India’s economic journey since independence has been shaped by planned development, institutional reforms, and major policy shifts. In this unit, BBA students will learn how economic planning evolved—from Five-Year Plans to the LPG reforms—and how institutions like NITI Aayog are shaping modern India’s economy.
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Objectives of Economic Planning in India
Economic planning in India began with the First Five-Year Plan in 1951. The main purpose was to allocate resources efficiently and achieve rapid economic growth.
Major Objectives:
Promote economic growth and development
Achieve social justice and reduce inequalities
Ensure balanced regional development
Strengthen self-reliance in production and resources
Modernize agriculture and industries
Planning was necessary to guide India’s transition from a colonial economy to a self-sustained, inclusive economy.
Achievements of Economic Planning
Over the years, planning has brought several accomplishments that have shaped India’s economic landscape.
Key Achievements:
Agricultural success: The Green Revolution boosted food grain production
Industrial growth: Development of heavy industries and public sector enterprises
Infrastructure expansion: Roads, railways, energy, and telecom saw massive growth
Education & healthcare: Increased literacy rates and healthcare access
Poverty reduction: While challenges remain, poverty has declined over decades
Though not without flaws, economic planning laid the groundwork for India’s long-term growth.
NITI Aayog – Structure, Objectives, and Role
In 2015, the Government of India replaced the Planning Commission with NITI Aayog (National Institution for Transforming India). The aim was to move from a centralized planning model to a more flexible, participative approach.
1. Structure:
Chairperson: Prime Minister of India
Vice-Chairperson and Full-time Members
Governing Council: Chief Ministers of all States & UTs
Experts and part-time members from various sectors
2. Objectives of NITI Aayog:
Foster cooperative federalism among states
Act as a think tank for long-term policy planning
Promote bottom-up planning and local development
Encourage innovation and entrepreneurship
Role in the Economy:
NITI Aayog works with central and state governments to implement strategies in sectors like health, education, energy, and infrastructure. It focuses on sustainable and inclusive development goals (SDGs).
Five-Year Plans – Overview and Highlights
India launched a series of Five-Year Plans from 1951 to 2017 to guide economic progress. Each plan had distinct objectives based on the needs of the time.
Highlights of Major Plans:
| Plan | Period | Focus Area |
|---|---|---|
| 1st | 1951–1956 | Agriculture, irrigation, and land reforms |
| 2nd | 1956–1961 | Industrialization (Nehru-Mahalanobis Model) |
| 3rd | 1961–1966 | Self-reliance and defense preparedness |
| 6th | 1980–1985 | Poverty eradication and employment |
| 10th | 2002–2007 | Accelerated GDP growth and social development |
| 12th | 2012–2017 | Faster, inclusive, and sustainable growth |
Post-2017, India moved away from Five-Year Plans and adopted flexible planning through NITI Aayog.
Liberalization, Privatization, and Globalization (LPG) – 1991 Economic Reforms
The 1991 economic crisis forced India to liberalize its economy. Under the leadership of P.V. Narasimha Rao and Dr. Manmohan Singh, India adopted the LPG reforms, marking a new era of economic openness.
1. Liberalization:
Removed licensing requirements in most sectors
Reduced government control and allowed private participation
Simplified import-export policies
2. Privatization:
Disinvestment in public sector undertakings (PSUs)
Allowed private sector entry in industries like telecom, banking, and aviation
3. Globalization:
Opened Indian markets to foreign direct investment (FDI)
Integrated Indian economy with global markets
Improved competitiveness and productivity
4. Impact of 1991 Reforms:
Increased GDP growth rate
Rise in foreign investment and exports
Boom in service industries like IT and telecom
Strengthened foreign exchange reserves
The LPG reforms fundamentally changed the way business is conducted in India and laid the foundation for today’s globalized economy.