•FIVE YEAR PLANS : GOALS AND
ACHIEVEMENTS
PART 1
•
SHASHI AGGARWAL ECONOMICS AND LAW CLASSES
•
INDIAN ECONOMIC DEVELOPMENT
•
MEANING OFECONOMIC PLANNING
1.
ECONOMIC PLANNING MEANS UTILIZATION OF COUNTRY’S RESOURCES IN DIFFERENT
DEVELOPMENT ACTIVITIES IN ACCORDANCE WITH NATIONAL PRIORITIES.
2.
ECONOMIC PLANNING REFERS A SYSTEM UNDER WHICH A CENTRAL AUTHORITY SETS A SET
OF TARGETS AND SPECIFIES A SET OF PROGRAMMES AND POLICIES TO ACHIEVE THOSE
TARGETS WITH IN SPECIFIED PERIOD OF TIME
3.
THE MAIN FOCUS IS TO RATIONAL UTILIZATION OF LIMITED RESOURCES SO THAT
SOCIAL WELFARE IS MAXIMIZED.
4.
IN INDIA,THE IDEA OF ECONOMIC PLANNING BECAME A REALITY WITH THE SETTING UP
OF PLANNING COMMISSION IN 1950 UNDER THE CHAIRMANSHIP OF PROFESSOR MAHALNOBIS
5.
INDIA BEING A UNION OF STATES HAS ACCEPTED PLANNING BOTH FOR ITS CENTRAL AND
STATE GOVERNMENT. THE PLANNING COMMISSION OF INDIA WAS SET UP FOR THE FIRST
TIME IN MARCH 1950 WITH PANDIT JAWAHAR LAL NEHRU AS ITS CHAIRMAN. THE PLANNING
COMMISSION IS COMPOSED OF EIGHT MEMBERS:-
1.
PRIME MINISTER( CHAIRMAN)
2.
FOUR FULL TIME MEMBERS ( INCLUDING DEPUTY CHAIRMAN)
3.
MINISTER OF PLANNING
4.
MINISTER OF FINANCE
5.
MINISTER OF DEFENCE
6.
WITH THE CHANGE IN GOVERNMENT A NEW PLANNING COMMISSION IS FORMED.
•
THE FUNCTION OF THE PLANNING COMMISSION
1.
MAKING REAL ASSESSMENT OF VARIOUS RESOURCES AND INVESTIGATE INTO THE
POSSIBILITY OF INCREASING THE RESOURCES
2.
FORMULATION OF PLAN
3.
DEFINING STAGES OF PLAN IMPLEMENTATION AND DETERMINING PLAN PRIORITIES
4.
IDENTIFICATION OF THE FACTORS WHICH ARE CRITICAL FOR ITS SUCCESS
5.
DETERMINING PLAN MACHINERY AT EACH STAGE OF PLANNING PROCESS
6.
MAKING PERIODIC ASSESSMENT
7.
MAKING RECOMMENDATION
•
NATIONAL DEVELOPMENT COUNCIL
1.
TO FULFILL THE REQUIREMENT OF A COORDINATING AGENCY THE NATIONAL DEVELOPMENT
COUNCIL WAS SET UP BY THE GOVERNMENT OF INDIA ON 6 TH AUGUST,1952.
2.
EVERY PLANNING DECISION IN INDIA ORIGINATED FROM THE PLANNING COMMISSION AND
BEING FINALLY APPROVED BY NDC
3.
IN NDC REPRESENTATIVE OF BOTH CENTRAL AND STATE GOVERNMENT SIT TOGETHER TO
FINALLY APPROVE ALL IMPORTANT DECISIONS RELATING TO PLANNING
4.
NDC WAS COMPOSED OF THE FOLLOWING MEMBERS
a)
PRIME MINISTER OF INDIA
b)
ALL STATE CHIEF MINISTERS
c)
MEMBERS OF PLANNING COMMISSION
d)
WORKING AS AN ADVISORY COUNCIL AND IN THIS COUNCIL THE STATE GOVERNMENT
OCCUPY THE IMPORTANT POSITION.
•
NITI AAYOG
1.
FOR SIX AND HALF DECADES,THE FIVE YEAR PLANS WERE FORMULATED BY THE PLANNING COMMISSION.
WITH EFFECT FROM JANUARY 1,2015,THE PLANNING COMMISSION HAS BEEN REPLACED BY
NITI AAYOG (NATIONAL INSTITUTION FOR TRANSFORMING INDIA)
2.
THE INSTITUTION WILL SERVE AS “ THINK TANK” OF THE GOVERNMENT- A DIRECTIONAL
AND POLICY DYNAMO.
3.
IT WILL PROVIDE GOVERNMENT AT CENTRAL AND STATE LEVELS WITH RELEVANT
STRATEGIC AND TECHNICAL ADVICE FOR THE
KEY ELEMENT OF THE POLICY:-
1.
ALSO INCLUDE MATTERS OF NATIONAL AND INTERNATIONAL IMPORTANCE ON THE
ECONOMIC FRONT
2.
BEST PRACTISES FROM WITH IN THE COUNTRY AS WELL FROM THE INTERNATIONAL
•
NITI AAYOG
•
MEANS
•
A GROUP OF PEOPLE THAT THE GOVERNMENT ENTRUST FOR FORMULATING AND REGULATING
POLICIES CONCERNING THE TRANSFORMATION OF INDIA
1.
A COMMISSION WHICH ASSISTS THE GOVERNMENT IN BOTH SOCIAL AND ECONOMIC ISSUES
2.
AN INSTITUTION WITH EXPERTS
3.
A BODY WHICH ACTIVELY MONITORS AND EVALUATES THE IMPLEMENTATION OF THE
GOVERNMENT PROGRAM AND INITIATIVES
•
NEED FOR PLANNING IN INDIA
1.
BACKWARD AND STAGNANT ECONOMY AT THE TIME OF INDEPENDENCE
2.
LEVEL OF OUTPUT AND PRODUCTIVITY WAS VERY LOW
3.
GDP GROWTH RATE WAS VERY LOW
4.
ECONOMY’S GROWTH COULD NOT BE LEFT TO MARKET FORCES OF SUPPLY AND DEMAND
5.
NEEDED A BIG PUSH OF INVESTMENT SUPPORTED BY THE GOVERNMENT
•
DIRECTIVE PLANNING AND COMPREHENSIVE PLANNING
•
DIRECTIVE PLANNING :
•
REFERS TO A SYSTEM IN WHICH PLANNING
IS INTRODUCED JUST TO DIRECT THE FORCES
OF SUPPLY AND DEMAND SO THE SYSTEM SHOULD NOT DEVIATE FROM THE STATE OF
EQUILIBRIUM
1.
NO DIRECT PARTICIPATION OF THE STATE IN THE PROCESS OF GROWTH
2.
MORE LIKE DIRECTING THE PRIVATE SECTOR WITH REGARD TO A SET OF DO AND DONOT
SO THAT THE NATIONAL INTEREST DOES NOT SUFFER WHILE INDIVIDUAL GAINS ARE
ALLOWED TO BE MAXIMIZED
3.
PURSUED IN CAPITALISTIC ECONOMIES
•
COMPREHENSIVE PLANNING
•
WHERE THE GOVERNMENT PARTICIPATE IN THE GROWTH PROCESS
- PURSUED IN SOCIALISTIC AS WELL AS MIXED ECONOMIES
- IN CASE OF MIXED ECONOMIES LIKE INDIA BOTH PRIVATE AND PUBLIC SECTOR CO
EXIST AS AGENTS OF GROWTH
- IN INDIA PLANNING COVER ECONOMIC PLANNING AS WELL AS SOCIAL SPHERE
- AGRICULTURE .INDUSTRY AND TRADE ARE THE EXAMPLE OF ECONOMIC SPHERE
- EDUCATION,HEALTH AND HOUSING ARE THE PRINCIPAL EXAMPLE OF SOCIAL AREAS
- PLANNING THAT COVER BOTH THE ASPECT IS CALLED COMPREHENSIVE PLANNING
- WHILE INDIVIDUAL GAINS ARE ALLOWED TO BE MAXIMIZED AS UNDER
CAPITALISM,SOCIAL GAINS ARE FOSTERED THROUGH DIRECT PARTICIPATION OF THE
STATE AS UNDER SOCIALISM
•
MEANING OF ECONOMIC SYSTEM
•
AN ECONOMIC SET IS AN ENTIRE SET OF ARRANGEMENT AND INSTITUTIONS FOR MEETING
TWO FOLD OBJECTIVES OF SOCIETY
1.
INCREASING THE AVAILABILITY OF RESOURCES
2.
ENSURING THE ECONOMIC USE
•
SYSTEM
OF PRODUCTION,RESOURCE ALLOCATION AND DISTRIBUTION OF GOODS AND SERVICES WITH
IN A SOCIETY OR GIVEN GEOGRAPHIC AREA. IT INCLUDES THE COMBINATION OF VARIOUS
INSTITUTIONS,AGENCIES,ENTITIES,DECISION MAKING PROCESS AND PATTERN OF
CONSUMPTION.
•
ALL
ECONOMIC SYSTEM HAVE THREE QUESTIONS TO ASK:HOW TO PRODUCE,IN WHAT QUANTITIES
AND WHO RECEIVES THE OUTPUT OF PRODUCTION,
•
ECONOMIC SYSTEM
•
THREE
IMPORTANT TYPES OF ECONOMIC SYSTEM. TYPE OF ECONOMIC SYSTEM ARE BASED UPON PER CAPITA INCOME,PRIORITIZATION OF
INDIVIDUALS TO SPEND THEIR RESOURCES AND SCARCITY OF BOTH AND RESOURCES
1.
CAPITALISM
2.
SOCIALISM
3.
MIXED
ECONOMY
•
CAPITALISM
•
PHILOSPHY
OF INDIVIDUALISM BELIEVED IN PRIVATE OWNERSHIP OF ALL AGENTS OF PRODUCTION,IN
PRIVATE SHARING OF DISTRIBUTION PROCESSES THAT DETERMINE THE FUNCTIONS REWARDS
OF EACH PARTICIPANTS AND IN INDIVIDUAL EXPRESSION OF CONSUMER CHOICE THROUGH A
FREE MARKET PLACE.
•
DEFINITION
•
LOUCKS,”
CAPITALISM IS A SYSTEM OF ECONOMIC ORGANIZATION FEATURED BY THE PRIVATE
OWNERSHIP AND USE FOR THE PRIVATE PROFIT OF MAN MADE AND NATURE MADE CAPITAL.
•
FEATURES
- FREE MARKET AND
ABSENCE OF GOVERNMENT INTERVENTION IN THE ECONOMY
- MEANS OF
PRODUCTION ARE OWNED PRIVATELY THAT IS BY INDIVIDUAL AND HOUSEHOLD. THE
INSTITUTION OF PRIVATE PROPERTY ALSO COVERS THE RIGHT TO INHERITANCE
- PEOPLE ACQUIRE
MOTIVE FOR EARNING MORE,ALWAYS LOOKING FOR MORE PROFITABLE OPPORTUNITIES
AND SYSTEM HAS HIGH PRODUCTION
POTENTIAL
- PRIVATE PROPERTY AND INHERITANCE LEAD TO EVER INCREASING INCOME
INEQUALITIES OF INCOME AND WEALTH
- POLICY OF LAISSEZ FAIRE MEANS ABSENCE OF GOVERNMENT INTERVENTIONS
- COMPETITIVE STRUCTURE
- USE OF MONEY AND CREDIT
- ALL ECONOMIC ACTIVITIES ARE GUIDED BY MARKET FORCES
•
MERITS
- ENSURE OPTIMAL UTILIZATION OF
RESOURCES
- WHAT TO PRODUCE AND HOW TO PRODUCE ON THE MARKET FORCES OF DEMAND AND
SUPPLY
- AUTOMATIC BALANCE IN THE SYSTEM ( SELF REGULATORY)
- EFFICIENCY PROPERLY REWARDED
- INCENTIVES FOR RISKS AND UNCERTAINTIES
- ECONOMIC GROWTH IS FASTER
- ENCOURAGE CAPITAL FORMATION AND PROVIDE FLEXIBILITY
•
DEMERITS OF CAPITALISM
- WASTAGE AND
MISALLOCATION OF RESOURCES
- GENERATION OF
INEQUALITIES OF INCOME AND
WEALTH
- NO PRODUCTION OF
MERIT GOODS RATHER PRODUCING THOSE GOODS WHICH ARE MORE PROFITABLE
- CONSUMER’S
SOVEREIGNTY IS A MYTH
- INEQUALITY OF
WEALTH
- NO FREEDOM
- CLASS STRUGGLE
- UNEMPLOYMENT AND
CORRUPTION
- LOSS OF HUMAN
VALUES AND WELFARE
•
SOCIALISM
•
IS
AN ECONOMIC SYSTEM WHERE THE MEANS OF PRODUCTION ARE EITHER OWNED OR MANAGED BY
THE STATE AND WHERE THE INVESTMENT STRUCTURE,CONSUMPTION,ALLOCATION OF
RESOURCES,DISTRIBUTION OF INCOME ETC ARE REGULATED AND DIRECTED BY STATE.
•
FOUNDATIONS
WERE LAID BY KARL MARX AND FEERIC ENGLES
•
DEFINITION
•
H.D. DICKINSON,” SOCIALISM IS AN
ORGANIZATION OF THE SOCIETY IN WHICH THE MATERIAL MEANS OF PRODUCTION
ARE OWNED BY THE WHOLE COMMODITY AND OPERATED BY ORGANS,REPRESENTATIVE OF AND
RESPONSIBLE TO,ALL MEMBERS OF COMMUNITY ACCORDING TO A GENERAL PLAN,ALL MEMBERS
OF THE COMMUNITY BEING ENTITLED TO GET BENEFITS FROM THE RESULTS OF SUCH
SOCIALIST PLANNED PRODUCTION ON THE BASIS OF EQUAL RIGHTS.
•
DEFINITION
OF SOCIALIST ECONOMY
•
ACCORDING TO MAURICE DOBB,”THE FUNDAMENTAL CHARACTER OF SOCIALISM CONSISTS
IN ITS ABOLITION OF CLASS RELATIONS WHICH FORM THE BASIS OF CAPITALIST
PRODUCTION THROUGH EXPROPRIATION OF THE
PROPERTIED CLASS AND SOCIALIZATION OF LAND AND CAPITAL
•
FEATURES OF SOCIALISM
1.
NOT GUIDED BY FREE WORKING OF MARKET MECHANISM.HANDLED BY CENTRALIZED
ECONOMIC PLANNING.REGULATION OF PRICES WITH THE OBJECTIVES OF SERVING THE
NATIONAL INTERESTS
2.
MEANS OF PRODUCTION ARE OWNED BY GOVERNMENT AUTHORITIES . THE INSTITUTIONS
OF PRIVATE PROPERTY AND INHERITANCE ARE ABOLISHED
3.
RECOGNIZES THE ILL EFFECTS OF MONEY AND CREDIT,TRY TO RESTRICT IT TO MINIMUM
NECESSARY
4.
DECISION WHAT TO PRODUCE AND HOW TO PRODUCE TAKEN BY CENTRAL PLANNING
AUTHORITY
5.
CLASS LESS SOCIETY
•
MERITS
- BETTER
ALLOCATION AND UTILIZATION OF RESOURCES
- ELIMINATION OF
UNEMPLOYMENT
- NO CYCLIC
FLUCTUATIONS
- NO CLASS
STRUGGLE
- REDUCTION IN
EQUALITY OF INCOME
•
DEMERITS
- BUREAUCRATIZATION
- LACK OF
INCENTIVES
- RED TAPISM
- NO CONSUMER
SOVEREIGNTY
- CONCENTRATION OF
ECONOMIC POWER IN THE HANDS OF STATE
- PROMOTES
CORRUPTION
- MISALLOCATION OF
RESOURCES
•
MIXED ECONOMY
1.
SOME ELEMENTS OF BOTH CAPITALISM AND
SOCIALISMI
2.
INDIAN
ECONOMY IS MIXED ECONOMY
3.
EXISTENCE
OF PUBLIC SECTOR.PRIVATE SECTOR AND JOINT SECTOR
4.
ACCORDING
TO DIRECTIVE PRINCIPLES OF STATE POLICY WE HAVE ADOPTED MIXED ECONOMY
•
CHARACTERISTICS
1.
EXISTENCE
OF PUBLIC AND PRIVATE SECTOR
2.
THEIR
FIELD ARE DEFINED
3.
CONSTANT
VIGILANCE
4.
SELECTION
OF DETAILED FEATURES OF MIXED ECONOMY WITH REFERENCE TO WORKING OF MARKET MECHANISM AND EXPECTED EFFECTS
MERITS
1.
COMBINES
THE MERITS OF CAPITALIST AND AS WELL AS
SOCIALIST ECONOMY
2.
ENCOURAGEMENT
OF GDP GROWTH
3.
PROMOTION
OF SOCIAL JUSTICE
DEMERITS :-
1.
GOVERNMENT
SECTOR IS OFTEN INFLICTED WITH CORRUPTION
2.
LOW
LEVEL OF PRODUCTIVITY AND EFFICIENCY IN PUBLIC SECTOR
3.
GRADUALLY
OPTING FOR PRIVATE SECTOR
•
SALIENT FEATURES OF INDIA’S FIVE YEAR PLANS (
HISTORY)
1.
DEMOCRATIC:-WHILE FORMULATING A FIVE YEAR PLANS OPINIONS OF VARIOUS TIERS OF
GOVERNMENT,VARIOUS ORGANIZATIONS,INSTITUTIONS,EXPERTS ARE BEING GIVEN DUE
CONSIDERATION.
2.
DECENTRALIZED PLANNING”-DECENTRALIZED PLANNING IS A KIND OF PLANNING AT THE
GRASS ROOT LEVEL OR PLANNING FROM BELOW. EMPHASIS HAS BEEN GIVEN ON THE
INTRODUCTION OF DISTRICT PLANNING.SUB DIVISIONAL PLANNING AND BLOCK LEVEL
PLANNING SO AS TO REACH FINALLY THE VILLAGE LEVEL PLANNING SUCCESSFULLY
3.
REGULATORY MECHANISM:- THAT IT IS BEING DIRECTED BY A CENTRAL PLANNING
AUTHORITY THAT IS THE PLANNING COMMISSION OF INDIA WHICH PLAYS THE ROLE OF
REGULATORY MECHANISM. FOR PROPER COORDINATION BETWEEN CENTRE AND STATE A
COORDINATING AGENCY THE NATIONAL DEVELOPMENT COUNCIL WAS SET UP IN 1952
4.
EXISTENCE OF CENTRAL PLAN AND STATE PLAN”-CO EXISTENCE OF BOTH THE CENTRAL
AND STATE PLANS. IN EVERY FIVE YEAR PLANS OF THE COUNTRY, SEPARATE OUTLAY IS
EARMARKED BOTH FOR THE CENTRAL PLAN AND ALSO FOR THE STATE PLAN. CENTRAL PLAN
IS UNDER THE EXCLUSIVE CONTROL OF THE PLANNING COMMISSION AND THE SATE PLAN IS
UNDER STATE PLANNING BOARD AND STATE GOVERNMENT WHICH ALSO REQUIRE APPROVAL
FROM THE PLANNING COMMISSION.
5.
PUBLIC AND PRIVATE SECTOR: ANOTHER NOTABLE FEATURE OF INDIA’S FIVE YEAR
PLANS IS THAT EACH PLAN A SEPARATE OUT LAY IS EARMARKED BOTH FOR PUBLIC SECTOR
AND PRIVATE SECTOR
6.
PERIODIC PLAN” ONE OF THE IMPORTANT FEATURES OF INDIAN PLANNING HAS ADOPTED
PLAN OF FIVE YEARS HAVING FIVE SEPARATE ANNUAL PLANS COMPONENTS,
7.
FIVE YEAR PLANS IN INDIA ARE DETERMINING ITS PRIORITIES CONSIDERING THE
NEEDS OF THE COUNTRY.
8.
IMPORTANCE TO BALANCED REGIONAL DEVELOPMENT
9.
PERSPECTIVE PLANNING ON BASIC ISSUES OR PROBLEMS
10.
INDIAN PLANNING SYSTEM IS BROADLY SUPPORTED BY PROGRAMME IMPLEMENTATION AND
EVALUATION MACHINERY WHICH PLAYED A VITAL ROLE
•
BASIC OBJECTIVE: MAJOR OBJECTIVES:-
1.
ATTAINMENT OF HIGHER ECONOMIC GROWTH
2.
REDUCTION OF INCOME INEQUALITIES
3.
ACHIEVING FULL EMPLOYMENT
4.
ATTAINING SELF ECONOMIC RELIANCE
5.
MODERNIZATION OF VARIOUS SECTORS
6.
REDRESSING THE IMBALANCES IN THE ECONOMY
7.
GROWTH AND JUSTICE IS THE MAIN OBJECTIVE
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