Objectives of Indian Economic Planning

Planning in India derives its objectives from the Directive Principles of state policy set forth in the Constitution. It is perhaps because of this reason that immediately after the adoption of new Constitution on 26 January, 1950, the Planning Commission came into existence. The Government of India constituted Planning Commission in March, 1950 under the Chairmanship of Pandit Jawaharlal Nehru, to prepare a plan for the most effective and balanced utilisation of the country’s resources. This Planning Commission prepared country’s First Five Year Plan covering the period of 1951 to 1956. It was further followed by a series of Five Year Plans.

Our First Five Year Plan states that “Economic planning is an a way of organising and utilising resources to the maximum advantage in terms of defined social ends.” What are those social ends? In a way they will act as objectives for our economic planning. In view of the directive Principles of the Constitution and requirements of the Indian economy, our development plans have set following long-term objectives:

1.High Rate of Growth. The improvement in the levels of living by raising the national and per capita income has been the first and foremost objective for all the plans in the country. Raising the per capita income implies that the growth rate of national income should be higher than the population growth. This aim of higher rate of growth has also been expressed as the goal of removal of poverty. We want to speed up this rate of growth so that we can come out from the clutches of abject poverty.

2.Social and Economic Justice. As we have already studied in the last chapter that the Directive Principles of our Constitution have proclaimed justice as a basic national commitment. Hence, one of the objectives of economic planning in India is to ensure economic and social justice. This objective has three main dimensions (a) reducing inequalities in the distribution of income and wealth, (b) curbing concentration of economic power, and (c) uplifting the weaker section of the society

High rate of growth and social justice have been regarded as the two primary objectives of India’s economic planning. Some argue that there is a certain amount of conflict between these two objectives. For example, high rate of growth requires high rates of saving and capital formation. And this can be provided only by the rich section of the society. Similarly, a too vigorous pursuit of equality can injure economic incentives and bring down the level of national production. But if we look deeply we find that these two objectives are not contrary to each other rather complementary. One task of economic planning in India is, therefore, to strike a judicious balance between these two primary objectives. To stress this line of thinking, they are now not considered as two separate objectives but One single objective ‘Development with Social Justice’. This is the first and foremost objective of Indian planning.

3.Increase in Employment Opportunities. Unemployment and underemployment ar& important reasons for poverty in the country. Hence, the creation of additional employment opportunities has been an important objective in India’s plans right from the beginning. There may be investment plans which may increase production without increasing employment. But this does not suit to the Indian environment. In India where population and labour force are rising fast, we require employment-oriented investment plans. Accordingly, India’s plans have stressed on employment objective and have taken into consideration the impact of different types of development programmes on the employment situation. The device of employment creation, specially for the poor, could also combine the increase in production with social justice.

4.Self-reliance. In the early stage of her development, a country is forced to depend upon foreign aid. But foreign aid has its own difficulties and problems. In view of this, India’s plans have been emphasising the objective of self-reliance. Self-reliance implies eliminating dependence on concessional foreign aid, in other words meeting external payments obligations out of our own earnings. This objective has many aspects such as expansion of exports, substitution of imports and increase in the domestic production of food grains etc.

Thus, the major long-term objectives of Indian planning are four-fold; increasing national and per capita income; reducing inequalities, creating employment opportunities and achieving self-reliance.

For economic planning India has started Five-Year Plans. Our First Five-Year Plan began in 1951 and Eighth Five-Year Plan was completed in 1997. Currently Ninth Five-Year Plan (1997-2002) is in operation.