Economic Planning and Policy of India

Economic Planning is the making of major economic decisions.It's about what and how is to be produced and to whom it is to be allocated by the conscious decision of a determinate authority,on the basis of result of surveys.

The country like India have some socioeconomic problems in their economy. The problems be like poverty, unemployment, there is lack of growth in agricultural sector and industrial production and inequality in distribution of income and wealth can hardly be solved within the framework of an unplanned economy.Economy Planning is requiring to remove these basic problems in our Indian economy.

For resolving we have to make some targets be like:-

• We need to have definite figure of our socioeconomic problems to fix them.
• We set our goals time period and achieved them by putting great efforts in a given set time period
• There is need to have a central planning authority to take decision for some changes.
• There the authorities makes a complete figure on our economic resources of the country.
• There is need to share knowledge on the utilization of limited resources to get maximum output and welfare.

 After the independence ,one of the major choices for leaders had to make was to decide the type of economic system that was help in progress for developing the country.After great efforts the planning committee decided to adopt a Mixed Economic System.It is a judicious mix of both socialists and capitalists system.Mixed Economy was finally chosen with the help of Industrial Policy Resolution of 1948 and Directive Principle of Indian Constitution.The planning commission was set up in 1950,and the prime minister of India was made the chairperson of the commission.   

 

What is Mixed Economic System?

A mixed economic system is an economic system which characterize both capitalism and socialism.This system protects private property and allows a level of economic freedom in the use of capital , but also allows government to interface in economic activities in order to achieve social aims.

Five-Year Plans 

The first five year plan was comes in 1951 to 1956.It was one of the most important as it paved for the development of the country then and for the years to come.This plan is formulated in a very systematically in which all the problems are considered on priority basis.This system helps in propels the growth and development.

 

 Target of Five Year Plan

• Growth

       The main target for this plan is to increasing the Gross Domestic Product (GDP) of the country.The different sectors of the economy  -the agriculture sector,the service sector, and the industrial sector are considered when a country's GDP is derived.

• Modernization

       In order to increase the productivity and rapid growth, modernization is necessary.Hence,new agricultural technology as well as advanced machinery for factories were used.It also helps to give equal social status of women. They all are considered as equal and granted them equal rights.

• Self- Reliance      

      In order to develop all the sectors and make them self reliant country , only indigenous resources and technology were promoted during the five year plan.The main purpose for self reliance is that India didn't depend on other country for food and important technologies.
 

• Equity

       Gives equal rights for the betterment of people.There some steps taken to ensure equity.Like the implementations of the Land Reform Act,the government abolished the existing zamindar system and the tillers were made the owners of the respective land.Land Ceiling act was another commendable act.The Green revolution marked a significant change in the field of agriculture of India.It promoted the use of High yielding variety (HYV) seeds.
There is main motto is to give equal rights to every person.

Industrial Policy

It is a resolution adopted by Indian Parliament in 1956.It was formulated under the second Five Year plan.
This policy Categorize the industries in three sectors:-

1. State Owned Industry
2. Mixed(state and private both running industry together)
3. Private Sector

According to this policy every private sector industry have license.This license is gives by government.After getting the license the industry is follow all the rule and regulation of the government.To set up a small scale industry in those days maximum investment is Rs5 Lakh.The limit is increase to Rs1crore.

Trade Policy

According to five year plan the country have self reliance was the primary objective.The trade policy is no in favor of import of goods from other countries.Import taxes on goods are very high,which affect the supply of goods.This policy was practiced only to protect domestic firms from the foreign competition. There results were also good GDP increase 11.8% to 24.6%. There the expands of other operations and new units were started other than the jute and textile.

Liberal Policy  

Many economist criticized the trade policy as there the high import tax and restriction on foreign products.There was huge debate on public vs private sector.So after all of this happened government introduce with new Liberal economic policy of 1991,Indian economy addressed the prevailing economic problems through the following.

1. Liberalization
2. Privatization
3. Globalization