8 Process of Developing Five Year Plans in India

Dr. Nasra Shabnum

     1. Introduction

2. Objectives

3. Stages of the Process of Planning in India

4. Plan

5. Implementation

6. Plan Evaluation

7. Features of Planning Process in India

8. Summary

INTRODUCTION

Planning is a process under which a central authority defines a set of targets related to growth and development of the country to be achieved within a specified period of time, keeping in view the needs and means of the country. It refers to a system under which a central planning authority sets a set of targets and specifies as set of programs and policies to achieve those targets within the specified period of time. The economy of India is based on planning through its five-year plans, developed, executed and monitored by the Planning Commission. With the Prime Minister as the ex-officio Chairman, the commission has a nominated Deputy Chairman, who has rank of a

Cabinet minister. The principal task of the Planning Commission is to formulate the Five Year and Annual Plans for the most effective and balanced utilization of the country’s material, capital and human resources, appraise from time to time the progress in their implementation and recommend adjustments of policy and measures that are considered to be necessary in the light of such appraisal.

From 1947 to 2017, the India was premised on the concept of planning. India launched the year plan for rapid growth. Planning had the following long term goals; Growth, Modernization, Self-reliance and Social justice. This was carried through the Five-Year Plans, developed, executed, and monitored by the Planning Comission (1951 – 2014) and the NITI ( National Institution for Transforming India) Aayog (2014 – 2017). With the Prime Minister as the ex-officio Chairman, the commission has a nominated Deputy Chairman, who holds the rank of a Cabinet Minister. Montek Singh Ahluwalia is the last Deputy Chairman of the Commission , resigned on 26 May 2014. The Twelfth Plan completed its term in March 2017.

OBJECTIVES

After completing this unit:

1. The learners will be able to understand the significance of national planning.
2. The learners will be able to explain different stages of planning process in India.
3. The learners will be able to critically comment on the socio economic and political dimensions of planning in India.

STAGES OF THE PROCESS OF PLANNING IN INDIA

Process of planning in India takes place in three steps- formulating the plan, its implementation and the evaluation. Over the years and due to the political pressures two new aspects have been added to the process, namely decentralization and popular participation. These are briefly discussed below.

1. FORMULATION

The formulation of the development is the first stage of the economic planning. At the top, the Planning Commission formulates a draft plan in consultation with the various ministries or economic councils, similarly, at the bottom; individual perspective plan on the basis of past experience and future requirements is prepared. The Planning Commission assesses the balances of technical possibilities, recommendations, suggestions and requirements in the light of reports given by two agencies-one from the top and the other from the bottom. The final draft is comprehensive, coherent and well knit document. The detailed process is given below.

1. Perspective Targeting

– The first stage is the consideration of the general approach to the formulation of the Five Year Plan. This begins about three years in advance of the commencement of the Plan and involves an examination of the state of the economy, identification of its social, economic and institutional weaknesses and appraisal of past trends in production and rate of growth in relation to the long- term view of the progress of the economy. Attempts are made also to suggest the directions in which, during the period of the Plan, imbalances must be corrected or more intensive efforts ensured.

– Preliminary conclusions on these and related aspects, submitted by the Planning Commission to the Cabinet at the Centre and to the National Development Council, a body presided over by the Prime Minister of India and composed of Union Cabinet Ministers, Chief Ministers of States and Members of the Planning Commission. At this stage, no attempt is made to suggest magnitudes of the Plan; this awaits the fuller study which has yet to be undertaken. This phase of deliberations leads to preliminary indications on the part of the National Development Council of the rate of growth to be assumed for the next plan and the objectives and considerations which should receive special emphasis. Planning commission lays down tentatively certain general goals for the long time i.e. for fifteen or twenty years, after making a careful analysis of technical possibilities, the basic and non-basic needs of the economy and various methods of development. These goals may or may not be explicated but against their background only, are broad targets for a five year plan formulated.

b. Formulation of Guidelines

– The five year targets are given provisional guidelines by a number of working groups, created for each important sector. These groups comprise specialists, economists and administrators in the central ministries and the planning commission. They formulate targets for their respective sectors, keeping their needs and resources in view. The Planning commission also seeks suggestions from the state and union territory governments on the structure of their respective plans.

– This stage consist studies in great details, which are intended to lead to the consideration of the Five Year Plan. The inter-relationships and the broader dimensions of the Plan are studied within the Planning Commission. While these studies proceed, the Planning Commission constitutes a series of working groups, composed of its own specialists and those of the Ministries concerned at the Centre. To ensure greater participation, while the groups are expected to report to the Planning Commission and to function on its behalf frequently senior officials from the Ministries and more often the permanent heads, serve as chairmen of the groups, and a considerable part of the technical study in each field is undertaken by experts in the Ministries and the technical organizations associated with them. The working groups reviews the performance of the economy in their respective fields, assess progress in achieving the policy objectives outlined in the current and proceeding plans, and point out deficiencies which may have been observed. From time to time, the working groups raise questions as to the assumptions to be made in the formulation of further plans, and on these the Planning Commission is expected to provide the necessary guidance.

As the working groups at the Centre begin their work, State Governments are also advised to constitute similar working groups of their own, and arrangements are made for the working groups at the Centre and in the States to be in informal contact with one another. The main object of the working groups in the States is to try to build up a picture of the development plan of each State.

– In several sectors while the expert working groups undertake their studies, the Planning Commission constitutes Panels, composed of leading experts and workers drawn mainly from outside the Government to advice on the broader aspects of policy and approach towards the formulation of the Plan, in their respective fields.

The Planning Commission take the assistance of a Panel of Economists, a Panel of Scientists and Panels for agriculture, land reform, education, health, housing and social welfare. The working groups constituted by the Planning Commission studies Financial Resources, Agriculture, Irrigation, Power, Steel, Fuel, General Education, Technical Education, Scientific Research, Health and Family Planning, Housing and Urban and Rural Planning and Welfare of Backward Classes. The working groups on Resources remains concerned with the estimation of financial resources both external and internal, and resources for the public sector as well  as the private sector, and include officials from the Planning Commission, the Ministry of Finance and the Reserve Bank of India.

1. Preparation of the Approach Paper

– The approach paper is prepared on the basis of preliminary exercises undertaken in the Planning Commission, projecting the growth profile of the economy over a period of 15-20 years including the ensuing five-year plan period. On the basis of the reports of the working groups, state governments and union territories, the Planning Commission prepares an approach paper for the Five Year Plan. It is a brief document, broadly outlining the goals to be achieved during the proposed five-year plan period. It is based on documents prepared by various working groups and a steering committee.

– For preparing an Approach paper; Steering Committees and Working Groups are set up for reviewing the progress in the implementation of the five-year plans, and for making recommendations regarding policies, programs, projects, and schemes as also for outlays and targets for the various sectors and sub-sectors. Members of the steering committee and working groups are drawn from officials in the Planning Commission, central ministries and departments, academic institutions, state governments and specialists from business and industry, and experts from relevant fields.

d. Publication of the Draft Plan

The Planning Commission formulates a draft plan in consultation with the various ministries or economic councils, similarly, at the bottom; individual perspective plan on the basis of past experience and future requirements is prepared. The Planning Commission assesses the balances of technical possibilities, recommendations, suggestions and requirements in the light of reports given by two agencies-one from the top and the other from the bottom.

The Draft Five Year Plan is a considerable elaboration of the earlier document. It is intended to give more content to the plans envisaged for different sectors and to bring out the main issues of policy and objectives and the approach which is proposed to be adopted. The Draft Plan is prepared in the Planning Commission, is commended upon in draft by the various Ministries and the State Governments and is considered in the Central Cabinet before being submitted to the National Development Council.

With the approval of the Council, the Draft Plan is published as a document for the widest public discussion and consideration. Comments are invited from all sections of opinion. State Governments arrange for the Draft Plan to be discussed thoroughly at the district level by District Development Councils and other bodies. According to the practice which is now well developed, at the national level both Houses of Parliament arrange for discussion of the Draft Plan, first in a general way for a few days at a time, and then in greater detail through a series of Parliamentary Committees which individual Members are free to join and whose proceedings eventually form part of the parliamentary record.

While the Draft Plan is under discussion throughout the country, the Planning Commission, in association with the Ministries at the Centre holds detailed discussions regarding the plans of individual States. These involved a study of their financial projections, proposals for raising additional resources and their detailed plans of development in different sector. With each State the discussions are held both at the expert level and at the political level, the final conclusions being reached in consultation with the Chief Ministers of individual States. These conclusions are regarded as understandings between the Planning Commission and the States, for the size and composition of each State’s plan, the main targets and programs to be fulfilled and obligations undertaken by the Centre to provide a given quantum of financial assistance and by each State to find its share of resources and observe the agreed priorities.

On the basis of detailed discussions with States, comments from different sources and the more detailed recommendations from various working groups and Panels, the Planning Commission submits a fresh Memorandum to the Central Cabinet and the National Development Council in which it brings together the principal features of the Plan, the policy directions to be stressed and the issues which may require further consideration.

The conclusions reached on the Five Year Plan, this detailed report, outlining the objectives, policies, programs and projects in the Plan, is again commented upon in draft by the Ministries at the Centre and by the State Governments and is finally submitted to the Cabinet and the National Development Council. With the approval of the Council, the Report is published and presented to Parliament, usually by the Prime Minister. After discussions lasting for several days, each House of Parliament accords its general approval to the Plan and gives a call to the nation for its implementation and for the achievement of the objectives and targets embodied in it.

e. Finalization of the Final Plan

– A draft outline of the Five Year Plan is prepared keeping in view observations made by the National Development Council and is published several months before the plan is to come into force. This is presented before the Parliament for discussion and later on sent to different Central Ministries, State bodies and other institutions. The final draft is comprehensive, coherent and well knit document.

– Then, final report is prepared and presented before the cabinet, National Development Council and finally before the Parliament for approval. The Planning commission, even after its final approval, studies and examines the various aspects from time to time and modifies the plan as and when required. The Five Year Plan then is broken into annual plans. During the months of November or December of each year, there are series of consultations between the Commission and the Central and State Ministries for reviewing the progress and making further reassessment of resources and technical possibilities of adjustment and readjustment of targets and requirements of the annual plan for the next year, there are series of consultations between the Commission and the Central and State Ministries for reviewing the progress and making further reassessment of resources and technical possibilities of adjustment and readjustment of targets and requirements of the annual plan for the next year. Thus, annual plan is introduced with a much needed flexibility in the implementation of final Five Year Plan.

2. PLAN IMPLEMENTATION

– It should be noted here that the Commission is an advisory body and has no executive functions. It is only a national organ for plan formulation and a staff body to advise the cabinet. The task of implementation is left to the union ministries and state governments. It is in this field that efforts have been made to introduce the two concepts of democratic decentralization and the popular participation, particularly after the introduction of the Panchayati Raj in the country. As an advisory body the Planning Commission assists both the central government and the state governments. Its advice is given invariably after consultation with the agencies concerned and, as a general practice; it takes the forms of mutually agreed conclusions.

Perhaps the most important aspect of the planning structure that has developed in India over the years is that responsibility of planning is widely shared, that those who are charged with the duty of execution also plan, but do so within a framework and on premises indicated by the planning commission with the approval of the Central Cabinet and the National Development Council. At no point is the planning isolated from the responsibility for implementation, nor is implementation viewed as an independent responsibility which may be pursued in disregards of the conditions laid down in the context of planned development. The Planning Commission observes how far the basic social and economic objectives are being achieved and endeavour to consider problems in each sector from the point of view of economy as a whole. In India, supervision is done by the planning agency or a special agency. The program evaluation organization which is an impartial body, supervises the plans.

3. PLAN EVALUATION

As per the requirement of the various Divisions of Planning Commission and Ministries and Departments of Government Evaluation is the last of the three stages in the process. One of the functions of the Commission is to appraise from time to time the progress achieved in the execution of each stage of the plan and make recommendations for necessary adjustment.

The Commission makes such appraisal through:

1) Monthly reports of selected projects, quarterly reviews of the working of the plan and the annual progress reports obtained from the union ministries and the state governments.

2) The advisors who visit the states within their charge and study at first hand the working of the development programs; and

3) Through the machinery of the Committee on Plan Projects.

In addition, there is the Program Evaluation Organization set up 1952. The Program Evaluation Organization (PEO) undertakes evaluation of selected programs and schemes under implementationof India. The evaluation studies are designed to assess the performance, process of implementation, effectiveness of the delivery systems and impact of programs. The Programmed Evaluation Organization which functions as an independent unit of the Commission.

FEATURES OF PLANNING PROCESS N INDIA

Indian planning has certain well known feature. These may be stated as follows:

Decentralized Machinery. In India, we have a decentralized process of planning. For instance, planning machine is three-ties, the central, the states and the district planning bodies. These bodies are closely associated with the formulation as well as implementation of the plans.

Democratic Character. Another pioneer feature is its democratic nature. No doubt, various plans are prepared by expects but at the same time, adequate opportunities are provided to the people to actively participate at various levels. Being federal structure of the Indian Constitution, the Union Government only uses its fiscal, monetary and physical controls to guide and give direction in consonance with the five year plans.

Only an Advisory Role of Planning Commission. In the decentralized set up of planning, Planning Commission is at the apex. It provides the necessary perspective guidance and coordination. Furthermore, it serves the close link between different agencies so that the functioning may be smooth. In this regard, Planning commission is of an advisory character.

Essentially a Framework Plan. One more distinguishing feature is that Indian plans are essentially a framework plan. It has laid down the major parameters and fixed targets at the centre and in the states, in the districts and the blocks. It has considerable autonomy in programming and also in its operations.

Continuous Process. By the virtue of its process, Indian plans are a continuous character. The Planning Commission prepares a perspective plan which is divided into five year plans and have a certain medium of continuity from one plan period to the another plan.

Summary

These are the steps by which a Five Year Plan takes shape. A great deal of the discussion is necessarily of a public nature, widely shared and involved large groups in every part of the country and in each branch of the national life. By the time the Plan emerges in its final form, it has already met its critics half-way, assimilated to a large extent the constructive thanking thrown up in the course of the debate and gained a degree of general acceptance for its assumptions, objectives, priorities and major features, which is in fact the principal moral and social sanction for its subsequent implementation. Responsibility for its execution rests with the Ministries at the Centre and with the Government of States. The Planning Commission continues to watch and report on its implementation, assist the Central and State executive agencies to the extent necessary, advise on changes and adjustments and otherwise help ensure that the basis economic and fiscal policies are in conformity with the requirements of the Plan and that its social goals and long range objectives are at no stage lost sight of.

In formulating the Five Year Plan the Planning Commission coordinates and oversees the development programs of the Central Ministries and State Governments and integrates these in a national Plan covering both the public and private sectors. Specific schemes of financing are worked out for the Centre and each State, indicating clearly the additional resource mobilization efforts that they would have to undertake; these are integrated with the overall scheme of flow of funds for the economy as a whole. At the Centre, the role of the Planning Commission in investment planning is crucial as the Commission provides an objective method of resource allocation reconciling claims of various Ministries taking into account the broad national objectives and priorities. Similarly, the Commission seeks to ensure through the Annual Plans which are the operational plans that the sum total of outlays of the Centre and the State is consistent with the estimates of resources available to the public economy. The plan outlays in both the public and private sectors are matched by resources in order to ensure orderly growth in conditions of relative stability, without introducing any distortions in investments or the production pattern. The process of planning in India is quite remarkable in character which has centralized in its formulation, decentralized in its implementation, directive in the public sector, indicative in the private sector. This planned economy, in fact, aims at a progressive and socialistic pattern of economy.

Replacing the Five Year Plans beyond 31st March, 2017, NITI Aayog is in the process of preparing the 15-year vision document keeping in view the social goals set and/ or proposed for a period of 15 years; A 7-year strategy document spanning 2017-18 to 2023-24 to convert the longer-term vision into implementable policy and action as a part of a “National Development Agenda” is also being worked upon. The 3-year Action Agenda for 2017-18 to 2019-20, aligned to the predictability of financial resources during the 14th Finance Commission Award period, has been completed and will be submitted before the Prime Minister on April 23rd at the 3rd Governing Council Meeting.

The sum up, the process of planning in India is quite remarkable in character which has centralized its formulation, decentralized in its implementation, directive in the public sector, indicative in the private sector. This planned economy, in fact, aims at a progressive and socialistic patter of economy.