The Planning Commission stands apart from numerous commissions and other bodies established by the Constitution, as it was established on March 15,  1950, through a direct resolution by the Government of India. Its primary function is advisory in nature and its recommendations gain authority only upon approval by the Union Cabinet.

About

The resolution that set up Commission defined scope of its work in the following terms :

“The Constitution of India has guaranteed certain Fundamental Rights to the citizens of India and enunciated certain Directive Principles of State Policy, in particular, that the State shall strive to promote the welfare of the people by securing and protecting….a social order in which justice, social, economic and political, shall …….. …. direct its policy towards securing, among other things,

1. That the citizens, men, and women equally, have right to an adequate means of livelihood ;
2. That ownership and control of material resources of the community are so distributed as best to subserve the common good; and
3. The operation of the economic system does not result in a concentration of wealth and means of production to a common detriment.

The Early Initiatives

Adoption of Five-Year Plans: India’s Planning Commission adopting the USSR’s concept of five-year plans (FYP)  outlines a plan for its income and expenditure over the next five years.

• Non-Plan vs. Plan Budget: Accordingly, the budget is divided into two parts: “non-plan” budget which is spent on routine items every year, and “plan” budget which is spent on a five-year basis as per the priorities fixed by the plan.
• Public Response: The draft of India’s First Five-Year Plan, released in December 1951, generated widespread excitement and discussions among various sections of society, which continued in 1956 and 1961 plans.
• Impact of Economic Crisis on Fourth Plan: By the time the Fourth Plan was scheduled to begin in 1966, novelty of planning had waned, and India was grappling with a severe economic crisis. 
  • Consequently, the government declared a ‘plan holiday’ in response to the economic challenges.

The First Five Year Plan(1951-56)

• Aim: Under guidance of economist K.N. Raj aimed at breaking India’s poverty cycle.
  • He advocated a cautious approach during the first two decades to ensure the preservation of democracy.
• Investment in Agrarian Infrastructure: The plan addressed the agrarian sector including investment in dams and irrigation wherein significant investments were made in large-scale projects such as Bhakra Nangal Dam. 
• Land Reforms and Agricultural Growth: Land distribution patterns were identified as a major obstacle to agricultural growth, hence It also focused on land reforms as the key to the country’s development.
• Promoting Savings to Increase National Income: Planners also targeted increasing national income by promoting savings over personal spending. 
  • Due to low baseline spending levels in the 1950s coupled with low capital stock compared to its employable population, savings had to be pushed up.

The Second Five-Year Plan 

• Focus on Heavy Industries: The Second Five Year Plan (FYP) under the leadership of P. C. Mahalanobis, prioritized heavy industries. 
  • Unlike the first plan, which emphasized patience, the second plan aimed for rapid structural transformation by implementing changes in various directions simultaneously.
• Congress Resolution: Before this plan was finalized, the Congress party, during its session near Madras, passed a resolution declaring the goal of a “socialist pattern of society,” reflecting the objective of Second Plan.
• Protectionist Policies: The push for industrialization by creating a protected environment for both public and private sector industries through import tariffs, proved to be a significant turning point in India’s development.
• Growth of Public Sector Industries: As savings and investments started growing during this period, industries such as electricity, railways, steel, machinery, and communication expanded in the public sector.
• Protection of domestic industries came at a cost:
  • India’s technological backwardness required spending foreign exchange to acquire technology from the global market.
  • Balancing industry and agriculture became a challenge due to the shift of investment toward industry, which raised concerns about the possibility of food shortages.
• The third FYP resembled the second plan from the perspective of an “urban bias” in plan strategies.

Conclusion

The evolution of planned development in Indian politics began with consensus on government intervention, driven by experiences like the Great Depression and Soviet development model. The Planning Commission guided India through five-year plans, focusing on poverty, agriculture, and industrialization. Yet, it faced challenges and criticisms, leading to debates on the industry-agriculture balance and rural community impact. India’s development journey is characterized by ongoing adaptation and reflection, mirroring the dynamism of its democratic process.

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