShare.[9]

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