Planning Commission to NITI Aayog| Important Points |

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About Planning Commission

The Planning Commission was set up by a Resolution of the Government of India in March 1950.

Prime minister was the ex officio chairman of the planning commission assisted by a deputy chairman. It included 6 union cabinet ministers as its ex officio members. There was also a member secretary.
The planning commission was an autonomous body, which worked closely with union and state cabinets and had full knowledge of their policies. Institutionally it was a part of the cabinet organization and the ‘demands for grants’ for the PC was included in the budget for the cabinet secretariat.

Objectives of the government while starting PC were the following:

Promote a rapid rise in the standard of living of the people by efficient exploitation of the resources of the country.
Increase production.

Offer opportunities to all for employment in the service of the community.

Functions and Responsibilities of the Planning Commission

Make assessment of all resources of the country
Augment deficient resources
Formulate plans [Five Year Plans (FYP)] for the most effective and balanced utilization of resources and determining priorities.
Determine the stages of plan implementation
Determine the nature of machinery required.
Indicate the factors which tend to retard economic developments.
Monitor and evaluate.

Evolution of Indian Planning

The first Five-year Plan was launched in 1951 and two subsequent five-year plans were formulated till 1965, when there was a break because of the Indo-Pakistan Conflict. Two successive years of drought, devaluation of the currency, a general rise in prices and erosion of resources disrupted the planning process and after three Annual Plans between 1966 and 1969, the fourth Five-year plan was started in 1969.
The Eighth Plan could not take off in 1990 due to the fast changing political situation at the Centre and the years 1990-91 and 1991-92 were treated as Annual Plans. The Eighth Plan was finally launched in 1992 after the initiation of structural adjustment policies.

For the first eight Plans the emphasis was on a growing public sector with massive investments in basic and heavy industries, but since the launch of the Ninth Plan in 1997, the emphasis on the public sector has become less pronounced and the current thinking on planning in the country, in general, is that it should increasingly be of an indicative nature.

Timeline of Planning Commission To NITI Aayog

Noted civil engineer and administrator M. Visvesvaraya is regarded as a pioneer of economic planning in India. His book “Planned Economy for India” published in 1934 suggested a ten year plan, with an outlay of Rs. 1000 crore and a planned increase of 600% in industrial output per annum based on economic conditions of the time.

The Industrial Policy Statement published just after independence in 1948 recommended setting up of a Planning Commission and following a mixed economic model.

Here are the major milestones related to economic planning in India:

Setting up of the Planning Commission: 15 March 1950
First Five Year Plan: 9 July 1951
Dissolution of the Planning Commission: 17 August 2014
Setting up of NITI (National Institution for Transforming India) Aayog: 1 January 2015

1934	Visvesvaraya plan in this book “The planned economy of India”. He was an Engineer, Ex-Diwan of Mysore and Bharat Ratna recipient.
1938	Nehru’s Congress plan. But not implemented due to WW2.
1944	Bombay plan by noted industrialists such as JRD Tata, GD Birla, Kasturbhai Lalbhai et al.
1944	Sriman Narayan Agrawal’s Gandhian plan.
1945	MN Roy’s “people’s plan” – with socialist leanings.
1950	Jayprakash Narayan’s Sarvodaya Plan based on Vinoba Bhave’s philosophy
1950,March 15	Cabinet resolution to form Planning commission.
1952,Aug.	National Development council (NDC) made by Cabinet resolution.
2014,Aug.	Modi shuts down planning commission.
2015, Jan	Government notified the formation of Niti Aayog- National Institution for Transforming India.

Highlights of Five Year Plan

The Planning Commission from 1950 to 2014 formulated twelve five year plans. The 1^st and 2^nd plans aimed at raising public resources for investments in public sector, the 3^rd plan focused on increased emphasis on exports and the 4^th Plan formulated at a difficult period of balance of payments crisis focused on agricultural development. The 5^th Plan provided enhanced allocations for social sector spending. The 6^th and 7^th Plans were infrastructure plans focusing on raising plan resources for infrastructure spending. The 8^th Plan formulated in the midst of economic reforms achieved 6.7 percent growth. The 9^th Plan period witnessed a sharp decline in economic growth to 2.4 percent. The 10^th and 11^th Plans implemented in the 2004-2014 period witnessed economic growth trajectory of above 9 percent.

Plan	Period	Remarks
1st	1951-1956	Harrod Domar Model Main focus: Agriculture, irrigation and power. Got more GDP growth than its original target.
2nd	1956-1961	P. C. Mahalanobis Model Its main objective was rapid industrialization particularly the basic and heavy industries. The steel plants in public sector at Bhilai, Durgapur and Rourkela were constructed during this plan. This plan lags behind its target growth rate of 4.5% and achieved a growth rate of 4.27%.
3rd	1961-1966	It was based on John Sandy and S. Chakravarty model. Also called “Gadgil Yojana”. Its main objectives were self-reliant and self-generating economy. Failed to achieve its target due to droughts and wars with Pak-China
Plan Holidays	1966-1969	During the time period of 1966-69 three annual plans were executed which are also called ‘Plan holiday’. Its main objectives were to overcome the ill effects of 2 wars, to solve the food problems, to control inflation and to prepare the base for the fourth plan. During this period the green revolution started (1966-67). During this period the buffer stock share for food grains was introduced.
4th	1969-1974	It was based on Allen S. Manne and Ashok Rudra. Its objectives were ‘growth with Stability’ and ‘progress towards self-reliance’. During this period growth rate in agriculture and Industrial sector was quite good in the first 2 years but failed in the last three years. During this period inflation and unemployment was high. After 1971 war India also faced the problems of refugees. 14 banks were nationalized in 1969. GDP Growth rate was 3.2 % against the targeted 5.7 %.
5th	1974-1979	It was based on the model of D.D. Dhar. Its main objectives were poverty eradication (Garibi Hatao) and ‘attainment of self reliance’ . No improvement was observed in unemployment. The Electricity Supply Act was amended in 1975, a Twenty-point program was launched in 1975, the Minimum Needs Programme (MNP) and the Indian National Highway System was introduced. Janta Party came to power in 1978, the Plan was terminated.
RollingPlan	1978-1980	Morarji Desai’s Janta government came up with Rolling plan system – measure progress every year and make new plans accordingly for next year. In Indian history there were 2 sixth five year plans. One was operated by Janta Party and the other one was operated by congress when they returned to power in 1980. The sixth five year plan by the Janta Party was planned for 1978 to 1983 but it executed for only 2 years (1978-1980).
6th	1980-1985	The basic objective of this plan was economic liberalization by eradicating poverty and achieving technological self-reliance. Its main objectives were poverty reduction and employment generation. Poverty removal (Garibi Hatao), IRDP, NREM, TRYSEM etc.
7th	1985-1990	It was based on the model of planning commission with special emphasis on liberalization. Its main objectives were modernization, growth, self reliance and social justice. During this plan many sun-rise industries especially food processing and electronics were promoted. Creation of more opportunities and productive employment was emphasized during this plan. Jawahar Rozgar Yojana started. For the first time, the private sector got priority over the public sector. The plan was very successful as the economy recorded 6% growth rate against the targeted 5% with the decade of 80’s struggling out of the’ Hindu Rate of Growth’.
2 Annual plans	1990-1992	Political instability at Centre. Hence only annual plans.
8th	1992-1997	John W. Miller model suitable for liberalized economy. Narasimha Rao Govt. launched the New Economic Policy of India. Worsening Balance of Payment position, rising debt burden , widening budget deficits, recession in industry and inflation were the key issues during the launch of the plan.
9th	1997-2002	It was launched in the fiftieth (50th) year of India’s independence. Its main objectives were growth with social justice and equality. Mostly “indicative” planning. FAIL due to global slowdown after Asian financial crisis.
10th	2002-2007	This plan aimed to double the Per Capita Income of India in the next 10 years. Its growth target was 8.0% but it achieved only 7.6%. It also aimed to reduce the poverty ratio to 15% by 2012.
11th	2007-2012	It was prepared by the C. Rangarajan. Theme: “rapid and more inclusive growth”. It achieved a growth rate of 8% against a target of 9% growth.
12th	2012-2017	Theme: “Faster, More inclusive and sustainable growth”. Target growth rates: 9% GDP, 4% Agriculture, 10% Mfg.10% reduction in poverty, create 50 million new jobs. Get IMR:26, MMR:1000,Child Sex ratio: 950, TFR: 2.1 Increase mean school years, forest cover, infrastructure investment, rural tele-density.

Achievements of Planning Commission:

PC laid emphasis on infrastructure developments and capacity building. As a result, huge investments were made in education, energy, industry, railways and irrigation.
India became self-sufficient in agriculture and made great progress in capital sector goods and consumer sector goods.
PC introduced many remarkable concepts like nationalisation, green revolution etc and transformed itself to align with new concepts like liberalisation, privatisation and inclusion.
Planning commission made great emphasis on social justice, governance, employment generation, poverty alleviation, health and skill development.
The transformation of India from a poor to an emerging economic power is credited to the orderly and phased manner in which planning was implemented.

Problems of Planning Commission:

There were many issues with planning methods followed in India. The drawbacks of the planning adopted via PC includes:

No structural mechanism for regular engagement with states.
Ineffective forum for the resolution of centre-state and inter-ministerial issues.
Inadequate capacity expertise and domain knowledge; weak networks with think tanks and lack of access to expertise outside government.
Failed to implement land reforms. Faulty policies for MSME, industrialization, Factory-labour law problems.
It was a toothless body, was not able to make union/states/UTs answerable for not achieving the targets.
Designed plans with ‘one size fit for all’ approach. Hence, many plans failed to show tangible results.
Weak implementation, monitoring and evaluation.
The contemporary world is governed by constitutional ethos like federalism rather than centralisation.

And thus Niti Aayog was born.

Niti Aayog:

The National Institution for Transforming India, popularly called the (NITI) Aayog, was set up in 2015 through a resolution of the Union Cabinet in 2015.

Structure :

Chairperson – The Prime Minister.
Governing Council – Headed by the Prime Minister, it comprises of the Chief Ministers of all States/UTs and the Lieutenant Governors/Administrators of UTs without a legislature.

Regional Councils – these can be constituted to address specific issues which, in the opinion of the Prime Minister, can affect more than one state in a region. These Councils can be headed by the Prime Minister or his nominee and include the Chief Ministers and Lieutenant Governors/Administrators of States/UTs in the region.
The full-time organizational framework of the Aayog consists of,
- Vice Chairperson who is in-charge of its everyday activities. He has the rank of a Cabinet Minister.
- Four full-time members who have the rank of Minister of State at the Union level.
- Two part-time members who are academics from leading universities, research organizations etc. They are appointed on a rotational basis.
- Union Cabinet Minister, not exceeding four, are nominated by the Prime Minister as ex-officio members.
- A Chief Executive Officer who has a rank of Secretary to the Government of India is appointed by the Prime Minister. He has a fixed tenure and serves as the Member-Secretary to the Aayog.
- A Secretariat.

Objectives of NITI Aayog:

As a government think tank, the Aayog is mandated to provide strategic and technical advice to the Central and State governments in the formulation of a wide range of policies.
To foster Centre-State coordination as well as inter-Ministerial coordination at the Union level.
To evolve a shared vision towards national developmental priorities among the Centre and States and strengthen cooperative federalism.

Functions of NITI Aayog:

To adopt a bottom-up approach to development by evolving mechanisms which assist in formulating credible plans at the village level which can be progressively aggregated at higher levels of government. Such plans are to be consolidated to evolve a national level mission strategy and vision statement.
To involve the experts at the national and international level in creating a knowledge, innovation, and entrepreneurial support system. The Knowledge and Innovation Hub of the Aayog is tasked with this function.
To monitor and evaluate the implementation of policies, schemes, and programmes and stressing on capacity building and technology upgradation across all the levels of government.
The Team India Hub, one of the two hubs under NITI Aayog, interfaces with the states to ensure the spirit of cooperative federalism.

Position	Planning Commission	NITI Aayog
Born	1950, March 15thdied in 2014, August after Modi became PM.	2015, January 1st
Chairman	Prime minister	same
Vice Chairman	Last Dy.Chairman was Montek Singh Ahluwalia (Cabinet minister rank).	First VC Arvind Panagriya. He was the Chief economist of Asian Development bank, and the the brain behind Rajasthan’s land-labour reform.
CEO	Member-Secretary (IAS)Sindhushree Khullar (IAS)	A secretary level bureaucrat with fixed tenure.Same Ms. Sindhushree Khullar is the first CEO.
Ex-officio members	Finance MinisterPlanning minister	PM can nominate four-Union ministers.

Planning commission vs NITI Aayog

Planning commission	NITI Aayog
It serves as an extra constitutional body.	It serves as an advisory think tank.
It had limited expertise.	It draws membership from a wider expertise.
State participated as spectators in annual plan meetings.	It serves in spirit of cooperative federalism as states are equal partners.
Secretaries were appointed through usual process.	Secretaries to be known as CEO appointed by PM.
It focuses upon top down approach.	It focuses upon bottom up approach.
Design FYP-Five year plans	Design national agenda, and cooperative federalism.
It had powers to allocate funds to ministries and state governments.	It does not have powers to allocate funds. which are vested in Finance Ministers.

Niti Aayog: Criticism/Anti-Arguments

Like PC, NITI Aayog too is a non-Constitutional, non-statutory body formed by a cabinet resolution. Niti Aayog should have been created through a legal/Constitutional amendment.
A deeply unequal society cannot be transformed into a modern economy by the NITI Aayog, that ensures the welfare of all the citizens, irrespective of their social identity.
NITI Aayog has no role in influencing private or public investment.
NITI Aayog does not seem to influence policy-making with long-term consequences. For example, demonetization and Goods and Services Tax.
If NITI Aayog is a think-tank, it should be maintaining a respectable intellectual distance from the government. Instead, what we see is uncritical praise of the Government-sponsored schemes and programs.
The intention behind setting up NITI Aayog was to encourage participation in the economic policy and public involvement, it has done neither.
The prime minister himself is of the view that the NITI Aayog has not been able to do enough in promoting initiatives like Swachh Bharat Mission, Make in India, and smart city projects in the states.
It does not have the power to analyze the performance of various government schemes.

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