Economic Planning & NITI Aayog
Planning in India — the Planning Commission and the Five-Year Plans, the shift from imperative to indicative planning, and the creation of NITI Aayog in 2015.
Key Takeaways
- The Planning Commission (1950) launched the Five-Year Plans; the first began in 1951.
- The Second Plan (Mahalanobis model) prioritised heavy industry and the public sector.
- NITI Aayog (2015) replaced the Planning Commission as a think tank for cooperative federalism.
Core concept
Economic planning is the conscious direction of the economy by a central authority to achieve defined goals. India adopted centralised planning after independence to overcome poverty and build a self-reliant economy, but shifted toward a market-friendly, indicative approach after 1991.
Static foundation — Planning Commission & the Plans
- The Planning Commission (1950) — created by a government resolution — formulated the Five-Year Plans (FYPs).
- First Plan (1951–56): Harrod-Domar model; focus on agriculture and irrigation (Bhakra-Nangal).
- Second Plan (1956–61): the Mahalanobis model; focus on heavy industry and the public sector — the industrial backbone.
Planning Commission vs NITI Aayog
| Feature | Planning Commission (1950) | NITI Aayog (2015) |
|---|---|---|
| Nature | Constitutionally silent; allocated funds | Think tank; advisory, no fund allocation |
| Approach | Top-down planning | Bottom-up, cooperative federalism |
| States' role | Limited — recipients of allocations | Partners — CMs on the Governing Council |
| Powers | Approved state plans, allocated resources | Recommends policy; the Finance Ministry allocates funds |
Types of Planning
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NITI Aayog — structure & role
NITI (National Institution for Transforming India) Aayog — Chairperson: the Prime Minister; a Vice-Chairperson and CEO; a Governing Council of all Chief Ministers and Lt-Governors. Its flagship initiatives include the Aspirational Districts Programme, the SDG India Index, and various indices (Health, Water, Innovation). It promotes competitive and cooperative federalism.
Current affairs linkage
NITI Aayog anchors India's development strategy toward long-term goals (e.g., 'Viksit Bharat / developed-economy' targets) and the SDGs. (Add the latest NITI index or vision-document release to keep this current.)
Prelims trap zones
- Both the Planning Commission and NITI Aayog are non-constitutional, non-statutory (executive) bodies — a favourite trap.
- The Second Plan (Mahalanobis) = heavy industry, not the First (which was agriculture).
- NITI Aayog does not allocate funds — that is the Finance Ministry's job.
Prelims Pointers
- The Planning Commission was set up by an executive resolution, not by the Constitution.
- The First FYP (1951–56) was based on the Harrod-Domar model and focused on agriculture.
- The Twelfth Plan (2012–17) was the last Five-Year Plan.
- NITI Aayog has no power to allocate funds; the PM is its chairperson.
Mains Angle
- 'NITI Aayog is old wine in a new bottle.' Critically evaluate.
- Assess the achievements and failures of India's Five-Year Plans.
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