Role of Economic Planning
*Economic planning in India before Independence* *Economic study by Dadabhai Naraoji* -*drain theory* that british were draining huge amount of wealth(resources and revenues) *Royal commission on Indian expenditure in 1896* -reviewed financial burdens on India and in some case came to the conclusion that those burdens were misplaced -national planning committee(first attempt to develop a national plan)
*Bombay plan* -by 8 industrialists -doubling per capita income and tripling national income in 15 years *People's plan* -by MN Roy(based on Marxist socialism) -10 year plan based on agriculture *Gandhian plan* -by Sriman Narayan -it emphasized the economic decentralization with primacy to rural development by developing the cottage industries *Sarvodaya plan* -by Jaiprakash Narayan -it emphasized on agriculture and small & cottage industries -also suggested the freedom from foreign technology and stressed upon land reforms and decentralized participatory planning
*Economic planning in India after independence* *Planning commission* -set up in 1950 and Jawaharlal Nehru as chairman -replaced by NITI Aayog in 2015 *National Development Council(NDC)* -planning commission took approval from NDC
*Five year plans*[see all plans from edutap] (first five year plan started in 1951) (discontinued after 12th five year(ended on March 31,2017) plan due to replacement of Planning commission by NITI Aayog) objectives:- -a high growth rate to improve the standard of living -economic self-reliance -social justice and removal of inequalities -modernization of economy -economic stability for prosperity
*NITI Aayog* -formed on Jan 1, 2015 -*think tank* of govt and advisory body -two hubs:- a)Team India hub(engagement of states with the central govt) b)Knowledge and Innovation hub(think tank capabilities of NITI) *composition*(read from edutap) -PM as chairperson -Governing council(CM of all states and Lt. Governor of UTs) -Regional council (also sub-groups of CMs)
*How different from planning commission* -more roles of state govts -bottom-up approach unlike PC(top-down approach) -provision of regional council(to address local/regional issues) -not formulate *Central Plans* unlike PC(but schemes were formulated and planned)
*25 core monitoriable targets of 12th Five Year Plan* *Economic growth* 1)Real GDP growth at 8% 2)Agriculture growth at 4% 3)Manufacturing growth at 10% 4)Every state must have higher growth rate than the levels of 11th Five year plan *Poverty and Empowerment* 5)poverty rate to be reduced to 10% 6)5cr work opportunities and skill certifications in non-farm sector *Education* 7)Mean year of schooling increase to 7 years 8)20 lakh seats for each age bracket in higher education 9)end gender gap and social gap in school enrollment *Health* 10)Reduce IMR to 25,MMR to 1, Increase Child sex ratio to 950 11)Reduce total fertility rate to 1 12)Reduce under nutrituion of children in age group of 0-3 to half of NFHS-3 levels
*Infrastructure* 13)Investment in infrastrucure at 9% of GDP 14)Gross irrigated area 103 million hectares 15)electricity to all villages;reduce at&c losses by 20% 16)connect villages with All Weather Roads 17)minm of 2 lane standard of National and state highways 18)complete western and eastern dedicated freight corridors 19)rural tele-density to 70% 20)40 litres per capita per day drinking water to 50% of rural population;Nirmal Gram status to 50% of gram panchayats *Environment and sustainability* 21)increase green cover by 1 million hectare every year 22)30000MW renewable energy 23)emission intensity of GDP to be reduced to 20-25% of 2005 levels by 2020 *Service delivery* 24)Banking services to 90% of total households 25)subsidies and welfare related payment to be routed through aadhar based direct cash transfer scheme
*Economic planning in India since 1991* Reasons for economic reforms:- -huge rise in fiscal deficit -rise in BoPs -sharp lack of performance of PSUs -rise of prices of food grains
*LPG*[read from edutap]
the distribution of production,distribution and consumption. It is composed of people, Institutions and relationships. It addresses the problem of economics like the allocation of resources. *(Economic System)*
*Types of Economic System* -*Market(capitalism) economy*(driven by the market, purchasing power of people and not needs) -*Planned(socialism) economy*(driven by the people needs, govt plans for benefits of people) -*Mixed(capitalism+socialism) economy*
a process which involves thinking about all the activities that are reqd to achieve the reqd goals (planning)
*Types of planning* *Based on Levels* -local,national,international *Based on Domains* -economic planning,social,land-use,policy,environmental planning etc *Based on the center of power* -centralized and decentralized *Based on nature of planning* -formal,informal *Based on duration of planning* -short-term (tactical),long-term(strategic)
why economic planning reqd in India?
-rapid economic development -quick improvement in standard of living -removal of poverty -rationale allocation and efficient utilization of resources -increasing the rate of capital formation -reduction in the unequal distribution of income and wealth -reduction of unemployment and increase in employment opportunities -reorganisation of foreign trade -regional balanced development
*Plans put forth by NITI Aayog* 3 types of plan
1)*Vision*(15 year long-term vision) 2017-2032) 2)*Strategy*(7 year mid-term strategy)(2017-2024) 3)*Action*(3 year short-term action)(2017-2020)
Inclusive growth first appeared in the (11th five year plan)
12th five year plan(faster sustainable and more inclusive growth)
*7 key areas for improvement* -India effort to reach 10$ trillion economy by 2032(should increase growth rate from 7% to 10%) 1)*Better infrastructure* -development of roads,airports and Rurban(smart villages) 2)*Skilling India* -proposes linking of employment exchanges with national career service to increase employment 3)*Medical tourism and quality education* -funding to villages where the SC community makes up half or more of the students
4)*Welcoming business* -setting up of one contact point for approving projects -ease of doing business 5)*Improving farming* -proposes the use of advanced technology,setting up an irrigation fund,use of high-yield seeds -to address food waste, 4 mega food parks and 29 cold chain projects to preserve agricultural products -deregulate genetically engineered insect-resistent crops 6)*Cleaning India* -swacch bharat 7)*Going green* -improve electricity production -reduce fuel import -tougher emission norms for vehicles,incentivising the construction of energy efficient buildings,setting up of 15 new coal washers to reduce ash content
*Types of Economic Planning* 1)*Democratic planning*(state plans based upon the needs of common masses and planned democratically)(slow development) 2)*Totalitarian(authoritarian) planning*(planning under a dictator or supreme power of the govt)(fast development but not catering to the needs of people) 3)*Centralized planning*(only decided by a single authority)(top to bottom approach) 4)*Decentralized planning*(decided by many authorities)(bottom to top approach) 5)*Functional planning*(the existing structure is corrected and modified)(no change in economic and social set-up) 6)*Structural planning*(big economic and social changes and new system is formed)
7)*Perspective planning*(long periods 15-25 years further divided into short periods of 4-6 years plans) 8)*Annual or prospective planning*(short periods of 4-6 years further divided into annual plans,further divided into regional and sectional plans) 9)*Indicative planning*(just like mixed economy but does not control the private sectors) 10)*Imperative planning*(just like authoritarian planning) 11)*Rolling planning*(every year three new plans are made-current year plan,3-5 year plan,10-20 year plan) 12)*Fixed planning*(a fixed year planning) 12)*Socialistic planning* 13)*Capitalistic planning*
Garibi Hatao (4th Five year plan-Indira Gandhi)
Cooperative federalism (NITI Aayog)
the planning for economic growth by utilizing the available resources more effectively and achieving the well-defined objectives during given period of time
Economic planning
ac to planning commission estimates,poverty levels dropped from 36% in 1993-94 to ___ in 2004-05 (27.5%)
Nehru-Mahalanobis model (2nd five year plan)(rapid industrialization)
___ five year plan follows the LPG reforms in India (8th)
___ means to unshackle the economy from bureaucratic cobweb to make it more competitive (liberalisation)
In _____ people are associated at every step in the formulation and implementation of the plan. Voluntary organisations,different agencies, and associations also play a major role (democratic planning)
____ is a blueprint regarding the objectives and targets that are fixed for a long-term say 15-25 years (persepective planning)
India's five year plans were very much impressed by the rapid strides achieved by the ____ through its five year plans (USSR)
the ____ committee recommended setting up of the planning commission (Economic Programmes Committee,chairman-Jawaharlal Nehru)
