Planning in India and NITI Aayog: Plans, Models and Bodies
Indian planning notes for exams: early plan proposals, the Planning Commission, the twelve Five Year Plans with their models and aims, and the structure of NITI Aayog.
By GK24 Editorial Team· Published · 4 min read
Independent India chose to grow through planning, and for sixty-five years a Five Year Plan decided where public money went. The subject is a favourite in economy sections because it is a set of matched pairs: a plan with its number, its years, the model behind it and the slogan attached to it, and then the bodies that made those plans. Since 2015 the Planning Commission has been replaced by NITI Aayog, so questions now come from both halves of the story.
The idea before Independence
Planning was debated long before 1947. M. Visvesvaraya set the argument out in his book Planned Economy for India in 1934. The Indian National Congress set up a National Planning Committee in 1938 under the chairmanship of Jawaharlal Nehru, when Subhas Chandra Bose was Congress president. In 1944 eight leading industrialists, among them J. R. D. Tata and G. D. Birla, published the Bombay Plan; the same year S. N. Agarwal proposed a Gandhian Plan built around villages and small industry; in 1945 M. N. Roy put forward the People Plan on socialist lines; and in 1950 Jayaprakash Narayan offered the Sarvodaya Plan. Examiners ask for the author with the plan, so learn the five names as one list.
The Planning Commission and the National Development Council
The Planning Commission was set up on 15 March 1950 by a resolution of the Union Cabinet. It was neither a constitutional nor a statutory body, the Prime Minister was its chairman, and it had a deputy chairman of cabinet rank who ran it. The National Development Council followed on 6 August 1952, also by an executive resolution, to give the states a voice; it was chaired by the Prime Minister and included the chief ministers and the members of the commission, and it gave a plan its final approval. The commission recommended grants to states through the Gadgil formula, while the Finance Commission, a constitutional body under Article 280, handled the statutory share of taxes.
The Five Year Plans at a glance
| Plan | Years | Model or main aim |
|---|---|---|
| First | 1951 to 1956 | Harrod-Domar model; priority to agriculture, irrigation and the river valley projects; target exceeded |
| Second | 1956 to 1961 | Mahalanobis model; heavy and basic industry; the Industrial Policy Resolution of 1956 belongs to it |
| Third | 1961 to 1966 | A self-reliant and self-generating economy; wrecked by two wars and drought, and followed by a plan holiday of three annual plans from 1966 to 1969 |
| Fourth | 1969 to 1974 | Growth with stability and progressive achievement of self-reliance |
| Fifth | 1974 to 1979 | Removal of poverty, the Garibi Hatao plan, and self-reliance; ended a year early, followed by a rolling plan |
| Sixth | 1980 to 1985 | Poverty removal with modernisation and a move away from tight controls |
| Seventh | 1985 to 1990 | Food, work and productivity, with a stress on employment |
| Eighth | 1992 to 1997 | Human resource development, begun after the reforms of 1991 and two years of annual plans |
| Ninth | 1997 to 2002 | Growth with social justice and equity |
| Tenth | 2002 to 2007 | Doubling per capita income in ten years and cutting the poverty ratio |
| Eleventh | 2007 to 2012 | Faster and more inclusive growth |
| Twelfth | 2012 to 2017 | Faster, more inclusive and sustainable growth; the last of the Five Year Plans |
NITI Aayog
The National Institution for Transforming India, NITI Aayog, came into existence on 1 January 2015 through a cabinet resolution that replaced the Planning Commission. Like its predecessor it is neither constitutional nor statutory, but its character is different: it is a think tank that advises, and it does not allocate funds to the states. The Prime Minister is its chairperson. Its structure has a vice-chairperson, full-time members, part-time members, ex officio members drawn from the Union Council of Ministers, special invitees, and a chief executive officer of the rank of secretary appointed by the Prime Minister. Its Governing Council brings together the Prime Minister, the chief ministers of all states, the chief ministers of union territories with legislatures and the lieutenant governors of other union territories, and regional councils are formed for issues that concern a group of states.
What changed, and what NITI Aayog does
- The Planning Commission handed states plan funds; NITI Aayog has no such power, and transfers now rest with the Finance Commission and the Union Budget.
- Planning was once top down and uniform; NITI Aayog works bottom up and speaks of cooperative and competitive federalism, in which states are partners and also rivals in performance.
- Instead of Five Year Plans it framed a long-term vision, a medium-term strategy and a short action agenda.
- It runs the Atal Innovation Mission, publishes indices on health, school education, water management and the Sustainable Development Goals, and steers the Aspirational Districts Programme, which ranks the most backward districts on measurable indicators.
For revision, hold three anchors: 1950 and 1952 for the two old bodies, 2015 for NITI Aayog, and the pairing of the first two plans with the Harrod-Domar and Mahalanobis models. Everything else in this chapter hangs on those.
Exam Point of View
Questions here are almost always one-line matching. Expect the year of a body, the model behind a plan, the slogan of a plan, or the officer who heads a body. The standing traps are the Harrod-Domar model against the Mahalanobis model, 1950 against 1952 for the Planning Commission and the National Development Council, and the plan holiday being placed after the Third Plan rather than the Fourth. A second set of questions asks how NITI Aayog differs from the Planning Commission, where the key point is that it advises and does not allocate funds. Remember also that both bodies were created by executive resolution, so neither is constitutional or statutory, a favourite statement-based question.
Important Facts
| Planned Economy for India | Written by M. Visvesvaraya in 1934 |
|---|---|
| National Planning Committee | Formed in 1938 under the chairmanship of Jawaharlal Nehru |
| Bombay Plan | Published in 1944 by eight leading industrialists, including J. R. D. Tata and G. D. Birla |
| Planning Commission | Set up on 15 March 1950; chairman the Prime Minister; not a constitutional body |
| National Development Council | Set up on 6 August 1952; chaired by the Prime Minister with the chief ministers as members |
| First Plan model | Harrod-Domar model, 1951 to 1956, with agriculture as the priority |
| Second Plan model | Mahalanobis model, 1956 to 1961, with heavy industry as the priority |
| Plan holiday | 1966 to 1969, three annual plans after the Third Plan |
| Garibi Hatao plan | The Fifth Five Year Plan, 1974 to 1979 |
| Last Five Year Plan | The Twelfth Plan, 2012 to 2017 |
| NITI Aayog | National Institution for Transforming India, formed on 1 January 2015 |
| NITI Aayog leadership | Prime Minister as chairperson, a vice-chairperson, and a chief executive officer of secretary rank |
Practice MCQs on this topic
The Planning Commission of India was set up in which year?
- A.1947
- B.1950
- C.1952
- D.1956
Show answer
The Planning Commission was constituted on 15 March 1950 by a resolution of the Union Cabinet, with the Prime Minister as its chairman, and it drafted every Five Year Plan until it was replaced in 2015.
Read the full explanation →NITI Aayog came into existence on which date?
- A.1 January 2015
- B.15 March 2014
- C.1 April 2016
- D.26 January 2015
Show answer
On that date a cabinet resolution created the National Institution for Transforming India in place of the Planning Commission, keeping the Prime Minister as the head of the new body but changing its work from allocating funds to advising governments.
Read the full explanation →The Second Five Year Plan of India was based on the model given by
- A.P. C. Mahalanobis
- B.Harrod and Domar
- C.M. Visvesvaraya
- D.V. K. R. V. Rao
Show answer
The statistician who founded the Indian Statistical Institute gave the Second Plan its framework, in which investment was directed towards heavy and basic industries such as steel, machinery and power on the argument that they would build the capacity to produce everything else.
Read the full explanation →The plan holiday in Indian planning was declared after the failure of which Five Year Plan?
- A.Second Plan
- B.Third Plan
- C.Fourth Plan
- D.Fifth Plan
Show answer
The plan of 1961 to 1966 was overwhelmed by the war with China in 1962, the war with Pakistan in 1965 and a severe drought, so instead of a new five year plan the government ran three annual plans from 1966 to 1969, a stretch called the plan holiday.
Read the full explanation →The slogan Garibi Hatao, the removal of poverty, is associated with which Five Year Plan?
- A.Third Plan
- B.Fourth Plan
- C.Fifth Plan
- D.Sixth Plan
Show answer
Running from 1974 to 1979, it took the removal of poverty and the attainment of self-reliance as its twin objectives, and it is remembered by the slogan Garibi Hatao.
Read the full explanation →Who is the chairperson of NITI Aayog?
- A.The President of India
- B.The Prime Minister of India
- C.The Union Finance Minister
- D.The Governor of the Reserve Bank of India
Show answer
The office of Prime Minister carries the chairmanship of NITI Aayog, exactly as it carried the chairmanship of the Planning Commission before 2015 and as it carries the chairmanship of the Governing Council and of the National Development Council.
Read the full explanation →The Governing Council of NITI Aayog consists of the Prime Minister and
- A.the chief ministers of all states and the lieutenant governors of union territories
- B.the governors of all states
- C.the judges of the Supreme Court
- D.the members of the Finance Commission
Show answer
The Governing Council brings together the Prime Minister, the chief ministers of all the states, the chief ministers of union territories that have legislatures and the lieutenant governors of the remaining union territories, so that the Union and the states can settle priorities in one room.
Read the full explanation →The book Planned Economy for India, published in 1934, was written by
- A.M. N. Roy
- B.M. Visvesvaraya
- C.Jayaprakash Narayan
- D.S. N. Agarwal
Show answer
The engineer and statesman set out a ten year programme to move labour from agriculture into industry, and his book of 1934 is treated as the first systematic proposal for planning in India.
Read the full explanation →The National Development Council was constituted in which year?
- A.1950
- B.1951
- C.1952
- D.1954
Show answer
The National Development Council was set up on 6 August 1952 by an executive resolution so that the states could take part in national planning; chaired by the Prime Minister, it included the chief ministers and the members of the Planning Commission, and it gave a plan its final approval…
Read the full explanation →Which was the last of the Five Year Plans in India?
- A.The Tenth Plan
- B.The Eleventh Plan
- C.The Twelfth Plan
- D.The Thirteenth Plan
Show answer
It ran from 2012 to 2017 with the aim of faster, more inclusive and sustainable growth, and when it ended no thirteenth plan followed, because NITI Aayog had replaced the Planning Commission and put a long-term vision with a shorter action agenda in place of five year plans.
Read the full explanation →The Atal Innovation Mission is an initiative of which body?
- A.NITI Aayog
- B.The Reserve Bank of India
- C.The Finance Commission
- D.The Securities and Exchange Board of India
Show answer
The mission promotes a culture of innovation and enterprise, chiefly through tinkering laboratories in schools and incubation centres in colleges and institutions, and it is run under NITI Aayog as part of its role as the government think tank.
Read the full explanation →Which of the following statements about NITI Aayog is correct?
- A.It allocates plan funds to the states every year
- B.It is a constitutional body created by an amendment
- C.It is an advisory think tank without the power to allocate funds
- D.It replaced the Finance Commission
Show answer
NITI Aayog advises the Union and the state governments, prepares strategy, monitors programmes and acts as a forum for the states, but no money passes through it; that is the sharpest difference from the Planning Commission it replaced.
Read the full explanation →Frequently Asked Questions
Is NITI Aayog a constitutional body?
No. NITI Aayog was created on 1 January 2015 by a resolution of the Union Cabinet, exactly as the Planning Commission had been created in 1950, so it is neither a constitutional nor a statutory body. It is an executive body and can be changed or wound up by another cabinet decision, without any amendment of the Constitution or an Act of Parliament.
How does NITI Aayog differ from the Planning Commission?
The Planning Commission prepared Five Year Plans and allocated plan funds to the states, which made it a controlling body. NITI Aayog only advises, designs long-term strategy and evaluates programmes, while money now moves through the Finance Commission and the Union Budget. It also works bottom up, treating states as partners in what it calls cooperative and competitive federalism.
Why was a plan holiday declared in 1966?
The Third Plan collapsed under the pressure of the war with China in 1962, the war with Pakistan in 1965 and a severe drought, which drained resources and pushed up prices. Instead of starting a fourth plan, the government ran three annual plans from 1966 to 1969, a period called the plan holiday, and the Fourth Plan began only in 1969.
Which plans are linked with the Harrod-Domar and Mahalanobis models?
The First Five Year Plan, from 1951 to 1956, was based on the Harrod-Domar model, which links growth to the rate of saving and investment, and it put agriculture and irrigation first. The Second Plan, from 1956 to 1961, was based on the model of the statistician P. C. Mahalanobis and put heavy and basic industry first.
What is the Aspirational Districts Programme?
It is a NITI Aayog initiative that identifies the most backward districts of the country and ranks them regularly on measurable indicators of health and nutrition, education, agriculture, basic infrastructure and financial inclusion. The ranking is published so that districts compete to improve, which is the competitive federalism idea applied below the level of the state.
Sources
- Indian Economic Development (Class XI), chapters on Indian economy on the eve of Independence and on five year plans — NCERT
- Cabinet resolution constituting NITI Aayog, 1 January 2015 — Government of India
