Planning in India: Five Year Plans, the Planning Commission and NITI Aayog

Detail

1. What "planning" means

• Planning has three steps:
• thinking about a goal
• making a scheme (a step-by-step design) to reach it

• acting on that scheme

• In this chapter, planning means a planned process of economic development. The state decides goals, priorities and resources in advance.

• "Hit-and-miss" reform is the opposite. It means changing things by trial and error, with no long-term design.
• Two ways to plan:
• Sectoral planning: plans for one sector of the economy at a time, such as agriculture, irrigation, industry, power or transport.

• Regional planning: plans for a particular area. It tries to reduce the gap in development between regions.

• Why India needed regional planning:

• Development did not spread evenly. Some regions grew fast and others lagged behind.
• So India needed area-based plans as well as sector-based plans, to narrow the gaps between regions.

2. Roots of planning before 1951

• Several plans were drafted before Independence and just after it [4]:
• Bombay Plan (1944), drafted by industrialists
• Gandhian Plan (1944)
• People's Plan (1945), drafted by the Post-War Reconstruction Committee of the Indian Trade Union

• Sarvodaya Plan (1950), by Jayaprakash Narayan

• These showed that people across Indian society agreed the country should plan its development [4].

3. From centralised to decentralised planning

• Centralised planning means plans are made at the top, by the Centre, and passed down to the states.

• India used this model after Independence.

• Decentralised multi-level planning means planning bodies work at several levels: the Centre, the states and the districts.

• India moved towards this model over time.

• Why the change happened:

• One plan made in Delhi could not fit very different regions, such as hills, deserts, drought-prone plateaus and tribal belts.
• So states and districts were given more of a role in making plans.
• The result was area-specific programmes (Section 5).

4. The Planning Commission (1950-2014)

• Planning Commission: the national body that made India's Five Year Plans and shared out plan money.
• Set up: 15 March 1950 by a Cabinet resolution [4]. Its chairman was the Prime Minister.
• Aim given in the resolution: to raise people's standard of living quickly by [4]:
• using the country's resources efficiently
• increasing production

• giving everyone a chance of employment

• Main tasks [4]:

• assess all the country's resources
• build up resources that were in short supply
• make plans for the most effective and balanced use of resources

• decide priorities

• Plan funds: it divided plan money among Union ministries and states. This gave it strong financial power.

• National Development Council (NDC): this body helped coordinate plans and approved them before they began [5].
• New approaches it brought in:

Approach	Plan period	What it means
Target area approach	Fourth and Fifth Plans	Programmes for problem regions, e.g. Command Area Development, Drought Prone Area and Hill Area Development Programmes
Target group approach	Fourth and Fifth Plans	Programmes for disadvantaged groups, e.g. Small Farmers Development Agency (SFDA) and Marginal Farmers Development Agency (MFDA)
Special area programmes	Eighth Plan (1992-97)	Infrastructure for hill areas, north-eastern states, tribal areas and backward areas
Agro-climatic regional planning	From 1988	Plans for regions grouped by similar climate, soil and crops

5. Target area and hill area programmes (Fifth Plan, 1974-79)

• Why they were needed:
• National growth had made the gap between regions wider.
• Areas held back by hills, drought or poor irrigation fell behind.

• So programmes were designed for those specific areas.

• Hill Area Development Programme: started in the Fifth Plan. It covered 15 districts:

• all the hill districts of Uttar Pradesh (now Uttarakhand)
• the Mikir Hills and North Cachar Hills in Assam
• Darjeeling district in West Bengal

• Nilgiri district in Tamil Nadu

• Hill area guideline: In 1981, the National Committee on the Development of Backward Areas said hill areas are those above 600 m in height and not covered by the Tribal Sub-Plan.

• Drought Prone Area Programme (DPAP): started in the Fourth Plan.
• It created jobs in drought-hit areas through irrigation works, land development, afforestation and grassland development.
• It later worked to restore the ecological balance of these areas.

6. Five Year Plans (1951-2017)

• Five Year Plans: India's medium-term development plans. Each one set goals, priorities and spending for five years.
• The Planning Commission made twelve plans between 1950 and 2014 [4].

Plan	Period	Key point
First	1951-56	Based on the Harrod-Domar model (growth depends on saving and investment) [5]
Second	1956-61	Mahalanobis model, with stress on heavy industry [5]
Third	1961-66	—
Annual Plans	1966-69	Plan holiday: no Five Year Plan, only yearly plans [5]
Fourth	1969-74	Target area and target group approaches
Fifth	1974-79	Hill Area Development Programme; ended a year early [5]
Rolling Plan	1978-80	Plan targets reviewed and updated every year [5]
Sixth to Seventh	1980-85; 1985-90	—
Annual Plans	1990-92	Second plan holiday
Eighth	1992-97	Special area programmes
Ninth to Eleventh	1997-2002; 2002-07; 2007-12	—
Twelfth	2012-17	The last Five Year Plan

• After 2017: Five Year Plans ended. Vision and strategy documents took their place.

7. NITI Aayog (2015-)

• NITI Aayog stands for National Institution for Transforming India.
• It replaced the Planning Commission through a Union Cabinet resolution dated 1 January 2015 [2][3].
• What kind of body it is:
• It is a policy think tank: a body that gives advice and ideas. It does not run large spending programmes.

• It does not allocate plan funds. This is the main difference from the Planning Commission.

• Cooperative federalism: the Centre and the states work together as partners on national goals.

• NITI Aayog aims to promote this through regular, organised support to states. Its idea is that strong states make a strong nation [2][3].

• Earlier, policy flowed one way, from the Centre to the states. NITI Aayog aims to replace that with a lasting partnership with the states [2].

• Governing Council: NITI Aayog's structure includes a Governing Council. It is the platform where states and the Centre work on national development goals together [2][3].

• Advice: it gives strategic and technical advice on key areas of policy to both Union and state governments [2][3].

Feature	Planning Commission	NITI Aayog
Set up	15 March 1950, Cabinet resolution [4]	1 January 2015, Cabinet resolution [2]
Nature	Body that made and funded plans	Policy think tank (advice body)
Plan funds	Allocated them	Does not allocate them
Approach	Mostly top-down (Centre to states)	Cooperative federalism; partnership with states [2]
Output	Twelve Five Year Plans	Vision and strategy documents

8. Aspirational Districts Programme (2018)

• Launch: by the Prime Minister in January 2018 [6].
• Aim: to change the 112 least-developed districts of India quickly and effectively [6].

• The baseline ranking was done for 115 districts [7].

• The three Cs [6]:

• Convergence: Central and state schemes work together in the same district.
• Collaboration: Central and state nodal officers work together with District Collectors.
• Competition: districts are compared every month through a delta ranking, which measures how much each district has improved.

• The whole effort is meant to be a mass movement [6].

• Indicators: 49 Key Performance Indicators (KPIs) under 5 themes [7]:

Theme	Weightage	Number of indicators
Health and nutrition	30%	13
Education	30%	8
Agriculture and water resources	20%	10
Financial inclusion and skill development	10%	10
Basic infrastructure	10%	7

• Tracking: delta rankings are published on the Champions of Change dashboard [6].
• NITI Aayog also brings out the SDG India Index (SDG means Sustainable Development Goals). It ranks states on these goals.

Prelims Hooks

• The Planning Commission was set up on 15 March 1950 by a Cabinet resolution, not by the Constitution or an Act of Parliament. So it was neither a constitutional nor a statutory body.
• NITI Aayog was set up on 1 January 2015, also by a Union Cabinet resolution. It is also non-constitutional and non-statutory.
• NITI Aayog does not allocate plan funds. The Planning Commission did. This is a common trap.
• First Plan used the Harrod-Domar model; Second Plan used the Mahalanobis model (heavy industry).
• Plan holidays: 1966-69 (Annual Plans) and 1990-92. The Rolling Plan ran from 1978-80.
• The Twelfth Plan (2012-17) was the last Five Year Plan.
• The Hill Area Development Programme began in the Fifth Plan (1974-79). It covered 15 districts, including Mikir and North Cachar Hills (Assam), Darjeeling (West Bengal) and Nilgiri (Tamil Nadu).
• Target area and target group approaches came in the Fourth and Fifth Plans. Special area programmes came in the Eighth Plan.
• Aspirational Districts Programme: launched January 2018; covers 112 districts; uses 49 KPIs in 5 themes. Health and nutrition and education carry 30% each.

Mains Points

• Why planning moved from centralised to multi-level (GS-I, regional development):
• One national plan made the gap between regions wider.

• So target area programmes (hill, drought-prone and command areas) and later district-level planning were brought in to fit local conditions.

• Planning Commission vs NITI Aayog:

• The shift went from a top-down body that controlled funds to a think tank built on cooperative federalism.
• Gain: states get more say in policy.

• Concern: without power over funds, NITI Aayog can mostly influence states only through advice and rankings.

• Aspirational Districts as regional planning:

• It targets the least-developed districts, many of them tribal or Left Wing Extremism-affected.
• It uses convergence of schemes, live data and competition between districts (delta ranking) to reduce gaps within states.

• Use it as an example of planning that is area-based and measured by results.

• Lessons from area programmes (GS-I/GS-III):

• Hill and drought-prone area programmes show that development must respect the limits of each ecosystem.
• This links planning to sustainable development.