Economic planning has been a central belief of India’s development strategy since independence. Since the time of independence, India has successfully followed the path of planned development.

Understanding How Planning Worked: The Model

The Indian Situation at the time of Independence.

The Choices

The basic question’s that planners had to decide are:

The First question:

The Second Question:

The Third Question:

The Chosen Path by the Indian Planners: Mahalanobis Model

Centralised (Imperative) versus Capitalist Economic Planning

Indicative versus Imperative Economic Planning

The Rationale for Planning in India

The Feature of Indian Planning

The Key Objectives of Planning in India

The Achievements of Planning in India

India’s development strategy, commitments, and approaches towards growth and development, as reflected in the Plans, have undergone various shifts over the years in response to the objective conditions of the economy and challenges of the moment. Some of these changes have been strikingly bold and original, others more modest.

Criticism of Indian Planning: The Debate

Despite the achievement, however, in recent years Indian planning has come under attack from a number of quarters, both within and outside the country. Countries which for long had centrally-planned economies have abandoned planning, at least overtly. It sometimes comes as a surprise to people abroad that India continues to preserve planning as a central pillar of its development strategy despite having had a vibrant market economy for many years now.

The dissatisfaction with planning originates from two main directions.

The Counter Arguments

The Relevance of Planning in the 21^st Century India

The Way Forward

1. All this is not to say, however, that the planning methodology should not change so as to reflect the new economic realities and the emerging requirements. It has, it must, and it will.
2. First of all, the – inter-sectoral balancing and indicative planning, at least in the sense of working out the optimal investment programme, which has been the centre-piece of Indian planning since the Second Plan, will continue to remain important in the foreseeable future.
3. Despite the much greater openness of the Indian economy, our very size and diversity will ensure that imports will continue to play a relatively small role in the economy, except in a very few products.  Thus, the requirement of planning in estimating the sectoral investment needs will remain.
4. A more important conceptual issue relates to the nature of the planning problem itself. In a controlled or directed economy, it is only necessary to work out a feasible path from the initial condition to the target. However, in a largely market economy this is not sufficient. Although working out the traditional feasible path continues to be necessary, it needs to be complemented by an assessment of the path the economy is likely to take on a business-as-usual basis.
5. The planning problem then is how to move from the projected path to the desired. Thus, in addition to the standard planning model, there is need to have two other models: (a) a projection model; and (b) a model which adequately captures the effect of policy measures on key parameters.

By,

Himanshu Arora

Doctoral Scholar in Economics & Senior Research Fellow, CDS, Jawaharlal Nehru University