The Planning of Economic Progress in India

Introduction (Roots of Planning)

The roots of planning in India may be traced to Karachi congress resolution (1950), Visvesvaraya Plan (1934), all India National Planning Committee, headed by J.Nehru (1938), the Bombay Plan (1943), People Plan, Gandhian Plan, Advisory Planning Board, chaired by K.C.Neogy and Economic Programme Committee, appointed By AICC (1947).

The Planning Commision, 1950

               The Planning Commission was established by a resolution of the Government of India on 15 March 1950. It was an extra-constitutional institution. The Prime Minister was the ex-officio chairman of the Commission and he was the only link between the Commission and the Government. The members of the Commissions were appointed by executive action. The Planning Commission was an advisory body.

National Development Council, 1952        

             The National Development Council (NDC) was constituted in August 1952. It is composed of the Prime Minister, all union Cabinet Ministers, Chief Ministers, Heads of Union Territories, and Members of the Planning Commission.

The Objectives of the National Development Council are to:

  1. Secure compliance of states in the implementation of the plan;
  2. Mobilize resources;
  3. Promote national economic policies;
  4. Ensure balanced economic development.

In practice, the council prescribes guidelines for preparation on the five year plan; critically considers the draft plan; assess resources and suggests measures to augment them, considers important socio-economic policy matters, reviews the working of the plan; and recommends measures for realizing the objectives of the plans.

Objectives of Planning

The following were the objectives of planning:

  1. To prepare a plan for the most effective and balanced utilization of the nation’s resources.
  2. To initiate a progress of development in which will raise living standards and open out to the people new opportunities for a richer and more varied life.
  3. To field up an institutional frame work an adequate to the needs and aspirations of the people.
  4. To doubt the national and per capita incomes from the levels obtaining at the beginning of the first year plan.
  5. To raise the consumption standards and
  6. To ensure that the economy can reduce substantially dependence on assistance from abroad.

Five Year Plan

First Five Year Plan (1951-1956)

          In the absence of reliable data, the first plan was formed on a ration hypothesis. It was a best patch work of several projects which had been worked out earlier and the developmental activities of various government departments.

The triple objectives of the first plan were:

  1. To correct the imbalances in the economy,
  2. To initiate simultaneously a process of all-round balanced development,
  3. To provide an infrastructure for rapid industrial expansion in the future.

The planning effort, besides being an existing, pioneering venture was a new deal approach to the shattered and shaky   Indian economy.

In spite of serious limitations the plan had some revolutionary features:

  1. The reform of an antiquated land system which was inhibiting agriculture production.
  2. the setting up of a nationwide agriculture extension service as part of a comprehensive community development programme and
  3. Revitalization of the cooperative movement, and extension of irrigation and power facilities.

Though modest, the first five year plan achieved food targets, did not impose strain on the people, which led to self-confidence and was an invaluable experience of planning itself.

Community Development Programme, 1952

Community Projects

The Community Development Programme, was launched on 2 October 1952, with great publicity along the birth anniversary of Mahatma Gandhi and along with the First Five Year Plan. The objective of the programme was to change the face of rural India, the vast majority of our population. It was began by initiating 55 Community Projects, covering 17,000 villages.

National Extensive Service (NES) 1953

In 1953, the National Extensive Service (NES) was formulated. The purpose of NES was to provide trained workers for the community projects all over country. Initially, the community projects were started in 55 development blocks each block consisting of about 100 villages with population of 60,000 to 70,000. The NES was organized to provide trained manpower to CD projects and to spread the ideology of the community development in villages, which initiates a process of transformation of the social and economic life of the villages.

since the community projects were comprehensive in coverage and character embracing agriculture, animal husbandry, social education, communication, village Industries and other aspects of village life and also produced results in better seeds, fertilizers in agricultural development, greater food production in particular, construction of roads, tanks, wells, schools, health centres, and education.

The Community Development Programme produced result in providing better seeds, fertilizers resulting in agricultural development  in general and greated food production in particular, construction of roads, tanks, wells, schools, primary health centres, extension of education and health facilities.

Both the Community Development Programme and the National Extensive Service were the major policy initiates boldly started by the Nehru government.

Second Five Year Plan, 1956-1961

Avadi Congress, 1955

         The 60th general session of the Indian National Congress was held from 21st to 23rd January 1955, at Sathyamurthy Nagar Avadi, Madras. The Chief Minister of Madras state, K.Kamaraj was in overall charge of arrangements and the session was attended by a record number of congress leaders, like Nehru and other delegates.

Socialistic pattern of society

         The Avadi Congress session, passed-“Socialistic Pattern of Society”. They are:

  1. The principal means of production would be under social ownership,
  2. Production of goods and services would be progressively speeded up and
  3. That they would be equitable distribution of national wealth.

Mahalanobis model

           Prof. Prasana Chandra Mahalanobis gave content to the concept of Socialistic Pattern of Society and gave alternative to the Gandhian village Swaraj scheme and the Soviet socialistic design. The Mahalanobis model consisted of 3 distinct elements;

  1. Approach of self-reliance,
  2. Emphasis on basic and heavy machine-building industries;
  3. The dominant role of the public sector in basic and heavy industries.

Mixed Economy

         Mixed economy was the outcome of the Mahalanobis architecture of India’s development was largely influenced by it. The policy of mixed economy attempted to clearly demarcate the definite spheres of economic activities for public and private sectors.

The unique model of mixed economy was adopted because:

  1. Economic consolidation and resurgence could be accomplished by the initiatives and efforts of the public sector alone,
  2. State alone could shoulder the immense responsibility to deal with the problems of poverty, unemployment, population, illiteracy, regional imbalances and
  3. The then existing physical infrastructure like power, roads, railways, ports, telecommunications etc.

Primacy of public sector

         When India became independent, had basically an agrarian economy. Industrial base and level of saving and investment was very poor the private sector faced problems like neither resources nor the court risks in large investment, hence Public Sector Enterprises (PES) ‘were given prime of place in the economic planning of the country’.

Industrial Policy

Industrial Policy Resolution, 1948

          The government of India, on April 1948, announced its industrial policy by promulgation of the Industrial Policy Resolution. The resolution defined and demarcated the respective roles of public and private sectors and small scale industries. In short, the 1948 resolution defined the broad contours of Independent India’s Industrial Policy.

Industries (Development and Regulationm) act, 1951

           The industries (Development and Regulation) Act 1951 came into effect on 8 may 1952.the Act was to achieve the objective of the Industrial Policy of the Government Industies are required to be licensed by the government. This enabled the government to regulate the growth of private industries in tune with the industrial policy.

Industrial Policy Resolution, 1956

On 30th April 1956, the government adopted the Industrial Policy Resolution which replaced with earlier resolution of 1948.

The objectives of the new resolution were:

  1. Accelerate the rate of economic grow and speed up industrialization.
  2. Develop heavy and machine building industries:
  3. Expand the public sector:
  4. Develop a large and cooperative sector
  5. Reduce disparities in income and wealth
  6. Prevent concentration of power in the hands of few indiviuals

The salient features of the Industrial Policy Resolution, 1956 were:

  1. Industries were classified into two state owned or public sector and promote section units;
  2. Inter dependence between these two sectors
  3. The role of cottage and small scale industries was specified
  4. Intensive development in backward and neglected areas and removal of regional disparities
  5. Emphasis on technical and personnel and
  6. The role of labour in industrial development programmes, with added on improvement on their working and service conditions.

Second five year plan 1956-1961

            The second five year plan was based on the government policy of socialistic pattern of society and Mahalanobhis Model of Mixed Economy. The main objectives of the plan were:

  1. The increase of 25% in the national income
  2. Rapid industrialization with emphasis on the development of basic and heavy industries
  3. Large expansion of employment opportunities
  4. Reduction of inequalities in income and wealth and more even distribution of economic power.

Panchayat Raj, 1959

Balwantrai Mehta Study Team

By 1956, Committee of Plan Projects appointed a study team under chairmanship of Balwantrai Mehta. In its report published in 1957, the study team disclosed that,

  1. The CD programme had failed to evoke popular initiative
  2. Local bodies at a level higher than Village Panchayat had evinced little enthusiasm in it and
  3. Even the Panchayats had not come into the fold of Community Development in any significant way

The study team recommended a three-tier system of rural local government .Panchayat at the village level, Panchayat Samiti at the block level and Zila Parishad at the district

Rajesthan and Andhra Pradesh were the first stats to adopt the Panchayat Raj, in 1959. Other village joined later. Villages were empowered to use the local bodies as an instrument of socio-economic development.  Hence countryside was covered by thousands of co-operatives.

Defects of Panchayat Raj system

  1. As local government being the state subject, each state adopted and adapted to suit their needs.
  2. It resulted in distortion of the scheme
  3. No State governments gave full freedom to the village local bodies
  4. The middle tier Panchayat Committes were deprived of power and finance.

Third five year plan 1961-1966

              Although there are both the plan (first and second), the third five year plan is the strategy of development. Public sector had been assigned commanding role to play


Industrial growth

On the eve of planning, industrial development in India was stagnant. A handful of industries such as arms and ammunition, atomic energy, railways, steel, ship-building were reserved by public sector.  The rest was left to private sector. Gradually, more industries were brought under the net of public sector and raised to the commanding heights of the economy. The intention was to use the license – control mechanism selectively for the promotion of industries in the private sector. As a result, the overall economic performance was impressive; the saving and investment rates were high; industries grew rapidly industrial infrastructure increased, and foreign and private investment was deliberately kept low.

Labour policy and labour legislation

Labour policy was evolved with the twin motives of

1) Maintaining industrial peace and

2) Promoting the welfare of labour.

The Minimum Wages Act (1948) provided for the fixation of minimum wages, particularly in the unorganized sector. Similarly, the Factories Act (1948) regulated various aspects relating to safety, health and welfare of workers. The Mines Act (1952) safeguarded the workers employed in mines. The Newspaper Employees (Conditions Of Service) And Miscellaneous Provisions Act (1955) regulated conditions of service of working journalists. The Apprenticeship Act (1961) obliged employers to engage apprentices for undergoing training.

Agrarian Reforms

Agrarian reforms consisted of

  1. Abolition of Zamindari system
  2. Tenancy reforms
  3. Land ceiling
  4. Co-operatisation
  5. Community Development Programme
  6. Milk Co operatives



Fifteen years of planned development resulted in all round progress of the economy in short, planned economy represented a radical departure from the colonial past. Agriculture production declined forcing the country to import food products, if we take the 20th century into consideration, 1951-1952 was the turning point of economic performance.

Keywords: The Planning Commission, National Development Council, First Five Year Plan (1951-1956), Second Five Year Plan (1956-1961), Third Five Year Plan (1961, Labour policy, Agrarian Reforms, Factories Act, Minimum Wages Act, Mines Act, Panchayat Raj, Industrial Policy Resolution, Avadi Congress, Community Development Programme, Planning Commision.


Delonia Prathiksha.J.p