History of Economic Planning in Pre-Independence India – Indian Economy Notes for APSC Exam

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History of Economic Planning in Pre-Independence India

Indian Economy Notes for APSC, UPSC and state Exams

 

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Significance of Economic planning was acknowledge even before the India’s Independence. Economic planning were advocated by many great leaders of that time. Prominent intellectuals like Dadabhai Naoroji, M. C. Ranade, R. C Dutt and M. Visvesvaraya wrote extensively on the social and economic problems of the Indians. Leaders of the freedom movement and prominent industrialists  discussed the future of India after Independence.

The Industrial Policy Statement published just after independence in 1948 recommended setting up of a Planning Commission and following a mixed economic model. The Planning Commission was set up on 15 March 1950 and the First Five Year Plan started on 9 July 1951. The Planning Commission was dissolved on 17 August 2014 and NITI (National Institution for Transforming India) Aayog was instituted on 1 January 2015.

 

Various Economic Planning of Pre-Independence India

Starting from the Soviet Union experiment in 1928, economic planning slowly spread over great part of the world. And during 1930s depression when all the major economies were beaten badly, USSR was exempted from effects of this great depression mainly because of their planning after that whole world was attracted towards USSR’s economic planning. model.

The resolutions of the Indian National Congress from 1929 onwards stressed the need for the revolutionary changes in the present economic structure of society and removal of great inequalities in order to remove poverty and improve the economic and social conditions of the masses.

M. Visvesvaraya, the 19th Diwan of Mysore and noted civil engineer is regarded as a pioneer of economic planning in India. His wrote a book “Planned Economy for India” which was published in 1934, wherein he suggested a ten year plan, with an outlay of Rs. 1000 crore and a planned increase of 600% in industrial output per annum. This was the first systematic work in the direction of planning for economic development of India.

The Government of India Act – 1935, introduced provincial autonomy as per which Congress Government were formed in eight provinces. In August 1937 the Congress Working Committee passed a resolution suggesting the committee of inter provincial experts to consider urgent and vital problems, the solution of which is necessary to any scheme of national reconstruction and social planning.

 

NATIONAL PLANNING COMMITTEE (1938)

National Planning Committee, was first initiated in India in 1938 by the session Congress President Netaji Subhash Chandra Bose, later on Jawaharlal Nehru headed the National Planning Committee. This was followed by the formulation of National Planning Committee consisting of fifteen members.

The setting up of a National Planning Committee highlighted both the
importance of social and economic objectives as also need to profit from the experience of planned development through national plans elsewhere.

The National Planning Committee appointed several sub committees to study different aspects of the national economy. It attempted to examine the fundamental economic problems and draw up co – ordinate plan for upliftment of the people.

A separate department of Planning and Development was established with Sir Ardeshir Dalal as a member in charge. Panels were constituted for the development of basic and important consumer goods industries. Similarly, post Second World War committee was constituted under the chairmanship of Sir Ramaswami Mudaliar.

 

BOMBAY PLAN (1944)

In the early 1944, several eminent industrialists and economists of Bombay Sir
Purshottamdas Thakurdas, Mr. J.R.D. Tata and six others made another attempt and published a development plan, which was called Bombay plan.

Its main purpose was to stimulate the thinking of the people and to lay down the principles on the basis of which a national plan could be formulated and executed.

The central aim of the plan was to raise the national income to such a level that after meeting the minimum requirements of every individual we would be left with enough resources for the enjoyment of life and for cultural activities.”

  • Its objective was at doubling the per capita income in the country within 15 years.
  • It proposed the increase of about 130 per cent and 500 percent, in agriculture and industry respectively.
  • The total outlay of Rs. 10,000 crores was recommended.

The planners believed that this could be achieved only by reducing the overwhelming predominance of agriculture and by establishing a balanced economy.

This plan was the systematic scheme of economic planning which made the country plan-minded. Its major shortcoming was of maintenance of a capitalist order and not giving much emphasise to the agriculture sector.


GANDHIAN PLAN (1944)

This plan was based upon Gandhian philosophy was put forward by Shri S.N. Agarwal of Wardha. The outlay of the plan was estimated Rs. 3500 crores only and it sought to set up a decentralized economy with self sufficient villages and Industrial production.

It laid emphasis on small scale industries and agriculture.

 

PEOPLE’S PLAN (1945)

A ten year plan was prepared by the M.N. Roy. Its chief emphasis was on agricultural and consumer goods industries through collectivization and setting up of sate owned industrialization.

The total outlay was of Rs. 15000 crores. It also advocated the nationalization of land.

 

POST WAR RECONSTRUCTION (1941- 46)

The government of India seriously considered the plans for the post war reconstruction during June, 1941 and appointed a reconstruction committee of the cabinet with Viceroy as Chairman and the members of the Executive Council as Members. In June, 1944 Planning and Development Department was created under a separate member of the Executive Council for organizing the planning work in the country. To assist the department, there was a Planning and Development Board consisting of Secretaries of economic department.

It suggested to State Governments that special priority should be given to schemes for training technical personnel.

The department of planning and development was abolished in 1946.

ADVISORY PLANNING BOARD (1946)

The interim Government was installed on 24th August, 1946. The Advisory Planning Board submitted its report in January, 1947. Its major recommendations were

  • The increase in production that is essential could be secured only through a well considered plan.
  • There must be control on the use of energy sources, control over distribution and price and as well leases and sub leases.
  • Mineral rights in the permanently settled areas in Bengal and Bihar should be
    acquired by the state.

For future Planning organizations, the Board suggested the setting up of single compact organization. The composition of the Planning Commission it was recommended that the Chairman should be a senior minister, holding no portfolio. No minister should be a member of the Planning Commission and that it should be, as far as possible, a non political Commission consisting of five members. It also recommended a consultative body of 25 to 30 members which would meet half yearly or quarterly to advice on problems and receive progress reports.