Economic Planning and Development

Economic Planning and Development

• Economic Planning is the process in which the limited natural resources are used skillfully so as to achieve the desired goals. The concept of Economic Planning in India, is derived from Russia (the then USSR).
• Planning' in India derives its objectives and social premises from the Directive Principles of State Policy enshrined in the Constitution.
• In the year 1934, the proposal relating to economic planning came for the first time in the book of Vishveshwaraiya titled 'Planned Economy for India'. Thereafter in 1938, the All India Congress Committee demanded for the same. In 1944 efforts were made by 8 industrialists under 'Bombay Plan'.
• Thereafter, in the same year, 'Gandhian Plan' by Sriman Narayan, in April, 1944 the 'People's Plan' by labour leader M.N. Roy and in January 30, 1950 the 'Sarvodaya Plan' by Mr. Jai Prakash Narayan were presented. After independence, in 1947, the committee on economic planning was constituted under the chairmanship of Jawahar Lai Nehru. Thereafter, on the recommendation of this committee, Planning Commission was constituted in March, 1950 and the format of first Five Year Plan was prepared in 1951. The Planning Commission was constituted in India in 1950 as a non-constitutional and advisory corporation. The Indian Constitution did not provide for the formation of Planning Commission.
• On 1^stJanuary, 2015, the newly formed N1T1 Aayog' has replaced the Planning Commission.
• The basic aim of economic planning in India is to bring about rapid economic growth through development of agriculture, industry, power, transport and communications and all other sectors of the economy. In India, 12th Five Year-Plans have been implemented so far. The target and achievements of these plans are given below:

Types of planning

Imperative Planning:

In this type of planning the Central Planning authority decides upon every aspect of the economy and the targets set and the processes delineated to achieve them are to be strictly followed. This type of planning is mainly practiced in the socialist economies.

Indicative Planning:

In this type of planning the State sets broad parameters and goals for the economy. It is different from centralised planning as unlike in the latter, the State does not see Plan targets to the minutest details, but only broadly indicates the targets to be achieved. It was adopted in our country since the 8th Five-Year Plan, as practised in many developed countries.

Perspective Planning:

It's a type of planning for a long period of time, usually 15-20 years. As a highly specialised task, it is operationalised through the Five Year and Annual Plans. In such form of planning, the planners formulate a perspective Plan that broadly defines the direction desired to be taken by the economy.

Rolling Plan:

Under the scheme of rolling Plans, there are three different steps. First, a plan for te current year which includes the annual budget. Second, a plan for a fixed number of years, say three, four or five. It is revised every year as per the requirements of the economy. Third, a perspective plan for 10,15 or 20 years.

Core Plan:

As per this concept, the Planning Commission asks the states to submit their projected revenue estimates. On the basis of these estimates, Planning Commission determines the expenditure heads for State Annual Plans. This helps in keeping the Plan target to realistic limits and prevents diversion of funds from the priority items to the non-plan account. The concept of 'Core Plan' has emerged recently

Models of Economic Development

Nehru-Mahalanobis Model:

• Nehru-Mahalanobis model of development emerged as the driving force of the strategy of development adopted at the time of formulation of the Second Five Year Plan and has continued right up to the eighties.
• It aimed at enlargement of opportunities for the less privileged sections of the society.
• Growth with social justice was the goal of Nehru-Mahalanobis model since it intended to foster a self-generating path of development with an assurance to the common man that poverty, unemployment, disease and ignorance would be removed so that individuals could realise their potential with the extension of social and economic opportunities.
• In the Nehru-Mahalanobis model the State controlled the commanding heights of the economy through the public sector.

The Gandhian Model of Growth

• Gandhian Plan' was brought out by Acharya S.N. Agarwala in 1944 and was re-affirmed in 1948, formed the basis of Gandhian model of growth.
• The basic objective of this model is to raise the material as well as the cultural level of the Indian masses so as to provide a basic standard of life.
• It aims primarily at improving the economic conditions of the villages of India and hence, it lays the greatest emphasis on the scientific development of agriculture and rapid growth of cottage and village industries.
• The Gandhian model aims at the reform of agriculture as the most important sector in economic planning in India.
• The Gandhian model's primary aim is the attainment of maximum self-sufficiency in village communities. Hence, the plan emphasises the rehabilitation, development and expansion of cottage industries side by side with agriculture. Spinning and weaving are given the first place.
• While Nehru wanted to give prime importance to heavy industries, the Gandhian model attempts to give primacy to agriculture supported by handicrafts and cottage industries.

LPG Model of Development

• The LPG Model of development was introduced in 1991 by the then Finance Minister Dr. Manmohan Singh.
• This model was intended to charter a new strategy with emphasis on Liberalisation, Privatisation and Globalisation (LPG).
• LPG Model of development emphasises a bigger role for the private sector.
• It envisages a much larger quantum of foreign direct investment to supplement our growth process.
• It aims at a strategy of export led growth as against import substitution practised earlier.
• It also aims at reducing the role of the State significantly and thus abandons planning fundamentalism in favour of a more liberal and market driven pattern of development.

PURA Model of Development

• The Union Cabinet on 20th January, 2004 accorded in principle approval for the execution of PURA within the gross budgetary support for bridging the rural-urban divide and achieving balanced socioeconomic development.
• Dr. A.P.J. Abdul Kalam, to eradicate poverty from India emphasised the adoption of PURA (Providing Urbar Amenities in Rural Areas). Earlier, it was Mahatnu Gandhi who underlined the exploitation of rural societv by its urban counterpart.
• The objective of PURA is to propel economic development without population transfers.
• The PURA concept is the response to the need for creating social and economic infrastructure which can create a conducive climate for investment by the private sector to invest in rural areas.
• Although PURA draws its inspiration from the Gandhian model of development which emphasises rural development as a fundamental postulate, yet in the prescription, it is neo-Gandhian in the sense, that it intends to bring rural regeneration with the avowed objective of taking modern technology and moderr amenities to the rural areas.
• It does emphasize the enlargement of employment as the sole objective to make use of rural manpower in various development activities.
• The PURA model, however, attempts a reconciliation between employment and GDP growth objectives.
• The 11^th Plan (2007-12) has provided Rs. 248 crores for implementing the PURA scheme in compact rural areas in Public-Private Partnership (PPP) mode.

Social Infrastructure, Employment and Human Development

• As on 16th January 2022, a total of 156.76 crore doses of COVID-19 vaccines have been administered: 90.75 crore first dose and 65.58 crore second dose. With these, 93% of 18 year and above aged persons have been vaccinated with first dose and about 70 % with second dose.
• Gross enrolment ratio in higher education recorded at 27.1% in 2019-20, was slightly higher from 26.3 % in 2018-19.
• The latest National Family Health Survey-5 Total Fertility Rate (TFR) has come down from 2.2 in 2015-16 to 2 in 2019-21.
• Under the Jal Jeevan Mission (JJM), 83 districts in the country have already become 'Har Ghar Jal' districts.
• Consequently, Government spending on social services increased significantly during the pandemic, recording an increase of 9.8 % over 2020-21.

Trends in Social Sector Expenditure

• Government's spending on social services increased significantly during the pandemic. In 2021-22 (BE), Centre and State governments earmarked an aggregate of Rs. 71.61 lakh crore for spending on social service sector; an increase of 9.8 % over 2020-21. Last year's (2020-21) revised expenditure has also gone up by 54,000 crore from the budgeted amount. In 2021-22 (BE), funds to the sector increased to 8.6 % of Gross Domestic Product (GDP) (8.3 % in 2020-21). During the last five years, social services accounted for about 25% of the total Government expenditure (Centre and States taken together). In 2021-22 (BE), it was 26.6 %.
• Expenditure on health sector increased from Rs. 2.73 lakh crore in 2019-20 (pre-COVID-19) to Rs. 4.72 lakh crore in 2021-22 (BE), an increase of nearly 73 %. For the education sector, the increase during same period was 20%.
• In addition to the National Health Mission, Union Budget 2021-22, announced Ayushman Bharat Health Infrastructure Mission, a new Centrally Sponsored Scheme, with an outlay of about Rs. 64,180 crore in next five years to develop capacities of primary, secondary, and tertiary care Health Systems, strengthen existing national institutions and create new institutions to cater to detection and cure of new and emerging diseases.
• The National Health Policy, 2017 envisaged to increase government's health expenditure to 2.5 % of GDP by 2025. In keeping with this objective, Central and State Governments' budgeted expenditure on health sector reached 2.1% of GDP in 2021-22, against 1.3 % in 2019-20.
• Ayushman Bharat Pradhan Mantri Jan Arogya Yojana (AB-PMJAY) is being implemented by the National Health Authority (NHA) in partnership with state governments. The scheme provides a health cover of Rs. 5 lakhs per family per year for secondary and tertiary care hospitalization to over 10.74 crores poor and vulnerable families in the bottom 40 % of the Indian population. As on 19^th January 2022, total of 17.5 crore Ayushman Cards have been issued under AB PM-JAY.
• Latest estimates of Expectation of life at birth for India are available for 2014-18. Life expectancy at birth was 69.4 years for the period 2014-18; it has increased by 0.4 years from 2013-17. It varies widely across states; ranging from the lowest of 65.2 years in Chhattisgarh to the highest at 75.3 years in Kerala and Delhi. It is higher in urban areas (72.6 years) than in rural areas (68.0 years).

Total Fertility rate

• Latest NFHS-5 shows that Total Fertility Rate (TFR), an average number of children per women, has further come down to 2 in 2019-21 from 2.2 in 2015-16. The total fertility rate has even come down below the replacement level of fertility (2.1 children per woman) in the country. Further, in all the States/UTs except for Manipur, Meghalaya, Bihar, Jharkhand and Uttar Pradesh the replacement level of fertility has been achieved.
• Use of family planning methods has increased from 53.5% in 2015-16 to 66.7 % in 2019-21.
• Institutional delivery has increased to 88.6 % in 2019-21 compared to 78.9 % in 2015-16.

Sex Ratio

• Sex ratio, number of females per 1000 males, in the total population has risen from 991 females in 2015-16 (NFHS-4) to 1020 in 2019-21 (NFHS-5). More importantly, sex ratio at birth, female children per 1000 male children born in the last five years, has grown from 919 in 2015-16 to 929 in 2019-21.